The number for Gross Profit for selling "processors" Has Been Grossly Overstated.
The main problem is that two things are being confused: the cost of the entire system including Engineering, construction, commissioning, and startup; with the cost of the "processor" which is currently at the fabricator incurring storage cost. The SAIC Summary and most recent Financial Statements for JBI are most useful in looking at the cost of a fully functional system. The last financial statements show a value of over $1 Million for Construction in Process and a total of $7.4 Million invested in Plant & Equipment (3 Units) to-date.
We know that there are several pieces of Equipment (Processors) at a fabricator. The "Processors" at the fabricator are only part of the solution.
Based on my experience the cost breakdown on any job in the process industries are roughly as follows:
- Construction - 20%
- Equipment - 20%
- Engineering - 30%
- Project management - 10%
- Commissioning -20%
The best reference we have for the cost of a full 3-processor installation comes from the SAIC Summary. That document put the Total Cost at $9 Million. The last financial statements support that, showing an Incurred Cost to-date for the 3 machines that JBI has already built is about 7.4 Million. Any estimate produced by SAIC would have used Union labor rates, etc and would be more expensive, with no shortcuts.
The SAIC estimate was estimating the cost to the Owner. The role that JBI would play is that of an Equipment Vendor. Therefore, JBI would receive as Revenue only a portion of the $9 Million SAIC estimate. They do not have the construction, Engineering, Commissioning, or Project Management experience to do 100% of this work. From the percentages above, I would guess that portion to be 3-4 Million for one Unit and 5-6 Million for a 3-unit cluster.
The last financial statements show a value of over $1 Million for Construction in Process. The only thing that makes sense would be this number refers to the status of the fabricated equipment (Processors) alone. We have the comment from Heddle during the last Q&A that "the processors are 75% Complete". Heddle's comment is likely referring to that as well. That is to say, they are 75% complete on the "Equipment - 20%" component.
The SAIC Summary is accurate from a Cost standpoint and supports this. Their figure was 8.5 Million with an OOM estimate complete (according to the document). An OOM estimate is worth 5% of the total budget. That is an industry standard. That gives a total cost of 9 Million for a 3-processor cluster, with about 400k already spent. The rest of the figures they give, which is a further 2 Million for Engineering, jive with industry standards. A FEL2 estimate is worth 10%, a FEL3 (final detailed) estimate is worth 15% of the budget. That results in the 30% Engineering cost.
The SAIC study was done on Processor #2, and things have been improved. #3 is more modular and has some drawings (Engineering work) associated with it. OK, modularization is worth about 10% cost reduction in Construction. The drawings mean more Engineering has been done.
The SAIC study was for a 3-processor cluster. There would be a lot of common systems that would make a cluster advantageous.
Profit to JBI
The Revenue to JBI would be a part of the Cost to the Owner. I would guess that portion to be 3-4 Million for one Unit and 5-6 Million for a 3-unit cluster. I think the only thing we can assume a 20-30% markup on Labor (Consulting) and Equipment. That would mean they would make anywhere from $500k to $1 Million per processor sale... or 1 Million on a 3-processor cluster. That fits well with the invested capital as reported in JBI Financial Statements.
This is assuming that that kind of money can be justified. I know of no business (ROI) justification for doing this based on profitability, and if it is some other justification (Green? Environmental?) those budgets are hard to find in those amounts.
