Financial auditing firms make sure the books are according to GAAP. That is entirely different from internal management accounting. I have never seen a CMA comment on this board, or anyone attest to being a CMA. I do know how projects are costed inside companies.
Most use a structure (WBS) something like this:
Level 1:
Project amanagement and Business Analysis
Engineering
COnstruction
Equipment
Start-up and Commissioning
The most advanced place I have worked at had a structure with that at the top level and it went 5 levels deep. It collected costs very sccurately for every compoentn of the job. They knew exactly what the final cost and ROI would be on every job they did and that information never made it to the Financial Statements. Another thing to consider is that the primary motivation of an accountant is to reduce taxes. THat impacts how things are reported.
In ym job I interfac ewith financial people, obtain data from them, and sometimes report to them, but I know enough about accounting to be dangerous and could care less about GAAP. i manage cash and forecast expenditure.
Much of my assumptions about JBI are based on similar projects I worked on, the largest and most similar being worth $12 Million.
On that job there was a key piece of Equipment (much like the processor) that was worth $3M. Construction contracts were 4-5M. The remainder was spread out over the rest of it. Note that PM&BA, Engineering, and Start-up are all salaried positions.
According to GAAP, it is not necessary to report on a project basis. The costs above are spread through out the organization and reported as salaries everywhere. It would be impossible to separate the costs of building the P2oO machine vs. day-to-day operations, a distinction that companies make very clear internally, so that they know what projects are costing.
All I have read about JBI is the oost of the processor and then they add some additional money for some labor and call it done.
My approach is scientific, it is a common estimating approach called factoring. You take a similar job and apply the same ratios. In that $12M job the equipment was worth 3M, probably 4M all-in. Based on that and looking at percentages for the cost on construction contracts, etc, so you are easily over 1M for a P2O installation and I guessed 2M for 3 processors.
JBI can publish such numbers fairly easily, but in the construction or engineering world, no one will be fooled. It will be interesting to see how this rolls out and what the true numbers really are. You can bet that no one will purchase a P2O machine without doing an analysis looking at the components I have outlined above.
The fact that JBI has a machine shop makes it even more obtuse. I can't imagine how it helps him, although it may seem like a good idea at first blush.
There are 3 kinds if items required to build a P2O installation:
- Long Lead items (custom in nature, the processor)
- items which have to be ordered
- items which can be bought on-site (bulk items)
One would think that for rapid rollout of P2O, JBI would maximize the number of bulk and ordered items, and minimize the custom or long Lead items. Then why have a machine shop? All that accomplishes is increases the number of custom items, making it more costly, and making potential partners more reliant on jBI.
The issue is referred to as Constructability, which means exactly what it says. If JBI thinks that by making it complicated and custom that guarantees success, they are wrong. It is the opposite.
One unit which impressed me was the Envion unit. Based on the pictures I saw, it had a very small footprint and was very compact. It looks like it comes in a modular form which could be lifted neatly into place on-site with one lift. Modular construction is the way to go. I worked on a modular construction job some 5 years ago which involved 16 modules, all of them about the same size as the Envion unit.
At the very least JBI has to provide a BOM (Bill of Materials) to tell the JV partner what they need to order to build the unit, and a set of IFC drawings. From what I have read here JB does all the design himself and is protective of his knowledge, so how does that help JBI?
Hope that helps.
I finally reveal my true identity!!!!!!!!!
