Capital Argument
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A trademark of Paperitalo Publications
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Four kinds of Money, Part 4
Unless your company has a specific policy prohibiting what I am about to describe, there is no excuse for your large project going over budget.
Of course, the best way to prevent going over budget is by doing a professional, competent estimate and then executing on time using experienced engineering and construction managers.
Even in the best of cases, however, things can go slightly askew.
What to do then? Convert the balance of your hard assets to leases. This is very easy to do with spare parts, and in most cases, unless there are specific liens or mortgages against named equipment, you can do it with these assets as well.
It is amazing how little $10 million in leased equipment nudges your proforma P & L. Just do the math--$10 million amortized over twenty years works out to $0.5 million per year. If your facility makes 1,000 tons per day, it is $1.39 per ton. Add 10% for handling fees and interest and you are still below $1.67 per ton. Your proforma P & L was not within this range of accuracy to start with.
So, there is no excuse for exceeding your capital budget if you did a halfway decent job of estimating, managing and constructing. You just need to become a bit creative (and this creativity is perfectly legal and ethical) if you find a squeeze as you get to the end.
What is your opinion? Drop me a line at
jthompson@taii.com. I would like to hear from you.
Engineering Manager of the Year, call for nominations
We are looking for an individual who has done an extraordinary project, one that almost defies belief. Its extraordinary features can be schedule, technology, cost or all three.
We have often gotten nominees that go something like this, "I nominate Joe because he has done a great job of running our engineering department for the last fifteen years." Quite frankly, we are not interested in such nominees.
However, if you know someone who has led a very exceptional project in the recent past (the last two or three years), we want to know about it. We want to honor them and hold them up as an example for Engineering Managers in every pulp and paper mill around the world.
Just send your nomination, with as much details as you can provide, to jthompson@taii.com. We will seriously consider it.
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Current Patent Activity is available here.
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Capital Arguments Engineering Manager of the Year
Hall of Fame
Since its inception, Capital Arguments has believed extraordinary projects are possible. They can be done safely, responsibly and offer a great advantage to their mills with lower capital costs and saved downtime. We established this award in 2008 to recognize those people and companies that follow this philosophy. This award is given once per year somewhere in the world. We honor our inductees permanently here.
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Mac Switkowski--Engineering Manager of the Year 2015
Mac Switkowski, center, holds his Capital Arguments Engineering Manager of the Year Award that was presented by Paperitalo CEO Jim Thompson, left, as Luis Henao, right, vice president at Pratt Industries applauds. Mac brought the new mill at Valparaiso in on time and on budget despite a change of paper machine suppliers mid project.
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Not Awarded 2014
You have to be really good to get this award. We did not receive any qualifying nominations in 2014.
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Not Awarded 2013
You have to be really good to get this award. We did not receive any qualifying nominations in 2013.
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Not Awarded 2012
You have to be really good to get this award. We did not receive any qualifying nominations in 2012.
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Ed Kersey--Engineering Manager of the Year 2011
Jim p
resents Ed with the Engineering Manager of the Year for 2011.
(L - R) Matt Nilsen, Jim Thompson, Ed Kersey and Wayne South. Nilsen is Account Manager and South is Business Development Manager for Kadant Black Clawson, underwriter of this year's award. Ed Managed the construction of the Pratt Industries mill in Shreveport, Louisiana which took 13 months from piling to paper on the reel. His reward? They made him mill manager!
Kadant Black Clawson was a major sponsor of the 2011 Award. Here, on the left, Peter Flynn, President of Kadant Black Clawson, receives the company's duplicate of Ed's Award from Steve Roush, Publisher and Editor, Paperitalo Publications.
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Not Awarded 2010
You have to be really good to get this award. We did not receive any qualifying nominations in 2010.
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Dean Abrams--Engineering Manager of the Year 2009
Now retired, Dean was an engineer at Corrugated Services, Forney, Texas, USA in the summer of 2009 when he completed his award winning project. Dean managed a team that installed a secondary headbox in 11 hours, 30 minutes, paper-to-paper. The experts had said it would take at least 3 days. In April 2010, we presented the award to Dean in the presence of a number of his colleagues.
Here is the award we presented to Dean:
Mike Ahcan--Engineering Manager of the Year 2008
Mike works at the UPM Blandin Mill in Grand Rapids, Minnesota, USA. In 2008, the mill's sole effluent pipe, running outside a building, almost in the Mississippi River, was determined to be in a state of imminent collapse. The experts said it would take a week of total mill downtime to replace it. Additionally, there was a danger of leakage into the river. Mike and his team went to work and replaced the pipe without any downtime and with no spillage. We had a banquet in Grand Rapids for him in July 2009.
And here is Mike's award:
We normally accept nominations in the November-December time frame. They can be sent to jthompson@taii.com with "EMOY Nomination" in the subject line.
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Please write when we tickle your brain cells! Email jthompson@taii.com
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