Real option framework for equipment wise expansion of modular plants applied to the design of a continuous multiproduct plant

In this work a framework for such a design based on predefined and standardized modules will be presented. The framework consists of two stages. The first stage is the selection of possible modular setups and suitable expansion strategies. Next these setups are evaluated in a real option analysis to investigate the economic performance in an uncertain market. The approach will be used to evaluate a multiproduct continuous plant. The main finding is that the economy of the modular plant depends under the given boundary conditions on the equipment item with the highest proportion on total investment costs and a high cost degression exponent.