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The cost of a cubic metre of desalinated water, and why energy prices matter

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

A developer is bidding for a 300,000 cubic metre a day reverse osmosis plant on the Red Sea coast of Saudi Arabia. It will cost USD 300 million to build, and the developer uses a capital recovery factor of 8 percent a year (the yearly payment that repays the plant and its financing). The plant runs 95 percent of the time. It uses 3.5 kWh of electricity per cubic metre at USD 0.04 per kWh. Other running costs are USD 0.08 per cubic metre. What is the cost per cubic metre? What if the electricity price doubles? (Figures are illustrative.)

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Cost per cubic metre = capital charge + energy + other running costs
- Yearly output = daily capacity x 365 x availability
- Capital charge = capex x capital recovery factor, divided by yearly output
- Energy = kWh per cubic metre x price per kWh

4. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Yearly output
What a strong candidate does: 300,000 cubic metres a day, 365 days, 95 percent of the time.
Yearly output (cubic metres): 300,000 × 365 × 0.95 = 104,025,000
Step 2: Capital charge per cubic metre
What a strong candidate does: USD 24 million a year (8 percent of 300 million) spread over the yearly output.
Capital charge (USD per cubic metre): 300,000,000 × 0.08 ÷ 104,025,000 = 0.2307
Step 3: Energy per cubic metre
What a strong candidate does: 3.5 kWh at USD 0.04.
Energy cost (USD per cubic metre): 3.5 × 0.04 = 0.14
Step 4: Total cost
What a strong candidate does: Capital, energy and other running costs added.
Total cost (USD per cubic metre): 300,000,000 × 0.08 ÷ 104,025,000 + 3.5 × 0.04 + 0.08 = 0.4507
Step 5: Total cost if electricity doubles
What a strong candidate does: Energy becomes 3.5 kWh at USD 0.08, which is USD 0.28.
Total cost with dearer power (USD per cubic metre): 300,000,000 × 0.08 ÷ 104,025,000 + 3.5 × 0.08 + 0.08 = 0.5907

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

The developer can bid near USD 0.45 per cubic metre only if it locks in cheap power, because energy is about a third of the cost and doubling its price lifts the total to about USD 0.59, a rise of about 31 percent. First, the capital charge of about USD 0.23 is fixed once the plant is financed. Second, energy is the block most exposed to change, so a long power contract or its own solar supply matters. The risk is a tariff set too low to cover membranes and repairs. As a next step, price a solar power purchase agreement for the plant.

Risks a strong answer names: Plant downtime lowers yearly output and raises the capital charge per cubic metre; The brine left over must be handled so it does not harm the sea.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.