5. Example 5.1
The estimated capital cost from a chemical plant using the study estimate method
(Class 4) was calculated to be $2 million. If the plant were to be built, over what range
would you expect the actual capital estimate to vary?
For a Class 4 estimate, from Table 5.2, the expected accuracy range is between 3 and
12 times that of a Class 1 estimate. A Class 1 estimate can be expected to vary from
+6% to -4%. We can evaluate the narrowest and broadest expected capital cost
ranges as:
Lowest Expected Cost Range
High value for actual plant cost ($2.0 x 106)[1 + (0.06)(3)] = $2.36 X 106
Low value for actual plant cost ($2.0 x 106)[1 - (0.04)(3)] = $1.76 x 106
Highest Expected Cost Range
High value for actual plant cost ($2.0 x 106)[1 + (0.06 )(12)] = $3.44 x 106
Low value for actual plant cost ($2.0 x 106)[1 - (0.04 )(12)] = $1.04 x 106
The actual expected range would depend on the level of project definition and effort. If
the effort and definition are at the high end, then the expected cost range would be
between $1.76 and $2.36 million. If the effort and definition are at the low end, then
the expected cost range would be between $1.04 and $3.44 million.
6. Example 5.2
Compare the costs for performing an order-of-magnitude estimate and a detailed
estimate for a plant that cost $5.0 x 106 to build.
Solution :
For the order-of-magnitude estimate, the cost of the estimate is in the range of
0.015% to 0.3% of the final cost of the plant:
Highest Expected Value: ($5.0 x 106)(0.003) = $15,000
Lowest Expected Value: ($5.0 x 106)(0.00015) = $750
For the detailed estimate, the cost of the estimate is in the range of 10 to 100
times that of the order-of-magnitude estimate
For the lowest expected cost range
Highest Expected Value: ($5.0 x 106 )(0.03) = $150,000
Lowest Expected Value: ($5.0 x 106)(0.0015) = $7500
For the highest expected cost range:
Highest Expected Value: ($5.0 x 106)(0.3) = $1,500,000
Lowest Expected Value: ($5.0 x 106)(0.015) = $75,000
7. Estimating Purchased Equipment Costs
Vendor quote
Most accurate
- based on specific information
- requires significant engineering
Use previous cost on similar equipment and scale for
time and size
Reasonably accurate
- beware of large extrapolation
- beware of foreign currency
Use cost estimating charts and scale for time
Less accurate
Convenient
8. Effect of Size (Capacity)
n
Ca Aa
= (5.1)
Cb Ab Cost Exponent
Cost Equipment Cost
Attribute - Size
Ca = KAa n
(5.2)
Cb
where K=
Ab n
9. Effect of Capacity on Purchased Equipment Cost
Ca = K Aan
where
K = Cb Abn
10. Effect of Size (Capacity) cont.
n = 0.4 – 0.8 Typically
Often n ~ 0.6 and we refer to Eq.(5.1) as the
(6/10)’s Rule
Assume all equipment have n = 0.6 in a
process unit and scale-up using this method
for whole processes
Order-of-Magnitude estimate
12. Economy of Scale
Example 5.3 :
Use the six-tenths-rule to estimate the % increase in purchased
cost when the capacity of a piece of equipment is doubled.
Using Equation 5.1 with n = 0.6:
Ca./Cb = (2/1)0.6 = 1.52
% increase = (1.52 -1.00)/1.00)(100) = 52%
The larger the equipment, the lower the cost of equipment per
unit of capacity.
13. Economy of Scale
Example 5.4
Compare the error for the scale-up of a heat exchanger by a
factor of 5 using the six-tenth- rule in place of the cost exponent
given in Table 5.3.
Using Equation 5.1:
Cost ratio using six-tenth-rule (i.e. n = 0.60) = 5.00.6 = 2.63
Cost ratio using (n =0.59) from Table 5.3 = 5.00.59 = 2.58
% Error = (2.63 -2.58)/2.58)(100) = 1.9 %
14. Effect of Capacity on Purchased Equipment Cost
Rearranging equation 5.2
C = K An
C
= K An −1
A
15. Equation for Time Effect
I2
C2 = C1
I
1
C = Cost
I = Value of cost index
1,2 = Represents points in time at which
costs required or known and index values
known
17. Effect of Time on Purchased Equipment Cost
Example 5.6
The purchased cost of a heat exchanger of 500 m2 area in 1990 was $25,000.
a. Estimate the cost of the same heat exchanger in 2001 using the two indices
introduced above.
b. Compare the results.
From Table 5.4: 1990 2001
Marshal and Swift Index 915 1094
Chemical Engineering Plant Cost Index 358 397
a. Marshal and Swift: Cost = ($25,000)(1094/915) = $29,891
Chemical Engineering: Cost = ($25,000)(397/358) = $27,723
b. Average Difference: ($29,891 -27,723)/($29,891 + 27,723)/2)(100) = 7.5%
19. Table 5.5: The Basis for the Chemical Engineering Plant Cost Index
Components of Index Weighting of Component (%)
Equipment, Machinery and Supports:
37
(a) Fabricated Equipment
14
(b) Process Machinery
20
(c) Pipe, Valves, and Fittings
7
(d) Process Instruments and Controls
7
(e) Pumps and Compressors
5
(f) Electrical Equipment and Materials
10
• Structural Supports, Insulation, and
100 61 % of total
Paint
Erection and Installation Labor 22
Buildings, Materials, and Labor 7
Engineering and Supervision 10
Total 100
20. Example 5.7
The capital cost of a 30,000 metric ton/year isopropanol plant in
1986 was estimated to be $7 million. Estimate the capital cost of a
new plant with a production rate of 50,000 metric tons/year in 2001.
Cost in 2001 = (Cost in 1986)(Capacity Correction) (Inflation
Correction)
= ($7,000,000)(50,000/30,000)°.6(397/318)
=($7,000,000)(1.359)(1.248) = $11,870,000
21. Factors affecting Capital Cost
• Direct project expenses
• Indirect project expenses
• Contingency and fee
• Auxiliary facilities
22. 1. Direct project expenses
Factor Symbol Comments
Equipment Cp Purchased cost of equipment at
f.o.b. cost manufacturer's site
Materials CM Includes all piping, insulation and installation
fireproofing, foundations and structural
supports, instrumentation and electrical, and
painting associated with the equipment
Labor CL Includes all labor associated with equipment
and material installing mentioned above
23. 2. Indirect project expenses
Factor Symbol Comments
Freight, CFIT transportation costs for shipping equipment
insurance, and materials to the plant site, all insurance
and taxes on the items shipped, and any purchase
taxes that may be applicable
Construction CO Includes all fringe benefits such as vacation,
overhead sick leave retirement benefits; etc.; labor
burden such as social security and
unemployment insurance, etc.; and salaries
and overhead for supervisory personnel
Contractor CE salaries and overhead for the engineering,
engineering drafting, and project management personnel
expenses on the project
24. 3. Contingency and fee
Factor Symbol Comments
Contingency CCont A factor to cover unforeseen circumstances.
These may include loss of time due to storms
and strikes, small changes in the design, and
unpredicted price increases.
Contractor CFee fee varies depending on the type of plant and
fee a variety of other factors
25. 4. Auxiliary facilities
Factor Symbol Comments
Site CSite land; grading and excavation of the site;
development installation and hook-up of electrical, water,
and sewer systems; and construction of all
internal roads, walkways, and parking lots
Auxiliary CAux administration offices, maintenance shop and
buildings control rooms, warehouses, and service
buildings
Off-sites and COff raw material and final product storage &
utilities loading & unloading facilities; all equipment
necessary to supply required process utilities;
central environmental control facilities; and
fire protection systems
27. Lang Factor
n
CTM = FLang ∑ C pi
i =1
Total Module Cost Purchased Cost of Major Equipment
From Preliminary PFD
(Pumps, Compressors, vessels, etc.)
Chemical Plant Type Lang Factor Flang
Fluid Processing Plant 4.74
Solid-Fluid Processing Plant 3.63
Solid Processing Plant 3.10
28. Lang Factor
Example 5.8:
Determine the capital cost for a major expansion to a fluid processing
plant that has a total purchased equipment cost of $6,800,000.
Capital Costs = ($6,800,000)(4.74) = $32,232,000
29. Lang Factor
• Advantage
1. Easy to apply.
• Drawbacks
1. Special MOC.
2. High operating pressure.
30. Module Factor Approach
• Table 5.8
• Direct, Indirect, Contingency and Fees are
expressed as functions (multipliers) of purchased
equipment cost(C p ) at base conditions (1 bar and
o
CS)
• Each equipment type has different multipliers
• Details given in Appendix A
31. Module Factor Approach
o
CBM = C p FBM Bare Module Factor
(sum of all multipliers)
Bare Module Purchased Equipment Cost for CS
Cost and 1 atm pressure - Appendix A
o
FBM = B1 + B2
FBM = B1 + B2FpFM
Fp = pressure factor (= 1 for 1 bar)
FM = material of construction factor (=1 for CS)
C p = C o Fp FM
p
34. Example 5.9
The purchased cost for a carbon steel heat exchanger operating
at ambient pressure is $10,000. For a heat exchanger module
given the following cost information:
Item % of Purchased Equipment Cost
Equipment 100.0
Materials 71.4
Labor 63.0
Freight 8.0
Overhead 63.4
Engineering 23.3
Using the information given above, determine the equivalent cost
multipliers given in Table 5.8 and the following:
0
a. Bare module cost factor, FBM
b. Bare module cost, CBM0
35. Item % of Purchased Cost Multiplier Value of Multiplier
Equipment Cost
Equipment 100.0 1.0
Materials 71.4 αM 0.714
Labor 63.0 αL 0.63/(1+0.714)=
0.368
Freight 8.0 α FIT 0.08/(1+0.714)=
0.047
Overhead 63.4 0.634/0.368/
αO
(1+0.714)= 1.005
Engineering 23.3 αE 0.233/(1+0.714) =
0.136
a. Using Equation 5.8:
0
FBM = (1 + 0.368 + 0.047 + (1.005)(0.368) + 0.136)(1 + 0.714) = 3.291
b. From Equation 5.6:
0
CBM = (3.291)($10,000) = $32,910
36. Module Factor Approach
o
CBM = C p FBM Bare Module Factor
(sum of all multipliers)
Bare Module Purchased Equipment Cost for CS
Cost and 1 atm pressure - Appendix A
o
FBM = B1 + B2
FBM = B1 + B2FpFM
Fp = pressure factor (= 1 for 1 bar)
FM = material of construction factor (=1 for CS)
C p = C o Fp FM
p
37. Bare Module Cost Factor
For Heat Exchangers, Process vessels, and pumps
CBM = CP FBM = CP ( B1 + B2 FM FP )
0 0
FBM = ( B1 + B2 )
0
Material Factor, FM, for these equipment are obtained from Figure A.8
along with Table A.3.
Values of B1 and B2 are given in Table A.4
38. Bare Module Cost Factor
For Heat Exchangers, Process vessels, and pumps
Values of B1 and B2 are given in Table A.4
40. Pressure Factor for vessels
Pressure Factor, FP , for other equipment are given in table
A.6 along with Figure A.9
( P + 1) D
+ 0.0315
2 [ 850 − 0.6( P + 1) ]
FP ,vessel = for tvessel > 0.0063m
0.0063
If FP is less than 1, then FP= 1.0
For P less than -0.5 barg, FP = 1.25
41. Pressure Factor for Other
Equipment
Pressure Factor, FP , for other equipment are given in table
A.6 along with Figure A.9
log10 FP = C1 +C2 log10 P + C3 [ log10 P ]
2
Constants are given in Table A.2
45. Purchased Equipment Cost
log10 C p = K1 + K 2 log10 ( A) + K 3 [ log10 ( A) ]
0 2
Where A is the capacity or size parameter for the equipment
K1, K2, and K3 are given in table A.1
These data are also presented in the form of graphs in Figures A.1-A.7
46.
47.
48.
49. Illustrative Example
Compare Costs for
1. Shell-and-tube heat exchanger in
2001 with an area = 100 m2 for
Carbon Steel at 1 bar
Carbon Steel at 100 bar
Stainless Steel at 1 bar
Stainless Steel at 100 bar
50. Effect of Materials of Construction
and Pressure on Bare Module Cost
P MOC Co Cp o
CBM CBM
p
1 bar CS 25 K 25 K 82.3 K 82.3 K
1 bar SS 25 K 68.3 K 82.3 K 154 K
100 bar CS 25 K 34.6 K 82.3 K 98.1 K
100 bar SS 25 K 94.4 K 82.3 K 197.4
K
51. Bare-Module and Total-
Module Costs
BM – Previously Covered
TM – Includes Contingency and Fees at
15% and 3% of BM
CTM = 1.18 ∑ C BM
all equip
52. Grass-Roots Costs
GR – grass-roots cost includes costs for
auxiliary facilities
CGR = 0.50 ∑ o
C BM + CTM
all equip
Use base BM costs in GR cost (1 atm and
CS) since auxiliary facilities should not
depend on pressure or M.O.C.
54. Capcost
Calculates costs based on input
CEPCI – use current value of 401 or
latest from Chemical Engineering
Program automatically assigns
equipment numbers
