2. Outline
• Types of estimates
• Adjusting costs for changes in capacity
• Adjusting costs for changes in time
• Total plant cost estimates
– Direct, indirect, etc.
– Lang Factors
– Module cost approach
– Effect of temperature and pressure
• Capcost program
3. Capital Cost Estimate Types
• 1. Order of Magnitude Estimate (Feasibility)
– + 40%, - 20%
– BFD , Process Modification
• 2. Study Estimate / Major Equipment
– + 30%, - 20%
– PFD , Cost Chart
5. Capital Cost Estimates Types (cont’d)
• 5. Detailed (Firm or Contractors) Estimate
– + 6%, - 4%
– Everything included – ready to go to construction phase
• Estimate low so actual cost will be high (+)
• Estimate high so actual cost will be low (-)
• Why is + # > - #.?
6. Cost of Estimate – See Also Table 7.2
Accuracy
1
2
3
4
5
Cost of Estimate (Time)
7. Factored Estimates
• Total Plant Capital Cost CTM (Fixed Capital
Investment, FCI) can be estimated by a factored
estimate.
• In a factored estimate, one first estimates the cost of
individual pieces of equipment, then estimates the
total installed cost by multiplying by factors.
8. Definitions
CoP,i Purchased cost equipment i (base conditions)
FoBM,i Bare module $ factor (base conditions).
CoBM,i BM equipment cost (base conditions).
FBM,I BM factor corrected for not CS 1atm
CBM,I Bare module equipment cost
FM Materials factor (1 for carbon steel)
FP Pressure factor (1 for pressure ~1 atm)
CTM Total module cost (addition to existing plant)
CGR Grass roots cost (new plant, new site)
9. Estimating Purchased Equipment Cost
• 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
10. Effect of capacity on cost
• A equipment cost attribute n
• C purchased cost
Ca Aa
• n cost exponent Cb Ab
– typically 0.4-0.8
– Often use n = 0.6, then refer to eqn as the 6/10ths rule
– 6/10ths rule can be used to scale up an entire process
• a unit with required attribute
• b unit with base attribute
Exponents tabulated in numerous sources, such as Perry's
Chemical Engineer's Handbook
In general, the larger the equipment, the lower the cost of
equipment per unit of capacity
11. Example 1
• A New Plant Ordered a Set of Floating Head Heat
Exchangers (Area = 100 m2) cost $92,000. What
Would Cost be for a Heat Exchanger for Similar
Service if Area = 50 m2 and n = 0.44 ?
12. Example 1 - Solution
Ca æ Aa ö
n
æ Aa ö n
=ç ÷ Ca = Cbç ÷
Cb è Ab ø è Ab ø
æ 50 ö0.44
92,000ç ÷ Ca $67,300
è 100 ø
100 m2 Exchanger is not twice as expensive as a 50 m2 exchanger
Economy of Scale
13. Effect of Time
• Time increases – cost increases (inflation)
• Inflation is measured by cost indexes - Figure 7.3
– Chemical Engineering Plant Cost Index (CEPCI)
– Marshall and Swift Process Industry Index
• Numbers based on “basket of goods” typical for
construction of chemical plants - Table 7.5
14. Effect of time on cost
C 2 I2
=
• I cost index C1 I1
• C purchased cost
• 1 base time when cost is known
• 2 time when cost is desired
15. Cost Indicies
• Marshall & Swift Equipment Cost Indexes
– all-industry equipment index - arithmetic average of indexes for 47
different types of industrial, commercial, and housing equipment
– based on an index value of 100 for the year 1926
– account for cost of machinery and major equipment plus costs for
installation, fixtures, tools, office, and minor equipment
• Engineering News-Record Construction Cost Index
– indicates variance in labor rates and materials costs for industrial
construction
– one of three basis’ used: 100 for 1913, 1949 or 1967
• Nelson-Farrar Refinery Construction Cost Index
– petroleum industry construction costs
– basis - 100 for 1946
18. Chem. Engr. Plant Cost Index (CEPCI)
• construction costs for chemical plants
• equipment, machinery and supports, 61%; erection and
installation labor, 22%; buildings, materials, and labor, 7%;
engineering and supervision, 10%
• major components subdivided as: fabricated equipment, 37%;
process machinery, 14%; pipe, valves, and fittings, 20%;
process instruments and controls, 7%; pumps and
compressors, 7%; electrical equipment and materials, 5%;
structural supports, insulation and paint, 10%
• basis - 100 for 1957-1959
19. Chemical Engineering Plant Cost Index from 1950 to 2010
700
600
500
400
300
200
100
0
1950 1960 1970 1980 1990 2000 2010
20. Table 7.5: The Basis for the Chemical Engineering Plant Cost Index
Components of Index Weighting of Component (%)
Equipment, Machinery and Supports:
(a) Fabricated Equipment 37
(b) Process Machinery 14
(c) Pipe, Valves, and Fittings 20
(d) Process Instruments and Controls 7
(e) Pumps and Compressors 7
(f) Electrical Equipment and Materials 5
(g) Structural Supports, Insulation, Paint 10
100 61% of total
Erection and Installation Labor 22
Buildings, Materials, and Labor 7
Engineering and Supervision 10
Total 100
21. Example 2
• Cost of vessel in 1993 was 25,000, what is estimated
cost today?
Inow 551
Cnow C1993 25,000
I1993 359
22. Example 3 - Accounting for Time and Size
• 2 heat exchangers, 1 bought in 1990 and the other in
1995 for the same service
A B
Area = 70 m2 130 m2
Time= 1990 1995
Cost = 17 K 24 K
I = 358 381
23. Example 3 (cont’d)
• What is the Cost of a 80 m2 Heat Exchanger Today ?
• Must First Bring Costs to a Common Time
551
A = 70 C A 2010 17 26
358
551
B = 130 CB 2010 24 37
381
24. Example 3 (cont’d)
C KAn
n log 37 log 26
26 K 70 n 0.57
n
log 130 log 70
37 K 130
C 26
K n 0.57
2.31
A 70
0.57
C 2.31 80 28.1
25. Total Cost of Plant
• Purchased cost – equipment f.o.b.
– f.o.b. – freight (free) on board
• commonly used when shipping goods to indicate who pays loading
and transportation costs, and/or the point at which the
responsibility of the goods transfers from shipper to buyer
• Installed cost – Often 3 to 8 times larger than
purchased cost
26. Installed Equipment Cost (Table 7.6)
• 1. Direct Project Expenses
– Equipment
– Material for installation
– Labor for installation
• 2. Indirect Project Expenses
– Freight, insurance, and taxes
– Construction overhead
– Contractor engineering expenses
27. Installed Equipment Cost (cont’d)
• Contingency and Fee
– Contingency
– Contractor fee
• Auxiliary Facilities
– Site development
– Auxiliary buildings
– Off-sites and utilities
28. Equipment Costs
• Purchased cost Cpo is typically estimated by an
equation of form:
o 2
log10 Cp K1 K 2 log10 A K3 log10 A
– where Ki are a series of constants associated with the type
of equipment being costed, and
– A is the capacity (independent variable) of the unit
• Cpo is the base condition cost (i.e., for carbon steel at
atmospheric condition)
29. Equipment Costs
Heat Exchanger K1 K2 K3
Fixed tube, sheet, or U tube 4.3247 -0.303 0.1634
Floating Head 4.8306 -0.8509 0.3187
Bayonet 4.2768 -0.0495 0.1431
Kettle Reboiler 4.4646 -0.5277 0.3955
10000000
fixed tube sheet
floating head
bayonet
kettle reboiler
K values taken from the
1000000
CAPCOST® program
cost, U.S. $
100000
10000
100 1000 10000
exchanger area (sq ft) (capacity, A)
31. Module Costing Technique
• The bare module cost CBM is the sum of the direct and indirect costs
associated with equipment purchase and installation.
• The bare module cost CBM can be found from the expression:
CBM = CP FBM = CP (B1 + B2FMFp)
– CP is the purchased cost of the base condition (most common
material, usually carbon steel, operating at ambient pressure)
– FBM is a multiplicative factor called the bare module cost factor that adjusts
for all of the previously discussed costs, as well as for specific materials of
construction (FM) and for actual operating pressures (Fp).
– B1 and B2 are factors that are dependent on equipment-type.
– The superscript is used to denote base condition factor (i.e, carbon steel and
ambient pressure operation).
32. Pressure Factors
• A pressure factor Fp,vessel for a vessel of diameter D and
operating at pressure P (in units of bar) is based the
ASME code for pressure vessels.
• Assuming a maximum allowable carbon steel stress of
944 bar, a 90% weld efficiency, a minimum allowable
vessel thickness of ¼", and a corrosion allowance of ⅛"
P 1D
0.00315
2 850 0.6 P 1
Fp, vessel
0.0063
• For pressures below -0.5 barg, Fp,vessel = 1.25
• For all other process log F C C log P C3 log10 P
2
10 p 1 2 10
equipment,
35. Material Factors
material FM .
carbon steel 1.0
stainless steel clad 1.7
stainless steel 3.1
nickel clad 3.6
nickel 7.1
titanium clad 4.7
titanium 9.4
36. Direct Project Expenses
CDE = CP + CM + CL
CDE = CP (1 + M)(1 + L)
• Equipment f.o.b. cost CP
– purchased cost of equipment at manufacturer's site (free on board)
• Materials required for installation CM = M CP
– includes all piping, insulation and fire proofing, foundations and structural
supports, instrumentation and electrical, and painting associated with the
equipment.
• labor to install equipment & mat'l CL = L (CP + CM) = CP L (1 + M)
– all labor associated with installing the equipment and materials
37. Indirect Project Expenses
CIDE = CFIT + CO + CE
CIDE = CP (1 + M) ( FIT + L O + E)
• Freight, insurance, taxes CFIT = FIT (C0 + CM)
– includes all costs for shipping equipment and materials to the plant site
• Construction overhead CO = O CL
– includes fringe benefits, sick leave, vacation; labor burden such as social
security and unemployment insurance, etc.; and salaries and overhead for
supervisory personnel
• Contractor engineering expense CE = E (CP + CM)
– includes salaries and overhead for engineering, drafting, and project
management personnel
38. Bare Module Cost
• Substitution and collection of like terms:
CBM = CIDE + CDE
CBM = CP (1 + M) (1 + L + FIT + L O + E)
• Sum of Direct and Indirect costs for a process unit
39. Contingency and Fee
• A contingency factor covers unforeseen
circumstances (15% for well understood systems)
CCont = ContCBM
= CP (1 + M) (1 + L + FIT + L O+ E Cont
• Contractor Fee (typically assumed to be 3%)
CFee = FeeCBM
= CP (1 + M) (1 + L + FIT + L O+ E Fee
40. Total Module Cost
• Total cost for purchase and installation of a process
unit, CTM
CTM = CBM + CCont + CFee
CTM = CP FBM + CP Cont + CP Fee
CTM = CP (1 + M)(1 + L + FIT + L O+ E Fee + Cont)
41. Bare Module Cost for
nonbase conditions
• Pressure Factors (FP) – calculated from expression specific to type of
vessel (see Appendix A)
• Materials of Construction Factors (FM) – simple mutiplicative factor based
on relative cost of material to base case material
– Carbon steel (base case)
– Low-alloy steel (low/moderate)
– Stainless steel, Aluminium and Copper and their alloys (moderate)
– Titanium and Nickel and their alloys (high)
CBM = CP FP FM = CP [FP FM (1+fP&I)+FBM -1-fP&I]
where fP&I represents fraction of installation associated with piping and instrumentation
42. Grass Roots Cost (new site)
• Includes costs for site development, auxiliary
buildings, and off-sites and utilities. Such facilities
depend typically on materials of construction and/or
operating pressure, and can range from 20 to 100%
of the base module cost. A value of 50% is a good
starting point to assume.
CGR = CTM + 0.5 CBM,i
summation is performed over all n process units in the design
43. CAPCOST®
• CAPCOST® is a Microsoft Excel program for
estimating bare module, total module, and grass
roots costs of complex chemical plants.
44. Lang Factors
• Table 7.7
• Use multiplier depending on type of plant to escalate
equipment costs to installed costs
• Flang = 4.74 Fluid processing plant
= 3.63 Solid-Fluid processing plant
= 3.10 Solid processing plant
45. Lang Factors (cont’d)
n
CTM FLang C pi
i 1
Total Module Cost Purchased Cost of Major Equipment
From Preliminary PFD
(Pumps, Compressors, vessels, etc.)