1. Estimating Capital Costs

2. Basic Steps in the Feasibility Evaluation of a Process Design
Develop the conceptual design and flowsheet for the process.
Calculate the capital investment needed to build the plant.
Calculate the operational investment needed to run the plant.
Perform an economic analysis and calculate the break even point and internal return on investment
Compare the investment with other investment options

3. Capital Cost Estimates
Detailed Estimate – Contractor Design
Definitive Estimate
Preliminary Estimate – Group Student Designs
Study Estimate
Order of magnitude Estimate

4. Detailed Estimate Class 1 (Firm or Contractor’s)
Requires a final PFD, P&ID, vessel sketches, plot plan, elevation diagram, utility balances, piping isometrics
Accuracy +6% to -4%
Vendor quotes for all items
Detailed engineering of the process (ready to go to the construction stage)

5. Definitive Estimate Class 2 (Project Control)
Requires a PFD, vessel sketches, plot plan, elevation diagram, utility balances and a preliminary P&ID.
Accuracy +15% to -7%
Preliminary specifications for all equipment, utilities, instrumentation, electrical, and off-sites.

6. Preliminary Estimate Class 3 (Scope)
Requires a Process Flow Diagram.
Includes vessel sketches for major equipment, preliminary plot plan and elevation diagram
Accuracy +25% to -15%
Each equipment is more accurately sized than in study estimate.
Estimates of piping, instrumentation, electrical requirements and utilities included

7. Study Estimate Class 4 (Major Equipment/Factored)
Requires a Process Flow Diagram
Accuracy +30% to -20%
Utilizes a list of major equipment in the process.
Each equipment is roughly sized and approximate cost is determined

8. Order of magnitude Estimate Class 5 (Ratio or Feasibility)
Requires only a Block Flow Diagram
Accuracy +40% to -20%
Utilizes Cost information for a complete process from previously built plants
Takes capacity and inflation into account

9. Effect of Capacity on Purchased Equipment Cost

10. Adjusting Cost for Inflation
Various cost indices exist to relate costs from previous dates to current date:
A) Marshall & Swift (Appears in Chemical Engineering Magazine)
B) Chemical Engineering Plant Cost Index (Appears in Chemical Engineering Magazine)
C) Nelson-Farrar Refinery Construction Index
D) Engineering News Record Construction Index

11. Historical Cost of CEPCI through 2010

12. Order of magnitude Estimate: Example
The cost of a 80k metric tons/year process in 1996 is $10m. Estimate the cost for a 120ktons/year plant in 2004.
C1=10m, P1=80 ktons/year, I1=382
C2 =??, P2=120 ktons/year, I2=486(Jan 2004)

13. Procedure for Equipment Cost Estimation
Size each piece of equipment at standard conditions and determine an approximate cost Cp0.
Determine the factor FM to account for materials of construction different than standard.
Determine the pressure factor Fp to account for pressures other than atmospheric.

14. Procedure for Equipment Cost Estimation
Obtain the Bare Module Cost CBM - the sum of the actual equipment cost and all the other costs that are incurred in the process of equipment installation. (See Table 7.6 in Text)
Installation materials (piping, electrical, insulation, foundations, etc.
Installation labor
Freight, insurance & taxes
Construction overhead
Contractor expenses

15. Procedure for Equipment Cost Estimation
Calculate a Total Module or Grass Roots Cost
Contingency & fee
Site development and auxiliary buildings
Off sites & utilities

16. Procedure for Equipment Cost Estimation
Size each piece of equipment at standard conditions and determine an approximate cost Cp0.
A is the capacity or size parameter.
K1, K2 and K3 are given in Appendix A Table A.1 pp for various types of equipment
Method Based on approach by Guthrie (1969 /1974) &
modified by Ulrich (1984)

17. Procedure for Equipment Cost Estimation
Estimate Bare Module Cost by adding additional costs associated with the equipment.
Additional costs (Labor, piping, instrumentation, foundations, electrical, etc.) are tied up into constants B1 & B2 given in Appendix A Table A.4 p 948 for Heat Exchangers, Pumps & Vessels
Table A.5 p 948 is used for Equipment not covered in Table A.4 (gives FBM)

18. Procedure for Equipment Cost Estimation
Determine the factor FM to account for materials of construction different than standard.
Material factor FM is found from Figure A.18 p945 and Table A.3 pp

19. Procedure for Equipment Cost Estimation
Determine the pressure factor Fp to account for pressures other than atmospheric.
C1, C2 and C3 are given in Appendix A Table A.2 pp for various types of equipment

20. Procedure for Equipment Cost Estimation
Obtain the Bare Module Cost CBM - the sum of the actual cost and all the other costs that are incurred in the process of equipment installation.
▲Cost Should be Updated from to present by using a cost index.

21. Estimation of Total Module Cost (For an Existing facility)
Sum the cost of the individual Bare Module Costs and add the Contingency and Fee Cost (=18% of Bare module cost).

22. Estimation of Grass Roots Cost (For a new facility)
Add the Total Module Cost to the Auxiliary Facilities Cost (=50% of Bare module cost).

23. Lang Factor Method for Estimating Total Module Cost of a Plant
CTM = Total module cost of the plant
Cp,i = the purchase cost of equipment I
n = number of individual units
FLang = the Lang Factor (from Table 7.7)