Professional Documents
Culture Documents
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Subtotal A
Offsites
Subtotal B
Special costs
Subtotal C
Location factor
Subtotal D
Contingency
Total
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Revenue: $ 375,000,000
Variable Cost $ 300,000,000
Fixed Cost: $ 30,000,000
Depreciation $ 15,000,000
Tax: $ 15,000,000
Net Profit (Pretax Profit - Tax): $ 15,000,000
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Revenue: $ 375,000,000
Variable Cost $ 300,000,000
Fixed Cost: $ 30,000,000
Depreciation $ 15,000,000
Tax: $ 15,000,000
Net Profit: $ 15,000,000
Operating Cash Flow $ 30,000,000
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Conclusions
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32
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1384
1385
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1386
1387
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The N exponent
An analysis of the cost of individual pieces of
equipment shows that the size factors
exponent will vary from 0.3 to unity, but the
average is very near to 0.6, thus the name for
the rule of thumb.
If a higher degree of sophistication is sought,
Table 1 below can be used.
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1389
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1390
1391
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1392
1393
13
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Cost Indices
Cost indices are useful when basing the
approximated cost on other than current prices.
If the known cost of a piece of equipment is
based on, for instance 1998 prices, this cost
must be multiplied by the ratio of the present
day index to the 1998 base index in order to
proportion the value to present day dollars.
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Cost Indices
1395
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1396
1397
15
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1398
1399
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1400
1401
17
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1402
1403
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1404
1405
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Cost Indexes
Estimating Process Costs From Existing
Operations
No costs remain stable due to inflation and
deflation.
As a result, in our estimates we must adjust
any cost relative to some basis or index.
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Cost Indexes
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1410
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4. Definitive Estimates
Definitive cost estimates are the most time consuming and
difficult to prepare but are also the most accurate.
These estimates require preparation of plot plans, detailed
ow sheets and preliminary construction drawings.
Scale models are sometimes used.
All material and equipment are listed and priced.
The number of man hours for each construction activity is
estimated.
Indirect field costs, such as crane rentals, costs of tools,
supervision, etc., are also estimated.
This type of estimate usually results in an accuracy of 5%.
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1414
1415
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1418
Intratec Plant Construction Cost Index (IC Index) comprises a series of specific and general price
indexes, evaluated by Intratec consultant's as fundamental for the construction of chemical
plants, which are combined to reasonably reflect generic chemical plants capital costs. Most of
the price indexes are obtained from Bureau of Labor Statistics (BLS) website and measures the
behavior of selling prices received by U.S. producers during time
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1420
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Lang Exponent
The exponent used in scaling the cost for different plant capacities.
Promoter calculates the cost of the project facilities from the reference
plant by applying the following formula:
C = Cb x [Qa / Qb] pow ( x)
where
Ca = Cost of the Plant,
Cb = Base Case Cost,
Qa = Capacity of the Plant,
Qb = Base Case Capacity, x = the Lang cost capacity exponent.
The Lang exponent is usually between 0.6 and 0.7 and can vary
from one process to another.
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