Chapter 7 - Capital Cost Estimation

Chemical Engineering Department

West Virginia University

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Outline
Types of estimate
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
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Types of Capital Cost Estimate
1. Order of Magnitude Estimate (Feasibility)
+ 40%, - 20%
BFD , Process Modification
2. Study Estimate / Major Equipment
+ 30%, - 20%
PFD , Cost Chart

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Types of Capital Cost Estimate (contd)

3. Preliminary Design (Scope) Estimate

+ 25%, - 15%
PFD , vessel sketches , equip. diagrams
4. Definitive (Project Control) Estimate
+ 15%, - 7%
PFD , P&ID, all vessel sketches, equip. diagrams,
preliminary isometrics

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Types of Capital Cost Estimates (contd)

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 + # > - #.?

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Cost of Estimate See Also Table 7.2

Accuracy
1
2
3
4
5

Cost of Estimate (Time)

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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
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Effect of Size (Capacity)
n
Ca Aa
(7.1)
Cb Ab Cost Exponent

Cost Equipment Cost

Attribute - Size

C a KA a n
(7.2)

where K
Cb
Ab n Copyright - R.Turton and J.
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Effect of Size (Capacity) cont.
n = 0.4 0.8 Typically
Often n ~ 0.6 and we refer to Eq.(7.1)
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

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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 ?

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 Example 1 - Solution
n
Aa
n
C a Aa
Ca Cb
C b Ab Ab
0.44
50 Ca $67, 300
92 ,000
100
100 m2 Exchanger is not twice as expensive as a 50 m2 exchanger

Economy of Scale
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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

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 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, and 10
Paint 100 61% of total
Erection and Installation Labor 22

Buildings, Materials, and Labor 7

Engineering and Supervision 10

Total 100
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Equation for Time Effect
I2
C2 C1
I1
C = Cost
I = Value of cost index
1,2 = Represents points in time at
which costs required or known and
index values known
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Example 2
Cost of vessel in 1993 was 25,000,
what is estimated cost today (Sept 2007
CEPCI = 500)?

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Example 2 - Solution

I now 500
C now C1993 25 ,000 $34 ,820
I1993 359

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 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
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Example 3 (contd)
What is the Cost of a 80 m2 Heat
Exchanger Today ? (I = 500)

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Example 3 - Solution

Must First Bring Costs to a Common

Time 500
Ca (2007) 17 $23, 743
A = 70 358

500
Cb (2007) 24 $31, 496
A = 130 381

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Example 3 - Solution (contd)
C KA n

$23, 743 K (70) n

$31, 496 K (130) n

log 31, 496 log(23, 743)
n 0.4565
log 130 log(70)
C 23, 743
K n
0.4565
$3, 414
A 70
C 3, 414 80
0.4565
$25, 235
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 Example 4
Date Vessel Purchased Cost Exchange
Capacity (pounds sterling = ) Rate
(m3)
1993 75 7,800 $ 1.40/
1998 155 13,800 $ 1.65/
2007 120 $ 2.00/

How much ($) would the new vessel cost?

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Total Cost of Plant
Purchased cost equipment f.o.b.
Installed cost Often 3 to 8 times
larger than purchased cost

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Installed Cost of Equipment (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

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Installed Cost of Equipment Table 7.6 (contd)

Contingency and Fee

Contingency
Contractor fee

Auxiliary Facilities
Site development
Auxiliary buildings
Off-sites and utilities

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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

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Lang Factors (contd)
n
C TM FLang C pi
i 1

Total Module Cost Purchased Cost of Major Equipment

From Preliminary PFD
(Pumps, Compressors, vessels, etc.)

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Module Factor Approach

Table 7.8
Direct, Indirect, Contingency and Fees are
expressed as functions (multipliers) of purchased
equipment cost C op at base conditions (1 bar and
CS)
Each equipment type has different multipliers
Details given in Appendix A

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Module Factor Approach
C BM o
C p FBM Bare Module Factor
(sum of all multipliers)

Bare Module Purchased Equipment Cost for CS

Cost and 1 atm pressure - Appendix A

FBM = B1 + B2FpFM
o
FBM B1 B2

Fp = pressure factor (= 1 for 1 bar)

FM = material of construction factor (=1 for CS)

C p C op Fp FM
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Module Factor Approach Pressure Factors

Figure 7.6 Pressure Factors for Carbon Steel Vessels

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Module Factor Approach Pressure Factors

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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

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 Effect of Materials of Construction
and Pressure on Bare Module Cost
P MOC C op Cp o
C BM CBM

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

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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

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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.
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Materials of Construction
Very important
Table 9.9 rough guide
Perrys good source

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Capcost
Calculates costs based on input
CEPCI use current value of 500 or
latest from Chemical Engineering
Program automatically assigns
equipment numbers

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Capcost

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 Summary

In general, information about costs must be scaled

for capacity and time using appropriate cost
exponents and indices
Total plant costs involve a variety of factors that vary
with equipment type, operating pressure, and
materials of construction.
For additions to existing facilities, the total module
cost should be used but for totally new projects grass
roots costs are appropriate.

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