Capital Cost Estimation NMSU Chemical Engineering        Ch E 452
Outline•   Types of estimates•   Adjusting costs for changes in capacity•   Adjusting costs for changes in time•   Total p...
Capital Cost Estimate Types• 1. Order of Magnitude Estimate (Feasibility)   – + 40%, - 20%   – BFD , Process Modification•...
Capital Cost Estimates Types (cont’d)• 3. Preliminary Design (Scope) Estimate   – + 25%, - 15%   – PFD , vessel sketches ,...
Capital Cost Estimates Types (cont’d)• 5. Detailed (Firm or Contractors) Estimate   – + 6%, - 4%   – Everything included –...
Cost of Estimate – See Also Table 7.2Accuracy             1                  2                      3                     ...
Factored Estimates• Total Plant Capital Cost CTM (Fixed Capital  Investment, FCI) can be estimated by a factored  estimate...
DefinitionsCoP,i    Purchased cost equipment i (base conditions)FoBM,i   Bare module $ factor (base conditions).CoBM,i   B...
Estimating Purchased Equipment Cost• Vendor quote   – Most accurate      • based on specific information      • requires s...
Effect of capacity on cost• A equipment cost attribute                                n• C purchased cost                 ...
Example 1• A New Plant Ordered a Set of Floating Head Heat  Exchangers (Area = 100 m2) cost $92,000. What  Would Cost be f...
Example 1 - Solution     Ca æ Aa ö                   n                                            æ Aa ö   n       =ç ÷   ...
Effect of Time• Time increases – cost increases (inflation)• Inflation is measured by cost indexes - Figure 7.3   – Chemic...
Effect of time on cost                               C 2 I2                                  =•   I   cost index          ...
Cost Indicies• Marshall & Swift Equipment Cost Indexes   – all-industry equipment index - arithmetic average of indexes fo...
Marshall & Swift Equipment Cost             Index
Marshall & Swift Equipment Cost             Index
Chem. Engr. Plant Cost Index (CEPCI)• construction costs for chemical plants• equipment, machinery and supports, 61%; erec...
Chemical Engineering Plant Cost Index from 1950 to 2010700600500400300200100 0  1950   1960       1970        1980        ...
Table 7.5: The Basis for the Chemical Engineering Plant Cost Index       Components of Index                    Weighting ...
Example 2• Cost of vessel in 1993 was 25,000, what is estimated  cost today?                    Inow               551Cnow...
Example 3 - Accounting for Time and Size• 2 heat exchangers, 1 bought in 1990 and the other in  1995 for the same service ...
Example 3 (cont’d)• What is the Cost of a 80 m2 Heat Exchanger Today ?• Must First Bring Costs to a Common Time           ...
Example 3 (cont’d)C KAn          n                    log 37 log 2626 K 70                  n                          0.5...
Total Cost of Plant• Purchased cost – equipment f.o.b.   – f.o.b. – freight (free) on board      • commonly used when ship...
Installed Equipment Cost (Table 7.6)• 1. Direct Project Expenses   – Equipment   – Material for installation   – Labor for...
Installed Equipment Cost (cont’d)• Contingency and Fee   – Contingency   – Contractor fee• Auxiliary Facilities   – Site d...
Equipment Costs• Purchased cost Cpo is typically estimated by an  equation of form:            o                          ...
Equipment Costs                            Heat Exchanger                                  K1       K2       K3           ...
Module Costing Technique• The bare module cost CBM is the sum of the direct and indirect costs  associated with equipment ...
Pressure Factors• A pressure factor Fp,vessel for a vessel of diameter D and  operating at pressure P (in units of bar) is...
Module Factor Approach – Pressure             Factors  Figure 7.6 Pressure Factors for Carbon Steel  Vessels
Module Factor Approach – Pressure             Factors
Material Factors     material          FM    .   carbon steel        1.0stainless steel clad   1.7  stainless steel      3...
Direct Project Expenses                               CDE = CP + CM + CL                          CDE = CP (1 +        M)(...
Indirect Project Expenses                              CIDE = CFIT + CO + CE                  CIDE = CP (1 +         M)   ...
Bare Module Cost• Substitution and collection of like terms:                     CBM = CIDE + CDE     CBM = CP (1 +    M) ...
Contingency and Fee• A contingency factor covers unforeseen  circumstances (15% for well understood systems)    CCont =   ...
Total Module Cost• Total cost for purchase and installation of a process  unit, CTM                   CTM = CBM + CCont + ...
Bare Module Cost for                    nonbase conditions• Pressure Factors (FP) – calculated from expression specific to...
Grass Roots Cost (new site)• Includes costs for site development, auxiliary  buildings, and off-sites and utilities. Such ...
CAPCOST®• CAPCOST® is a Microsoft Excel program for  estimating bare module, total module, and grass  roots costs of compl...
Lang Factors• Table 7.7• Use multiplier depending on type of plant to escalate  equipment costs to installed costs• Flang ...
Lang Factors (cont’d)                    nCTM        FLang          C pi                    i 1Total Module Cost         P...
Chapter 7 capital cost estimation
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Chapter 7 capital cost estimation

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Chapter 7 capital cost estimation

  1. 1. Capital Cost Estimation NMSU Chemical Engineering Ch E 452
  2. 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. 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
  4. 4. Capital Cost Estimates Types (cont’d)• 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
  5. 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. 6. Cost of Estimate – See Also Table 7.2Accuracy 1 2 3 4 5 Cost of Estimate (Time)
  7. 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. 8. DefinitionsCoP,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 1atmCBM,I Bare module equipment costFM 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. 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. 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 Perrys Chemical Engineers Handbook In general, the larger the equipment, the lower the cost of equipment per unit of capacity
  11. 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. 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 ø100 m2 Exchanger is not twice as expensive as a 50 m2 exchanger Economy of Scale
  13. 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. 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. 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
  16. 16. Marshall & Swift Equipment Cost Index
  17. 17. Marshall & Swift Equipment Cost Index
  18. 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. 19. Chemical Engineering Plant Cost Index from 1950 to 2010700600500400300200100 0 1950 1960 1970 1980 1990 2000 2010
  20. 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. 21. Example 2• Cost of vessel in 1993 was 25,000, what is estimated cost today? Inow 551Cnow C1993 25,000 I1993 359
  22. 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. 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. 24. Example 3 (cont’d)C KAn n log 37 log 2626 K 70 n 0.57 n log 130 log 7037 K 130 C 26 K n 0.57 2.31 A 70 0.57C 2.31 80 28.1
  25. 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. 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. 27. Installed Equipment Cost (cont’d)• Contingency and Fee – Contingency – Contractor fee• Auxiliary Facilities – Site development – Auxiliary buildings – Off-sites and utilities
  28. 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. 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® programcost, U.S. $ 100000 10000 100 1000 10000 exchanger area (sq ft) (capacity, A)
  30. 30. 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).
  31. 31. 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,
  32. 32. Module Factor Approach – Pressure Factors Figure 7.6 Pressure Factors for Carbon Steel Vessels
  33. 33. Module Factor Approach – Pressure Factors
  34. 34. Material Factors material FM . carbon steel 1.0stainless steel clad 1.7 stainless steel 3.1 nickel clad 3.6 nickel 7.1 titanium clad 4.7 titanium 9.4
  35. 35. Direct Project Expenses CDE = CP + CM + CL CDE = CP (1 + M)(1 + L)• Equipment f.o.b. cost CP – purchased cost of equipment at manufacturers 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 & matl CL = L (CP + CM) = CP L (1 + M) – all labor associated with installing the equipment and materials
  36. 36. 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
  37. 37. 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
  38. 38. 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
  39. 39. 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)
  40. 40. 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
  41. 41. 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
  42. 42. CAPCOST®• CAPCOST® is a Microsoft Excel program for estimating bare module, total module, and grass roots costs of complex chemical plants.
  43. 43. 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
  44. 44. Lang Factors (cont’d) nCTM FLang C pi i 1Total Module Cost Purchased Cost of Major Equipment From Preliminary PFD (Pumps, Compressors, vessels, etc.)
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