Project cost engineering

1. Elements of Project Cost and plat
machinery and construction
Dr. Pramod Deshpande
Sr. Associate Professor
NICMAR University

2. What is Plant and machinery
• For project cost estimation Plant and machinery needs to understand
• Plant and Machinery of Project means equipment
• Pressure vessels, tanks pups, piping, heat exchanger , separator, Clarifier equipment(M)
• Electrical motors, control panel , cable trays, internal lighting, external lighting
• Instruments for operation, safety, process control, automation electrical
• Plant and machinery for construction includes equipment required for
construction which is included in Building and civil work Equipment and
machinery required for
• Foundation, Internal road, machinery for electrical work Diesel generator
• DPENDING ON TYPE OF PROJECT THIS REQUIRMENTS VARIES
• For road project require more construction equipment as compared to Refinery
or Water and waste water treatment cost

3. Elements of Greenfield Project Cost
(Typical Petrochemical Project)
1. Land and site development : 3-5 %
2. Buildings and civil works : 5-10 %
3. Plant and machinery
Process equipment 40-60 %
4. Know-how and engineering
Design engineering : 15-25 %
5. Expenses on foreign 1-3
technicians and training of
Indian technicians abroad :
6. Miscellaneous fixed assets : 2-5
7. Per-operative expenses : 15-20
8. Contingencies : 8-10
9. Preliminary and capital issue related
expenses : 1-2
10. Margin money : 3-6
Elements of Green field project Solar PV plant
1. Land and site development : 10-15 %
2. Buildings and civil works : 3-4 %
3. Plant and machinery 40-50%
Solar panel /electrical /battery back up
4. Know-how and engineering
Design engineering : 4-5 %
5. Expenses on for surviving 1-2%
technicians and training of
Indian technicians abroad : 1-3%
6. Miscellaneous fixed assets : 2-5%
7. Per-operative expenses : 5-10 %
8. Contingencies : 5-8%
9. Preliminary and capital issue related
expenses : 1-2 %
10. Margin money : 1-2 %
Develop the elements of project
1. Real estate plot development 2. Waste water treatment plat
3. Commercial complex 4. water treat plant 5 Road project – National Highway,

4. Estimation of land Requirement -I
1Plant Battery limit .
2.Outside battery limit facilities
• Storage
• Liquid storage (tanks)
• Hazardous
• Non-hazardous
• Drumming area
• Liquid storage
• Solid storage building and silo
• Gas metering station
• Packaging and bagging unit
• Utilities:
• Water storage (raw water storage
• and fire water storage)
• Water treatment plant
• Boiler (Steam)
• Co-generation
• Instrument air
• Refrigeration unit
• Inert gas generator
• Cooling tower
• Electrical sub-station
• Diesel power generating unit

5. 3 Building Cost Elements
• Workshop
• Warehouse
• R&D building
• Admin building
• Gate and time office
• Weigh bridge
• Canteen
• Workers center
• Fire station
• Excise office
• Car park and cycle park
• Truck parking and so on
4. Effluent Treatment Plant
5. Total Area (1 to 4)
6. Site Development Area
• (Including landscaping)
• 7. Roads within Factory
• Total area required
• Area for housing of plant personnel

6. Estimate of Land and Site Development
1. Cost of Land Rs.
Rate Rs/m2
or Rs/hectare
Area m2
/hectare
Total
2. Cost of Leveling and Develop-
ment Rate Rs/m2
Area
Total
3. Cost of Fencing
Length Rs/m
Type of fencing
Rate of fencing Rs/m
4. Cost of Gates
Cost of gate Rs/gate
Number of gates
5. Cost of Laying Road Rs/km

7. Buildings and Civil Works
Factory Buildings Rs
- Factory building for the main plant, and effluent
treatment plant
- Factory buildings for auxiliary services steam,
water, workshop, electrical power station
- Administrative buildings
- Research and Development Centre
- Warehouses, yard facilities for
• raw materials
• intermediates
• products and also for furnace oil/fuel oil/diesel oil
Total factory buildings Rs
2. Non-Factory Buildings
2. Non-Factory Buildings
- Miscellaneous non-factory buildings:
Canteen, gate house, time office, excise house, workers amenities,
medical centre, car park, cycle stand, etc.
- Quarters for essential staff
- RCC and other structural materials
- Garages
- Storm water drains
- Civil engineering work for effluent treatment plant - lagoons
etc.
- Architects fees
- Plant model
Total non-factory buildings Rs.

8. Interest During Period of Construction
Fund Flow Statement during construction period: 24 months, 2months grid
Project Cost
Component
(with
Contingencies)
1 2 3 4 5 6 7 8 9 10 11 12
1. Land and site
development
√ √
2. Building √ √ √ √ √ √ √ √ √ √
3. Plant & Machinery √ √ √ √ √ √ √ √ √ √ √
4. Know-how √ √ √
5. Detailed engg √ √ √ √ √ √ √ √ √ √ √ √
6. Expenses on training
of persons
√ √ √ √
7. Miscellaneous fixed
assets
√ √ √ √
8. Ore-operative exp. √ √ √ √ √ √ √ √ √ √ √ √
9. Prelim & issue
related exp.
√ √ √
1
0
Margin money √
Total X1 X3 X3 X4 X5 X6 X7 X8 X9 X10 X11 X12
Fund flow subsidy √
Promoter’s
contribution
√ √ √
Term Loan √ √ √ √ √ √ √
Public issue √ √
Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12

9. Miscellaneous and Contingency cost
• For know how known project miscellaneous cost is that cost where we
know the requirement however quantity is difficult to estimate
Give example :
• For New and different technology or expected problems mislenious
cost includes above
• Contingency is generally related to unit rate variation cost and depends
on project span, gestation period of project
• While estimation one can declare these cost by indicating the basis
• During the final estimation and budgeting of cost it is governed by
various factors and market condition, but basis is important