SlideShare a Scribd company logo
Estimation of
Fixed Capital Cost
Dr. K. Shahzad Baig
Memorial University of Newfoundland (MUN) Canada
Indirect costs
The indirect costs are estimated as a function of the direct costs.
1. Design and engineering costs
cost of design and the cost of
“engineering” the plant:
purchasing, procurement
and construction supervision.
20 -30 % of
the direct capital costs.
2. Contractor’s fees
5-10 % of
direct capital cost
3. Contingency allowance
labour disputes,
design errors,
adverse weather
5 -10 % of
of the direct costs.
Total physical plant cost = (PPC)
Estimation of fixed capital cost
Direct Costs
Fluids processing plant, PCE £130,000
f1 Equipment erection 0.40
f3 Instrumentation 0.20
f4 Electrical 0.10
f5 Buildings none required
f6 Utilities not applicable
f7 Storages provided in PCE
f8 Site development not applicable
f9 Ancillary buildings none required
f2 Piping 0.70
f10 Design and Engineering 0.30
f11 Contractor’s Fee none
(unlikely to be used for a small, plant project)
f12 Contingencies 0.10
Working capital
allow 5% of fixed capital to cover the cost of the initial solvent charge
Operating Cost
Operating time
Variable costs:
1. Raw materials, solvent make-up = 10 * 347 * 400/1000 = £ 1388
2. Miscellaneous materials, 10% of maintenance cost (item 5) = £ 2200
3. Utilities, cost from Table 6.5:
Steam, at 7£/t = 7 * 8328 * 200/1000 = £11,659
Cooling water, at 1.5 p/t = (1.5/100) * 8328 * 5000/1000 = £ 625
Power, at 1.2 p/MJ = 1.2/100 * 360 * 347 = £ 1499
4. Shipping and packaging not applicable
Variable costs = £17,371
Fixed costs:
5. Maintenance, take as 5% of fixed capital = 445,000 * 0.05 = £22,250
6. Operating labour, allow one extra man on days. It is unlikely
that one extra man per shift would be needed to operate
this small plant, and one extra per shift would give
a disproportionately high labour cost.
Say, £30,000 per year, allowing for overheads = £30,000
7. Supervision, no additional supervision would be needed
8. Plant overheads, take as 50% of operating labour = £15,000
9. Laboratory, take as 30% of operating labour = £ 9000
10. Capital charges, 6% of fixed capital (bank rate 4%) £26,700
11. Insurance, 1% of fixed capital £ 4450
12. Local taxes neglect
13. Royalties not applicable
Direct production costs = 17,396 + 107,400 = £124,796
14. Sales expense not applicable
15. General overheads not applicable
16. Research and development not applicable
Annual operating cost, rounded = £125,000
Following books were used in preparation of notes
 Blank, L., Tarquin. A. 2005. Engineering Economy. 6th Edition, McGraw-Hill.
 Eschenbach, T. G. 2003. Engineering Economy”, 2nd Edition, Oxford University Press
 Riggs, J. L., Bedworth, D. D., Randhawa, S. U. 1996. Engineering Economics”, 4th Edition, Tata McGraw-Hill.
 Riggs, J. L., West. T. M. 1986. Essentials of Engineering Economics”, 2nd Edition, McGraw-Hill.
 Peter, M. S., Timmerhaus, K. D. 1991. Plant Design and Economics for Chemical Engineers. 4th Edition, McGraw-Hill.

More Related Content

Similar to Estimation of Fixed Capital Cost

Uts ab 2011 2012 gasal
Uts ab 2011 2012 gasalUts ab 2011 2012 gasal
Uts ab 2011 2012 gasal
Farah Fauziah Hilman
 
Project feasibilty report on Pricision Auto pistons aniket kulkarni
Project feasibilty report on Pricision Auto pistons aniket kulkarniProject feasibilty report on Pricision Auto pistons aniket kulkarni
Project feasibilty report on Pricision Auto pistons aniket kulkarni
ANIKET KULKARNI
 
Project preparation
Project preparationProject preparation
Project preparation
Ajit Majumder
 
Costs (3).pptx
Costs (3).pptxCosts (3).pptx
Costs (3).pptx
AkkalaNagavarun
 
Job costing slides
Job costing slidesJob costing slides
Job costing slides
sachin kumar sharma
 
Copper Sulphate- Manufacturing Plant, Detailed Project Report, Profile, Busin...
Copper Sulphate- Manufacturing Plant, Detailed Project Report, Profile, Busin...Copper Sulphate- Manufacturing Plant, Detailed Project Report, Profile, Busin...
Copper Sulphate- Manufacturing Plant, Detailed Project Report, Profile, Busin...
Ajjay Kumar Gupta
 
Thermocol Cups, Glass and Plates - Market Survey cum Detailed Techno Economic...
Thermocol Cups, Glass and Plates - Market Survey cum Detailed Techno Economic...Thermocol Cups, Glass and Plates - Market Survey cum Detailed Techno Economic...
Thermocol Cups, Glass and Plates - Market Survey cum Detailed Techno Economic...
Ajjay Kumar Gupta
 
CEE 8.pptx
CEE 8.pptxCEE 8.pptx
CEE 8.pptx
PradeepTalwelkar
 
Cost Estimation
Cost EstimationCost Estimation
Cost Estimation
Chandran Udumbasseri
 
Lecture _Analysis of Cost Estimation.pptx
Lecture _Analysis of Cost Estimation.pptxLecture _Analysis of Cost Estimation.pptx
Lecture _Analysis of Cost Estimation.pptx
RayanAlShehri6
 
Diamond Chemicals plc (A): The Merseyside Project
Diamond Chemicals plc (A): The Merseyside ProjectDiamond Chemicals plc (A): The Merseyside Project
Diamond Chemicals plc (A): The Merseyside Project
Jatin Jain
 
Cost accounting slides unit1 and unit2, edicted
Cost accounting slides unit1 and unit2, edictedCost accounting slides unit1 and unit2, edicted
Cost accounting slides unit1 and unit2, edicted
Samukelo Nelson Saola
 
PGBM01 - MBA Financial Management And Control (2015-16 Trm1 A) Lecture 8 sho...
PGBM01 - MBA Financial Management And Control (2015-16 Trm1 A) Lecture 8  sho...PGBM01 - MBA Financial Management And Control (2015-16 Trm1 A) Lecture 8  sho...
PGBM01 - MBA Financial Management And Control (2015-16 Trm1 A) Lecture 8 sho...
Aquamarine Emerald
 
A ll questions according to topics
A ll questions according to topicsA ll questions according to topics
A ll questions according to topics
Ziyad Zaidi
 
Product job costing revision notes 0
Product job costing revision notes 0Product job costing revision notes 0
Product job costing revision notes 0
Parthiban Ramalingam
 
Poc spur
Poc spurPoc spur
Poc spur
Jing Deng
 
Manufacturing account
Manufacturing accountManufacturing account
Manufacturing account
Sam Catlin
 
Bsr3 a unit 1 2016
Bsr3 a unit 1   2016Bsr3 a unit 1   2016
Bsr3 a unit 1 2016
Dimpho Thobejane
 
The Changing Role of Managerial Accounting in a GLOBAL Business Environment
The Changing Role of Managerial Accounting in a GLOBAL Business EnvironmentThe Changing Role of Managerial Accounting in a GLOBAL Business Environment
The Changing Role of Managerial Accounting in a GLOBAL Business Environment
Abdullah Rabaya
 
Project Greenland Cost Report - Initial Draft
Project Greenland Cost Report - Initial DraftProject Greenland Cost Report - Initial Draft
Project Greenland Cost Report - Initial Draft
Rupak Parekh
 

Similar to Estimation of Fixed Capital Cost (20)

Uts ab 2011 2012 gasal
Uts ab 2011 2012 gasalUts ab 2011 2012 gasal
Uts ab 2011 2012 gasal
 
Project feasibilty report on Pricision Auto pistons aniket kulkarni
Project feasibilty report on Pricision Auto pistons aniket kulkarniProject feasibilty report on Pricision Auto pistons aniket kulkarni
Project feasibilty report on Pricision Auto pistons aniket kulkarni
 
Project preparation
Project preparationProject preparation
Project preparation
 
Costs (3).pptx
Costs (3).pptxCosts (3).pptx
Costs (3).pptx
 
Job costing slides
Job costing slidesJob costing slides
Job costing slides
 
Copper Sulphate- Manufacturing Plant, Detailed Project Report, Profile, Busin...
Copper Sulphate- Manufacturing Plant, Detailed Project Report, Profile, Busin...Copper Sulphate- Manufacturing Plant, Detailed Project Report, Profile, Busin...
Copper Sulphate- Manufacturing Plant, Detailed Project Report, Profile, Busin...
 
Thermocol Cups, Glass and Plates - Market Survey cum Detailed Techno Economic...
Thermocol Cups, Glass and Plates - Market Survey cum Detailed Techno Economic...Thermocol Cups, Glass and Plates - Market Survey cum Detailed Techno Economic...
Thermocol Cups, Glass and Plates - Market Survey cum Detailed Techno Economic...
 
CEE 8.pptx
CEE 8.pptxCEE 8.pptx
CEE 8.pptx
 
Cost Estimation
Cost EstimationCost Estimation
Cost Estimation
 
Lecture _Analysis of Cost Estimation.pptx
Lecture _Analysis of Cost Estimation.pptxLecture _Analysis of Cost Estimation.pptx
Lecture _Analysis of Cost Estimation.pptx
 
Diamond Chemicals plc (A): The Merseyside Project
Diamond Chemicals plc (A): The Merseyside ProjectDiamond Chemicals plc (A): The Merseyside Project
Diamond Chemicals plc (A): The Merseyside Project
 
Cost accounting slides unit1 and unit2, edicted
Cost accounting slides unit1 and unit2, edictedCost accounting slides unit1 and unit2, edicted
Cost accounting slides unit1 and unit2, edicted
 
PGBM01 - MBA Financial Management And Control (2015-16 Trm1 A) Lecture 8 sho...
PGBM01 - MBA Financial Management And Control (2015-16 Trm1 A) Lecture 8  sho...PGBM01 - MBA Financial Management And Control (2015-16 Trm1 A) Lecture 8  sho...
PGBM01 - MBA Financial Management And Control (2015-16 Trm1 A) Lecture 8 sho...
 
A ll questions according to topics
A ll questions according to topicsA ll questions according to topics
A ll questions according to topics
 
Product job costing revision notes 0
Product job costing revision notes 0Product job costing revision notes 0
Product job costing revision notes 0
 
Poc spur
Poc spurPoc spur
Poc spur
 
Manufacturing account
Manufacturing accountManufacturing account
Manufacturing account
 
Bsr3 a unit 1 2016
Bsr3 a unit 1   2016Bsr3 a unit 1   2016
Bsr3 a unit 1 2016
 
The Changing Role of Managerial Accounting in a GLOBAL Business Environment
The Changing Role of Managerial Accounting in a GLOBAL Business EnvironmentThe Changing Role of Managerial Accounting in a GLOBAL Business Environment
The Changing Role of Managerial Accounting in a GLOBAL Business Environment
 
Project Greenland Cost Report - Initial Draft
Project Greenland Cost Report - Initial DraftProject Greenland Cost Report - Initial Draft
Project Greenland Cost Report - Initial Draft
 

More from K. Shahzad Baig

Income tax
Income taxIncome tax
Income tax
K. Shahzad Baig
 
Nominal and Effective Interest Rate
Nominal and Effective Interest RateNominal and Effective Interest Rate
Nominal and Effective Interest Rate
K. Shahzad Baig
 
Interest Why Engineers should know ?
InterestWhy Engineers should know ?InterestWhy Engineers should know ?
Interest Why Engineers should know ?
K. Shahzad Baig
 
Projects, Investment, Profitability
Projects, Investment, ProfitabilityProjects, Investment, Profitability
Projects, Investment, Profitability
K. Shahzad Baig
 
Taxes and Insurance Engineering point of view
Taxes and InsuranceEngineering point of viewTaxes and InsuranceEngineering point of view
Taxes and Insurance Engineering point of view
K. Shahzad Baig
 
Summary of Production Costs
Summary of Production CostsSummary of Production Costs
Summary of Production Costs
K. Shahzad Baig
 
Purchase Cost of Miscellaneous Equipment
Purchase Cost of Miscellaneous EquipmentPurchase Cost of Miscellaneous Equipment
Purchase Cost of Miscellaneous Equipment
K. Shahzad Baig
 
Mass Transfer Equipment Cost
Mass Transfer Equipment CostMass Transfer Equipment Cost
Mass Transfer Equipment Cost
K. Shahzad Baig
 
HEAT-TRANSFER EQUIPMENT COSTS
HEAT-TRANSFER EQUIPMENT COSTSHEAT-TRANSFER EQUIPMENT COSTS
HEAT-TRANSFER EQUIPMENT COSTS
K. Shahzad Baig
 
Gross Profit, Net Profit
Gross Profit, Net ProfitGross Profit, Net Profit
Gross Profit, Net Profit
K. Shahzad Baig
 
Manufacturing Costs
Manufacturing Costs Manufacturing Costs
Manufacturing Costs
K. Shahzad Baig
 
Capital Investment
Capital InvestmentCapital Investment
Capital Investment
K. Shahzad Baig
 
Cost Indices for Industrial Application
Cost Indices for Industrial ApplicationCost Indices for Industrial Application
Cost Indices for Industrial Application
K. Shahzad Baig
 
Estimation of Capital Investments
Estimation of Capital  Investments Estimation of Capital  Investments
Estimation of Capital Investments
K. Shahzad Baig
 
Production Costs
Production CostsProduction Costs
Production Costs
K. Shahzad Baig
 
Location of an industry
Location of an industryLocation of an industry
Location of an industry
K. Shahzad Baig
 
Fluctuation of money value with time
Fluctuation of money value with timeFluctuation of money value with time
Fluctuation of money value with time
K. Shahzad Baig
 
Economics for Engineers, Why ?
Economics for Engineers, Why ?Economics for Engineers, Why ?
Economics for Engineers, Why ?
K. Shahzad Baig
 
Psychrometric chart, How to read
Psychrometric chart, How to readPsychrometric chart, How to read
Psychrometric chart, How to read
K. Shahzad Baig
 
The Scientific Methods
The Scientific MethodsThe Scientific Methods
The Scientific Methods
K. Shahzad Baig
 

More from K. Shahzad Baig (20)

Income tax
Income taxIncome tax
Income tax
 
Nominal and Effective Interest Rate
Nominal and Effective Interest RateNominal and Effective Interest Rate
Nominal and Effective Interest Rate
 
Interest Why Engineers should know ?
InterestWhy Engineers should know ?InterestWhy Engineers should know ?
Interest Why Engineers should know ?
 
Projects, Investment, Profitability
Projects, Investment, ProfitabilityProjects, Investment, Profitability
Projects, Investment, Profitability
 
Taxes and Insurance Engineering point of view
Taxes and InsuranceEngineering point of viewTaxes and InsuranceEngineering point of view
Taxes and Insurance Engineering point of view
 
Summary of Production Costs
Summary of Production CostsSummary of Production Costs
Summary of Production Costs
 
Purchase Cost of Miscellaneous Equipment
Purchase Cost of Miscellaneous EquipmentPurchase Cost of Miscellaneous Equipment
Purchase Cost of Miscellaneous Equipment
 
Mass Transfer Equipment Cost
Mass Transfer Equipment CostMass Transfer Equipment Cost
Mass Transfer Equipment Cost
 
HEAT-TRANSFER EQUIPMENT COSTS
HEAT-TRANSFER EQUIPMENT COSTSHEAT-TRANSFER EQUIPMENT COSTS
HEAT-TRANSFER EQUIPMENT COSTS
 
Gross Profit, Net Profit
Gross Profit, Net ProfitGross Profit, Net Profit
Gross Profit, Net Profit
 
Manufacturing Costs
Manufacturing Costs Manufacturing Costs
Manufacturing Costs
 
Capital Investment
Capital InvestmentCapital Investment
Capital Investment
 
Cost Indices for Industrial Application
Cost Indices for Industrial ApplicationCost Indices for Industrial Application
Cost Indices for Industrial Application
 
Estimation of Capital Investments
Estimation of Capital  Investments Estimation of Capital  Investments
Estimation of Capital Investments
 
Production Costs
Production CostsProduction Costs
Production Costs
 
Location of an industry
Location of an industryLocation of an industry
Location of an industry
 
Fluctuation of money value with time
Fluctuation of money value with timeFluctuation of money value with time
Fluctuation of money value with time
 
Economics for Engineers, Why ?
Economics for Engineers, Why ?Economics for Engineers, Why ?
Economics for Engineers, Why ?
 
Psychrometric chart, How to read
Psychrometric chart, How to readPsychrometric chart, How to read
Psychrometric chart, How to read
 
The Scientific Methods
The Scientific MethodsThe Scientific Methods
The Scientific Methods
 

Recently uploaded

What is Digital Literacy? A guest blog from Andy McLaughlin, University of Ab...
What is Digital Literacy? A guest blog from Andy McLaughlin, University of Ab...What is Digital Literacy? A guest blog from Andy McLaughlin, University of Ab...
What is Digital Literacy? A guest blog from Andy McLaughlin, University of Ab...
GeorgeMilliken2
 
How to Setup Warehouse & Location in Odoo 17 Inventory
How to Setup Warehouse & Location in Odoo 17 InventoryHow to Setup Warehouse & Location in Odoo 17 Inventory
How to Setup Warehouse & Location in Odoo 17 Inventory
Celine George
 
Standardized tool for Intelligence test.
Standardized tool for Intelligence test.Standardized tool for Intelligence test.
Standardized tool for Intelligence test.
deepaannamalai16
 
Walmart Business+ and Spark Good for Nonprofits.pdf
Walmart Business+ and Spark Good for Nonprofits.pdfWalmart Business+ and Spark Good for Nonprofits.pdf
Walmart Business+ and Spark Good for Nonprofits.pdf
TechSoup
 
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...
PECB
 
Benner "Expanding Pathways to Publishing Careers"
Benner "Expanding Pathways to Publishing Careers"Benner "Expanding Pathways to Publishing Careers"
Benner "Expanding Pathways to Publishing Careers"
National Information Standards Organization (NISO)
 
HYPERTENSION - SLIDE SHARE PRESENTATION.
HYPERTENSION - SLIDE SHARE PRESENTATION.HYPERTENSION - SLIDE SHARE PRESENTATION.
HYPERTENSION - SLIDE SHARE PRESENTATION.
deepaannamalai16
 
Stack Memory Organization of 8086 Microprocessor
Stack Memory Organization of 8086 MicroprocessorStack Memory Organization of 8086 Microprocessor
Stack Memory Organization of 8086 Microprocessor
JomonJoseph58
 
Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...
Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...
Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...
EduSkills OECD
 
Pengantar Penggunaan Flutter - Dart programming language1.pptx
Pengantar Penggunaan Flutter - Dart programming language1.pptxPengantar Penggunaan Flutter - Dart programming language1.pptx
Pengantar Penggunaan Flutter - Dart programming language1.pptx
Fajar Baskoro
 
How to deliver Powerpoint Presentations.pptx
How to deliver Powerpoint  Presentations.pptxHow to deliver Powerpoint  Presentations.pptx
How to deliver Powerpoint Presentations.pptx
HajraNaeem15
 
مصحف القراءات العشر أعد أحرف الخلاف سمير بسيوني.pdf
مصحف القراءات العشر   أعد أحرف الخلاف سمير بسيوني.pdfمصحف القراءات العشر   أعد أحرف الخلاف سمير بسيوني.pdf
مصحف القراءات العشر أعد أحرف الخلاف سمير بسيوني.pdf
سمير بسيوني
 
Nutrition Inc FY 2024, 4 - Hour Training
Nutrition Inc FY 2024, 4 - Hour TrainingNutrition Inc FY 2024, 4 - Hour Training
Nutrition Inc FY 2024, 4 - Hour Training
melliereed
 
Haunted Houses by H W Longfellow for class 10
Haunted Houses by H W Longfellow for class 10Haunted Houses by H W Longfellow for class 10
Haunted Houses by H W Longfellow for class 10
nitinpv4ai
 
Level 3 NCEA - NZ: A Nation In the Making 1872 - 1900 SML.ppt
Level 3 NCEA - NZ: A  Nation In the Making 1872 - 1900 SML.pptLevel 3 NCEA - NZ: A  Nation In the Making 1872 - 1900 SML.ppt
Level 3 NCEA - NZ: A Nation In the Making 1872 - 1900 SML.ppt
Henry Hollis
 
Elevate Your Nonprofit's Online Presence_ A Guide to Effective SEO Strategies...
Elevate Your Nonprofit's Online Presence_ A Guide to Effective SEO Strategies...Elevate Your Nonprofit's Online Presence_ A Guide to Effective SEO Strategies...
Elevate Your Nonprofit's Online Presence_ A Guide to Effective SEO Strategies...
TechSoup
 
A Visual Guide to 1 Samuel | A Tale of Two Hearts
A Visual Guide to 1 Samuel | A Tale of Two HeartsA Visual Guide to 1 Samuel | A Tale of Two Hearts
A Visual Guide to 1 Samuel | A Tale of Two Hearts
Steve Thomason
 
Présentationvvvvvvvvvvvvvvvvvvvvvvvvvvvv2.pptx
Présentationvvvvvvvvvvvvvvvvvvvvvvvvvvvv2.pptxPrésentationvvvvvvvvvvvvvvvvvvvvvvvvvvvv2.pptx
Présentationvvvvvvvvvvvvvvvvvvvvvvvvvvvv2.pptx
siemaillard
 
Educational Technology in the Health Sciences
Educational Technology in the Health SciencesEducational Technology in the Health Sciences
Educational Technology in the Health Sciences
Iris Thiele Isip-Tan
 
How Barcodes Can Be Leveraged Within Odoo 17
How Barcodes Can Be Leveraged Within Odoo 17How Barcodes Can Be Leveraged Within Odoo 17
How Barcodes Can Be Leveraged Within Odoo 17
Celine George
 

Recently uploaded (20)

What is Digital Literacy? A guest blog from Andy McLaughlin, University of Ab...
What is Digital Literacy? A guest blog from Andy McLaughlin, University of Ab...What is Digital Literacy? A guest blog from Andy McLaughlin, University of Ab...
What is Digital Literacy? A guest blog from Andy McLaughlin, University of Ab...
 
How to Setup Warehouse & Location in Odoo 17 Inventory
How to Setup Warehouse & Location in Odoo 17 InventoryHow to Setup Warehouse & Location in Odoo 17 Inventory
How to Setup Warehouse & Location in Odoo 17 Inventory
 
Standardized tool for Intelligence test.
Standardized tool for Intelligence test.Standardized tool for Intelligence test.
Standardized tool for Intelligence test.
 
Walmart Business+ and Spark Good for Nonprofits.pdf
Walmart Business+ and Spark Good for Nonprofits.pdfWalmart Business+ and Spark Good for Nonprofits.pdf
Walmart Business+ and Spark Good for Nonprofits.pdf
 
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...
 
Benner "Expanding Pathways to Publishing Careers"
Benner "Expanding Pathways to Publishing Careers"Benner "Expanding Pathways to Publishing Careers"
Benner "Expanding Pathways to Publishing Careers"
 
HYPERTENSION - SLIDE SHARE PRESENTATION.
HYPERTENSION - SLIDE SHARE PRESENTATION.HYPERTENSION - SLIDE SHARE PRESENTATION.
HYPERTENSION - SLIDE SHARE PRESENTATION.
 
Stack Memory Organization of 8086 Microprocessor
Stack Memory Organization of 8086 MicroprocessorStack Memory Organization of 8086 Microprocessor
Stack Memory Organization of 8086 Microprocessor
 
Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...
Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...
Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...
 
Pengantar Penggunaan Flutter - Dart programming language1.pptx
Pengantar Penggunaan Flutter - Dart programming language1.pptxPengantar Penggunaan Flutter - Dart programming language1.pptx
Pengantar Penggunaan Flutter - Dart programming language1.pptx
 
How to deliver Powerpoint Presentations.pptx
How to deliver Powerpoint  Presentations.pptxHow to deliver Powerpoint  Presentations.pptx
How to deliver Powerpoint Presentations.pptx
 
مصحف القراءات العشر أعد أحرف الخلاف سمير بسيوني.pdf
مصحف القراءات العشر   أعد أحرف الخلاف سمير بسيوني.pdfمصحف القراءات العشر   أعد أحرف الخلاف سمير بسيوني.pdf
مصحف القراءات العشر أعد أحرف الخلاف سمير بسيوني.pdf
 
Nutrition Inc FY 2024, 4 - Hour Training
Nutrition Inc FY 2024, 4 - Hour TrainingNutrition Inc FY 2024, 4 - Hour Training
Nutrition Inc FY 2024, 4 - Hour Training
 
Haunted Houses by H W Longfellow for class 10
Haunted Houses by H W Longfellow for class 10Haunted Houses by H W Longfellow for class 10
Haunted Houses by H W Longfellow for class 10
 
Level 3 NCEA - NZ: A Nation In the Making 1872 - 1900 SML.ppt
Level 3 NCEA - NZ: A  Nation In the Making 1872 - 1900 SML.pptLevel 3 NCEA - NZ: A  Nation In the Making 1872 - 1900 SML.ppt
Level 3 NCEA - NZ: A Nation In the Making 1872 - 1900 SML.ppt
 
Elevate Your Nonprofit's Online Presence_ A Guide to Effective SEO Strategies...
Elevate Your Nonprofit's Online Presence_ A Guide to Effective SEO Strategies...Elevate Your Nonprofit's Online Presence_ A Guide to Effective SEO Strategies...
Elevate Your Nonprofit's Online Presence_ A Guide to Effective SEO Strategies...
 
A Visual Guide to 1 Samuel | A Tale of Two Hearts
A Visual Guide to 1 Samuel | A Tale of Two HeartsA Visual Guide to 1 Samuel | A Tale of Two Hearts
A Visual Guide to 1 Samuel | A Tale of Two Hearts
 
Présentationvvvvvvvvvvvvvvvvvvvvvvvvvvvv2.pptx
Présentationvvvvvvvvvvvvvvvvvvvvvvvvvvvv2.pptxPrésentationvvvvvvvvvvvvvvvvvvvvvvvvvvvv2.pptx
Présentationvvvvvvvvvvvvvvvvvvvvvvvvvvvv2.pptx
 
Educational Technology in the Health Sciences
Educational Technology in the Health SciencesEducational Technology in the Health Sciences
Educational Technology in the Health Sciences
 
How Barcodes Can Be Leveraged Within Odoo 17
How Barcodes Can Be Leveraged Within Odoo 17How Barcodes Can Be Leveraged Within Odoo 17
How Barcodes Can Be Leveraged Within Odoo 17
 

Estimation of Fixed Capital Cost

  • 1. Estimation of Fixed Capital Cost Dr. K. Shahzad Baig Memorial University of Newfoundland (MUN) Canada
  • 2. Indirect costs The indirect costs are estimated as a function of the direct costs. 1. Design and engineering costs cost of design and the cost of “engineering” the plant: purchasing, procurement and construction supervision. 20 -30 % of the direct capital costs. 2. Contractor’s fees 5-10 % of direct capital cost 3. Contingency allowance labour disputes, design errors, adverse weather 5 -10 % of of the direct costs.
  • 3. Total physical plant cost = (PPC)
  • 4. Estimation of fixed capital cost Direct Costs Fluids processing plant, PCE £130,000 f1 Equipment erection 0.40 f3 Instrumentation 0.20 f4 Electrical 0.10 f5 Buildings none required f6 Utilities not applicable f7 Storages provided in PCE f8 Site development not applicable f9 Ancillary buildings none required f2 Piping 0.70
  • 5. f10 Design and Engineering 0.30 f11 Contractor’s Fee none (unlikely to be used for a small, plant project) f12 Contingencies 0.10 Working capital allow 5% of fixed capital to cover the cost of the initial solvent charge
  • 6.
  • 7. Operating Cost Operating time Variable costs: 1. Raw materials, solvent make-up = 10 * 347 * 400/1000 = £ 1388 2. Miscellaneous materials, 10% of maintenance cost (item 5) = £ 2200 3. Utilities, cost from Table 6.5: Steam, at 7£/t = 7 * 8328 * 200/1000 = £11,659 Cooling water, at 1.5 p/t = (1.5/100) * 8328 * 5000/1000 = £ 625 Power, at 1.2 p/MJ = 1.2/100 * 360 * 347 = £ 1499 4. Shipping and packaging not applicable Variable costs = £17,371
  • 8. Fixed costs: 5. Maintenance, take as 5% of fixed capital = 445,000 * 0.05 = £22,250 6. Operating labour, allow one extra man on days. It is unlikely that one extra man per shift would be needed to operate this small plant, and one extra per shift would give a disproportionately high labour cost. Say, £30,000 per year, allowing for overheads = £30,000 7. Supervision, no additional supervision would be needed 8. Plant overheads, take as 50% of operating labour = £15,000 9. Laboratory, take as 30% of operating labour = £ 9000 10. Capital charges, 6% of fixed capital (bank rate 4%) £26,700 11. Insurance, 1% of fixed capital £ 4450 12. Local taxes neglect 13. Royalties not applicable
  • 9. Direct production costs = 17,396 + 107,400 = £124,796 14. Sales expense not applicable 15. General overheads not applicable 16. Research and development not applicable Annual operating cost, rounded = £125,000
  • 10. Following books were used in preparation of notes  Blank, L., Tarquin. A. 2005. Engineering Economy. 6th Edition, McGraw-Hill.  Eschenbach, T. G. 2003. Engineering Economy”, 2nd Edition, Oxford University Press  Riggs, J. L., Bedworth, D. D., Randhawa, S. U. 1996. Engineering Economics”, 4th Edition, Tata McGraw-Hill.  Riggs, J. L., West. T. M. 1986. Essentials of Engineering Economics”, 2nd Edition, McGraw-Hill.  Peter, M. S., Timmerhaus, K. D. 1991. Plant Design and Economics for Chemical Engineers. 4th Edition, McGraw-Hill.