Capital Cost Estimation 411j6g

Capital Cost Estimation Chapter 5

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1. Order of Magnitude Estimate (Feasibility) 2. Study Estimate / Major Equipment 3. Preliminary Design (Scope) Estimate 4. Definitive (Project Control) Estimate 5. Detailed (Firm or Contractors) Estimate

Capital Cost Estimate Classifications Estimate Type

Accuracey

Data

Diagrams

Notes

Order of Magnitude

+ 25%, - 15% Existing plants

BFD

Capacity + inflation

Study (Major equipment, Factored)

+ 30%, - 20% Roughly sized major equipment

PFD

Generalized charts cost

Preliminary Design (scope)

+ 25%, - 15% major equip. + piping + instr. + Elec. + util.

PFD

Group project

Definitive

+ 15%, - 7%

Prelim spcs for all equipment

PFD + P&ID

Detailed (firm or contractor

+ 6%, - 4%

Complete engineering

Capital Cost Estimate Classifications

Example 5.1 The estimated capital cost from a chemical plant using the study estimate method (Class 4) was calculated to be $2 million. If the plant were to be built, over what range would you expect the actual capital estimate to vary? For a Class 4 estimate, from Table 5.2, the expected accuracy range is between 3 and 12 times that of a Class 1 estimate. A Class 1 estimate can be expected to vary from +6% to -4%. We can evaluate the narrowest and broadest expected capital cost ranges as: Lowest Expected Cost Range High value for actual plant cost ($2.0 x 106)[1 + (0.06)(3)] = $2.36 X 106 Low value for actual plant cost ($2.0 x 106)[1 - (0.04)(3)] = $1.76 x 106 Highest Expected Cost Range High value for actual plant cost ($2.0 x 106)[1 + (0.06 )(12)] = $3.44 x 106 Low value for actual plant cost ($2.0 x 106)[1 - (0.04 )(12)] = $1.04 x 106 The actual expected range would depend on the level of project definition and effort. If the effort and definition are at the high end, then the expected cost range would be between $1.76 and $2.36 million. If the effort and definition are at the low end, then the expected cost range would be between $1.04 and $3.44 million.

Example 5.2 Compare the costs for performing an order-of-magnitude estimate and a detailed estimate for a plant that cost $5.0 x 106 to build.

Solution : For the order-of-magnitude estimate, the cost of the estimate is in the range of 0.015% to 0.3% of the final cost of the plant: Highest Expected Value: ($5.0 x 106)(0.003) = $15,000 Lowest Expected Value: ($5.0 x 106)(0.00015) = $750 For the detailed estimate, the cost of the estimate is in the range of 10 to 100 times that of the order-of-magnitude estimate For the lowest expected cost range Highest Expected Value: ($5.0 x 106 )(0.03) = $150,000 Lowest Expected Value: ($5.0 x 106)(0.0015) = $7500 For the highest expected cost range: Highest Expected Value: ($5.0 x 106)(0.3) = $1,500,000 Lowest Expected Value: ($5.0 x 106)(0.015) = $75,000

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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

Ca  Aa    Cb  Ab 

(5.1) Cost Exponent

Equipment Cost Attribute - Size

Cost

Ca  KAa where

n

K

n

Cb Abn

(5.2)

Effect of Capacity on Purchased Equipment Cost

Ca  K Aan where K  Cb Abn

n = 0.4 – 0.8 Typically  Often n ~ 0.6 and we refer to Eq.(5.1) 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 

Effect of Capacity on Purchased Equipment Cost

Economy of Scale Example 5.3 : Use the six-tenths-rule to estimate the % increase in purchased cost when the capacity of a piece of equipment is doubled. Using Equation 5.1 with n = 0.6:

Ca./Cb = (2/1)0.6 = 1.52 % increase = (1.52 -1.00)/1.00)(100) = 52% The larger the equipment, the lower the cost of equipment per unit of capacity.

Economy of Scale Example 5.4 Compare the error for the scale-up of a heat exchanger by a factor of 5 using the six-tenth- rule in place of the cost exponent given in Table 5.3. Using Equation 5.1: Cost ratio using six-tenth-rule (i.e. n = 0.60) = 5.00.6 = 2.63 Cost ratio using (n =0.59) from Table 5.3 = 5.00.59 = 2.58 % Error = (2.63 -2.58)/2.58)(100) = 1.9 %

Effect of Capacity on Purchased Equipment Cost

Rearranging equation 5.2

C  K An C  K An 1 A

 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 

Effect of Time on Purchased Equipment Cost

Effect of Time on Purchased Equipment Cost

Example 5.6 The purchased cost of a heat exchanger of 500 m2 area in 1990 was $25,000. a. Estimate the cost of the same heat exchanger in 2001 using the two indices introduced above. b. Compare the results.

From Table 5.4: 1990 2001 Marshal and Swift Index 915 1094 Chemical Engineering Plant Cost Index 358 397 a. Marshal and Swift: Cost = ($25,000)(1094/915) = $29,891 Chemical Engineering: Cost = ($25,000)(397/358) = $27,723 b. Average Difference: ($29,891 -27,723)/($29,891 + 27,723)/2)(100) = 7.5%

Marshal & Swift and CEPCI

Table 5.5: The Basis for the Chemical Engineering Plant Cost Index Components of Index

Weighting of Component (%)

Equipment, Machinery and s: (a) (b) (c) (d) (e) (f) (g)

Fabricated Equipment Process Machinery Pipe, Valves, and Fittings Process Instruments and Controls Pumps and Compressors Electrical Equipment and Materials Structural s, Insulation, and Paint

37 14 20 7 7 5 10 100

Erection and Installation Labor

22

Buildings, Materials, and Labor

7

Engineering and Supervision

10

Total

100

61% of total

Example 5.7 The capital cost of a 30,000 metric ton/year isopropanol plant in 1986 was estimated to be $7 million. Estimate the capital cost of a new plant with a production rate of 50,000 metric tons/year in 2001. Cost in 2001 = (Cost in 1986)(Capacity Correction) (Inflation Correction) = ($7,000,000)(50,000/30,000)°.6(397/318) =($7,000,000)(1.359)(1.248) = $11,870,000

Factors affecting Capital Cost • • • •

Direct project expenses Indirect project expenses Contingency and fee Auxiliary facilities

1. Direct project expenses Factor

Symbol

Comments

Equipment f.o.b. cost

Purchased cost of equipment at manufacturer's site

Materials

CM

Includes all piping, insulation and installation fireproofing, foundations and structural s, instrumentation and electrical, and painting associated with the equipment

Labor

CL

Includes all labor associated with equipment and material installing mentioned above

2. Indirect project expenses Factor

Symbol

Comments

Freight, insurance, and taxes

CFIT

transportation costs for shipping equipment and materials to the plant site, all insurance on the items shipped, and any purchase taxes that may be applicable

Construction overhead

CO

Includes all fringe benefits such as vacation, sick leave retirement benefits; etc.; labor burden such as social security and unemployment insurance, etc.; and salaries and overhead for supervisory personnel

Contractor engineering expenses

CE

salaries and overhead for the engineering, drafting, and project management personnel on the project

3. Contingency and fee Factor

Symbol

Comments

Contingency

CCont

A factor to cover unforeseen circumstances. These may include loss of time due to storms and strikes, small changes in the design, and unpredicted price increases.

Contractor fee

CFee

fee varies depending on the type of plant and a variety of other factors

4. Auxiliary facilities Factor

Symbol

Comments

Site development

CSite

land; grading and excavation of the site; installation and hook-up of electrical, water, and sewer systems; and construction of all internal roads, walkways, and parking lots

Auxiliary buildings

CAux

istration offices, maintenance shop and control rooms, warehouses, and service buildings

Off-sites and utilities

COff

raw material and final product storage & loading & unloading facilities; all equipment necessary to supply required process utilities; central environmental control facilities; and fire protection systems

Capital Cost Modules 1. Total Module Cost (Lang Factor) 2. Bare Module Cost

Lang Factor n

CTM  FLang  C pi i 1

Total Module Cost

Purchased Cost of Major Equipment From Preliminary PFD (Pumps, Compressors, vessels, etc.)

Chemical Plant Type

Lang Factor Flang

Fluid Processing Plant

4.74

Solid-Fluid Processing Plant

3.63

Solid Processing Plant

3.10

Lang Factor Example 5.8: Determine the capital cost for a major expansion to a fluid processing plant that has a total purchased equipment cost of $6,800,000. Capital Costs = ($6,800,000)(4.74) = $32,232,000

Lang Factor • 1. • 1. 2.

Advantage Easy to apply. Drawbacks Special MOC. High operating pressure.

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Table 5.8

• 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

o CBM  C p FBM Bare Module Cost

Bare Module Factor (sum of all multipliers)

Purchased Equipment Cost for CS 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  Cop Fp FM

Bare Module Cost F  1 M 1 L  FIT  LO  E  0 BM

Example 5.9 The purchased cost for a carbon steel heat exchanger operating at ambient pressure is $10,000. For a heat exchanger module given the following cost information: Item % of Purchased Equipment Cost Equipment 100.0 Materials 71.4 Labor 63.0 Freight 8.0 Overhead 63.4 Engineering 23.3 Using the information given above, determine the equivalent cost multipliers given in Table 5.8 and the following: 0 a. Bare module cost factor, FBM 0 b. Bare module cost, C BM

Item

% of Purchased Cost Multiplier Value of Multiplier Equipment Cost

Equipment

100.0

1.0

Materials

71.4

M

0.714

Labor

63.0

L

0.63/(1+0.714)= 0.368

Freight

8.0

 FIT

0.08/(1+0.714)= 0.047

Overhead

63.4

Engineering

23.3

O

0.634/0.368/ (1+0.714)= 1.005

E

0.233/(1+0.714) = 0.136

a. Using Equation 5.8: 0 FBM = (1 + 0.368 + 0.047 + (1.005)(0.368) + 0.136)(1 + 0.714) = 3.291 b. From Equation 5.6: 0 C BM = (3.291)($10,000) = $32,910

o CBM  C p FBM Bare Module Cost

Bare Module Factor (sum of all multipliers)

Purchased Equipment Cost for CS 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  Cop Fp FM

Bare Module Cost Factor For Heat Exchangers, Process vessels, and pumps

CBM  0 FBM  0  B1  B2 FM FP  0 FBM   B1  B2 

Material Factor, FM, for these equipment are obtained from Figure A.8 along with Table A.3. Values of B1 and B2 are given in Table A.4

Bare Module Cost Factor For Heat Exchangers, Process vessels, and pumps Values of B1 and B2 are given in Table A.4

Pressure Factor for vessels Pressure Factor, FP , for other equipment are given in table A.6 along with Figure A.9

FP ,vessel 

( P  1) D  0.0315 2 850  0.6( P  1)  0.0063

If FP is less than 1, then FP= 1.0 For P less than -0.5 barg, FP = 1.25

for tvessel  0.0063m

Pressure Factor for Other Equipment Pressure Factor, FP , for other equipment are given in table A.6 along with Figure A.9

log10 FP  C1 C2 log10 P  C3 log10 P

2

Constants are given in Table A.2

Module Factor Approach – Material Factors

Bare Module Cost Factor For equipment not covered in table A.3

Material Factor Material Factor, FM , for other equipment are given in table A.6 along with Figure A.9

Purchased Equipment Cost log10 C p0  K1  K2 log10 ( A)  K3 log10 ( A)

2

Where A is the capacity or size parameter for the equipment K1, K2, and K3 are given in table A.1 These data are also presented in the form of graphs in Figures A.1-A.7

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

Effect of Materials of Construction and Pressure on Bare Module Cost C op



o C BM

P

MOC

1 bar

CS

25 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

25 K

CBM

82.3 K 82.3 K

197.4 K

Bare-Module and TotalModule Costs BM – Previously Covered  TM – Includes Contingency and Fees at 15% and 3% of BM 

CTM  1.18

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all equip

CBM

Grass-Roots Costs  

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GR – grass-roots cost includes costs for auxiliary facilities CGR  0.50

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o CBM  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.

Materials of Construction Very important  Table 5.9 – rough guide  Perry’s – good source 

Capcost Calculates costs based on input  CEPCI – use current value of 401 or latest from Chemical Engineering  Program automatically assigns equipment numbers 