Plant Design & Economics - Engineers Institute...(7) A hemispherical head is the strongest shape...

Chemical Engineering GATE 2021 Plant Design & Economics

ENGINEERS INSTITUTE OF INDIA 2020 All Rights Reserved [1]61C, Kalu Sarai, Near Hauz Khas Metro Station Gate No. 1, New Delhi-110016. Ph. 011-26514888. www.engineersinstitute.com

CHEMICAL ENGINEERING

Revised as per GATE-2021

STUDY MATERIAL

Plant Design & Economics



C O N T E N T

S. No. Title Page number

Part 1. Economics 3

1. Cost Estimation 4

2. Interest and Investment Costs 15

3.` Depreciation 32

4. Project Economic Evaluation 45

5. Design Optimisation 65

Part 2. Plant Design 71

1. Designing of Heat Exchanger 72

2. Designing of Columns 86

3. Designing of Compressor 96

4. Designing of Pipes and Pumps 110

Annexure 1 120

Annexure 2 126

Annexure 3 133



Part 1

ECONOMICS



CHAPTER-1COST ESTIMATION

Aim of any process plant is to make profit. Hence an estimated cost of the investment is needed.Remember: The purpose of estimating is to develop cash flow projections and not to produce exact dataabout the future, which is virtually impossible. Production cost is needed before the profitability of aproject can be assessed. When a new industry is set up, a large amount of money is required for variousoperations such as purchasing of land, equipment, etc. and also labour and other working capital is alsoneeded. The approach to estimate the cost is shown in this chapter.

Total Capital Investment:The capital required to supply the necessary manufacturing and plant facilities is called fixed

capital investment. The capital required for the operation of plant is called working capital. The sum ofthe fixed capital investment and working capital investment is called total capital investment. Totalcapital investment is written as:Total capital investment = fixed capital investment + working capital investment

Fixed Capital Investment (F.C.I.)Fixed capital refers to the total cost of plant needed to start-up. It is the cost paid to the

contractors and is a once-only cost that is not recovered at the end of the project life, other than scrapvalue. it can also be considered as depreciable asset (except for land). Fixed capital investment can bedivided into-(a) Manufacturing fixed capital investment(b) Non-manufacturing fixed capital investment

Manufacturing fixed capital investment represents the capital necessary for installed processequipment with all auxiliaries that are needed for complete process operation. Examples are piping,instrument, insulation, foundation and site operations. Fixed capital required for construction, overheadand all plant components that are not directly related to the process operation is called non manufacturingFixed capital investment. Examples are land, processing building, administration and other offices, warehouses, laboratories, transportation, shipping and receiving facility, utility and waste disposal facilities.Construction overhead cost consists of field office and supervision expenses, home office expenses,engineering expenses, miscellaneous construction cost, contractor’s fees and contingencies.

Working Capital (W.C.)Working capital is the additional investment needed over the fixed capital to start the plant up

and operate plant to the point where profit is earned.The working capital for an industrial plant consists of the total amount of money invested in:(a) Raw materials and supplies carried in stock.(b) Finished product in stock and semi finished product in the process of being manufactured.(c) Accounts receivable.(d) Cash kept on hand for monthly payment of operating expenses such as salaries, wages and raw

material purchase.



(e) Accounts payable and taxes payable.The ratio of working capital to total capital investment varies with different companies but most

chemical plant use an initial working capital amounting 10 to 20 percent of the total capital investment.

Fig.1. A typical Cumulative cash flow diagram

A typical list for complete estimation of the Fixed-Capital Investment (F.C.I.):

Direct Costs:1. Purchased Equipment:It includes all equipment listed on a complete flow sheet such as Spare parts and non installed equipment spares. Surplus equipment, supplies and equipment allowance. Inflation cost allowance Freight charges Taxes, insurance, duties Allowance for modification during start-up.

2. Purchased Equipment Installation:The costs regarding installation of all equipment listed on complete flow sheet such as Structural supports. Equipment insulation and painting.

3. Instrumentation and Controls: Purchase, installation, calibration, computer control with supportive software.



4. Piping: Process piping utilizing suitable structural materials. Pipe hangers, fitting, valves Insulation

5. Electrical Systems: Electrical equipments such as motor, switches, etc. Electrical material and labor

6. Building (including services) Process buildings Auxiliary buildings Maintenance shops Building services

7. Yard Improvements:The expenses bore for site development, including site clearing, grading, roads, walkways, etc.

8. Service facilities: Utilities-steam, water, power, refrigeration, compressed air, fuel, waste disposal Facilities-boiler plant incinerator, wells, river intaks, water treatment, cooling tower, storage

tank etc. Non process equipments-office furniture, cafeteria installment, medical equipment etc. Distribution and packaging-law material and product storage and handling equipment, product

packaging etc.

9. Land Surveys and fees Property cost

Indirect Costs:

1. Engineering and supervision: Engineering cost-administrative, process, design and general engineering etc.

2. Legal expenses3. Construction Expenses: Construction, operation and maintenance of temporary facilities, offices etc. Construction tools and equipment Construction supervision Warehouse expenses Safety expenses Permits and licenses Taxes, insurance, interest

4. Contractor’s fee

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Plant Design & Economics - Engineers Institute...(7) A hemispherical head is the strongest shape...

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