Week10 Turton Chapter 7 - Capital Cost Estimation

Copyright - R.Turton and J. Shaeiwitz 2008

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Chapter 7 - Capital Cost Estimation

Chemical Engineering Department

West Virginia University


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Outline Types of estimate 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


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Types of Capital Cost Estimate 1. Order of Magnitude Estimate

(Feasibility) + 40%, - 20% BFD , Process Modification

2. Study Estimate / Major Equipment + 30%, - 20% PFD , Cost Chart


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Types of Capital Cost Estimate (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


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Types of Capital Cost Estimates (cont’d)

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 + # > - #.?


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Cost of Estimate – See Also Table 7.2

1

23

5

4

Accuracy

Cost of Estimate (Time)


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Estimating Purchased Equipment Costs

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


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Effect of Size (Capacity)n

b

a

b

a

A

A

C

C

Cost Equipment CostAttribute - Size

Cost Exponent

naa KAC

bn

b

CK

A

(7.1)

where

(7.2)


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Effect of Size (Capacity) cont.

n = 0.4 – 0.8 Typically Often n ~ 0.6 and we refer to Eq.

(7.1) 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


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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 ?


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Example 1 - Solutionn

b

a

b

a

A

A

C

C

n

b

aba

A

ACC

$67,300aC

100 m2 Exchanger is not twice as expensive as a 50 m2 exchanger

Economy of Scale

44.0

100

50000,92


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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


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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(b) Process Machinery(c) Pipe, Valves, and Fittings(d) Process Instruments and Controls(e) Pumps and Compressors(f) Electrical Equipment and Materials (g) Structural Supports, Insulation, and

Paint

371420

775

10100 61 % of total

Erection and Installation Labor 22

Buildings, Materials, and Labor 7

Engineering and Supervision 10

Total 100


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Equation for Time Effect

C = Cost I = Value of cost index 1,2 = Represents points in time at

which costs required or known and index values known

1

212 I

ICC


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Example 2

Cost of vessel in 1993 was 25,000, what is estimated cost today (Sept 2007 – CEPCI = 500)?


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Example 2 - Solution

820,34$359

500000,25

19931993

I

ICC now

now


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Example 3 - Accounting for Time and Size

2 heat exchangers, 1 bought in 1990 and the other in 1995 for the same service

A BArea = 70 m2 130 m2 Time= 1990 1995Cost = 17 K 24 KI = 358 381


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Example 3 (cont’d)

What is the Cost of a 80 m2 Heat Exchanger Today ? (I = 500)


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Example 3 - Solution

Must First Bring Costs to a Common TimeA = 70

A = 130

500(2007) 17 $23,743

358aC

500(2007) 24 $31,496

381bC


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Example 3 - Solution (cont’d)

nKAC $23,743 (70)nK$31,496 (130)nK

log 31,496 log(23,743)0.4565

log 130 log(70)n

0.4565

23,743$3,414

70n

CK

A

0.45653,414 80 $25,235C


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Example 4

Date Vessel Capacity

(m3)

Purchased Cost(pounds sterling = £)

Exchange Rate

1993 75 £ 7,800 $ 1.40/£

1998 155 £ 13,800 $ 1.65/£

2007 120 $ 2.00/£

How much ($) would the new vessel cost?


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Total Cost of Plant

Purchased cost – equipment f.o.b. Installed cost – Often 3 to 8 times

larger than purchased cost


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Installed Cost of Equipment (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


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Installed Cost of Equipment Table 7.6 (cont’d)

Contingency and Fee Contingency Contractor fee

Auxiliary Facilities Site development Auxiliary buildings Off-sites and utilities


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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


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Lang Factors (cont’d)

n

ipiLangTM CFC

1

Purchased Cost of Major EquipmentFrom Preliminary PFD

(Pumps, Compressors, vessels, etc.)

Total Module Cost


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Module Factor Approach

• Table 7.8

• Direct, Indirect, Contingency and Fees are expressed as functions (multipliers) of purchased equipment cost at base conditions (1 bar and CS)

• Each equipment type has different multipliers

• Details given in Appendix A

opC


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Module Factor Approach

Bare Module Cost

Purchased Equipment Cost for CS and 1 atm pressure - Appendix A

Bare Module Factor(sum of all multipliers)

FBM = B1 + B2FpFM

Fp = pressure factor (= 1 for 1 bar)

FM = material of construction factor (=1 for CS)

1 2oBMF B B

op p p MC C F F

BMopBM FCC


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Module Factor Approach – Pressure Factors

Figure 7.6 Pressure Factors for Carbon Steel Vessels


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Module Factor Approach – Pressure Factors


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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


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Effect of Materials of Construction and Pressure on Bare Module Cost

P MOC Cp CBM

1 bar CS 25 K 25 K 82.3 K

82.3 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

197.4 K

opC o

BMC


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Bare-Module and Total-Module Costs

BM – Previously Covered TM – Includes Contingency and

Fees at 15% and 3% of BM

all equip

1.18TM BMC C


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Grass-Roots Costs GR – grass-roots cost includes costs

for auxiliary facilities

Use base BM costs in GR cost (1 atm and CS) since auxiliary facilities should not depend on pressure or M.O.C.

all equip

0.50 oGR BM TMC C C


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Materials of Construction

Very important Table 9.9 – rough guide Perry’s – good source


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Capcost

Calculates costs based on input CEPCI – use current value of 500 or

latest from Chemical Engineering Program automatically assigns

equipment numbers


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Capcost


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Summary

In general, information about costs must be scaled for capacity and time using appropriate cost exponents and indices

Total plant costs involve a variety of factors that vary with equipment type, operating pressure, and materials of construction.

For additions to existing facilities, the total module cost should be used but for totally new projects grass roots costs are appropriate.

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Week10 Turton Chapter 7 - Capital Cost Estimation

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