3-Capital-Cost-Estimation #1 s19 Fs15 #2 Fs20
3-Capital-Cost-Estimation #1 s19 Fs15 #2 Fs20
3-Capital-Cost-Estimation #1 s19 Fs15 #2 Fs20
TOPIC OUTCOME
Capital Cost
Classification of Fixed
Capital Cost Estimates
Estimating Purchased
Equipment Costs
What is economics?
-The study of how limited
resources is used to satisfy
unlimited human wants
Engineering Economy
- Is a collection of
mathematical techniques
that simplify economic
comparison
Example
Bad news: You have just wrecked your car!. You
need another car immediately because you have
decided that walking, riding a bike, and taking a
bus are not acceptable. An automobile wholesaler
offers you $2000 for your wrecked car. Also, your
insurance companys claims adjuster estimates that
there is $2000 in damage for your car. Because you
have collision insurance with a $1000 deductibility
provision, the insurance company mails you a
check for $1000. the odometer reading on your
wrecked car is 58 miles
Assumption:
A new car worth $10000 with odometer reading 28
miles
Price of selling a repaired car = $4500
Sources
of Equipment
Price Fluctuation
Company Policies
Operation Time and Rate of
Production
Study Estimate
Utilizes a list of major equipment found in the
process (e.g. pumps, compressors and turbines,
columns and vessels, fire heaters and exchangers)
Each of equipment is roughly size and appropriate
cost determined
Based on process flow diagram (PFD)
Accuracy: +30% to -20%
Definitive Estimate
Requires preliminary specifications for all the
equipment, utilities, instrumentation, electrical and
off-sites
Accuracy: +15% to -7%
Detailed Estimate
Requires complete engineering of the process and
all related off-sites utilities
Obtained vendor quotes for all expensive items
End of detailed estimate: the plant is ready to go to
construction stage
Accuracy: +6% to -4%
Alternatives of Estimation
C a Aa
C b Ab
---------
Equation 1.1
where;
A = Equipment cost attribute
C = Purchased cost
n = Cost exponent
Subscripts a:- equipment with the required
attribute
b:- equipment with the base attribute
Ca K Aa
where
---------
Equation 1.2
Cb
Ab n
Example 1
Use the six-tenth-rule to estimate the %
increase in purchased cost when the
capacity of a piece of equipment is doubled
Example 2
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 2.3
Equipment type
Range of
correlation
Units of
Capacity
Cost
Exponent n
Reciprocating compressor
with motor drive
220 to 3000
Kw
0.70
5 to 50
m2
0.44
1 to 40
m3
0.52
Single-stage Blower
0.5 to 4
m3/s
0.64
3 to 10
m3
0.65
Example 3
The purchased cost of a recently
acquired heat exchanger with an area of
100 square meters was $10,000.
Determine:
a) the constant K in equation 1.1
b) the cost of a new heat exchanger of
180m2
I2
C 2 C1 -------- I1
Equation 1.3
C= Purchase Cost
I = Cost Index
Subscripts 1:- refers to the base time when cost is
known
2:- refers to the time when cost is desired
Example 4
The purchased cost of a heat exchanger of
500m2 area in mid-1978 was $25,000
a) Estimate the cost of the same heat exchanger in
mid-1996 using the two indices introduced above
b) Compare the results
1996
381.8
1997
386.5
1998
389.5
1999
390.6
2000
394.1
2001
394.3
2002
395.6
2003
401.7
2004
444.2
2005
468.2
2006
499.6
2007
525.4
2008
575.4
Jun 2009
597.1
Auxiliary Facilities
Site development,CSite
Auxiliary Buildings, CAux
Offsites and Utilities, Coff
CTM FLang C p ,i
---------
Equation 1.4
i 1
where;
CTM = the capital cost of the plant
Cp,i
= the purchased cost for the major
equipment units
n
= the total number of individual units
FLang = the Lang Factor
Lang Factor,Flang
4.74
3.63
3.10
Example 5
The capital cost of a 30,000 metric ton/year
iso-propanol plant in 1980 was estimated to
be $5,000,000. Estimate the capital cost of a
new plant with a production rate of 50,000
metric tons/year in mid-1996
Example 6
Determine the capital cost for a major
expansion to a fluid processing plant that has
a total purchased equipment cost of
$6,800,000
C BM C P FBM
FBM 1 L FIT O L E 1 M
where
C BM = Bare module equipment cost: direct+ indirect cost
C P = Bare module equipment factor
Example 7
The purchased cost for a carbon steel heat exchanger
operation at ambient pressure is $10,000. for a heat
exchanger module, Ulrich [4] provides the following
cost multiplying factors
Cost Multiplier
M
L
FIT
O
E
Value
0.71
0.37
0.08
0.70
0.15
Determine:
a) Bare module cost factor, FBM
b) Bare module Cost, CBM
c) Materials and labor costs to install the exchanger
Example 8
Find the mid-1996 bare module cost of a
floating head shell and tube heat exchanger
with a heat transfer area of 100m2. The
operating pressure of the equipment is
1.0bar with both shell and tube sides
constructed of carbon steel. For this material
and pressure the values of FP and FM are
equal to 1.0
Figure A.1: Purchased equipment cost for shell and tube heat exchangers
Shell Material
Tube Material
Material Factor, FM
1.00
Copper (Cu)
1.25
Copper (Cu)
Copper (Cu)
1.60
1.70
3.00
2.80
3.80
Titanium (Ti)
7.20
Titanium (Ti)
Titanium (Ti)
12.00
C BM C P FBM
Example 9
Repeat example 8 except that the exchanger
is made with stainless steel shell and tube
Example 10
Find the bare module cost of a floating-head
shell and tube heat exchanger with a heat
transfer area of 100m2. The operating
pressure of the equipment is 100 bar on both
shell and tube sides and the construction of
the shell and tubes is of stainless steel.
Example 11
Find the bare module cost (in 1996) of a
stainless steel tower 3m in diameter and 30m
tall. The tower has 40 stainless steel sieve
trays and operates at 20 bar.
C
i 1
o
TM ,i
o
1.18 C BM
,i
i 1
o
C
BM ,i
i 1
Example 12
A small expansion to an existing chemical
facility is being investigated and a
preliminary PFD of the process is shown in
Figure E2.14. The expansion involves the
installation of a new distillation column with
a reboiler, condenser, pumps and other
associated equipment. A list of equipment,
sizes, materials of construction, and
operating pressure is given in Table E2.14A.
Using the charts in Appendix A, calculate
the total module cost for this expansion in
1996.