Hydrocarbon Processing

Brown, T. R.

Gulf Publishing Co.

Houston

Octubre 2000

Este material se utiliza con fines

exclusivamente didácticos
CAPITAL COST ESTIMATING
Use these guidelines to formulate more accurate projections

T. R. Brown, University of Cincinnati, Cincinnati, Ohio

For an engineer to economically optimize designs, he or she must be able to estimate capital costs.
The procedure requires adjusting costs to different time periods, ratioing costs for different capacities,
estimating purchase costs and, finally, converting these figures into capital costs. This article reviews the
methods for creating order-of-magnitude (OOM) and study estimates, focusing on Lang, Hand and Hand-
type factors.
OOM and study estimates are used when determining economic feasibility and when analyzing
options. These types of estimates are relatively inaccurate: ± 40–100% for OOM estimates and ± 30– 50%
for study estimates. In general, the lack of available design details is the main reason for the inaccuracy. The
kind of design information that’s usually available for these estimates is:
?? OOM estimates–block flow diagrams, preliminary material and energy balances, and the
preliminary environmental risk assessment
?? Study estimates–preliminary issues of P&IDs, process descriptions, equipment lists, control
strategies, logic diagrams, equipment layouts, building and utility requirements, site layouts,
environmental mitigation plans and study models.

Why estimate? These types of estimates are used to study options such as:
Broad project options . Should a product be bought or made? How many sites should there be?
Where should they be located? Should an existing plant or process be modified or a new one be built?
Should the plant/s be vertically integrated?
Optimize the process. Should the process he batch or continuous? Should there be one or multiple
units? Should there be surge between unit operations? How much?
Major equipment selection: Of the technically feasible types of equipment, which are the most cost-
effective? What is the optimum amount of heat recovery? How should the heat exchange loops be designed?
Optimize the equipment. Optimize operating conditions vs. equipment. For example:
?? Gas-liquid towers: diameter vs. height for different internals, reflux ratios, L/Gs, etc.
?? Heat exchangers: area vs. pressure drop and temperature approach.
?? Pressure filters: filtering time, initial flow and filtering temperature vs. filter area.
?? Reactors: reactor size (hold time) vs. temperature, pressure, reactant concentrations, catalyst
concentration, and recycle rate.
?? Pipe: diameter vs. pressure drop.
?? Insulation: thickness vs. heat loss.

Table 1. CEPI, annual averages (1957-59 = 100)

Year CEPI Year CEPI Year CEPI
1956 93.9 1972 137.2 1988 342.5
1957 98,5 1973 144.1 1989 355.4
1958 99.7 1974 165.4 1990 357.6
1959 101.8 1975 182.4 1991 361.3
1960 102.0 1976 192.1 1992 358.2
1961 101.5 1977 204.1 1993 359.2
1962 102.0 1978 218.8 1994 368.1
1963 102.4 1979 238.7 1995 381.1
1964 103.3 1980 261.2 1996 381.7
1965 104.2 1981 297.0 1997 386.5
1966 107.2 1982 314.0 1998 389.5
1967 109.7 1983 316.9 1999 390.6
1968 113.6 1984 322.7 2000 394.3 est’d
1969 119.0 1985 325.3 2001 398.0 est’d
1970 125.7 1986 318.4 2002 401.8 est’d’
1971 132.2 1987 323.8 2003 405.6 est’d

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 Capital costs defined. Capital costs include a broad range of cost categories. While companies
categorize or group their cost components differently, the total list of cost components will be the same. It’s
important to understand these to ensure all of the costs are included in an estimate. The main categories used
in this article are equipment, yard/site work, buildings, equipment-related, engineering, construction
overhead and contingency. These are detailed in the box, p. 94.
Since the design is not well defined when doing feasibility studies or option analyses, estimating
methods are quite simple; of necessity, they are based on minimal scope definition.

Inflation adjustments. Before reviewing the different estimating methods, we’ll discuss how to
adjust estimates for inflation. The data on which an estimate is based is almost always quoted at a date
different from the date of the estimate. For example, you need to know the cost of a heat exchanger in
today’s dollars, but your estimating database is based on 1990 costs. Because of these time differences, costs
are routinely adjusted for inflation using one of the equipment/plant cost indices.

Cost at time 2 Index at time 2

= (1)
Cost at time Index at time 1

Categories of capital costs

Estimate categories Subcategories Typical equipment
Equipment Processing Centrifuges
Columns
Compressors
Cyclones/dust filters
Dryers
Evaporators
Filters
Furnaces
Heat exchangers
Pumps
Reactors
Tanks/pressure vessels
Packaging Cappers
Case packers
Conveyors
Fíllers
Labelers
Palletizers
Shrink wrappers
Uncasers
Utilities Boilers
Compressors
Cooling towers
Electric generators
Refrigeration systems
Substations
Water systems
Environmental Cyclones/dust: filters
Effluent filters
Fume containment systems
Gas scrubbers
Incinerators
Precipitators
Sewage treatment systems
Settling basins/tanks
Spill containment systems
Waste compactors

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Yard/site work Construction labor
Fire protection equipment
Grading
Landscaping
Parking
Railroad tracks
Roads
Security systems
Sewers
Site preparation
Yard lighting

Buildings Construction labor

Air conditioning
Control rooms
Employee facilities (lockers, cafeteria,
restrooms, etc.)
Laboratories
Lighting
Maintenance facilities/ shop equipment
Office buildings/furnishings
Process & packaging buildings
Telephone systems
Warehouses/loading equipment

Equipment related Construction labor

Electrical
Equipment installation
Insulation
Foundations/supports
Piping/chutes/ducts
Safety devices
Instrumentation/controls

Engineering Company engineering effort

Engineering contractor costs, including
overhead and profit

Construction overhead Benefits

Contractor profit
Construction planning/field engineering
Equipment/tool rental
Field supervision
Temporary facilities

Contingency An allowance to account for uncertainties and

unknowns.

Table 2. Lang factors

Type of plant Original Lang factors Modified factors (study estimates)
Solids processing 3.10 2.8
Solids and fluid processing 3.63 3.3
Fluid processing 4.74 4.3

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 The more common indices are the Chemical Engineering Plant Cost Index (CEPI), the Marshall &
Swift Equipment Cost Index and the Engineering News-Record Construction Cost Index. Because it is based
on chemical plant construction, the CEPI is probably the best index to use for chemical plant estimating.
It includes the costs to design, purchase and install chemical plant equipment and is weighted as
follows–61% for equipment, machinery and supports, 22% for construction labor, 7% for buildings, and 10%
for engineering and supervision. The index is updated monthly. Table 1 lists the average CEPI’s from. 1956
to 1999 and projects them to 2003. The period 1957-59 is defined as an index of 100.
Example 1. If the cost of a plant were $30,000,000 in 1992, what would the cost of that same plant
be in 1999? The CEPI in 1992 = 358.2 and 390.6 in 1999. Rearranging Eq. 1:

Cost1999 = Cost1992 CEPI1999

CEPI1992

= $30M 390.6
358.2

= $32.7M

OOM ESTIMATES.

These are the simplest and least accurate of all estimates. They are usually based on a slightly
developed design concept. At times, only the concept or an idea exists. For example, the only information an
engineer might have is the question, “What would be the cost of a 150,000-tpy cyclohexane plant on the
West Coast that’s similar to the one in Baton Rouge?” In this case, no actual engineering has been done-only
the question about building another plant exists. There are two common OOM methods.

Ratioing by capacity. This is one of the most useful relationships in cost engineering. Normally
when the cost of items having the same design but different capacities are plotted on log-log paper, the line is
straight. This leads to:

Cost size 2 Capacity size 2 n

= (2)
Cost size 1 Capacity size 1

where n is the size exponent.

This equation is valid for equipment purchase costs and installed costs of plants and processes. Size
exponents are dependent on the type of plant, process or equipment. Garrett in his book and Guthrie include
log-log plots for several-hundred types of chemical plants. The cost data for these charts is now 15-40 years
old; they would have to be used with a great degree of caution. But the size exponents will be of continuing
value.

Table 3. Hand factors

Equipment type Factor
Fractionating columns 4
Pressure vessels 4
Heat exchangers 31/2
Fired heaters 2
Pumps 4
Compressors 21/2
Instruments 4
Miscellaneous equipment 21/2

Remer and Chai also published over 600 size exponents for a variety of chemical plants. The average
exponent for these plants was 0.67. This value com-pares well to previously calculated averages (Guthrie and
Chilton). In 1970, Chase proposed a method to calculate plant/process size exponents from the exponents of

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the different equipment classes used in the plant. When a plant size exponent is unknown, use the average
0.67. For equipment cost ratioing, use 0.6.
Example 2. If a 100-tpy plant cost $32.9M in 1999, what would a 150-tpy plant cost?
Since the size exponent isn’t known, use the aver-age, 0.67. Rearranging Eq. 2:

.67
Cost 150tpy = Cost 100tpy 150tpy
100tpy

.67
= $32.9M 150
100

= $43.2M

Scaling by capital/unit of capacity or by capital/unit of sales. These are often used but are flawed
methods. The reason: the ratios, capital/unit of capacity or sales, are not constants. Rather, the capital cost in
each ratio is a variable, dependent on plant capacity. To use these ratios accurately, you would have to know
what the base capacity or sales volume was and then ratio the capital using a size exponent.

Other. A number of other methods described in the 7th edition of Perry’s Chemical Engineering
Handbook. 10 In addition, Allen and Page compare some of these methods and propose an improved
technique. All these procedures use what; I believe are very limiting assumptions. While these methods may
be of value when faced with a pre-design situation–where no previous data exists–I believe a better approach
would be to do a minimum amount of design and to use the “study estimate” technique.

STUDY ESTIMATES

Although no much design information is known when doing a study estimate, considerably more is
available than for OOM estimates. At a minimum, block flow diagrams, material and energy balances, and
the preliminary environmental risk assessment will be available. These are used to develop rough sizes and
specifications for most of the major process, packaging, utility and environmental equipment.
The study estimate method is based on using the rough equipment sizes/specs to estimate equipment
purchase prices. The purchase prices are then multiplied by a factor to account for all the other components
in the estimate.

Table 4. Module factor*

Equipment type (carbon steel construction, unless noted) Module factor
Agitators. dual-bladed turbines/ single -blade propellers 2.0
Agitated tanks 2.5
Blenders
Ribbon 2.0
Sigma 2.8
Double arm, double cone, twin shell 2.2
Blowers, centrifugal 2.5
Boilers
Package and waste heat ed 1.8
Field erect 1.9
Centrifuges: solid-bowl, screen-bowl, pusher-stainless steel 2.0
Classifier: rake and spiral 2.3
Columns: distillation, absorption, etc.
Horizontal 3.1
Vertical 4.2
Compressors: low, medium, high pressure 2.6
Conveyors
Screw, pneumatic, roller 2.2
Belt, bucket, vibrating 2.4

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Coolers: spray, quenching, cascade 2.7
Cooling towers 1.7
Crystallizers 2.6
Drives/motors
Electric for compressors, fans, pumps 1.5
Electric for other units 2.0
Gasoline 2.0
Turbine: gas and steam 3.5
Dryers
Fluid-bed, spray 2.7
Rotary 2.3
Dust collectors
Bag filters 2.2
Cyclone, multiclone 3.0
Electrostatic precipitators 2.3
Venturi scrubbers 2.5
Evaporators, single effect-stainless steel
Falling film 2.3
Forced circulation 2.9
Fans 2.2
Filters
Belt, rotary drum and leaf, table, tilting pan 2.4
Others 2.8
Furnaces 2.1
Generators: electric power 2.5
Heat exchangers
Air cooled 2.2
Double-pipe 1.8
Shell and tube 3.2
Incinerators 2.2
Ion exchange system 2.0
Mills (size reduction)
Ball, jet, pebble (wet), rod 2.3
Hammer 2.8
Gyratory, jaw, roll 2.1
Presses: roll and screw 2.4
Pumps
Centrifugal 5.0
Chemical injection 2.8
Reciprocating 3.3
Turbine 1.8
Pressure vessels
Horizontal, spherical 3.1
Vertical 4.2
Reactors, jacketed, no agitation-stainless steel 1.8
Refrigeration system 1.5
Screens, vibrating 2.8

Size enlargement: tablet press, pug mill, pelletizer, granulator 2.1

Tanks, atmospheric storage
Conical top 3.5
Field erected 2.0
Thickeners/clarifiers 3.0
Vacuum equipment 2.2
*Adapted from Garrett, D. E., Chemical Engineering Economics, Van Nostrand Reinhold, 1989, ISBN: 0442318024.

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 Fig. 1. Material adjustment factor, Fm

The Lang method. H. J. Lang did the original work on this method of estimating in the 1940s. He
published three articles in 1947 and 1948. His studies included estimates of 14 processing plants built
primarily of car-bon steel.
His method involved summing the equipment purchase costs and multiplying the sum by a factor
that depended on the type of plant being built.

Capital cost = ? (Equipment purchase cost) x Hand Lang factor

His equipment purchase costs included costs for raw material handling and storage equipment,
processing equipment, finished product handling and storage equipment, and instruments. He developed
different factors for three types of plants: solids processing, solids and fluid processing, and fluid processing.
I’ve modified Lang’s original factors for study estimate conditions, making three changes:

?? Included the cost of services (utilities) equipment in the equipment purchase cost. This will
improve estimate accuracy, because services costs are so variable. Therefore, services were
removed from the factors. (In Lang’s original data, they were 9.9% of the cost of a plant.)
?? Included the cost of environmental equipment in the equipment purchase cost. Today,
environmental system costs are often a large part of the cost of a plant; in the 40s, almost nothing
was spent in this area. This doesn’t change the factors.
?? Since instrument scope is not known for OOM and study estimates, you cant estimate the
purchase cost of instruments. Thus, ? ( Equipment purchase cost) needs to be multiplied by a
factor (Fi ) to include instrumentation. Today, these are 15 -20% of the cost of a plant.
For well-automated plants, use 1.2.
So, using this method:

Capital cost = ? (Equipment purchase cost) x Lang factor x Fi

If the plant is built of materials other than carbon steel, the Lang factors (Table 2) will also have to
be adjusted for this change. This will be addressed later.

The Hand method–module factors. In 1958, W. E. Hand published an article that presented a
modification to Lang’s method. His method involves multiplying the purchase cost of each piece of
equipment by a factor and summing these to arrive at the total capital cost. He developed factors for eight
types of carbon steel equipment (Table 3).

Table 5. 1993 Place factors

Country Factor Country Factor
Australia 1.60 Italy 2.15
Belgium 1.26 Japan 0.95
Canada 1.32 Netherlands 1.04
Denmark 1.46 Spain 2.32
France 1.64 Sweden 1.79

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 Germany 1.19 United Kingdom 1.76
17
(Developed from data in Perry’s Chemical Engineering Handbook. )

Garrett expanded Hands factors, developing factors for over 60 types of equipment. He calls these
factors “module factors”. Again most are for carbon steel equipment. Table 4 is a list, adapted from Garrett,
of module factors. The module factors do not include instrumentation costs. Thus, when instrument scope is
not known (for OOM and study estimates), an instrument factor (Fi ) has to be included. For well-automated
plants, use 1.2. So, using this method:

Capital cost = ? (Equipment purchase cost x Hand or module factor) x Fi

As with the Lang factors, if the equipment is made from a material other than carbon steel, the Hand
and module factors will have to be adjusted.

Adjustment for materials other than carbon steel. Lang’s, Hand’s and Garrett’s factors were all
developed for carbon steel equipment. When other materials are used, the factors all have to be adjusted
downwards using a materials factor (Fm ). J. Clerk published the basis for the materials factor in 1963.
An adjustment is needed, because the cost of only a few of the items accounted for by the Lang or
Hand/module factors increases when metallurgy is upgraded (specifically: piping/chutes/duets, some
instruments, some safety devices and some contingency). All other costs-yard/site, buildings, some of the
equipment-related, engineering and construction overhead–remain constant and are independent of
metallurgy.
The materials factor (Fm ) is determined by using the chart in Fig. 1. First, calculate the material cost
ratio (the cost of the alloy divided by the cost of carbon steel). Then, go vertically from this value to the
curve and read Fm on the y-axis.
The material cost ratio and Fm are fairly easy to develop for a single piece of equipment, as would be
done when using Hand or module factors. However, with the Lang method, estimating the material cost ratio
for an entire plant is more complicated.
Example 3. What would Fm be for a vertical, 304 stainless steel absorption column when the
material cost ratio is 1. 7?
Enter Fig. 1 with a material cost ratio of 1.7. Go vertically to the curve and find Fm = .75 on the y-
axis.
Place factors . Suppose you wish to know the cost of a process or plant outside the U.S., and no one
is available who understands costs and construction in the other country. When that’s the case, you can
develop the cost of the plant as if it were in the U.S. and then adjust this cost with a place factor. The 7th
Edition of Perry’s Chemical Engineering Handbook (in the Process Economies section) contains data needed
to calculate a number of place factors. By definition, the place factor for the U.S. is 1.0. Table 5 lists 1993
factors.
Place factors are not particularly reliable, since economic conditions in countries–and in countries
relative to the U.S.–are constantly changing. Thus, any place factor more than one or two years old is
suspect.

THE METHODS IN FINAL FORM

When the materials (Fm ), instrument (Fi ) and place (Fp ) factors are added to the Lang and
Hand/module factor methods, the equations for capital cost become:
The Lang equation:

Capital cost = S (Equipment purchase cost) x Lang factor x Fm x Fi x Fp (3)

The Hand/module factor equation:

Capital cost = S (Equipment purchase cost x Hand or module factor x Fm ) x Fi x Fp (4)

Fig. 2 illustrates how the cost components in Eq. 4 relate to each other.

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 Capital cost = ? (Equipment purchase cost x Hand/module factor x Fm ) x Fi x Fp

Equipment purchaase cost

?? Processing
?? Packaging
?? Utilities
?? Environmental

Hand/module factor

This factor includes the average costs for

all of the following items that are required
to house or install the equipment
Instrumentation factor
?? Yard/site work
?? Buildings This factor is needed to include costs
?? Equipment-related for all instrumentation and controls
– Electrical (for the processing packaging utility
– Equipment installation and environmental system)
– Insulation
– Foundations/supports
– Painting
– Piping/chutes/ducts
– Safety devices Place factor
?? Engineering
This factor is used to adjust a U.S-
?? Construction overhead
based estimate to costs in another
?? Contingency
country

Material adjustment factor

This factor is needed to adjust the module

factor whenever the equipment is made of
a material other than carbon steel

Fig. 2. Hand/module factors and estimate structure.

Equipment purchase cost estimating. At the heart of both the Lang and Hand/module factor
methods is estimating the price of individual pieces of equipment. Each source of price data–budget quotes,
company or personal data, and published data–has a different level of accuracy. This is related to constantly
shifting economic conditions.
For example, when the construction industry is booming, fabrication shops run closer to capacity,
and costs are generally higher. The converse is true when there’s little construction activity, On a smaller
scale, when an individual shop is close to its capacity, regard-less of the situation in the industry, its costs
will be higher. Again the converse is true.
Budget quotes. The most accurate method of pricing equipment for a study estimate is to ask a
vendor for a budget quotation based on rough equipment specifications. It’s important to request a budget
quote, not a firm price bid, or the vendor will-of necessity-ask for more detailed specs to ensure the
equipment is very accurately priced. Because the vendor is concerned it will be held to this budget quote,
which is less precise than a firm price bid, it may be reluctant to bid. Asking two or three vendors for a quote
increases accuracy. As ifs based on the present economic situation and on your company’s unique
requirements, this method is the most accurate.
Getting budget quotes is time-consuming, so use it only for the more expensive pieces of equipment.
It’s acceptable to use less accurate methods for the less expensive items.

10
 Company or personal data. The next most precise method is to use data you or your company have
collected. Although it does not represent economically up-to-date data, this method does reflect the unique
equipment requirements of your company.
When using this kind of information, make sure your operating temperatures and pressures and
metallurgy are the same as the equipment in your database. If not, you’ll need to make appropriate
adjustments to the price. Since this data is almost always historical, it will have to be time indexed using Eq.
1. Additionally, you may have to size ratio the data using Eq. 2 so that it will match the capacity of your
equipment.
Published data. This is the least accurate method because it is never economically current and does
not take into account a company’s unique requirements. Because economic conditions were different when
each database was created, the databases seldom agree with each other. There are, however, times when this
kind of data should be used–when no other data is available, when speed is of the essence or when accuracy
is not critical (e.g., for minor, less expensive equipment). This data will always have to be time indexed and
may have to be size ratioed.
Four comprehensive chemical equipment databases are: Garrett, D. E., Chemical Engineering
Economics, Van Nostrand Reinhold, New York, 1989, Appendix 1; Guthrie, K. M., Process Plant
Estimating, Evaluation and Control, Craftsman Book Co., Solana Beach, California, 1974; Ulrich, G. D., A
Guide to Chemical Engineering Process Design and Economics, John Wiley & Sons, 1984, pp. 286-316;
Peters, M. S. and K.D Timmerhaus, Plant Design and Economics for Chemical Engineers, McGraw Hill
Inc., 1991.

AN EXAMPLE ILLUSTRATES EACH METHOD

We will estimate the capital cost in mid-2000 dollars of an upgrade to a fatty acid separation process
using the equipment list and prices in the box on page 100. Prices are for the year 2000. The process will be
fully automated and will be located in the U.S.

Lang method. Use Eq. 3 for this method.

Capital cost = S (Equipment purchase cost) x Lang factor x Fm x Fi x Fp

Find S (Equipment purchase cost) from the equipment list/cost table. This = $346.311.
Use a Lang factor of 4.3 since the plant is a fluid processing plant. Find the factors, Fm , Fi and Fp .

Fm : Find the weighted average of the 11 material ratios:

= ($26.1K + $50.7K + $54K) (3.5) + ($1,9K + $55K + $1.6K) (1.7) + ($9.9K + $12.SK + $4K +
$6K + $124.3K) (2) / $346.3K = 2.5

From Fig. 1, Fm = 0.63

Fi : Since the process is fully automated, use 1.2.
Fp : Since the process will be in the U.S., use 1.0.
Calculate the capital cost:

$ = $346.3K (4.3) (0.63) (1.2) (1) = $1,126K

Hand method. Use Eq. 4:

Capital cost = S (Equipment purchase cost x module factor x Fm ) x Fi x Fp

Find S (Equipment purchase cost x module factor x Fm ). Use the equipment list/cost table, Table 3
(the listing of Hand factors) and Fig. 1.

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Equipment Preliminary specs Material Purchase
ratio: cost,
alloy/CS ($2000)
1. Vacuum dryer heater U-tube, 200 ft 2 , 304 SS tubes/304 SS shell, 150 psig MAP 3.5 $26.1K
2. Vacuum dryer Diameter: 2 ft, height: 6 ft, 304 SS, full vacuurn/150 psig 1.7 1.9K
MAP
3. Vacuum dryer steam 2 stage, 50 mm Hg absolute pressure, 100 lb/hr equivalent air 2.0 9.9K
ejector flow, no condenser, 304 SS
4. Vacuum dryer pump AVS, 240 gprn, TDH: 130 psi, 304 SS 2.0 12.8K
5. Still heater U-tube, 450 , ft 2 304 SS tubes/304 SS shell, 800 psig MAP 3.5 50.7K
6. Fatty acid still Diameter: 10 ft, height: 35 ft, heating coil and internals 1.7 55K
included, 304SS, full vacuum/800 psig MAP
7. Still bottoms pump AVS, 100 gprn, TDH: 50 psi, 304 SS 2.0 4K
8. Overheads condenser U-tube, 570 ft 2 , 304 SS tubes/304 SS shell, 150 psig MAP 3.5 54K
9. Overheads surge tank Diameter: 2 ft, height: 4 ft, 304 SS, 50 psig MAP 1.7 1.6K
10. Overheads pump AVS, 150 gpm, TDH. 120 psi, 304 SS 2.0 6K
11. Still steam ejector 3 stages–ejectors and condensers, 15mm Hg abs pressure, 20 2.0 124.3K
lb/hr air load, 304SS
Total 346.3

Type equipment Purchase Hand Fm

$ factor
1. Heat exchanger 26.1 K 3.5 .55 50.2K
2. Pressure vessel 1.9K 4 .75 5.7K
3. Steam ejector 9.9K 2.5 .69 17.1 K
4. Pump 12.8K 4 .69 35.3K
5. Heat exchanger 50.7K 3.5 .55 97.6K
6. Pressure vessel 55.OK 4 .75 165.0K
7. Pump 4.OK 4 .69 1 1.OK
8. Heat exchanger 54.OK 3.5 .55 104.OK
9. Pressure vessel 1.6K 4 .75 4.8K
10. Pump 6.OK 4 .69 16.6K
11. Steam ejector 124.3K 2.5 .69 214.4K
Total $721.7K
Fi : Since the process is fully automated, use 1.2.
Fp : Since the process will be in the U.S., use 1.0.
Calculate the capital cost:

$ = $721.7K(1.2)(1) = $866K

Module factor method. Use Eq. 4:

Capital cost = ? (Equipment purchase cost x module factor x Fm ) x Fi x Fp

Find ? (Equipment purchase cost x module factor x Fm ). Use the equipment list /cost table, Table 4
(the listing of module factors) and Fig. 1.

Type equipment Purchase $ Module factor Fm

1. Heat exchanger 26.1 K 3.2 .55 45.9
2. Pressure vessel 1.9K 4.2 .75 6.0
3. Steam ejector 9.9K 2.2 .69 15.2
4. Pump 12.8K 5.0 .69 44.2
5. Heat exchanger 50.7K 3.2 .55 89.2
6. Pressure vessel 55.OK 4.2 .75 173.3

7. Pump 4.OK 5.0 .69 13.8

8. Heat exchanger 54.OK 3.2 .55 95.0

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9. Pressure vessel 1.6K 4.2 .75 5.0
10. Pump 6.0K 5.0 .69 20.7
11 . Steam ejector 124.3K 2.2 .69 188.7
Total $696.9K

Fi : Since the process is fully automated, use 1.2.

Fp : Since the process will be in the U.S., use 1.0.
Calculate the capital cost:

$ = $696.9K(1.2)(1) = $836K

Observations . Several important observations can be made from the results of this example.
?? Five major pieces of equipment, those costing more than $15K, account for 45% of the
equipment, but 70% of the capital cost.
?? The results from the Hand and module factor methods are within 3½% of each other.
Considering the accuracy range of study estimates (±30 – 50%), the two answers are basically
the same.
?? The Lang method produced a result much different than the other two methods–32% higher than
the average of the Hand and module factor methods. This is, however, still within the accuracy
range for this type of estimate.
From this one can conclude the Hand and module factor methods produce comparable answers,
while the Lang method produces a higher estimate. Thus, when you have only sized the major pieces of
equipment (those costing more than $15K in this example), the Lang method would be the preferred method.

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