COST ESTIMATION
Cost Estimation Overview
A capital investment is required for any industrial process and
determination of the necessary investment is an important part of a plant
design project. Evaluation of this investment is referred to as cost
estimation.
Capital investment
Before industrial plant can put into operation, a large sum of money must be
supplied to purchase and install the necessary machinery and equipment. Land
and service facilities must be obtained and the plant must be erected complete
with all piping, controls and service. In addition, it is necessary to have money
available for theinstallation and working of a plant is called total capital
investment. Total Capital Investment = Fixed Capital + Working Capital
Fixed Capital Investment
The capital needed to supply the necessary manufacturing and plant
facilities is called fixed capital investment. The fixed capital is further
subdivided into followings.
Manufacturing fixed capital investment
Non-manufacturing fixed capital investment
The fixed capital investment classified in to two sub divisions:
1. Direct Cost
2. Indirect Cost
Direct Cost
The direct cost items arc incurred in the construction of the plant in addition
to the cost of equipment.
Purchased equipment cost
Purchased equipment installation
Insulation cost
Instrumentation and control
Piping
Electrical installation
Building including services
Yard improvement
Service facilities
Land
Indirect Cost
In Direct cost can be estimated by estimating following costs.
Engineering and supervision
Construction expenses
Contractors fee
Contingencies
Start-up expenses
Working Capital
The capital required for the operation of the plant is known as working
capital. Working Capital Includes following things to be considered
Raw materials and supplies carried in stock
Finished product in stock and semi-finished products in the process of
being manufactured
Accounts receivable
Cash kept on hand for monthly payment of operating expenses, such as
salaries, wages and raw material purchases
Accounts payable
Taxes payable
Capital cost estimates
An estimate of the capital investment for a process may vary, pre-design
estimated based on little information except the size of the proposed
project to a detailed estimate prepared from complete drawings and
specifications. Between these two extremes of capital investment estimates
there can be numerous other estimates which vary in accuracy depending
on the stage of development of the project. These estimates are called by a
variety of names, but the following five categories represent the accuracy
range and designation normally used for the design purposes.
1. Order of magnitude estimates
2. Study estimate (factorial estimate)
3. Preliminary estimates( Budget authorization estimate
4. Definitive estimate (project control estimate)
5. Detailed estimate (Contractors estimate).
Cost of Gasifier
Types = Fluidized Bed Gasifier
Material of construction = stainless steel
Pressure factor = 1.1
L=3m
D = 1m
Pressure = 30 bar
Bare cost mid 2004 = 18560 $
The purchased cost can be calculated using
Purchased cost = Bare cost from figure x Type factor x Pressure factor
Purchased cost = 18560 x 1.1 x 1
Purchased cost = 20416 $ in mid 2004
cost in 2004 cost in 2013 = cost index in 2004 cost index in 2013
Cost in 2015 = 20416 (1.025)^8 Cost in 2004 = 23149.6 $
Cost of heat exchanger
Type = Shell and tube heat exchanger
Material of construction = stainless steel
Pressure factor = 1
Type factor = Fixed head x 1.0
Heat transfer area = 83m2
Pressure = 20bar
Bare cost mid 2004 = 105000 $
The purchased cost can be calculated using
Purchased cost = Bare cost from figure x Type factor x Pressure factor
Purchased cost = 105000 x 1 x 1
Purchased cost = 105000 in mid 2004
cost in 2004*cost in 2015=cost index in 2004*cost index in 2015
Cost in 2015 = 105000 (1.025)^8
Cost in 2015 = 127932.3 $
SHIFT CONVERTOR
Density = 1213 kg/m3
Volume = 1.504 m3
Density = mass/volume
Mass = density x volume
Mass = 12016.96 Kg
= 26437.312 lb
Cost of LTS in 1990 = 1.3 x 105 dollars
Present cost by using marshall and swift index.
Present cost = (1.3 x 105) x (1582.9/924)
= 22270.381 dollars
ABSORBER
Volume = area x height
= 8.6 x 13.9
Volume = 119.54 m3
Mass = volume x density
Density = 7990 Kg/m3
Mass = 959810 Kg
Diameter = 4.5 m= Diameter = 118.11 inch
Cost of one distribution plate = 1000
= 6 x 1000 = 6000
Cost of vessel = 13.9 m (height) and 4.5m dia
= 200 x 1000
= 200,000
For Distributor Plate:
Marshall and swift index for 1992 = 950
Present in 2013= O.C x (index value at present / index value at 1992)
= 9 x (6000) x (1582.9 / 950)
= 9997.26
For Column:
Present cost of vessel = 200000 x (1582.9 / 950)
= 333242.105
Cost Of Packing:
Volume of packing = 296 m3
Cost of 38mm Pall rings(plastic packing) = 340 /m3
= 340 x 296
Original cost = 100640
Present cost = 100640 x (1582.9 / 950)
= 167687.927
Total cost = for distributor + for column + for packing
Total cost = 510926.79
Total purchased cost of all equipment (PCE)
Total purchased cost of equipment = Cost of gasifier + Cost of heat exchanger
+shift converter+ Cost of H2S absorber column
PCE =23149.6 +127932+22270+510926.79
PCE = 684278 $
Fixed capital cost
Major equipment Total purchased cost factor
f1 = Equipment erection 0.4
f2 = Piping 0.70
f3 = Instrumentation 0.20
f4 = Electrical 0.10
f5 = Building process 0.15
f6 = Utilities 0.50
f7 = Storages 0.15
f8 = Site development 0.05
f9 = Ancillarybuilding 0.15 Total physical plant cost (PPC)
F10 = Design and engineering 0.30
F11 = Construction fee 0.05
F12 = Contingency 0.10
Total physical plant cost (PPC) = PCE (1 + f1 + f2 + f3 +.f9)
Total physical plant cost (PPC) = 200162 x 3.4 Total physical plant cost (PPC) =
680550.8 $ Fixed cost = PPC (1 + f10 + f11 + f12)
Fixed cost = 680550.8 x 1.45
Fixed cost = 967789.6 $
Cost of air separation unit(20% of fixed cost)= 217397.7$
Total investment required for project
Total investment required this project = Fixed capital + Working capital Suppose
working capital is 7.5 % of the fixed capital Now,
Working capital = 0.075 x Fixed capital Working capital = 0.075 x 986798.6
Working capital = 69119.8$
Total investment of the project = 986798.6+74009.8
Total investment of the project = 1170899.5 $
Fixed cost
Maintenance cost = 0.10 x Fixed capital cost
Maintenance cost = 0.10 x 986798.6
Maintenance cost = 98679.86$
Operating labor = .15x98679.86 $ = 14801.98
Laboratory cost = 0.22 x Operating labor
Laboratory cost = 0.22 x 14801.98
Laboratory cost = 3256.43 $
Supervision = 0.2 x Operating labor
Supervision = 0.2 x 14801.98
Supervision = 296.196 $
Plant overheads = 0.5 x 14801.98
Plant Overheads = 740.49 $
Capital charges = 0.1 x Fixed capital
= 0.1 x 986798.6
Capital charges = 98679.86 $
Local taxes = 0.02 x fixed capital
Local taxes = 0.02 x 986798.6
Local taxes = 19735.97 $
Royalties = 0.01 x Fixed capital Royalties = 0.01 x 986798.6
Royalties = 7868.986 $
Total fixed cost =
98679.86+14801.98+2256.43+296.196+740.49+98679.86+19735.79+96867.98 $
=293058.586$
Variable cost
Raw material cost = 100000 $
Miscellaneous cost = 0.1 x Maintenance cost
Miscellaneous cost = 0.1 x 8955.86
Miscellaneous cost = 8955.986$
Total cost for installation and running the plant
Cost for installation and running the plant = Total investment of project+ Annual
production cost
Cost for installation and running the plant = 1060808.5 + 1971704.52 Cost for
installation and running the plant = 31412820.9 $
Cost in Pakistani rupees (PKR) = 31412820.9x100 PKR = 31412820.9PKR
