Accounting, plant construction costs

Accounting, plant construction costs, 48 Cost accumulation, 49 Affinity laws, 201, 202, 203 Air Inleakage, vacuum systems, see vacuum systems Air pressure drop, table, 106 Chart, 114 Orifice flow, 107 Air, absolute viscosity, 132... 

It is cost competitive, with the cost of construction of a wind farm lower than construction costs of many types of conventional power plants. Cost per swept rotor area (kwh/m2) fell by 30 percent between 1989 and 2001 as a result of lower interest rates and reduction in turbine costs (which account for 80 percent of the total cost) coming from economies of scale.16... 

For a plant with a capital cost of Co, the plant investment cost, C, capitalises the return on investment during construction of the plant -it takes account of expenditure and the required return during the construction period. 

After arriving at the plant site, construction workers set the equipment in place. This entails placing the equipment on concrete or steel stmctural supports, prepared in advanced. Because some equipment could weigh tons, a crane will lift the equipment onto supports. Then, consttuction workers secure the equipment in place. A factor will account for this cost. 

Maintenance in a pilot plant often seems too insignificant or transitory to warrant organized attention. The reality is quite different. Few pilot plants operate for so short a time to require no maintenance. Annual maintenance costs are usually best expressed as a percentage of construction costs and vary widely due to differences in accounting practices and maintenance policies. In general, pilot plant maintenance costs can be estimated based on the technology and run length ... 

Table 4 presents the direct construction costs for the two plants. Equipment costs must be adjusted to account for hydrogen production these costs include the intermediate heat exchanger ( 56 M), reactor-process piping ( 38 M), primary helium circulator ( 33 M), and intermediate loop circulator ( 22 M) (for a total of 149 M). These costs are added to Account 22. On the other hand, 84% of the Fixed Capital Investment of the S-I hydrogen production facility ( 571.53 IM x 0.84 = 480 M) in account 23 (Chemical Facility) replaces account 23 (Turbine-Generator). Also, the initial chemical inventory (primarily iodine) is equal to 114.8 M x 0.84 = 96 M. (Although there is an implicit assumption in [13] that all iodine is recycled, this assumption is challenged in [14].)... 

Contingencies are unanticipated costs incurred during the construction of a plant To account for the cost of contingencies, it is common to set aside 15% of the direct permanent investment, C0PI, which is comprised of the components in Table 16.9. In addition, Guthrie (1969) adds a contractor fee of 3% of the direct permanent investment. When this total of 18%, designated is added, the total depreciable capital, Cxdc obtained. 

The construction cost of the power plant is a major factor (perhaps the major factor in most cases) in determining the cost of electricity from a nuclear power plant. In using costs for construction of existing plants as a basis for establishing current construction costs, one must account for the variations in the value of the dollar from the time those plants were built to the present. 

In this volume, there is an account of the basic theory underlying the various Unit Operations, and typical items of equipment are described. The equipment items are the essential components of a complete chemical plant, and the way in which such a plant is designed is the subject of Volume 6 of the series which has just appeared. The new volume includes material on flowsheeting, heat and material balances, piping, mechanical construction and costing. It completes the Series and forms an introduction to the very broad subject of Chemical Engineering Design. 

The cost of equipment or of a complete plant must be up-graded to account for the reduced purchasing power of the dollar (or pound) from a given time datum to the present. Various cost indices are published annually (and monthly, see Chemical Engineering magazine). Those of particular relevance to chemical plant costs are the Nelson Refinery Construction Index, Chemical Engineering (CE) Plant Cost Index, and the Marshall and Swift (M S, previously Marshall and Stevens) Equipment Cost Index. These indices apply to complete plants rather than individual items of equipment. The appropriate equation is C2 = C, (I2/I ), where Zis the relevant index, and the suffixes represent different time periods. 

The plant supervisor/manager has no control over fixed operating costs, whereas he/she is held accountable for the variable costs. In addition to those costs incurred due to the construction of the plant and/or its operation, each plant, site or product is usually required to contribute towards the general operating expenses of the company. These expenses include general overheads, research and development costs, sales expenses, etc. Each company decides how these costs are apportioned, however as a general indication they may add 20-30% to the direct production costs at site. 

Other factors are required to account for the engineering and contractors costs involved with construction. These factors relate to the total physical plant cost, A breakdown of these costs is shown in Table E.2 of Appendix E. 

Once the investment expenditures for plants/production lines are established for a single country, they have to be localized to account for cost differentials between countries. To this end, location adjustment factors can be employed (cf. McMillan and Humphreys 1990). Location factors for chemical industry can for example be obtained from SRI Consulting. A comprehensive overview of commercial sources for cost, inflation and location factors is published in Remer and Mattos (2003). Kohn et al. (1997) discuss how to construct country-specific factors from the U.S.-based Chemical Engineering s Plant Cost index. 

A second alternative requires construction and operation of new facilities at a location about 50 miles from the present plant. This alternative is attractive because cheaper labor is available at this location. The new facilities would cost 200,000. Labor costs would be 120,000 per year. Overhead costs would be 70,000 per year. Annual insurance and taxes would amount to 2 percent of the initial cost. All other costs except depreciation would be the same at each location. If the minimum return on any acceptable investment is 9 percent, determine the minimum service life allowable for the facilities at the distant location for this alternative to meet the required incremental return. The salvage value should be assumed to be zero, and straight-line depreciation accounting may be used. 

Tables 10.1, 10.2, and 10.3 illustrate a set of factors used by one chemical firm for fiuids-handling and solids-handling plants. The factors and ratios used to break down the total cost into the various direct and indirect accounts are based on a 100% subcontract construction where most of the labor-related field indirects are collected with the subcontract labor costs and the "field indirects" account refers to only the construction management and the site general conditions costs. Field indirects are discussed in more detail in Section 19.9.

The gas temperature has impacts mainly on the materials of construction ordinary carbon steel is adopted as the cost-effective material for most applications, which limits the operating temperature to approximately 400° C, while for higher temperatures, stainless or high nickel alloys need to be used. In the case of plants operating close to acid dew point temperature, particularly for wet type environments, when choosing the material for fabrication, one must take corrosion into account to ensure durability. ... 

---