Contingencies, cost

Type III Costs Contingent costs Liabilities (e.g., clean up) Lawsuits Damage to resources Accidents... 

The total capital investments costs was estimated on the basis of the equipment costs plus a specific installation factor and is shown in Table 3. An additional of 20% of the total installed equipment costs was included for engineering and contingency costs. The main part of these costs are due to the extraction column, EC, (this includes the price of steel to be used to make the column and the packing expenses) and the main gas compressor, C. 

The installation factor consists of direct costs, indirect costs, contingency cost, and a contractor s fee. The installation factor for a piece-of-equipment is given by... 

Even considering very high engineering and contingency costs for the catalytic filters, the overall treatment costs (running plus investment) of the flue gases from PFBC coal boilers can likely be reduced by 15-30%, by varying the above process parameters. 

Fig. 1. Example of contingent cost-benefit analysis. The effects of reduced SO emissions on visibility and mortality are considered. There are 3 options (NB — net benefit, V - benefit fiom 1% increased visibility, M — value of each life saved).

Contingency charges are extra costs added into the project budget to allow for variation from the cost estimate. All cost estimates are uncertain (see Section 6.3.1), and the final installed cost of many items is not known until installation has been successfully completed. Apart from errors in the cost estimate, contingency costs also help cover... 

Calculate the OSBL, engineering, and contingency costs using the factors given in Table 6.4. 

It provides more timely and informed decision-making with more accurate budgets, leading to reduced emergency and contingency costs on capital projects. 

Because most fuel ethanol manufactured ia the United States is made from com, price plays a cmcial role ia determining the competitive position of ethanol ia an open market. With com priced at about 2.50/bu, the embedded feedstock cost of product ethanol is about 0.14—0.23/L ( 0.52—0.87 gal), depending on over-all yield and by-products ignored (125). Euel ethanol plants may have contingency plans to close if com prices rise to a certain level, eg, 3.50/bu or above (126). 

The economic importance of an ore deposit itself is largely affected by mineral or metal prices. Mine closures and reopenings are a common event in the mineral iadustry for this reason. Economics can also be affected by the ore composition, for example, by unacceptable levels of penalty elements ia the ore. The assessment of overall economics of exploiting a given ore deposit is similar to that for any large-scale industry. The various cost components are those associated with equipment, labor, utiUties, contingencies, operation and production, transportation, working capital, suppHes, maintenance. 

A popular overall factor refinement, known as the Hand factor approach, uses a different factor to estimate overall costs for each class of equipment to cover all labor field materials, eg, piping, insulation, electrical, foundations, stmctures, and finishes and indirect costs, but not contingencies. Hand factors range from 4 for fractionating towers down to 2.5 for miscellaneous equipment. 

Cost of contractor s fees plus contingency allowance... 

Motor Protection Money spent lor motor-protective devices can be compared to insurance, in which premiums depend on the protected value vvFen the protected value is the cost ol the motor, the cost ol anticipated repairs, or the cost ol downtime, lost production, and, in some cases, contingent damage to other equipment. 

Land. At this point, it should be possible to determine how much land will be required. Do not forget to include things like holding ponds, environmental buffer area, camp facilities, and rights of way or easements. It may be well to allow some contingency in initial cost estimates for land requirement increases, as more definitive design information becomes available. 

Regardless of the estimating method, a process contingency should be added to the total plant cost for feasibility studies. As discussed earlier, this contingency depends on the status of the project. For most factored estimates, on a first of a kind process that is fairly well defined, the process contingency should be 30%. 

To compensate for some of these unexpected costs, a l0%-20% contingency should be added to the operating costs. 

The estimator s main objective should be to include all the known costs and keep the contingency for unknown and unexpected items to a reasonable level. 

Tier 0 and Tier 1 costs are direct and indirect costs. They include the engineering, materials, labor, construction, contingency, etc., as well as waste-collection and transportation services (in many cases we simply transform an air pollution problem into a solid waste or wastewater problem that requires final treatment and disposal), raw-material consumption (increase or decrease), and production costs. Tier 2 and... 

Engineering expenses Legal fees and license or permit costs Start-up and shake-down costs Contingency allowances... 

From such information even the inexperienced estimator can establish an approximation of the costs, provided he adequately visualizes the work functions and steps involved. From the same type of work reference, the experienced estimator can develop a realistic cost, usually expressed with certain contingencies to allow for unknown factors and changing conditions. The professional estimator wall normally develop cost charts and tables peculiar to the nature of his responsibilities and requirements of his employer. 

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