Cost escalation

Life cycle cost analysis is the proper tool for evaluation of alternative systems (11,12). The total cost of a system, including energy cost, maintenance cost, interest, cash flow, equipment replacement and/or salvage value, taxes, inflation, and energy cost escalation, can be estimated over the useflE life of each alternative system. A Hst of life cycle cost items which may be considered for each system is presented in Tables 3 and 4. Reference 14 presents a cash flow analysis which also includes factors such as energy cost escalation. 

Relatively high (typically 980—1200°C) temperatures are required to decompose spent acids at reasonable burner retention times. Temperatures depend on the type of spent acid. A wide variety of spent acids can be processed in this way, but costs escalate rapidly when the sulfuric acid concentration in spent acid (impurity-free basis) falls below about 75%. A few relatively uncontaminated spent acids can be reused without decomposition by evaporating the excess water in concentrators, or by mixing in fresh sulfuric acid of high concentration. Weak spent acids are frequently concentrated by evaporation prior to decomposition. 

Paradoxically, even rapid lowering of demand may cause rapid cost escalation this was the case in New Jersey during a 1981 drought when conservation caused substantial shrinking of demand and private water companies had to double their water prices. The continued increase of demand and reduction of supply portend real and relendess water-cost increases in every part of the United States in the future. One possible way to assure at least adequate suppHes, and possibly to moderate these cost increases, is through water reuse. 

Outside the United States, coal pyrolysis is more important as a source of BTX. The proportions are about 70 20 10, but can vary greatiy depending on the coal and on the pyrolysis process used. Product quaUty is not as good as petroleum-derived BTX. This source could become more important again if petroleum costs escalate. Much higher yields of BTX from coal can be obtained by first hydrogenating the coal (22). 

Figure 1.9 US tort cost escalation compared with GNP growth (Sturgis, 1992)...

Figure 1.14 Cost escalation of rectifying errors at down stream stages (Ostrowski, 1992)...

Test understanding at every opportunity for example, at meetings, when issuing instructions/procedures, when delays occur, when failures arise, when costs escalate. 

It is quite normal to provide sufficient resources to produce product. However, when it comes to verifying that you have done what you say you will do, there is a tendency to underestimate or to cut verification resources when costs escalate. These cuts are often seen as a risk worth taking. Another common weakness is defining requirements that are desirable rather than essential and then not verifying that they have been implemented. Being able to demonstrate provision of adequate verification resources is another sign of commitment to quality (see Defining commitment to quality above). 

The Sen Francisco metropolitan area had the nation s highest average price per gallon of gas as consumer costs escalated during 2000. (Corbis Corporation)... 

Doing it more cheaply (outsourcing contracts can face cost escalation, or painful and expensive break clauses when the real scope of work is discovered)... 

Of even more economic importance is the rheological impact of the addition of KC1 to conventional water-base drilling fluids. KC1 causes undesirable increases in both yield point and gel strength that can only be eliminated by chemical disperants or by dilution with fresh water. Dilution in turn requires more KC1 for clay inhibition, and the cycle continues with mud costs escalating exponentially. 

The analytical procedures applied at Level 2 may be extensions of the Level 1 procedures. In most cases, however, Information developed at Level 1 will provide background for selection and utilization of more sophisticated sampling and analysis techniques. Because Level 2 analyses must positively identify the materials in sources which have already been found to cause adverse environmental effects, these analyses are the most critical of all three levels. It is equally important, however, that the analyses be conducted in an information-effective manner. This is because increasing specificity and accuracy result in cost escalations which are, at best, exponential rather than proportional. Due to the multiplicity of analytical techniques required and the potential for unnecessarily high expenditures, the analyses must be conducted with a full awareness of the information requirements of the environmental assessment program. 

The pipeline was originally budgeted 900 million, but the cost escalated to exceed S 1 billion. 

The time and expense required to develop new drug products are enormous. A recent public food and drug administration (FDA) report (1) estimates that the cost of bringing a new drug to market is between 800 million to 1.7 billion, which represents a 50% increase in just five years (Fig. 1). This cost escalation has very substantial consequences The number of new drugs and devices submitted to the FDA is dropping rapidly and today it is less than half the number submitted five years ago (Fig. 2). Because of these rising... 

Ironically, Ralph Nader, the leader of the antinuclear activists, stated very early in the battle that the way to stop nuclear power was to make the costs escalate to the point where utilities could not afford to build them. I must admit that he fought a better battle than we nuclear scientists, and he won, very decisively. Unfortunately, the public has been the real loser from the victory of this so-called public advocate. ... 

Application of the new heat recovery techniques, mechanical materials of construction and combustion systems to conventional reformer furnace design will help to keep the HTSR even with material and feedstock cost escalation. Adoption of the... 

The costs of both the existing and planned units are expressed in dollars of the same period. In this example, the TCIs are in 2002 dollars. If the costs are not of the same vintage, the cost of the existing plant (which is likely older) will have to be adjusted to the same year dollars as that of the planned unit. However, unless the cost vintages are much different (e.g., five years or more), adjustments for escalation would be fine tuning, compared to the relative inaccuracy of these scaling factor estimates. (See Problem 18.2 for more on cost escalation.)... 

Although it is easy to escalate capital and annual costs, escalation over periods longer than 5-10 years is not recommended, as it tends to introduce additional inaccuracy to the estimates. For longer periods, rather than escalate the costs via an index, the cost estimator should obtain current cost quotes from equipment vendors and other sources (such as utilities). 

The basis for construction cost estimates were for the facility to be in the FY80 MCA program, with construction costs escalated to reflect January 1971 time frame, as the midpoint of construction. All estimates for the facility were based on unit pricing at Anniston and factored for other sites. 

Breakdown of indirects by engineering, field indirects, other costs, escalation, and contingency. 

Cost escalated approximately to the end of year 2000. CE plant cost index of 420.)... 

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