Cost estimation accurate

It should be emphasized that capital cost estimates using installation factors are at best crude and at worst highly misleading. When preparing such an estimate, the designer spends most of the time on the equipment costs, which represent typically 20 to 40 percent of the total installed cost. The bulk costs (civil engineering, labor, etc.) are factored costs which lack definition. At best, this type of estimate can be expected to be accurate to 30 percent. 

The first stage toward producing an accurate estimate is to use a standard cost code for all construction projects. Table 9-45 shows a suitable numerical cost code, and Table 9-46 shows a typical alphabetical-numerical code. The cost-code system can be used throughout the estimating and construction stages for the collection of cost data by manual or computer methods. There are numerous types of fixed-capital-cost estimates, but in 1958 the American Association of Cost Engineers defined five types as follows ... 

In-house or outside environmental experts should be brought into the study at an early stage. By having these people in "on the ground floor, feasibility analysis, cost estimates, and environmental impact studies will be more accurate with fewer surprises later in the project. 

Capital estimates are the heart and soul of all project Justification and feasibility studies. Inaccuracies can cause serious harm to a company as well as to the engineer making the mistake. With the flow of a project from its inception to construction, many cost estimates are made. Each new estimate is based on more data, and should be more accurate. 

Similarly, various operating and utility cost estimates are quoted in the literature, although accurate data remain proprietary information. 

The format of the cost estimate is just as important as the content The format can make a difference when proving whether or not the content is accurate. Therefore, the refiner should require that the cont tor present cost estimates in a format that is easy to understand and analyze. In addition, the refiner s cost engineer should independently review the cost estimate to ensure its accuracy and applicability, and also to determine the conting y amounts that the owner should maintain in his funding plans. 

Capital cost estimates for chemical process plants are often based on an estimate of the purchase cost of the major equipment items required for the process, the other costs being estimated as factors of the equipment cost. The accuracy of this type of estimate will depend on what stage the design has reached at the time the estimate is made, and on the reliability of the data available on equipment costs. In the later stages of the project design, when detailed equipment specifications are available and firm quotations have been obtained, an accurate estimation of the capital cost of the project can be made. 

The cost of the purchased equipment is used as the basis of the factorial method of cost estimation and must be determined as accurately as possible. It should preferably be based on recent prices paid for similar equipment. 

The initial goal of the preliminary process study is to obtain an economic evaluation of the process, with the minimum expenditure of time and money. During this stage, all information necessary to obtain a reasonably accurate cost estimate for building and operating the plant is determined. It is expected that these costs will be within 10% of the actual costs. 

The major disadvantage of this method is that no cost information has been published and so anyone wanting to use it must develop his own data. This is time-consumming and hence expensive. Once data are developed, this method could produce more accurate results than any except the detailed cost estimate. 

Bach,N.G. More Accurate Cost Estimates, Chemical Engineering, Sept. 22, 1958, p. 155. 

These facts shift cost estimation to much safer side, resulting into over-investment, which may reduce the advantage of reverse osmosis process over other processes. For the fiirther prosper of reverse osmosis, we definetely need more accurate and easier method to predict membrane life which may be determined by decrease in either flux through it or separation of solute. 

Finding 10. Prudent management requires early decisions, accurate assumptions, and full consideration of all cost components, regardless of the entity incurring them, and cost estimates that approach the actual final costs. Project cost control procedures and contract incentives were not established as part of the JACADS contract. 

In 1996, the vendor prepared cost estimates for CleanSoil treatment of 7500 yd of soil. More specihcaUy, the projections were based on processing the waste 10 hr per day for 150 days per year at a rate of 5 yd /hr. Table 1 discusses these cost estimates. According to the vendor, these estimates were intended to provide realistic operating costs based on the company s experiences. The projections were not intended for use by a startup company. Any expenses normally classed as general and administrative were not included. Numbers that are representative of the conditions at a specihc project area should be inserted into the table for the most accurate estimates (D15470L). 

The result of the basic design phase is a rather precise plan of the project and an accurate cost estimate that will constitute the basis for the hnal go/no go decision. The environmental impact of the project and all relevant permitting issues need also to be resolved during this phase. The detail engineering hnally will provide the necessary information needed to execute the project. 

The task to be solved is mainly accomplished by analysing the literature and archive documents available. At the same time the reconnaissance of the geotechnical surveys are essential. This allows for accurate selection of the most appropriate area for a pipeline. At this stage the accuracy of the total cost estimate for the pipeline construction is within 30-50%. 

It is necessary to include the full cost of auxiliary services, e.g. steam, water and electricity supply and distribution, roads, buildings, communications, etc., in the capital cost estimate for a new plant. If a chemical plant is to be constructed on an existing complex, then a proportion of the cost of existing services (based upon the estimated consumption) is usually charged. A very approximate estimate of the cost of auxiliaiy services can be obtained by taking 20-25% of the total installed (new) plant cost. However, in some situations a figure of 40-70% may be more appropriate. It must be emphasised that a more accurate estimate should be obtained during the preparation of the feasibility study. 

Definitive estimates. Definitive cost estimates are the most time-consuming and difficult to prepare, but they are also the most accurate. These estimates require preparation of plot plans, detailed flow sheets, and preliminary construction drawings. Scale models are sometimes used. All material and equipment is listed and priced. The number of labor hours for each construction activity is estimated. Indirect field costs, such as crane rentals, costs of tools, and supervision, are also estimated. This type of estimate usually results in an accuracy of 5%. 

To adjust for the cost estimating having been done at around the time of the peak in the commodity bubble , three cost factors were considered. In mid-2008 the price of carbon steel plate as an index was up a factor of 1.7 from its average in 2005 to 2007. The price of nickel, which is reflected in the cost of stainless steel and might more accurately track the cost of the process plant capital... 

In this paragraph, a sensitivity analysis is made of the costs of the different processes. It must be noted in advance, however, that it is very difficult to provide really accurate quantitative cost estimations, because of the lack of information on, for example, membrane selectivity and life-time and the costs of supported membranes and sealing. An attempt to provide yet a quantitative cost analysis has been made in [21],... 

Thus, it should be noted that, with exergy accounting, the effect of prospective design changes upon product cost can be estimated accurately, without a complete system re-design and recosting. 

As soon as the final process-design stage is completed, it, becomes possible to make accurate cost estimations because detailed equipmept specifications and definite plant-facility information are available. Direct price quotations based"... 

METHOD A DETAILED-ITEM ESTIMATE. A detailed-item estimate requires careful determination of each individual item shown in Table 1. Equipment and material needs are determined from completed drawings and specifications and are priced either from current cost data or preferably from firm delivered quotations. Estimates of installation costs are determined from accurate labor rates, efficiencies, and employee-hour calculations. Accurate estimates of engineering, drafting, field supervision employee-hours, and field-expenses must be detailed in the same manner. Complete site surveys and soil data must be available to minimize errors in site development and construction cost estimates. In fact, in this type of estimate, an attempt is made to firm up as much of the estimate as possible by obtaining quotations from vendors and suppliers. Because of the extensive data necessary and the large amounts of engineering... 

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