Cost estimation factored

Since the studies under discussion have cost estimates factored from major material, secondary systems at this stage have relatively smaller impact than later when more definitive cost estimates are done. At this stage, it is well to gain a feel for the completeness of the licensor s design with respect to secondary systems. 

Engineering, Construction, and Contractor Costs. These costs include design, engineering, field supervision of temporary and permanent construction, and inspection. Table 6-6 shows cost estimating factors based on physical plant costs and degree of complexity. 

Ramsay, B., Lean Compliance in Manufacturing, 2001, Pharmaceutical Tech. Europe. Remer, D.S. and Idrovo, J.H., 1991, Cost-Estimating Factors for Biopharmaceutical Process Equipment, Pharmaceutical Tech. International. 

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. 

Cost estimates can usually be broken into firm items, and items which are more difficult to assess because of associated uncertainties or novelty factor. For example, the construction of a pipeline might be a firm item but its installation may be weather dependent, so an allowance could be included to cover extra lay-barge charges if poor sea conditions are likely. 

A key factor in obtaining binding support for aquaculture is development of a sound business plan. The plan needs to demonstrate that the prospective culturist has identified all costs associated with estabhshment of the faciUty and its day-to-day operation. One or more suitable sites should have been identified and the species to be cultured selected before the business plan is submitted. Cost estimates should be verifiable. Having actual bids for a specific task at a specific location eg, pond constmction, well drilling, building constmction, and vehicle costs helps strengthen the business plan. 

Produced from a.tura.1 Ga.s, Cost assessments of methanol produced from natural gas have been performed (13—18). Projections depend on such factors as the estimated costs of the methanol production faciUty, the value of the feedstock, and operating, maintenance, and shipping costs. Estimates vary for each of these factors. Costs also depend on the value of oil. Oil price not only affects the value of natural gas, it also affects the costs of plant components, labor, and shipping. 

Equipment Costs. Equipment costs include the purchased cost of process and materials handling equipment, storage faciUties, waste treatment equipment, stmctures, and site service faciUties. Installation costs such as insulation, piping, painting and finishing, foundations, process stmctures, instmmentation, and electrical service connections are estimated or factored separately. Actual quoted prices from suppHers are the best data, but these are not usually available when estimates are made. The quick, inexpensive cost estimates are based largely on personal cost files, internal company cost data, or pubUshed cost correlations. 

Category Eactor Estimates. Various capital categories can be related to total equipment costs by factors, reported as percentages of equipment cost. Both purchased equipment costs, including pumps, tanks (qv), and instmments and deHvered equipment costs, excluding instmments, but including some off-sites, have been used in this approach (1,2). 

Factor Methods. A more detailed product cost estimation method is to relate manufacturing cost items to a few calculated items, such as raw materials, labor, and utihties by means of simple factors (1,2). Internal accounting groups often develop factors to use with this method. This factor method is very popular. 

The most common approach to fixed cost estimation iavolves the use of a capital recovery factor to give the annual depreciation and return on capital. This factor typically is between 15 and 20% of the total capital investment. Property taxes are taken as 1—5% of the fixed capital and iasurance is assumed to be 1—2% of the fixed capital. If annual depreciation is estimated separately, it is assumed to be about 10% of the fixed capital investment. The annual iaterest expense is sometimes neglected as an expense ia preliminary studies. Some economists even beHeve that iaterest should be treated as a return on capital and not as part of the manufactufing expense. 

A multiple-factor method for predesign cost estimating has been put forward by D. H. Allen and R. C. Paffe [Chem. Eng., 82, 142-150 (Mar. 3, 1975)] for fluid-type plants (F) that include some vapor processing. The method requires the following input information ... 

For prehminary screening and easibility studies or for rough cost estimates, one may wish to employ a version of the isothermal method which assumes that the liquid temperatures in the tower are everywhere equal to the inlet-liquid temperature. In their analysis of packed-tower designs, von Stockar and Wilke [Ind. Eng. Chem. Fun-dam. 16, 89 (1977)] showed that the isothermal method tended to underestimate the reqmred depth of packing by a factor of as much as 1.5 to 2. Thus, for rough estimates one may wish to employ the assumption that the temperature is equal to the inlet-liquid temperature and then apply a design fac tor to the result. 

Following development of the study direction, the evaluation describes the efforts of obtaining and validating process information, and then discusses equipment specifications and a cost estimate of the feasibility or budget type i.e., with plant costs factored from major material. Finally, project economics and financing complete the evaluation. 

Cooling Water System. A list of cooling duties will be available at this point so the cost estimate for this system can be factored or estimated based on a similar operating system. For a more definitive estimate based on initial or detailed layout, it is probably best to use a contractor or consultant skilled in these designs. If a cooling tower is involved, the groundwork will already have been set. This basis can be passed along on specification sheets provided in the Appendix to a vendor for quotes. 

Not only the buildings themselves, but an allowance for equipment and stocks within the buildings must be included in the cost estimates, such as maintenance shop power equipment, control laboratory analytical equipment and reagents and, largest of all, the thousands of warehouse equipment spares, fittings, and supplies. For feasibility cost estimates, such items are factored from experience. 

Early in the life of a project, information has not been developed to allow definitive cost estimates based on material takeoff and vendor quotes for equipment. Therefore, it is necessary to estimate the cost of a facility using shortcut methods. The first step is to develop or check flow-sheets, major equipment sizes, and specification sheets as described in earlier chapters. From the equipment specification sheets, the cost of each piece of equipment is estimated, using techniques discussed later. Once the major equipment cost has been estimated, the total battery limit plant cost can he quickly estimated using factors developed on a similar project. 

Prepare rough cost economics, including preliminary sizing and important details of equipment, factor to an order of magnitude capital cost estimate [34] (see also [19]), prepare a production cost estimate, and work with economic evaluation representatives to establish a payout and the financial economics of the proposed process. 

Estimates were made by Uhlig in the USA. Worner in Australia, and Vernon in the UK, in which the cost of protection and prevention were added to the cost of deterioration due to corrosion. These early estimates were made by individual scientists from cost information from new major industries scaled up to a national level, and were of the order of 1-1.5% of GNP. More detailed estimates were subsequently made by the Committee on Corrosion and Protection (the Hoar Committee) in the UK, and Payer etal. for the National Bureau of Standards in the USA. The later estimates were around 3.5-4% of GNP, the higher figure reflected factors not covered in the earlier surveys, which were, moreover, based on organisations which had probably already taken action to minimise their corrosion costs. Estimates have since been made for other European countries which tend to confirm the higher figure. 

Designing with plastics , G.W. Ehrenstein, G. Erhard Hanser Pubis (1984) ISBN 0029487706. Key book sections include (1) design influencing factors, (2) environmental effects on plastics, (3) lifecycle assessment and prediction, (4) cost estimation and (5) design guidelines. 

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 accuracy and reliability of an estimate can be improved by dividing the process into sub-units and using factors that depend on the function of the sub-units see Guthrie (1969). In Guthrie s detailed method of cost estimation the installation, piping and... 

The cost estimates prepared for the treatment technologies commonly used in this industry are described below in a brief fashion. More details of the factors considered in the cost analysis are available in the source.6... 

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