Cost estimation quality

When an oil or gas field has just been discovered, the quality of the information available about the well stream may be sparse, and the amount of detail put into the process design should reflect this. However, early models of the process along with broad cost estimates are needed to progress, and both design detail and cost ranges narrow as projects develop through the feasibility study and field development planning phases (see Section 12.0 for a description of project phases). 

Take advantage of corporate experience with other Quality Management projects when preparing your cost estimate. This will provide actual costs to use as a basis for estimating the costs for developing management systems and programs. 

Water quality must be studied as well as quantity. Chemical and bacteriological examination will indicate the extent of treatment required and will aid in the development of water cost estimates for comparison with other locations. The possible contamination of the water source by other industries in the area should be anticipated. Note that "contamination" may consist of raising the temperature of the water to a level that renders its use as a cooling medium impossible. 

A manufacturing company approached the cost of quality control in a realistic manner. Before a quotation was made for a new product, the control chemist submitted an estimate of the time required for running the necessary tests. An hourly charge was established for laboratory operation, and the cost of quality control could thus be established. The sales department did not like the arrangement because the cost was very much the same whether they sold 200 or 2000 gallons of a product. 

This book applies a systems philosophy to the preliminary process design and cost estimation of a plant. In doing so, it tries to keep in perspective all aspects of the design. There is always a tendency on the part of designers to get involved in specific details, and forget that their job is to produce a product of the desired quality and quantity, at the lowest price, in a safe facility. What is not needed is a technological masterpiece that is difficult to operate or costly to build. 

Quality control laboratories are a necessary part of any plant, and must be included in all cost estimates. Adequate space must be provided in them for performing all tests, and for cleaning and storing laboratory sampling and testing containers. 

Quality of Estimates Capital cost estimation is more art than science. An estimator mnst nse considerable jndgment in preparing the estimate, and as the estimator gains experience, the accnracy of the estimate improves. There are several types of fixed capital cost estimates ... 

Other multiple-factor methods that have been published in the past are those by C. E. Chilton, Cost Estimation in the Process Industries, McGraw-Hill, New York, I960 M. S. Peters, K. D. Timmerhaus, and R. E. West, Plant Design and Economics for Chemical Engineers, 5th ed., McGraw-Hill, New York, 2003 C. A. Miller, Chemical Engineering, Sept. 13,1965, pp. 226-236 and P. A. Holland, P. A. Watson, and V. K. Wilkinson, Chem. Eng., Apr. 1,1974, pp. 71-76. These methods produced preliminary quality estimates. Most companies have developed their own in-house multiple-factor methods for preliminary cost estimation. 

Thus, it appears that the current practice by analysts to use AWP results in a value for the cost of a drug that is substantially in excess of marginal cost. If the estimated incremental cost per quality-adjusted life year (QALY) using AWP is very low or very high relative to benchmarks of acceptable ratios, or if drug therapy is dominated by another comparator, treatment of cost would not matter in the decision about whether to cover a drug under an insurance plan or include it on the formulary. But over a sizeable range of values reasonably close to the benchmark, the cost estimate used should affect the decision about acceptability of the product. So it seems appropriate to explore the conceptual framework that should be used for such analysis in more detail. 

In 1998, an evaluation of Lasagna technology was prepared for the U.8. EPA s Rapid Commercialization Initiative. As part of the evaluation, cost estimates were prepared. An example of one of these estimates is given in Table 2. These estimates were determined for core costs only, as noncore costs such as oversight, health and safety, sampling, and quality assurance/quality control can vary significantly from one site to the next. The number of pore volumes of water... 

Similarly, cost estimates should include such items as preparation of work plans, permitting, excavation, processing, quality assurance/quality control verification of treatment performance, and reporting of data (D15673U, p. 7). For more specific cost estimates for ex situ thermal desorption techniques, refer to the individual technologies in the RIMS 2000 library/database. 

This cost estimate includes mobilization, materials, pile installation, joint flushing and sealing, labor, a quality assurance/quality control program, and a final report (D22932N, p. 18 personal communication with Waterloo Barrier, Inc., 1998). 

Later as a new product moves closer to commercialization the actual process development and engineering efforts must culminate in a reliable economic process that produces a product with the desired characteristics and quality. Anyone involved knows that this scale-up is expensive. It is time consuming to develop both a commercial process and the necessary supporting cost estimates. It is... 

The objective of any sea water conversion process is twofold to produce a demineralized water whose quality is adequate for the proposed use, and to produce this water at as low a cost as possible. In considering any new conversion process, after the establishing of the scientific and technologic soundness of the method, the question to be answered is the probable relative economics of the proposed process as compared to other processes, either actual (preferable) or proposed. One method of making this comparison is to prepare cost estimates. However, in some cases, such as this one, other indexes can be used. 

Cost estimates are categorized according to the quality of the basic process information available rather than on the meticulousness of the estimating procedure and the details included in the estimate. 

The Phase 1 design package is the basis for a very good quality semi-detailed preliminary cost estimate that can be prepared quickly using the procedures in Chapter 19. Appendix L illustrates the preparation of the estimate for the case study... 

The Case Study initiated with the initial Plan of Action in Section 5.3 has evolved into a Phase 0 Design Package and now a Preliminary Cost Estimate is required to confirm the viability of the project and, if required, request funds for the preparation of a Detailed Process Design and Engineering Specification (Phase 1) and an appropriation quality estimate. 

Additional information required by FSIS should accompany the paper describing the laboratory characterization of the test. This is the type of information that would not usually be included in a scientific paper. Ihis information is related to the planned use of the test that must be discussed with FSIS. Ihe information includes cost estimates for installation and the cost per test at various levels of usage, the guarantee of a reagent supply, quality control measures for test operators, quality control measures for test manufacture, and a description of the training required for analysts. 

Usually cost estimates include the cost and equivalents of starting materials and reagents, yields of products of acceptable quality, and total kilos of intermediates required per kilo of product. Other factors that may be considered include... 

Economic analysis of intensive therapy for type 2 DM is more complex. Outcomes must also factor in the burden of cardiovascular disease as the major cause of mortality. One model analyzed the health benefits and economics of treating type 2 DM with the goal of achieving normoglycemia, but using outcomes based on the DCCT trial results. Accounting for the prevalence of cardiovascular disease in type 2 DM, an estimate of 16,002 incremental cost per quality-adjusted life year gained was obtained. The limitation of this analysis is that while the UKDPS did demonstrate an improvement in diabetes-related outcomes, the overall efficacy on microvascular disease complications was not mirrored by the DCCT. 

In a follow-up smdy, this same group used physician focus group estimates to generate quafity-of-fife factors and incorporated these factors into an economic model. The incremental cost per quality-adjusted life-year gained seemed reasonable when data from the original CAB were used 25,000 for patients with minimal disease and... 

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