Cost of Construction

A major part of the investment appraisal exercise is the calculation of the total amount of capital needed  

The financial appraisal is normally undertaken quite early in the life of the project, well before the final designs are complete, so a great deal of the cost calculation is based on the skill of the estimator, and much of it is done by factoring on known figures (such as how much a similar plant cost in another place or at another time). As it is an estimate, the final figure will prudently include a contingency allowance - the better the estimate is believed to be, the lower this contingency needs to be. 

Most of the work in the estimating process relies on the application of well-established factors to a basic figure of the cost of all of the main items of the plant, as delivered to the site entrance. This figure has thus to be calculated as accurately as possible, based upon the plant design as available at the time of the estimate. It depends upon the identification and rough sizing of the key process plant items (such as reactors, distillation columns, heat exchangers, and so on), and the determination of approximate delivered prices for these items, from charts and other information published in textbooks, journals and on the internet. 

To the basic purchased equipment cost (including delivery to the site) of 100 are added each of the subsequent factors to make up the final total. The contractor s fee is necessary if the plant design and construction work is given to a contractor to undertake (which is very often the case, because the company needing the plant is unlikely to have the necessary engineers on its payroll). 

The interest accrued on any necessary loan taken out during the construction period will obviously depend markedly on the loan draw down and conditions, but 10% of the fixed capital investment (FCI) is a good approximation. The working capital is more sensibly calculated in 

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The next consideration is the cost of construction materials. This determines the final number of flare headers. Vapors that normally require expensive materials may be listed as follows a. Corrosive vapors, e.g., SOj, HjS. 

In both the materials used and the construction process, sustainability and efficiency will become standard. Improvements mjob site management and building design will reduce waste and cost of construction. Materials such as engineered wood, recycled carpeting, and cellulose insulation, which have lower environmental impact, will become cheaper and more widely available. Not only are buildings constructed with such material friendlier to the environment, they also provide higher-quality, lower-cost solutions. 

Range 3,000-3,600 rpm. These speeds are not often used due to the high cost of construction. Economics favor an induction motor at a slower speed with a gear speed increaser or an induction motor in the 2,500-22,000 hp range. 

If a well proves productive, the ensuing completion operation may require an area in excess of the drilling area. This may mean allocations for frac tank placement, blenders, pump trucks, bulk trucks and nitrogen trucks. In today s economic climate, the operator should weigh the probability of success, Bayes theorem (Equation 4-373), with the cost of constructing and reclaiming an additional area needed for stimulation (Equation 4-374). Plans such as these... 

The principal economic implications of corrosion of a plant are the initial cost of construction, the cost of maintenance and replacement, and the loss of production through unplanned shutdowns. The initial cost of the plant is influenced by material selection, and a choice of material that is more corrosion resistant than is necessary for the safe operation of the plant over its design life is a very expensive error. This cost involves initial outlay of money, and plants have been built which could never be profitable because of the inappropriate materials selection. 

The cost of construction can be minimised by adopting a layout that gives the shortest run of connecting pipe between equipment, and the least amount of structural steel work. However, this will not necessarily be the best arrangement for operation and maintenance. 

Cost of constructing, operating, and maintaining the treatment system can be relatively high... 

Limited cost data are available for the construction and operation and maintenance (O M) of ET cover systems. The available construction cost data indicate that these cover systems have the potential to be less expensive to construct than conventional cover systems. Factors affecting the cost of construction include availability of materials, ease of installation, and project scale. Locally available soils, which are usually less costly than imported clay soils, are typically used for ET cover systems. In addition, the use of local materials generally minimizes transportation costs.3945... 

The cost of constructing a nuclear power plant In Prance was about 400 per kilowatt In 1974 It Is now 800. In the U.S. presently the coat varies from 1,300 to 4,000 per kilowatt and more. The ratio of cost of building a nuclear power plant to that of coal plant Is about 1.4 in Prance, 2.4 in the U.S. Until 1978, the U.S. and Franco had about the same buildlug coat. 

Overtime is especially costly because after laboring eight hours a man s efficiency is less. He is naturally tired. Some employers have claimed that when a worker puts in two hours of overtime they get only about one hour of services. This means a company may pay for twelve hours of work at the base pay rate and effectively get only nine hours of work per day. This could increase the cost of construction labor by one-third or the total cost of constructing the plant by over 8%. The average construction costs index by state is given annually in the Plant Sites issue of Chemical Week and by the Federal Department of Labor. 

In the last chapter the design of equipment for proposed future expansions was discussed. Obviously, if the equipment has been overdesigned to meet the anticipated future expansion, no extra space needs to be provided. If, however, additional equipment will be required, space should be allocated for it. The net result will be an increase in the initial cost of construction and some increase in material transfer costs, because the transfer lines will be longer. 

There are a number of different ways of estimating the cost of constructing a chemical plant. Some require veiy little information and some require a complete listing of every item, from pipe fittings to storage tanks and electrical sockets to generators. All assume a normal schedule and normal conditions. A normal schedule implies that the contractor and engineers will be allowed to operate in the most efficient way. Any attempt to complete the plant sooner will result in increased investment costs. This is discussed in Chapter 13. 

Determine the cost of constructing a 500,000 gal. stainless-steel vertical storage tank in mid- 1968. 

Table 9E-9 lists unit operations in the polystyrene plant. The highest temperature is 400°F, in the extruder. From this and Figure 9-5, a temperature factor of 0.04 is obtained. There are no high pressures except in the extruder, and its value is unknown. The pressure factor will be assumed to be zero. Stainless steel is used, so the material factor is 0.2. From Equation 2 a complexity factor of 3.48 can be calculated. A direct process investment cost of 350,000 per functional unit is obtained from Figure 9-7. This means that the cost of constructing the plant when the Engineering News Record Construction Index (ENRCI) is 300 would be 3,150,000. This will be updated to 1960 when the ENRCI was 350, and then the CEPI will be used to obtain the cost in 1974. The resultant cost in 1974 is... 

Depreciation is the means by which the capital cost involved in constructing the plant is prorated over its prospective life. This is discussed in detail in Chapter 11. A rough estimate is 9% of the cost of constructing the plant. 

Since common stock (or equity) costs more than bonds, why do companies issue stock This is because a company is only able to borrow money at a good rate if the lender is 100% sure he can get his money back plus interest. The less sure he is that he can get his investment back, the higher the interest rate. When a bank is asked to finance the building of a private home it will rarely lend more than 85% of the cost of construction. It also insists that the house be insured, with the bank having the first lien. This means that in case of a catastrophe the bank loan is repaid first. Then the other creditors and the owners receive what is left. A lien s significance is that it takes precedence over all other debts. Even under this arrangement an individual is... 

Tax laws include various exceptions and special options that usually must be considered when corporate income taxes are figured. This is no different from the case when an individual uses the long form to figure his federal income tax. For instance, in 1970 a corporation could deduct 20% of the capitalized cost as an additional first-year depreciation, subject to the following restrictions the costs of constructing buildings do not apply the maximum amount deducted does not exceed 10,000 it is taken in the year the asset is purchased and the taxpayer is not a trust. 

One view is that nuclear energy is expensive, damages the environment and is harmful to human health and when the cost of construction and dealing with regulations and nuclear waste is included nuclear power... 

Although the advantage of placing the solar collectors in space is an unobstructed view of the Sun, the costs of construction are very high, and SPS may not be able to compete with conventional sources unless lower launch costs can be achieved, or unless a space-based manufacturing industry develops and they can be built in orbit from off-Earth materials. 

A passive recovery trench is often considered suitable as an interim procedure prior to initiation of active remediation. Its advantages include the relative ease, cost of construction (with conventional construction equipment), and low maintenance effort. 

Reinjection wells are not without disadvantages. One disadvantage referred to above is the possibility of accelerating off-site migration or dispersion of the pool. Another disadvantage is the additional costs for operation and maintenance (i.e., redevelopment). Redevelopment costs can be kept to a minimum by initial design considerations, but, as the time frame between redevelopment decreases, redevelopment costs increase. Eventually the cost of constructing a new reinjection well becomes the only cost-effective alternative. 

The full potential use of biofilters for cleaning air from livestock buildings, treatment plants and emissions from chemical industry have yet to be exploited. The papers presented produced proof of the efficiency of these filters to remove odour emissions from odorous air streams. Research and Development work is required to reduce the costs of construction and to find materials to which will not deteriorate quickly. Work is required to reduce the large surface areas required at present. 

In order to assess the cost advantages of the constructed wetland over the existing conventional water treatment plant, the critical measure is the payback period for the one-off capital costs of construction. Thus, the construction cost of about 700,000 has to be factored into the difference in operating costs between the conventional water treatment plant and the wetland. 

The drilling cost is determined by the depth of the well and the geology of the site. Tubing, casing and concreting costs all depend upon the depth and diameter of the well, and the selected material of construction (Mickley 2006). Since the flow rate of concentrate is less significant than the cost of construction, the diameter of... 

Vault size is very small, so the unit cost of construction and operation is very high. 

Availability of facilities and financing. Cost of construction, timing, single versus multiple-use facilities. Contract manufacturing. 

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