Equipment, costs references

Capital equipment costs refer to the cost of the equipment and are sometimes a bit difficult to define. For example, a microwave drying system may increase the throughput of a product dramatically and thereby necessitate the purchase of additional packaging equipment, conveyors, feed systems, and the like. In that case, the overall capital outlay would be much higher than for the microwave dryer alone. 

Table 9-42 presents information on some cost indices for the United States. Engineering News-Record updates its construction-cost index in March, June, September, and December. The Oil and Gas Journal gives the Nelson-Farrar refinery indices in the first issue of each quarter. The Chemical Engineering plant-cost index and Marshall and Swift equipment-cost index are given in each issue of the pubhcation Chemical Engineering. Derivation of the base values is referred to in the respective publications. 

The suggested bulk material factors are applied to direct equipment costs, whereas the bulk labor factors apply to the corresponding bulk material item. Because the distributive factors are based on larger scale field built plants, FETC applies an additional factory fabrication adjustment to reflect a more modular construction approach requiring less field fabrication as would likely be the case with smaller plant configurations. This approach is illustrated in reference (18). 

All eleven references in this category relate directly to Section 6.1, the Economic Evaluation of this project. They contain capital costing methods, cost correlations, typical plant and equipment costs, and economic indicators to account for cost changes with time. 

Reference CE8 contains the economic indicators including the M S Equipment Costing Index and the CE Plant Cost Index. These indices and their component values are listed from 1977 to 1985. 

The other references in this section all contain useful nomographs and correlations for the estimation of capital and equipment costs. 

The escalation index is simply the yearly increase of the particular major equipment item, referred to Chemical Engineerings published index. The equipment cost index is 438 as of January 2001. If you are calculating an equipment cost for, say, 2007, and this same referenced cost index for that year is 450, then the cost index is 450/438, or 1.027. These yearly equipment cost index numbers, 438 and 450, come from Chemical Engineering s monthly equipment cost index. Of course, 450 is an assumed index number, since the 2007 index has not been published as of this writing. 

The cost refers only to the membrane contactor part of the schematic plant reported in Figure 22.12. The cost of remaining equipment has not been evaluated because it refers to standard pieces of equipment extensively used in industries and their cost can vary remarkably depending upon specific factors of different companies. 

At the time the analysis was undertaken) information on the system performance was available for only one operating point and cost information consisted of initial installation costs plus estimates of life times. Equipment costs were not related to operating conditions. Under these circumstances only the accounting approach could be used. The available information is summarized in Table II. (For more details, see reference 10)... 

The most accurate method for determining process equipment costs is to obtain firm bids from fabricators or suppliers. Often, fabricators can supply quick estimates which will be very close to the bid price but will not involve too much time. Second best in reliability are cost values from the file of past purchase orders. When used for pricing new equipment, purchase-order prices must be corrected to the current cost index. Limited information on process-equipment costs has also been published in various engineering journals. Costs, based on January 1, 1990 prices, for a large number of different types and capacities of equipment are presented in Chaps. 14 through 16. A convenient reference to these various cost figures is given in the Table of Contents and in the subject index. 

A large amount of cost data is presented in tabular and graphical form. The table of contents for the book lists chapters where equipment cost data are presented, and additional cost information on specific items of equipment or operating factors can be located by reference to the subject index. To simplify use of the extensive cost data given in this book, all cost figures are referenced to the all-industry Marshall and Swift cost index of 904 applicable for January 1, 1990. Because exact prices can be obtained only by direct quotations from manufacturers, caution should be exercised in the use of the data for other than approximate cost-estimation purposes. 

To calculate several of the cost items listed in Table 2.1, requires the depreciable and fixed capital costs. The depreciable capital cost is the capital required for equipment and its installation or modification in the process, and all the facilities required to operate the process. There is some variation in the definition of fixed capital cost. References [1-5], define the fixed capital as consisting of the depreciable capital cost, land cost, and site or land development cost. Woods [10], however, omits land cost and land development cost so that that the fixed capital cost equals the depreciable capital cost. We will adopt the first definition here. For now, assume that we know the depreciable capital cost. We will develop a procedure for its evaluation later. In Example 2.1 estimate the production cost using Table 2.1. 

A composite index for the United States process plant industry is published monthly in the journal Chemical Engineering this is the Chemical Engineering Plant Cost Index (CEPCI), usually referred to as the CE index. Chemical Engineering also publishes the Marshall and Swift index (M S equipment cost index). 

Some other representative cost relationships can also be found in this reference (12), but these cannot be used as a substitute for data from the supplier. In general, the equipment costs include the following components fans, water pumps to dehver the water to the top of the tower, tower structure and packing, exterior covering, and electrical installation. The principal operating and maintenance costs are electrical power for pumping water and air, operating and maintenance labor, and chemicals to raise the pH. 

Technique Principle or parameter on which technique is based Momentfs) of orientation distribution Can or cannot separate component orientation (in principle) Favorable points or comments Limiting points or comments Approx, cost of commercially avail, equip. Suggested references (see Ref. list)... 

The money spent to acquire capital equipment and facilities used in research (referred to as capital expenditures) sometimes is not allocated to project-level management cost accounts. How companies allocated these expenses to specific NCEs for the purpose of the survey is unknown. If a responding company estimated only direct expenditures in its clinical period R D, but included R D capital expenditures in its total R D expenditures, the costs in the clinical period would be underestimated, but the ratio of preclin-ical period costs to total R D costs would be overestimated. Because clinical period costs occur later, the total capitalized cost would appear higher using this method. On the other hand, plant and equipment costs are always accounted for with depreciation formulas, which spread costs out for a number of years subsequent to the actual capital expenditure. 19 Because a proper cost estimate should be based on actual cash outlays, the delay in accounting for capital costs will skew expenditures toward the end of the period and will cause the total costs of R D capitalized to the point of market introduction to be underestimated. 

Table 4-6. Chemical Process Equipment and Cost References... 

In addition to the cost references listed in this table, the magazine Cost Engineering, published specifically on the subject of equipment specifications and costs, should be available to the design engineer. 

Delivered equipment costs from references (e.g., Table 4-G) and on... 

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