Estimating labor cost

Labor costs are extremely difficult to estimate. They depend on whether the process is batch or continuous, the level of automation, the number of processing steps, and the level of production. When... 

Pilot plant costs range from 10,000 to 10,000,000, but the majority are typically in the range of 50,000 to 250,000, assuming an existing facihty is available to house them. There are three basic methods for estimating the costs to design and constmct a pilot plant similarity, cost ratios, and detailed labor and materials. 

If the standard deviation of the lot caimot be estimated, a sampling program of greater sample size is required to generate an estimate of the standard deviation for future sampling operations. In some cases, sample size can be increased and sampling costs reduced by the use of automatic samplers. These offer a substantial reduction in labor costs but an increase in capital costs. 

Economic Aspects. As of 1995, two manufacturers produced sodium thiosulfate in the United States with an estimated total capacity of 30,000 metric tons. Despite declining volume, prices have increased, reflecting increased taw material, energy, and labor costs. Production outside of the United States is at least 25%i of the U.S. production, mainly in Germany. 

Wood is the raw material of the naval stores iadustry (77). Naval stores, so named because of their importance to the wooden ships of past centuries, consist of rosin (diterpene resin acids), turpentine (monoterpene hydrocarbons), and associated chemicals derived from pine (see Terpenoids). These were obtained by wounding the tree to yield pine gum, but the high labor costs have substantially reduced this production in the United States. Another source of rosin and turpentine is through extraction of old pine stumps, but this is a nonrenewable resource and this iadustry is in decline. The most important source of naval stores is spent sulfate pulpiag Hquors from kraft pulpiag of pine. In 1995, U.S. production of rosin from all sources was estimated at under 300,000 metric tons and of turpentine at 70,000 metric tons. Distillation of tall oil provides, in addition to rosin, nearly 128,000 metric tons of tall oil fatty acids annually (78). 

Capital Investment Cost. The capital investment involved in a proposed project is important because it represents the money that must be raised to get the project started, is used in profitabiUty forecasts, and is reflected in the estimated manufacturing cost of a product. The capital investment is classified herein as fixed capital, working capital, and land cost. Sample capital investment estimate forms provide for separate materials (M) and labor (L) categories, or just combined M L figures. 

A popular overall factor refinement, known as the Hand factor approach, uses a different factor to estimate overall costs for each class of equipment to cover all labor field materials, eg, piping, insulation, electrical, foundations, stmctures, and finishes and indirect costs, but not contingencies. Hand factors range from 4 for fractionating towers down to 2.5 for miscellaneous equipment. 

Direct labor costs can be estimated usiag the flow sheet, typical labor needs (persons /shift) for each piece of process equipment, and the local labor rate. Company files are the best source for labor needs and rates, although some Hterature data are available (1,2). The hourly cost of labor ia the United States can be estimated from the M.onthly l bor Review of the Bureau of Labor Statistics. Production supervision costs can usually be taken as a factor, such as 15% of the direct labor cost. 

Annual iadirect costs are estimated as percentages of the direct labor and fixed capital costs. Typical direct labor percentage ranges are 25—30% for payroll overhead, 15—20% for stores and suppHes, 10—20% for control laboratory, 10—20% for security, 10% for yard, and 10—15% for process improvements. That is, total iadirect costs are usually 80—115% of the direct labor cost (1). 

For many years, companies and countries have lived with the problem of inflation, or the faUing value of money. Costs—in particular, labor costs—tend to rise each year. Failure to account for this trend in predicting future cash flows can lead to serious errors and misleading profitabihty estimates. 

Operating Labor The cost of operating labor is the second largest item of expense in the manufac turing cost. Labor requirements for a process can be estimated from an intelhgent study of the equipment flow sheet, paying careful attention to the various primaiy process steps such as frac tionation, filtration, etc. The hourly wage rate should be that currently paid in the company. Once the number of persons reqiiired per shift has been estimated for a particular production rate, the annual labor cost and the labor cost per unit of production can be estimated. 

The current cost per unit for each utility is usually well known in a company. Thus, the annual cost for utilities and the utilities cost per unit of production can be estimated. The latter is normally much smaller than the raw-materials and labor costs. However, a great deal more work is involved in calculating the utilities cost than for any other item in the manufacturing cost. 

Overseas Construction Costs Although Table 9-55 gives location factors for the construction of chemical plants of similar function in various countries at 1993 values, these may vaiy differentially over a period of time owing to local changes in labor costs and productivity. Hence, it is often necessaiy to estimate the various components of overseas construction costs separately. Equipment and material prices will depend on local labor costs and the availability of raw materials. If the basic materials have to be imported, costs in the source area become important and import duties and freight charges must be added. 

The cost of the filter station includes not only the installed cost of the filter itself but also that of all the accessories dedicated to the filtration operation. Examples are feed pumps and storage facihties, precoat tanks, vacuum systems (often a major cost factor for a vacuum filter station), and compressed-air systems. The dehvered cost of the accessories plus the cost of installation of filter and accessories generally is of the same order of magnitude as the dehvered filter cost and commonly is several times as large. Installation costs, of course, must be estimated with reference to local labor costs and site-specific considerations. 

Every location has advantages and disadvantages that impact on the operating costs. Data must be collected for the proposed site and used to adjust historical data to get a proper estimate. Such costs as transportation, labor, and purchased utilities can be determined. However, such items as operating labor productivity, local customs, weather, and local management attitudes can only be estimated. 

Using the several materials selected and the basic design possibilities, products should be designed to meet the criteria as far as deflection is concerned, and the cost of manufacture estimated. If the designer does not have this type experience it is best done with the assistance of the fabricator who will fabricate the product. In addition to the material cost and the production labor costs, the amortization costs of the tools are to be included. 

Cost Factors) Define a cost-accounting model that includes consumables, labor, write-off, workload, and frequency of recalibration to estimate the cost per result. 

The estimated cost of equipment, labor, and herbicides for weed control within a specific crop can be very expensive. For example, in 1980, cotton was planted on 5.2 million ha in the United States. The total cost for equipment, labor, and herbicides used to control weeds was estimated to be 547 million (20). Herbicides account for 32% of the total cost while equipment and labor costs were 34% each. 

Labor cost. The cost of labor is difficult to estimate. It depends on whether the process is batch or continuous, the level of automation, the number of processing steps and the level of production. When synthesizing a process, it is usually only necessary to screen process options that have the same basic character (e.g. continuous), have the same level of automation, have a similar number of processing steps and the same level of production. In this case, labor costs will be common to all options and hence will not affect the comparison. 

Because the ASH technology has varied uses in the remediation and industrial sectors, costs will depend on the specific application. According to Advanced Processing Technologies, Inc. (APT), operation and maintenance costs for an ASH system that can process 50 tons of soil per hour are 2 to 5 per ton of soil treated. This estimate also includes labor costs. To process a steady feed stream of 10 to 20 gal/min of wash-rack wastewater, operational costs are 0.60 to 1.50 per 1000 gal of water treated. The capital costs of an ASH unit for this application range from 15,000 to 30,000 (D14439I, p. 2). 

Cost estimates are based on treating 8925 yd (6820 m ) over 266 days of treatment, using the company s commercial prototype. A site demonstration estimated the cost for treatment to be from 111 to 317/yd ( 145 to 415/m ), based on 70% online factor at 10 to 3 yd /h, respectively (D12487I, p. 6). Because the process is so labor intensive, the cost declines as the online factor rises and as treatment time per yard falls. 

Based on the treatment of 50,000 tons of contaminated material, the preliminary cost estimate for using the STRATEX technology is approximately 125 to 150 per ton of material processed. The preliminary cost estimations include preliminary estimates of the operations and maintenance costs, including labor costs, system transport costs, binder costs, fuel costs, and travel costs (D14167D, p. 6). 

The estimated operating costs were 6510/m of treated waste. This estimate inclnded binder costs of 85 cents per pound the labor costs eqnivalent to 4 fnll-time technicians at 70 per honr and the cost of the 55-gal barrels at 100 per barrel nsed to mix, cnre, store, and dispose of the waste. The operating costs of the baseline cement stabilization process are lower at 4300/m of treated waste (D20934H, p. 15). 

Downey et al., of Parsons Engineering Science, Inc., reported costs for bioventing at a diesel-fuel-contaminated site in Nebraska as 112,000, or less than 10/m of soil treated. This cost included pilot testing, full-scale installation, and 2 years of operation and maintenance but did not include the cost of electricity (estimated at 280 per month) or labor costs for system checks. It is noted that bioventing provides significant economy of scale and that costs for sites smaller than 11,000 m are typically in the range of 10 to 30/m (D151508, p. 124). 

In 1996, Delphi estimated the cost of processing wastes at 2.50 to 10.00/kg. Among the factors listed as affecting cost were quantity of waste, labor rates, initial contaminant concentration, characteristics of residual waste, waste handling and pretreatment, amount of debris, utility/fuel rates, and target contaminant concentration (D13821G, p. 24). 

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