Estimating major equipment costs

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. 

Major equipment factor estimates. Major equipment factor estimates are made by applying multipliers to the costs of all major equipment required for the plant or process facility. Different factors are applicable to different types of equipment, such as pumps, heat exchangers, and pressure vessels. Equipment size also has an effect on the factors. 

For reasons of confidentiality, exact details of the reactor designs have to remain undisclosed in this discussion. The final economic analysis, however, incorporates them in a 20% estimate of the major equipment cost. The installation factor, defined as the ratio of the final cost over the cost of major equipment items, is projected to be in the order of 2 here, as foundations, piping, general infrastructure will be far less extensive in this compact and highly physically integrated plant. Table 3.4 compares the cost of methanol produced for three cases ... 

Capital costs can be determined by estimating delivered equipment costs and adding on installation, building, piping, engineering, contingency, and indirect costs. These latter costs are often estimated as a factor times the delivered equipment cost for major items of equipment. 

Once the sizes of the major equipment items are known, there are several ways to get the cost of each. By far the most accurate is to get quotations from vendors. This is difficult to do in the early stages of a project because many equipment details are not known. Also, the time between making the preliminary study and purchasing the equipment is so long that the quotation ages, and vendors cannot afford to prepare quotations on every preliminary study. However, many vendors are very cooperative in providing verbal prices or " estimating quotations. Often, the vendor is the only source for accurate cost information. 

Once the cost of each piece of major equipment is known, it must be adjusted by construction cost indexes. Due to inflation and changing competitive situations, the price of equipment changes from year to year (Reference 26). Fortunately, there are several indexes that help in estimating today s costs based on historical data. Some of these indexes are Nelson Refinery Construction Cost... 

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. 

Pikulik and Diaz (1977) give a method of costing major equipment items from cost data on the basic components shells, heads, nozzles, and internal fittings. Purohit (1983) gives a detailed procedure for estimating the cost of heat exchangers. 

Estimate the purchase cost of the major equipment items. Use Figures 6.3 to 6.6 and Tables 6.2 and 6.3, or the general literature. 

For instance, equipment made of monel generally costs 6.5 times as much as the same item constructed of carbon steel. If 25% of the equipment purchased for a plant were made of monel, this would increase the equipment costs by 237%, and the factor cost estimate would be 2.37 times that for a plant constructed of carbon steel. This is unreasonable, since the cost of buildings, roads, wiring, piping utilities, insulating, and instrumentation are independent of the materials of construction. In fact the only major changes would be in the process piping, which,... 

Guthrie15 listed the cost of a water-treatment system. However, it is not known what this included. From his data the cost of the complete water-treatment system, installed, was estimated as 27,300. Since the equipment costs are needed for certain estimates, they had to be obtained from the installed cost. It was assumed that the major cost in constructing a sand filter (see Chapter 16) would be on-site labor. This gives an F.O.B. price of around 5,000 for the sand filter. 

Major equipment estimates based on a more detailed given flowsheet that includes all of the equipment of significance roughly sized with approximate costs. Optimization using process flow simulators (refer to Chapter 15) can be employed. Figure B.2 illustrates a typical analysis for a tank. Refer to Brown (2000) for additional details. 

A. Pikulik and H.E. Diaz, Cost Estimating — Major Process Equipment , Chemical Engineering, 10 October, pp.1 07-I 22 (1977). 

Cost correlations provide a convenient method of estimating the capital cost of major items of equipment. Correlations are usually provided graphically as plots (log-log coordinates) of capital cost of a particular item versus capacity (e.g. volume, surface area, throughput, or power rating). Even at zero capacity, there is some cost (e.g. overheads) associated with the equipment. The cost (C) increases to infinity (i.e. slope of the curve = I), at which point it is more economic to use multiple units of the same size. For an intermediate capacity (Q) range,... 

The fixed capital cost is estimated by first assessing the purchase cost of the major equipment items listed in Table 4.1. These costs are calculated in Appendix E, and are shown in Table 6.1. 

It was estimated that the total equipment cost was 1.69 million for this process. The major portion of this equipment cost was attributed to the chromatographic columns which was about 49%. The installation of this... 

The purchased-equipment cost for a plant which produces pentaerythritol (solid-fuel-processing plant) is 300,000. The plant is to be an addition to an existing formaldehyde plant. The major part of the building cost will be for indoor construction, and the contractor s fee will be 7 percent of the direct plant cost. All other costs are close to the average values found for typical chemical plants. On the basis of this information, estimate the following ... 

Piping is a major item in the cost of chemical process plants. These costs in a fluid-process plant can run as high as 80 percent of the purchased equipment cost or 20 percent of the fixed-capital investment. There are essentially two basic methods for preparing piping-cost estimates-the percentage of installed equipment method and the material and labor take-off method. Several variations of each method have appeared in the literature. 

In the factor methods for cost estimating, first calculate the purchased or delivered cost of all major equipment, for example, distillation columns, reactors, pumps, heat exchangers, etc. Then multiply the total equipment cost by factors to estimate the various other components of the depreciable capital cost given in Equation 2.2, such as piping and electrical wiring. Thus, we arrive at the cost of installing all the equipment and supplying all the services needed to produce an operational process. 

It is advisable to complete the definitive estimate before the fabrication of expensive equipment and start of construction as a protection against major, unexpected cost variations which could have a negative influence on project approval. 

Estimate the purchased cost of the major equipment items. See the next section. 

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