Fixed-capital-cost estimation equipment costs

Total fixed capital cost estimation, total fixed capital investment = 3 to 10 (4 to 5 usual) X FOB major pieces of equipment. The factor decreases as more alloys are used in the process. 

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. 

Ernst et al.5 indicate that the Super Pro Designer contains models to help estimate the direct fixed capital cost based on 1995 dollars. These numbers may be suitably updated using the current CPI or other suitable index. Maintenance cost were set at 25% of the purchase cost of the equipment per year. Laboratory costs were allocated to capital costs. Labor costs were carefully calculated based on number of operator hours per equipment hour. This was done after analyzing scheduling of the entire process as well as noting that the operator time on each equipment was reasonable. 

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. 

The purchased cost of an item of equipment, free on board (FOB) is quoted by a supplier, and may be multiplied by a factor of 1.1 to give the approximate delivered cost. The factorial methods for estimating the total installed cost of a process plant are based on a combination of materials, labor, and overhead cost components. The fixed capital cost, C(-p, of a plant based on design can be estimated using the Lang Factor method [14] given by the equation... 

A thorough presentation of fundamentals of an economic analysis for process design can be found in the classical book of Peters and Timmerhaus (1991). In addition this book contains detailed information about the cost of chemical equipment. A concise but useful treatment can be found in Coulson Richardson volume 6 (1993). The part on economics in Douglas (1987) is particularly well written from the viewpoint of a designer. The chapter written by Holland Wilkinson for Perry s Handbook 7 edition (1997) contains an extended description of the modem concepts of profitability, a comprehensive estimation of manufacturing and fixed-capital costs, as well as an introduction in the accounting and cost control concepts. The economic evaluation of projects from the perspective of the Institution of Chemical Engineers-UK may be found in Allen (1991). 

Design a 250,000 Ib/yr Lindane (99 per cent 7 isomer of benzene hexachloride) plant based on process information given in the current literature [e.g., see Chem. Eng. Progr., 52 281 (1956) Chem, Week, 78 54 (1956) Ind. Eng. CAem., 48(10) 41A (1956)], Develop the process flow. sheets, equipment specifications, and plant layout. Examine the economics of producing Lindane including (1) fixed and capital cost estimates by one or more of the methods outlined in Chap. 6, (2) profitability analysis showing return on investment and pay-out time, (3) break-even point analysis of the project, (4) economic estimates for a plant producing 500,000 Ib/yr and 750,000 Ib/yr. 

The fixed capital investment (excluding the cost of land) of a new project is estimated to be 150.0 million, and the salvage value of the plant is 10.0 million. Assuming a seven-year equipment life, estimate the yearly depreciation allowances using the following ... 

SuperPro Designer estimates equipment cost using built-in cost correlations that are based on data derived from a number of vendors and literature sources. In addition, users have the flexibility to enter their own data and correlations for equipment cost estimation. The fixed capital investment is estimated based on equipment cost using various multipliers, some of which are equipment specific (e.g., installation cost) while others are plant specific (e.g., cost of piping, buildings, etc.). This approach is described in detail in the literatrue [6,142]. The rest of this section provides a summary of the cost analysis results for this example process. Table 15.2 shows the key economic evaluation results for this project. Key assumptions for the economic evaluations include 1) a new production suite will be built and dedicated to the manufacturing of this product 2) the entire direct fixed capital is depreciated linearly over a period of twelve years 3) the project lifetime is 15 years, and 4) 27,000 kg of final product is produced per year. 

Multiple-factor methods include the cost contributions for each given activity, which can be added together to give an overall factor. This factor can be used to multiply the total cost of dehvered equipment X (Ce(j)del lo produce an estimate of the total fixed-capital investment either for grass-roots or for battery-hmit plants. The costs may be divided into four groups ... 

Equipment Costs The cost of dehvered equipment forms the basis of most methods of estimating the fixed-capital cost. The equipment required can usually be divided into (1) processing equipment, (2) equipment for handling and storage of raw materials, and (3) finished products handling and storage equipment. 

The factorial method of cost estimation is often attributed to Lang (1948). The fixed capital cost of the project is given as a function of the total purchase equipment cost by the equation ... 

This item will include the cost of maintenance labour, which can be as high as the operating labour cost, and the materials (including equipment spares) needed for the maintenance of the plant. The annual maintenance costs for chemical plants are high, typically 5 to 15 per cent of the installed capital costs. They should be estimated from a knowledge of the maintenance costs on similar plant. As a first estimate the annual maintenance cost can be taken as 10 per cent of the fixed capital cost the cost can be considered to be divided evenly between labour and materials. 

Capital costs can be estimated by applying installation factors to the purchase costs of individual items of equipment. However, there is considerable uncertainty associated with cost estimates obtained in this way, as equipment costs are typically only 20 to 40% of the total installed costs, with the remainder based on factors. Utility investment, off-site investment and working capital are also needed to complete the capital investment. The capital cost can be annualized by considering it as a loan over a fixed period at a fixed rate of interest. 

A certain amount of money must be invested if any product is to be produced. This is referred to as capital. The capital is made up of the fixed capital needed to construct the plant and the working capital needed to operate it. The fixed capital is the cost of building and equipping the plant and all its peripheral buildings and operations. Chapter 9 was devoted to methods for estimating the fixed capital investment. 

Equipment Cost Data The foundation of a fixed capital investment estimate is the equipment cost data. From this information, through the application of lactors or percentages based upon the estimator s experience, the fixed capital investment is developed. 

Two general methods have been used to estimate piping costs when detailed flow sheets are not available. One method is to use a percentage of the FOB equipment costs or a percentage of the fixed capital investment. Typical figures are 80 to 100 percent of the FOB equipment costs or 20 to 30 percent of the fixed capital investment. This method is used... 

Electrical This item consists of transformers, wiring, switching gear, as well as instrumentation and control wiring. The installed costs of the electrical items may be estimated as 20 to 40 percent of the delivered equipment costs or 5 to 10 percent of the fixed capital investment for preliminary estimates. As with piping estimation, the process design must be well along toward completion before detailed electrical takeoffs can be made. 

Buildings and Structures The cost of the erection of buildings and structures in a chemical process plant as well as the plumbing, heating and ventilation, and miscellaneous building service items may be estimated as 20 to 50 percent of dehvered equipment costs or as 10 to 20 percent of the fixed capital investment for a preliminary estimate. 

Yards, Railroad Sidings, Roads, etc. This investment includes roads, railroad spurs, docks, and fences. A reasonable figure for preliminary estimates is 15 to 20 percent of the FOB equipment cost or 3 to 7 percent of the fixed capital investment for a preliminary estimate. 

A pilot-scale demonstration remediating harbor sediment was conducted 1 year before the SITE demonstration. Based on the pilot-scale demonstration, the processing costs for a fuU-scale, 110-ton/day unit were projected to be 230/ton (September 1992 U.S. dollars). It is assumed that the unit will be down approximately 30% of the time for maintenance and design improvements in the first year of operation. Based on this system availability, 28,105 tons can be processed in one year. This cost included estimates for variable costs, fixed costs, and deprecia-tion/insurance. Variable costs include diesel fuel for a mobile generator, hydrogen, and caustic. Fixed costs include labor diesel fuel for pumps, heaters, process equipment, and instrumentation propane, water and sewer and parts and supplies. Depreciation/insurance costs include capital cost depreciated over a 3-year period, general insurance costs, and pollution liabihty insurance. This analysis does not include costs for setup and demobilization (D128007, pp. 5.12-5.14). 

In 1992, researchers developed an engineering and costing design for a fixed unit that operated at a rate of 2 tons per hour. Costs were estimated to be 149 (Canadian) per metric ton of soil treated. This estimate was based on the following assumptions the unit used medium naphtha as a solvent operations were 24 hours per day, for 260 days per year utilization factor of the facility was 83% capital costs were 2,548 million (Canadian) and capital amortized over 10 years at 10%, two payments per year. The estimate stipulated that the recovered oil was of suitable quality to be sold to offset process costs. It was estimated that the largest component of process costs would be labor ( 56 per ton of waste treated). Other cost components listed were capitalization costs ( 38 per ton), utilities ( 29 per ton), insurance ( 9 per ton), trucking and maintenance (each 5 per ton), equipment rental and site excavation and restoration (each 3 per ton), and waste disposal was estimated to cost 1 per ton (D17896F, p. 8). 

For the alkylation unit, purchased-equipment costs may be estimated using the equipment-specification information of Table 1 and the cost data presented in Chaps. 14 through 16 of this text. Table 2 presents these costs updated to January 1, 1990. The required fixed-capital investment for the nonbiodegradable detergent manufacturing process may be estimated from the total purchased-equipment cost using the equipment-cost ratio method outlined in Table 17 of Chap. 6. The total purchased-equipment cost is, presented in... 

Of the many factors which contribute to poor estimates of capital investments, the most significant one is usually traceable to sizable omissions of equipment, services, or auxiliary facilities rather than to gross errors in costing. A check list of items covering a new facility is an invaluable aid in making a complete estimation of the fixed-capital investment. Table 1 gives a typical list of these items. 

Example 1 Estimation of fixed-capital investment using ranges of process-plant component costs. Make a study estimate of the fixed-capital investment for a process plant if the purchased-equipment cost is 100,000. Use the ranges of process-plant component cost outlined in Table 4 for a process plant handling both solids and fluids with a high degree of automatic controls and essentially outdoor operation. 

The cost for land and the accompanying surveys and fees depends on the location of the property and may vary by a cost factor per acre as high as thirty to fifty between a rural district and a highly industrialized area. As a rough average, land costs for industrial plants amount to 4 to 8 percent of the purchased-equipment cost or 1 to 2 percent of the total capital investment. Because the value of land usually does not decrease with time, this cost should not be included in the fixed-capital investment when estimating certain annual operating costs, such as depreciation. 

Another expense which is included under indirect plant cost is the item of construction or field expense and includes temporary construction and operation, construction tools and rentals, home office personnel located at the construction site, construction payroll, travel and living, taxes and insurance, and other construction overhead. This expense item is occasionally included under equipment installation, or more often under engineering, supervision, and construction. If construction or field expenses are to be estimated separately, then Table 15 will be useful in establishing the variation in percent of fixed-capital investment for this indirect cost. For ordinary chemical-process... 

METHOD C PERCENTAGE OF DELIVERER-EQUIPMENT COST. This method for estimating the fixed or total-capital investment requires determination of the delivered-equipment cost. The other items included in the total direct plant cost are then estimated as percentages of the delivered-equipment cost. The additional components of the capital investment are based on average percentages of the total direct plant cost, total direct and indirect plant costs, or total capital... 

Example 3 Estimation of fixed-capital investment by percentage of delivered-equipment cost. Prepare a study estimate of the tied-capital investment for the process plant described in Example 1 if the delivered-equipment cost is 100,000. 

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