Purchased Cost of Equipment

To a first approximation, the cost of a single MPI is assumed to vary with scale (vessel volume or process throughput) on an exponent of 0.7. The value of this exponent does vary from one plant item type to another and while it typically lies in the range 0.5-0.9 [40, 42] for some equipment types (e.g., centrifuges) it may be at or above unity. This indicates that the purchased cost of equipment per unit production rate, say /(tons per year), generally increases as manufacturing scale decreases well known as economies of scale, related to large bulk chemical plants. 

Using Eqn. (7..7-4) to calculate the purchased cost of equipment, the following expression is obtained for the total equipment costs ... 

The purchased cost of equipment for a solid-processing plant is 500,000. The plant is to be constructed as an addition to an existing plant. Estimate the total capital investment and the tied-capital investment for the plant. What percentage and amount of the fixed-capital investment is due to wst for land and contractor s fee ... 

The central element in fixed-capital estimation is the Purchased Cost of Equipment (PCE). This can be determined simply by the addition of costs of individual items ... 

The interesting result is that the total cost of the investment can be expressed simply by a constant multiplying the purchasing cost of equipment PCE ... 

Turton et al (2009) provide the following correlation [Equation (10.B.4)] for estimating the purchase cost of equipment (PCE) for a compressor and its drive. 

Be able to estimate the purchase costs of equipment items using the equations provided together with cost indexes to update those costs. 

Another way to think of the economy of scale is to consider the purchased cost of equipment per unit capacity. Equation 7.2 can be rearranged to give the following relationship ... 

The estimating procedures to obtain the full capital cost of the plant are described in this section. If an estimate of the capital cost for a process plant is needed and access to a previous estimate for a similar plant with a different capacity is available, then the principles already introduced for the scaling of purchased costs of equipment can be used,... 

All the data for the purchased cost of equipment for the second edition of this book were obtained from a survey of equipment manufacturers during the period May to September of 2001, so an average value of the CEPCl of 397 over this period should be used when accounting for inflation. 

Eor this example the cost of the battery limits plant is about four times the purchase cost of the equipment. This number is about two for module I-type plants designed and iastalled by the fine chemicals company itself, and about six for expanded module IV-type plants designed and built by contractors. 

Equipment Costs. Equipment costs include the purchased cost of process and materials handling equipment, storage faciUties, waste treatment equipment, stmctures, and site service faciUties. Installation costs such as insulation, piping, painting and finishing, foundations, process stmctures, instmmentation, and electrical service connections are estimated or factored separately. Actual quoted prices from suppHers are the best data, but these are not usually available when estimates are made. The quick, inexpensive cost estimates are based largely on personal cost files, internal company cost data, or pubUshed cost correlations. 

Published Cost Correla.tions. Purchased cost of an equipment item, ie, fob at seller s site or other base point, is correlated as a function of one or more equipment—size parameters. A size parameter is some elementary measure of the size or capacity, such as the heat-transfer area for a heat exchanger (see HeaT-EXCHANGETECHNOLOGy). Historically the cost—size correlations were graphical log—log plots, but the use of arbitrary equation forms for correlation has become quite common. If cost—size equations are used in computer databases, some limit logic must be included so that the equation is not used outside of the appHcable size range. 

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. 

Table 6.2. Purchase cost of miscellaneous equipment, cost factors for use in equation 6.7. Cost basis mid 2004...

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. 

Total purchase cost of major equipment items (PCE)... 

The relative cost of equipment made from different materials will depend on the cost of fabrication, as well as the basic cost of the material. Unless a particular material requires special fabrication techniques, the relative cost of the finished equipment will be lower than the relative bare material cost. For example the purchased cost of a stainless-steel storage tank will be 2 to 3 times the cost of the same tank in carbon steel, whereas the relative cost of the metals is between 5 to 8. 

If the corrosion rate is uniform, then the optimum material can be selected by calculating the annual costs for the possible candidate materials. The annual cost will depend on the predicted life, calculated from the corrosion rate, and the purchased cost of the equipment. In a given situation, it may prove more economic to install a cheaper material with a high corrosion rate and replace it frequently rather than select a more resistant but more expensive material. This strategy would only be considered for relatively simple... 

In addition to the purchased cost of the equipment, investment is required to install the equipment. Installation costs include ... 

The total capital cost of the installed battery limits equipment will normally be two to four times the purchased cost of the equipment1112. 

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. 

The cost of equipment or of a complete plant must be up-graded to account for the reduced purchasing power of the dollar (or pound) from a given time datum to the present. Various cost indices are published annually (and monthly, see Chemical Engineering magazine). Those of particular relevance to chemical plant costs are the Nelson Refinery Construction Index, Chemical Engineering (CE) Plant Cost Index, and the Marshall and Swift (M S, previously Marshall and Stevens) Equipment Cost Index. These indices apply to complete plants rather than individual items of equipment. The appropriate equation is C2 = C, (I2/I ), where Zis the relevant index, and the suffixes represent different time periods. 

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. 

The technical literature is rife with detailed methods of cost-estimating process equipment. For the purpose of this chapter, the costs assembled in Table 8.1 will orient the novice designer to the approximate price of common types and sizes of plant equipment. The values shown are the purchased, as opposed to the installed, cost of equipment. A few items worthy of note from Table 8.1 are as follows ... 

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. 

The purchased cost of each piece of process equipment may now be estimated from published cost data or from appropriate manufacturers bulletins. Regardless of the source, the published purchased-cost data must always be corrected to the current cost index. This procedure is described in detail in Chap. 6. 

The purchased cost of a 50-gal glass-lined, jacketed reactor (without drive) was 8350 in 1981. Estimate the purchased cost of a similar 300-gal, glass-lined, jacketed reactor (without drive) in 1986. Use the annual average Marshall and Swift equipment-cost index (all industry) to update the purchase cost of the reactor. 

Analyses of the total installed costs of equipment in a number of typical chemical plants indicate that the cost of the purchased equipment varies from 65 to 80 percent of the installed cost depending upon the complexity of the equipment and the type of plant in which the equipment is installed. Installation costs for equipment, therefore, are estimated to vary from 25 to 55 percent of the purchased-equipment cost. 

Fabrication expenses account for a large fraction of the purchased cost for equipment. A chemical engineer, therefore, should be acquainted with the methods for fabricating equipment, and the problems involved in the fabrication should be considered when equipment specifications are prepared. 

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