Seven-Tenths Rule

April 1990, pp. 138-175. In the method known as the seven-tenths rule, the cost-capacity data for process plants may be correlated by a logarithmic plot similar to the six-tentlis plot for equipment. Remer and Chai compiled exponents for a variety of processes and found that the exponents ranged from 0.6 to 0.8. When the data are used to obtain a capital cost for a different-size plant, the estimated capital must be for the same process. 

Cost of plant B = cost of plant A (i apacityofplantB V capacity of plant A / 

Cost indices may be used to correct costs for time changes. 

Example 4 Seven-Tenths Rule A company is considering the manufacture of150,000 tons annually of ethylene oxide by the direct oxidation of ethylene. According to Remer and Chai (1990), the cost capacity exponent for such a plant is 0.67. A subsidiary of the company built a 100,000-ton aimual capacity plant for 70 million fixed capital investment in 1996. Using the seven-tenths rule, estimate the cost of the proposed new facility in the third quarter 2004. 

Study Method The single-factor method begins with collecting the delivered cost of various items of equipment and applying one factor to obtain the battery-hmits (BL) fixed capital (FC) investment or total capital investment as follows  

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When the cost of a plant of a given capacity is known, then the cost of another of a different capacity can be foimd by using the seven-tenths rule given as ... 

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