Chapter 3 COST ESTIMATION Details About Various Components Costs in FCI (1) Purchased Equipment: Cost is important for

or pre-design cost estimate Sources of equipment prices, methods of adjusting prices for capacity, methods of estimating auxiliary process equipment, should be known 3 major types of equipments---(i) Processing equipments (ii) Raw materials storage and handling equipments (iii) Finished products storage and handling equip. 1st source To get accurate costs----Bids from fabricators and suppliers Fabricators estimates --- quick and accurate 2nd source to get costs ---- files of past purchase orders; but to be corrected to current cost index 3rd source to get costs --- Engineering Journals Estimation of equipment cost by Scaling --- useful when no cost data related to particular size of operational capacity is available; Logarithmic Relation Six-Tenth Factor Rule is used Consider equipment, a and b --- same type but of different capacities, then--1 Compiled by Prof. Prasad Parulekar

Cost of Equipment a = Cost of equipment b (capacity of a / capacity of b)0.6 Log-log plot of capacity v/s equipment cost --straight line with slope 0.6 Factor 0.6 --- to be used in absence of other information Cost-capacity concept --- should not be used beyond 10 fold range of capacity; care to be taken both equipments are similar w.r.t. construction type, MOC, operating T & P, other pertinent variables (Refer Table-3, CH-6, Timmerhaus --- Values of Cost Indexes for different types in different years; Table- 5, CH-6, Timmerhaus --- Typical exponent values for equipment cost v/s capacity) Typical cost ---- 15 to 40% of FCI (2) Purchased Equipment Installation: Involves costs for --- labor, foundations, supports, platforms, construction expenses, others directly related to erection of equip Cost 25 to 55% of purchased equip cost (Refer Table-6, CH-6, Timmerhaus Installation costs for various equip as % of purchased equip cost; Refer Table-7, CH-6, Timmerhaus Typical exponents for equipment installation labor cost v/s size;

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 If exponent = 0 --- labor cost is independent of equip size e.g. tubular heat exchanger --- installed by cranes --- doesnt matter with size or weight of equip If exponent = higher value increasing complexity in installation e.g. carbon-steel tower --- increase in tower diameter, increases complexity in its internals (trays, down comers, etc.) (3) Insulation Cost: Insulation factor --- important during extreme high or low Temperature Cost of Insulation for Equip and piping --- included under headings equipment installation and piping cost resp. Involves labor & material cost for insulation 8 to 9% of purchased equip cost or 2% of TCI (4) Instrumentation & Control: Includes --- instrument costs, installation labor cost, auxiliary equip & material cost Amount of control required decides total instrumentation cost 6 to 30% of purchased equip cost; may go to 50 to 70% for complex systems; in chemical plants normally it is 13% 3% of TCI Computer controls increase instrumentation cost (5) Piping:
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 Includes --- costs for labor, valves, fittings, pipe, supports, etc. Includes piping for raw mat, intermediate product, finished product, steam, water, air, sewer & other processes 80% of purchased equip cost or 20% of FCI Its correct estimation requires --- detailed piping and flow sheet drawings Labor cost for installation of piping 40 to 50% of total installed cost of piping Material & labor cost for pipe insulation --- 15 to 25% of total installed cost of piping Piping cost greatly influenced by extreme T conditions of process streams Table for rough estimate of piping cost based on process plant type: (Table -8, CH-6, Timmerhaus) Type of % of purchased equip process Material Labor Total plant Solid 9 7 16 Solid-fluid 17 14 31 Fluid 36 30 66 % of FCI 4 7 13

(6) Electrical Installation: Includes --- costs for --- installation labor & materials for power, lighting, building service lights
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 Electrical installations major 4 components (refer table below) For ordinary chemical plant 10 to 15% of purchased equip cost ( go up to 40% for specific projects; 3 to 10% of FCI Table for component electrical costs as % of total electrical costs (Table-9, CH-6, Timmerhaus) Component Range % Typical value % Power wiring 25 50 40 Lighting 7 25 12 Transformation & service 9 65 40 Instrument control wiring 3-8 5 (7) Building including Services: Includes expenses for labor, materials & supplies for erection of all buildings, plumbing, HVAC, lighting, etc 10 & 11% of purchased equip cost & FCI resp (Table-10, CH-6, Timmerhaus; Cost of building including services as % of purchased equip cost Type of process % of purchased equip cost plant New plant New unit Expansion at new site at existing at existing site site Solid 68 25 15 Solid-fluid 47 29 7 Fluid 45 5 - 18 6
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(8) Yard Improvements: 10 to 20% of purchased equip cost; 2 to 5% of FCI (Table-12, CH-6, Timmerhaus, Yard improvement costs as % of FCI)

Yard improvement Range % Typical value% Site clearing 0.4 1.2 0.8 Roads & walks 0.2 1.2 0.6 Railroads 0.3 0.9 0.6 Fences 0.1 0.3 0.2 Yard & fence lighting 0.1 0.3 0.2 Parking areas 0.1 0.3 0.2 Landscaping 0.1 0.2 0.1 Other improvements 0.2 0.6 0.3 (9) Service Facilities: 30 to 80% of purchased equip cost Service facilities are function of plant physical size (Table 13, CH-6, Timmerhaus )
Service Facilities Steam generation Steam distribution Water supply, cooling, pumping Water treatment Water distribution Electric substations
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Range % of Typical value FCI % of FCI 2.6 6.0 3.0 0.2 2.0 1.0 0.4 - 3.7 1.8 0.5 2.1 1.3 0.1 2.0 0.8 0.9 2.6 1.3
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Electric distribution Gas supply & distribution Air compression & distribution Refrigeration 7 distribution Process waste disposal Sanitary waste disposal Communications Raw materials storage Finished product storage Fire-protection system Safety installation

0.4 2.1 0.2 0.4 0.2 0.3 1.0 3.0 0.6 2.4 0.2 0.6 0.1 0.3 0.3 3.2 0.7 2.4 0.3 1.0 0.2 0.6

1.0 0.3 1.0 2.0 1.5 0.4 0.2 0.5 1.5 0.5 0.4

(10) Land: Cost of land + surveys & fees depnds upon propertys location 4 to 8% of purchased equip cost; 1 to 2% of TCI Land value doesnt decrease with time; so its cost should not be included in FCI while estimating certain annual costs like depreciation (11) Engineering & Supervision: Is indirect cost in FCI 30% of purchased equip cost; 8% of total direct costs (Table 14, CH-6, Timmerhaus
Engineering component Engineering Drafting Purchasing & supervision Range % of Typical FCI value % 1.5 6.0 2.2 2.0 12.0 4.8 0.2 0.5 0.3
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Accounting, construction, cost engineering Travel & living Reproduction & communications Total engineering & supervision

0.2 1.0 0.1 1.0 0.2 0.5 4 - 21

0.3 0.3 0.2 8.1

(12) Construction Expenses: Part of Indirect costs 10% of total direct costs (Table 15, CH-6, Timmerhaus)

Component

Temporary construction operations Construction tools & rental Home office personnel in field Field pay roll Travel & living Taxes & insurance Start up materials & labor Overhead Total construction expenses

Range % of Typical FCI value% & 1.0 3.0 1.7 1.0 3.0 0.2 2.0 0.4 4.0 0.1 0.8 1.0 2.0 0.2 1.0 0.3 0.8 4.2 16.6 1.5 0.4 1.0 0.3 1.2 0.4 0.5 7.0

(13) Contractors Fees: Vary for different situations 2 to 8% of direct plant costs; 1.5 to 6% of FCI
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(14) Contingencies: Included in capital cost estimation to compensate for unpredictable events, like storms, floods, strikes, price changes, small design changes, errors in estimation, other unforeseen expenses 5 to 15% of direct & indirect plant costs Average value is 8% (15) Start-up Expenses: After complete construction of plant, frequently changes are made before plant can operate at maximum design conditions Changes involveexpenses for materials & equip As high as 12% of FCI; 1 time expenses only in 1st year of operation

Compiled by Prof. Prasad Parulekar