Download - Plant Design Costing Revision
SKF4153: Plant Design 1
mfaw080901
Capital Cost Estimation
SKF4153: Plant Design 1
mfaw080901
Objective
Be able to
◦ Estimate the purchase cost of process equipment
◦ Estimate bare-module cost
◦ Estimate total capital investment
SKF4153: Plant Design 1
mfaw080901
The company’s Income Statement
Income Statement (Table 16.4) is one of the financial statements in a
company annual report.
◦ Need to familiar with all the terms in the table. % Operating margin= (Income from operation)x100/(net sales)
% Profit margin = (Net income)x100/(net sales)
Net sales is gross sale minus returns, discounts and allowances.
Net income = (Net sales)- (Cost of goods sold)-(Operating expenses) -
(Interest expense)-(Taxes)
(Cost of goods sold) = (Cost of raw material) + (Cost of manufacturing)
SKF4153: Plant Design 1
mfaw080901
Use of equipment costing
To calculate:
Direct Permanent Investment CDPI
◦ Purchase cost of equipment + Cost of its installation
Total permanent investment CTPI (also known as fixed capital
investment)
◦ CTPI=CDPI + Cost of land + Royalties +Start up cost +
Contingency
SKF4153: Plant Design 1
mfaw080901
Rate of Return (IRR)
Total Capital Investment (TCI) for a chemical process = CTPI +
working capital
The TCI and the annual manufacturing cost plus other related
expenditures will be used to calculate the cash flows for
profitability analysis such as to determine
◦ the investor’s rate of return (IRR) or known also as the
discounted cash flow rate of return (DCFRR)
◦ IRR is one of the investment decision tools.
◦ If decision to choose among various processes is solely based
on IRR, we should go for the process with highest IRR
SKF4153: Plant Design 1
mfaw080901
Cost Index (I)
Equipment cost is obtained from charts, equations or quotes from vendors
The cost changes (increases) from year to year primarily due to inflation
The charts and equations are usually apply for a particular month/year.
Vendors quotes also valid for a certain period
To estimate purchase cost at a later date, we multiply the purchase
cost (Base Cost) available for a particular date with the ratio of cost index I
at a later date to a base cost index, Ibase at the date that applies to the
purchase cost
SKF4153: Plant Design 1
mfaw080901
The Indexes
The chemical engineering (CE) Plant Cost
Index
The Marshall & Swift (MS) Equipment
Cost Index
The Nelson-Farrar (NF) Refinery
Construction Cost Index
The Engineering News-Record (ENR)
Construction Cost Index
SKF4153: Plant Design 1
mfaw080901
Comparison of annual average
cost indexes
SKF4153: Plant Design 1
mfaw080901
Economy of Scale
Economies of scale refers to the decreased per unit cost
as capacity increases
This principle holds as long as each major piece of
equipment can be made larger for higher capacity.
However if the equipment size exceeds maximum size
that can be fabricated and shipped, the equipment must
be duplicated (e.g. two production trains)…..so the
economy of scale is lost.
SKF4153: Plant Design 1
mfaw080901
Economy of Scale
m varies from 0.48 to 0.87 for equipment and 0.38 to 0.9 for plants
If we use m=0.6 (average value), this is referred to as “six-tenths rule” ◦ Example, if the capacity is double, the cost will only
increase by 52%
The economy of scale is estimated by the following eqn,
eq. 16.3 m
Capacity
Capacity
Cost
Cost
1
2
1
2
SKF4153: Plant Design 1
mfaw080901
Typical Plant Capacity
See Table 16.8 for typical capacity (pounds/year) of 15 major commodity chemicals in
Common units are tonne/year or tons/day
Note: 1 tonne=1000kg 1 ton=2000 Ib
To estimate total depreciable capital investment (CTDC) using cost data form earlier plant at different capacity,
Note: b refers to base data such as in Table 16.8
SKF4153: Plant Design 1
mfaw080901
Total Capital Investment (TCI)
One-time expense for design, construction and start-up
for new or a revamp of an existing plant
Grass-roots plants vs Plant expansions
See Table 16.9 (Busche 1995)
See Table 16.5 for example
SKF4153: Plant Design 1
mfaw080901
Total Capital Investment (TCI)
TCI includes,
◦ total bare-module (include installation)
◦ spares and catalyst costs
◦ site preparation, building cost
◦ service facilities
◦ utilities plant
◦ contingencies, contractor’s fee, land, royalties
◦ start-up
◦ working capital
SKF4153: Plant Design 1
mfaw080901
Battery Limits
Imaginary border that separate on-site
(Process Plant) from offsite facilities
SKF4153: Plant Design 1
mfaw080901
Offsite Facilities
SKF4153: Plant Design 1
mfaw080901
Bare-module cost
Bare-module cost for fabricated equipment
◦ Distillation column, HEX, vessel
◦ Custom design
Bare-module cost for process machinery
◦ Pump, compressor, centrifuge
◦ Vendor supplied
SKF4153: Plant Design 1
mfaw080901
Bare-module cost
The bare-module costs could also be estimated using bare-
module factor based on f.o.b. purchase cost of equipment
◦ Bare-module cost=FBMx Purchase cost
◦ See Table 16.11
SKF4153: Plant Design 1
mfaw080901
Bare-module cost:
Direct Material and Labor
Direct Material and labor
◦ Material: Piping to other modules, concrete foundation, steel
supporting structure, instruments, controller, wiring, lighting,
painting, insulation
◦ Field labor for equipment erection and setting
SKF4153: Plant Design 1
mfaw080901
Bare-module cost: Indirect Cost
Indirect Cost
Freight, Insurance, Taxes
Construction overheads: workers health insurance, kwsp,
salaries of supervisory personnel, temporary building, crane
rental, security, job site clean-up
Contractor engineering expenses: Procurement expenses,
salaries for project and process engineers, designers, home
office expenses etc
◦ See Table 16.10 for bare-module cost for a HEX
SKF4153: Plant Design 1
mfaw080901
Working Capital (CWC)
Fund needed to cover operating costs required for the
early operation of the plant.
Include inventory (keeping stock)
Spare of charge catalyst and
Account receivable (transactions dealing with the billing
of customers)
SKF4153: Plant Design 1
mfaw080901
Estimation of TCI
Methods and Levels of accuracy of estimate,
◦ Order-of-magnitude estimate (± 50%) based on production rate
and major equipments as determine determine from bench-
scale laboratory data.
◦ Study estimate (± 35%) based on a preliminary process design
◦ Preliminary estimate (± 20%) based on detailed process design
studies leading to an optimized process design
◦ Definitive estimate based on a detailed plant design, including
detailed drawings and cost estimates, sufficient to apply cost
accounting.
SKF4153: Plant Design 1
mfaw080901
Order-of-Magnitude Estimate of TCI
Rapid determination to determine if a process is worth
pursuing
Suitable for low pressure process (<100psi)
Need production rate data
Need a flowsheet showing reactors, compressors and
separation equipment (no need to show HEX and
pump)
SKF4153: Plant Design 1
mfaw080901
Order-of-Magnitude Estimate of TCI
Calculation are based on
◦ Year 2000 Marshall and Swift Cost Index (MS index) of
1,103
◦ A base production rate of 10,000,000 lb/yr of main
product
◦ Carbon steel construction
◦ Design pressure < 100 psi
SKF4153: Plant Design 1
mfaw080901
Order-of-Magnitude Estimate
Step 1
Using six-tenths rule, compute production rate factor FPR
6.0
000,000,10
/,flowrateproduct Main
yrlbFPR
Eq 16.5
SKF4153: Plant Design 1
mfaw080901
Order-of-Magnitude Estimate
Step 2
Calculate module cost CM
)000,130$(100
100psi > if pressure,design
)000,130$(100
100psi > if pressure,design
25.0
25.0
USFFC
USFFC
MPRM
MPRM
FM is material factor, Carbon steel (FM=1.0), Copper (FM=1.2), Stainless steel (FM=2.0), Nickel Alloy (FM=2.5), Titanium clad (FM=3.0)
See Appendix III for assistance in choosing materials of construction
Eq 16.6
SKF4153: Plant Design 1
mfaw080901
Order-of-Magnitude Estimate
Step 3
Calculate total bare-module investment CTBM
MPITBM CFC
1103
2008year for index MS2008,
FPIis factor to account for piping, instrumentation,
automatic control as well as indirect costs.
FPI depends on whether the plant processes solid, fluids
or both
For solid handling (FPI=1.85), solid & fluids (FPI=2.0) and
for fluids handling (FPI=2.15)
Eq. 16.7
SKF4153: Plant Design 1
mfaw080901
Order-of-Magnitude Estimate
Step 4
Calculate direct permanent investment CDPI
TBMDPI CFFC 211
F1 and F2 are factors to account site preparation, service facilities, utility plants.
For outdoor construction (F1=0.15), Indoor & outdoor (F1=0.4) and indoor only (F1=0.8)
For minor addition to existing facilities(F2=0.10), major addition to existing facilities(F2=0.3) and for grass-roots plant (F2=0.8)
16.8
SKF4153: Plant Design 1
mfaw080901
Order-of-Magnitude Estimate
Step 5
Calculate total permanent investment CTPI
Add 40% to cover for contingencies and another 10% for land, royalties and start-up.
DPITPI CC 5.1
Calculate total capital investment CTCI
Add 15% to the total permanent investment CTPI
TPITCI CC 15.1
SKF4153: Plant Design 1
mfaw080901
Study Estimate of TCI
Here the method is based on overall factor method of
Lang (1947,1948)
Requires complete M&E balances and equipment sizing
Requires information on material of construction for
major equipment inclusive HEX and pump
f.o.b purchase cost of each equipment must be estimated,
see Table 16.9 for references.
SKF4153: Plant Design 1
mfaw080901
Study Estimate of TCI
Step 1
From process design prepare equipment list giving,
◦ Equipment title or name
◦ Equipment Label (e.g. P1, R2)
◦ Size (Hp, ft2, diameter (ft), height (ft))
◦ Material of construction
◦ Design temperature
◦ Design pressure
◦ See Table 16.18
SKF4153: Plant Design 1
mfaw080901
Study Estimate of TCI
Step 2
Add f.o.b purchase cost data (Cpi) and the corresponding
cost index (Ibi)
Update to the current cost index (Ii) and sum the
updated purchase cost to get the total f.o.b. purchase
cost
Multiply by 1.05 to account for delivery cost to the plant
site
SKF4153: Plant Design 1
mfaw080901
Study Estimate of TCI
cont. Step 2
Then, multiply by Lang factor (fL,TPI) to get the total permanent investment cost (CTPI), i.e. Not including working capital
Or multiply by Lang factor (fL,TCI) to get the total capital investment cost (CTCI)
See Table 16.16 for Lang Factors, details breakdown are in Table 16.17
iP
i ib
ITCILTCI
iP
i ib
ITPILTPI
CI
IfC
CI
IfC
,
,
,
,
,
,
05.1
05.1
Eq 16.9 & 16.10
SKF4153: Plant Design 1
mfaw080901
Study Estimate of TCI
cont. Step 2
See Table 16.16 for Lang Factors, details breakdown
are in Table 16.17
Note: You can add additional cost of spares, storage
and surge tanks, initial catalyst charge, royalties and
plant start up as Lang Factors do not include all these.
See example 16.3 (note, this example also compare
CTCI from order-of-magnitude estimate)
SKF4153: Plant Design 1
mfaw080901
Preliminary Estimate
Based on Individual Factors Method of Guthrie (1969,
1974)
Best carried out, after
◦ Optimal process design developed
◦ Complete M&E balances, Equipment sizing and
materials of construction
◦ Process control configuration developed as in P&ID.
SKF4153: Plant Design 1
mfaw080901
Preliminary Estimate
Step 1 From process design prepare equipment list giving,
◦ Equipment title or name
◦ Equipment Label (e.g. P1, R2)
◦ Size (Hp, ft2, diameter (ft), height (ft))
◦ Material of construction
◦ Design temperature
◦ Design pressure
SKF4153: Plant Design 1
mfaw080901
Preliminary Estimate
Step 2
Add f.o.b purchase cost data (CP,b) and the corresponding
cost index (Ib).
Note: Here the f.o.b purchase cost is based on near
ambient design pressure, carbon steel material and a base
design
SKF4153: Plant Design 1
mfaw080901
Preliminary Estimate
Step 3
Update to the current cost index (I).
For each piece of equipment, determine bare-module cost (CBM) using bare-module factors (FBM) in Table 16.11 and apply appropriate factors for design (Fd), pressure (FP) and material (Fm).
1,
MPdBM
b
bPBM FFFFI
ICC
Eq 16.12
SKF4153: Plant Design 1
mfaw080901
Preliminary Estimate
Step 4
Obtained the total bare-module cost CTBM.
BMTBM CC
SKF4153: Plant Design 1
mfaw080901
Preliminary Estimate
Step 5
Calculate total permanent investment CTPI, (note: not including start-up and royalties)
)(18.1 facilitiesoffsitebuildingsiteTBMTPI CCCCC
Add working capital to calculate total capital investment CTCI
WCTPITCI CCC
SKF4153: Plant Design 1
mfaw080901
Purchase Cost
See Table 16.19 for sources of widely used
equipment cost data
Included are the corresponding cost index for
the cost data
Equipment cost usually presented in the form of
graphs and/or equations of f.o.b. purchase cost as
a function of equipment size factor
Accuracy is no better than ±25%
SKF4153: Plant Design 1
mfaw080901
Purchase Cost
Always check the validity of cost data by comparison
with various sources.
Previous vendor bids and quotes
Cost estimate from manufacturer requires special
request and costly to prepare
SKF4153: Plant Design 1
mfaw080901
Purchase Cost Using IPE
IPE: Aspen Icarus Process Evaluator
Software for cost system
More accurate, consistent and periodically updated
SKF4153: Plant Design 1
mfaw080901
Purchase Cost:
Centrifugal Pump
This method is by Mosanto Company
Determine size factor, S=Q(H)0.5
Q is flowrate in gpm and H is the pump head in ft
Calculate base f.o.b. purchase cost, ◦ CB=exp{9.2951-0.6019[ln(S)]+0.0519[ln(S)]2}
Or determine base f.o.b. purchase cost form Figure 16.3
Base f.o.b. purchase cost are for single-stage, 3600 rpm, vertical split case (VSC), and made of cast iron.
SKF4153: Plant Design 1
mfaw080901
Fig 16.3
SKF4153: Plant Design 1
mfaw080901
Purchase Cost:
Centrifugal Pump
For centrifugal pump with specification (speed, material
etc.) other than base cost specification on the Figure
16.3, the f.o.b. purchase cost is,
◦ Cp=FTFMCB
FM is material factor (Table 16.21)
FT is pump type factor (Table 16.20)
This price does not include the electric motor
Note: CE cost index: 394 (mid-2000)
SKF4153: Plant Design 1
mfaw080901
Purchase Cost:
Shell and Tube HEX
Geometrical variables for S&T HEX are
◦ Tube diameter, wall thickness, length, spacing &
arrangement
◦ Baffle type and spacing
◦ Numbers of tube and shell passes
◦ Fixed-head, U-tube, floating head, kettle design
However, most published cost data are correlated in terms of
HEX surface area, i.e.
◦ size factor= surface area
SKF4153: Plant Design 1
mfaw080901
SKF4153: Plant Design 1
mfaw080901
SKF4153: Plant Design 1
mfaw080901
SKF4153: Plant Design 1
mfaw080901
SKF4153: Plant Design 1
mfaw080901
Purchase Cost: Shell and Tube HEX
Here specifications for base f.o.b. purchase cost are
◦ carbon steel tubes, ¾ in. or 1 in. OD, wall thickness of tube
is 16 BWG (Birmingham Wire Gage), 20 ft long, square or
triangular pitch
◦ carbon steel shell with shell side pressure up to 100psig
For base f.o.b. purchase cost use Figure 16.10, or
Use one of equations 16.39 – 16.42 (four different designs)
SKF4153: Plant Design 1
mfaw080901
Fig 16.10
SKF4153: Plant Design 1
mfaw080901
Purchase Cost: Shell and Tube HEX
Floating head,
CB=exp{11.667-0.8709[ln(A)]+0.09005[ln(A)]2} eqn 16.39
Fixed head,
CB=exp{11.0545-0.9228[ln(A)]+0.09861[ln(A)]2} eqn 16.40
U-tube,
CB=exp{11.147-0.9186[ln(A)]+0.09790[ln(A)]2} eqn 16.41
Kettle vaporiser,
CB=exp{11.967-0.8709[ln(A)]+0.09005[ln(A)]2} eqn 16.42
SKF4153: Plant Design 1
mfaw080901
Purchase Cost: Shell and Tube HEX
For S&T HEX with specification (pressure, material and
tube-length) other than base cost specifications on the
Figure 16.10, the f.o.b. purchase cost is,
◦ Cp=FPFMFLCB
FL is tube-length correction factor (see bottom page 523)
FM is material factor (Eqn 16.44 and Table 16.25)
FP is pressure factor (Eqn 16.45)
SKF4153: Plant Design 1
mfaw080901
Pressure vessel:
Knock-out drum
SKF4153: Plant Design 1
mfaw080901
Pressure vessel:
Flash drum
SKF4153: Plant Design 1
mfaw080901
Pressure vessel:
Reflux drum
SKF4153: Plant Design 1
mfaw080901
Pressure vessel with ladder, platform and support
SKF4153: Plant Design 1
mfaw080901
Pressure vessel
SKF4153: Plant Design 1
mfaw080901
Pressure vessel
SKF4153: Plant Design 1
mfaw080901
Pressure vessel
SKF4153: Plant Design 1
mfaw080901
Ellipsoidal head
SKF4153: Plant Design 1
mfaw080901
Pressure Vessel
Widely used in chemical industry
Cylindrical shape with inside diameter Di and cylindrical
shell length L (called the tangent-to-tangent length)
Welded two ellipsoidal or torispherical heads at
opposite ends
Includes:
◦ nozzles for entering and exiting streams,
manholes, connection for relief valves and
instruments, skirts and saddle for support,
platforms, ladder
SKF4153: Plant Design 1
mfaw080901
Pressure Vessel
Little or no internals (empty).
Examples are reflux drum, knock-out drum, settlers,
reactor, mixing vessel, vessel for fixed-bed adsorption and
storage drum
Oriented horizontally or vertically
Thickness of the wall are usually determined from ASME
Boiler and pressure vessel code
SKF4153: Plant Design 1
mfaw080901
Purchase Cost: Pressure Vessel
Here we use method by Mulet, Corripio and
Evan (1981)
See Figure 16.13, the correlations are eqn 16.53
(Horizontal), eqn 16.54(Vertical). This gives
CP=CV
Based on weight of shell and two 2:1 elliptical
heads
Size factor=weight (lb)
Carbon steel
Cost includes nozzles, manholes and supports
But do not include platform and ladder.
SKF4153: Plant Design 1
mfaw080901
Fig 16.13
SKF4153: Plant Design 1
mfaw080901
Purchase Cost: Pressure Vessel
For other specification,
◦ Cp=FMCV+CPL
Additional cost for platform and ladder is given in Eqn
16.55 (Horizontal) and Eqn 16.56 (Vertical)
FM are given in Table 16.26
Cost includes nozzles, manholes and supports
But do not include platform and ladder
SKF4153: Plant Design 1
mfaw080901
Stripping Tower
SKF4153: Plant Design 1
mfaw080901
Absorption Tower
SKF4153: Plant Design 1
mfaw080901
Distillation Tower
SKF4153: Plant Design 1
mfaw080901
Distillation Tower
SKF4153: Plant Design 1
mfaw080901
Towers for Distillation, Absorption and
Stripping
Vertical pressure vessel containing
◦ plates, packing, internals for multiple entries,
management of bottom liquids and its withdrawal.
SKF4153: Plant Design 1
mfaw080901
Purchase cost: Towers for Distillation,
Absorption and Stripping
Purchase cost (in US$) Cp=CT are from Figure 16.13 or
eqn 16.57 (note: should be CT instead of CV )
This cost inclusive nozzles, manholes, a skirt and internals
(but not plates or packing)
For other specification,
◦ Cp=FMCT+CPL
CPL is given by eqn 16.58
SKF4153: Plant Design 1
mfaw080901
Weight of pressure vessel and tower
W=π(Di+tS)(L+0.8Di)tSρ
ρ is density of carbon steel
tS is thickness of shell and head
SKF4153: Plant Design 1
mfaw080901
Pressure vessel cylindrical shell thickness tS
Use eqn 16.60
Note also the minimum wall thickness is
given at the top of pg 530
Eqn 16.62 for wall thickness taking into
consideration of wind load and earthquake
effect.
Eqns 16.63-16.65 are for pressure vessel
operating under vacuum
SKF4153: Plant Design 1
mfaw080901
Tower: Cost of Plate Column
◦ Add cost of installed trays (inclusive all downcomers) CT to
cost of vessel.
Cp=FMCT+CPL+CT where,
CT=NTFNTFTTFTMCBT
◦ Base cost CBT (CE 394, yr 2000) is given by eqn 16.67
◦ NT is tray number, FNT is given by eqn 16.68, FTT is tray type
factor, FTM is tray material factor, see pg 532
◦ For Packed column, see pg 534
SKF4153: Plant Design 1
mfaw080901
Table 16.32
Summary of Purchase cost of other
chemical processing equipments
For your plant design project, this table
could be very valuable
SKF4153: Plant Design 1
mfaw080901
Aspen Icarus Process Evaluator
(IPE) Software to estimate equipment size,
purchase costs, installation costs and total
permanent investment.
The CD-ROM that you have will show
two examples
◦ Depropanizer distillation tower
◦ Monochlorobenzene separation process.