Abstract
Keywords
Key Learning Objectives
Introduction
Components of capital cost
Accuracy and purpose of capital cost estimates
Order-of-magnitude estimates
Estimating purchased equipment costs
Estimating installed costs: The factorial method
Cost escalation
Location factors
Estimating off-site capital costs
Computer tools for cost estimating
Validity of cost estimates
References
Introduction
Most chemical engineering design projects are carried out to provide information from which estimates of capital and operating costs can be made. Chemical plants are built to make a profit, and an estimate of the investment required is needed before the profitability of a project can be assessed. Cost estimation is a specialized subject and a profession in its own right, but the design engineer must be able to make rough cost estimates to decide between project alternatives and optimize the design. This chapter introduces the components of capital costs and the techniques used for capital cost estimating. Simple costing methods and some cost data are given, which can be used to make preliminary estimates of capital costs in the early stages of design. Sources of cost data and methods for updating cost estimates re described. The more sophisticated software that is used in industry for preliminary estimating is discussed in Section 7.10. For a more detailed treatment of the subject, the reader should refer to the numerous specialized texts that have been published on cost estimation. The following books are particularly recommended: Happle and Jordan (1975), Guthrie (1974), Page (1996), Garrett (1989), Humphreys (1991, 2005).