Preliminary Study on Cost Estimation

Preliminary study on cost estimation:

1. Capital cost for a new design can be divided into 5 main category: Battery limit investment Utility investment Off-site investment Engineering fees Working capital

2. Purchased cost of equipment In battery limit:

3. To bring price up-to-date: Use CE Index of Equipment:

4. Construction materials, pressure and temperature have a great deal on capital cost of the equipment. Thus, cost factors is introduced into the equation to give a more accurate value:

5. Installation cost usually 2-4 times the purchase cost of equipment.

6. Utility investment: Investment in utilities system of equipment.

7. Off-site investment + utilities: 20-40% of total capital of installed battery limit investment.

8. Working capital: 15% of total capital investment

9. Total capital cost:

10. Thus, to estimate fixed capital cost: List the main plant items and estimate their sizes. Estimate the equipment cost of the main plant items, Adjust the equipment costs to a common time basis using a cost index, Convert the cost of the main plant items carbon steel, moderate pressure and

moderate temperature, Select the installation subfactors from table 2.7 and adjust for individual

circumstances. Select the appropriate materials of construction, operating pressure and

operating temperature correction factor, Apply equation 2.6 to estimate the total fixed capital cost.

11. Operating cost: Raw materials:

i. Trade journal (Chemical Marketing Reporter by Schnell Publishing Company)

ii. European Chemical News by Reed Business Info.

iii.

iv.

v.

Utilities:i. Fuelii. Electricity

iii. Steam:o Depend on boiler efficiency (typically 75%-80%)o Depend greatly on cost of fuel

o η IS=H 1−H '2H1−H2

o Colling water (1% of cost of power)o Refrigerationo Compressed airo Inert gas

iv. Labor cost:o Depend on the process (batch/continuous)

v. Maintenance:o Depend on the processing materials (solid/liquid/gas)o Normally 6% of fixed capital investment

12. Selling price of product: