CH 403 05 - Capital Cost Estimation

CAPITAL COST ESTIMATION
CH-403 Process Economics and Plant Design

Total Capital Investment (TCI)
 TCI is funds required to buy land, design and purchase
and install equipment and building and start-up
 TCI includes
 Land
 Fixed Capital Investment (FCI)
 Working Capital (WC)
 Offsite Capital (OC)
 Allocated Capital (AC)
 Other Capital items
 Interest on borrowed funds prior to start-up
 Catalyst and chemicals
 Patents, Licenses and Royalties
Assets per Employee
Textiles
Labour Intensive
Rubber and plastics
Aerospace and defense
Metals
Beverages
Forest and paper products
Chemicals Capital Intensive
Petroleum refining
Mining, Crude oil…
$1,000
$1,500
$2,000
$2,500
$0
$500
$ (in thousands)
Land
 Land forms a small part of TCI, but could be
included.
 As land does not depreciate in value, and
recovered or put to other use after completion of
project it may be considered a sunk cost.
 Real estate agents may be able to give prevailing
land costs.
 For estimates, land cost may be taken as 3% of FCI.
Fixed Capital Investment (FCI)
 Capital necessary to install process equipment with all
components that are needed for complete process
operation
 Manufacturing capital (V) / Direct Cost
 Site preparation, equipment, piping, instrumentation and
controls, insulation, foundations and auxiliary facilities
 These are directly involved in manufacturing process.
 Non-manufacturing capital (Ax) / Indirect Cost
 Construction overhead costs: field offices, supervision expenses,
contractor’s fee and contingencies, etc.
 Non-manufacturing facilities such as administrative, research,
sales and marketing, engineering offices, warehouses,
laboratories, utility and waste disposal facilities, canteen, etc.
Working Capital (WC) Investment
 Funds required for
 Raw material and supplies carried in stock
 Finished products in stock
 Semi-finished products in process
 Accounts receivable
 Cash for operating expenses such as salaries, raw
material purchase
 Accounts payable
 Taxes payable
 Insurance payable
Offsite Capital Investment
 Offsite facilities includes structure, equipment and services
that do not enter into manufacture of a product.
 Steam generation and distribution
 Electrical generation and distribution
 Fuel gas distribution
 Water well, city, cooling tower and pumping stations for water
distribution
 Refrigeration
 Plant air
 Environmental Control Systems
 Service facilities such as railroad, service road, warehouse,
material storage, fire protection, security and auxiliary buildings.
Allocated Capital Investment
 When raw material with sales potential is sourced from within the
company, then part of the fixed capital investment of raw material
producing plant is allocated to raw material using plant.
 The raw material also called intermediate.
 The intermediate producer’s fixed capital investment is reduced by
the allocated amount
 The intermediate user’s fixed capital investment is increased by
the allocated amount
 Process of allocation of capital is called proportionate share of
existing facilities (amongst production units)
 Allocated capital may consist of
 Intermediate chemicals as above
 Utilities
 Services
 Sales, Administration, Research and Engineering (SARE) Capital
Start up expenses
 Start-up expenses
 Operating expenses for the period from end of
construction to production of quality product in rated
quantity
 Operator and maintenance employee training
 Temporary construction
 Auxiliary services
 Testing and adjustment of equipment
 Piping and instruments

Other capital expenses
 Paid-up Royalties and Licenses
 Purchase of technology through paid-up royalties or
licenses – capital investment
 Running royalties – operating expenses
 Initial Catalyst and Chemical Charge

 Iflife of charge is more than 1 year – capital
investment
 Interest on Borrowed funds
Capital Cost Estimates
Classification of Estimates
Quality of Estimates
Equipment Cost Data and Sizing
Cost Indexes
Effect of Inflation and Escalation
Classification of Estimates
 Two broad classes based on facility boundary
 Green field estimate / grass roots estimates
 Includes entire site: Site preparation, Building and
structures, Processing equipment, Utilities, Service
facilities, Storage facilities, Railroad yards and docks
 Battery limits estimate
 Within an imaginary boundary around manufacturing
facility
 All other services, utilities, raw materials are assumed to
be available in proper quantity and quality at the boundary
Quality of Estimates
Estimate Purpose Data Use Accuracy Preparation
type range (% of capital
cost)
Order of Screening processes, Project scope, location, -30% to 0.01-0.05
rough business plan, utilities and services +50%
magnitude
check feasibility
Study Study equipments data Material and Energy -25% to 0.10-0.20
for preparing basic balances (PFDs), Rough +30%
economics package, size of equipments,
compare alternatives utilities, buildings, etc.
Preliminary Select equipments, Sufficient data to permit -20% to 0.20-0.50
economic planning, budgeting the proposal +25%
approval of management
Definitive Seek project funds and Complete data but not full -10% to 0.40-1.50
construction specifications and +20%
authorization drawings
Detailed For plant construction and Complete engineering -5% to 1.00-5.00
budget control drawings and site surveys +10%
Cost Estimating Information Guide
Equipment Cost Data
 Estimation of equipment cost is central to cost
estimate, other items are based on equipment cost
 Accuracy of equipment cost data is important
 Purchased cost – price of equipment (FoB – Free on
Board means the purchaser pays for the freight)
 Delivery cost – purchase cost + 10% of purchase
cost for delivery
 Installation cost – purchase + delivery + uncrated +
placed on foundation, also set-in-place cost
Cost-Capacity Exponents
 If equipment cost is known for a particular
capacity, then cost for another capacity can be
found S 
n
C2  C1  2 
 S1 
 C1 is cost of the equipment of size S1 and C2 is cost
of equipment of size S2 and n is the exponent that
varies between 0.30 to 1.20 depending on the type
of equipment.
 Six-tenths or 0.6 rule: typical value of n = 0.6 can
be used if specific value is not known.
Cost-Capacity Exponents
 Typical value of exponent for equipment group
Equipment group Average exponent
General equipment 0.68
Heat exchanger equipment 0.68
Fluid moving equipment 0.63
Tanks, Vessels and Towers 0.63
Environmental equipment 0.82
 A more detailed listing of equipments is available

in references (Peters and Timmerhaus, 2003)
Cost Curves
 The cost curves for various equipments can be given as
Ce  a  bS n
 Ce is the cost of purchased equipment. The values of

constants a and b, exponent n and limits of size
parameter S are tabulated (Towler and Sinnott, 2013)
 Cost-Capacity Parameters/Factors (S) that are used for
various equipments such as
Equipment Capacity Factors
Heat exchangers Surface area, number of passes, pitch, type head, pressure
Tanks, Receivers Volume, pressure, vertical or horizontal

Pumps Head, Capacity, Type of Pump, motor size
Reactors Reactor Volume, pressure type

Cost-Capacity Correlation
 Cost capacity can also be expressed in terms of correlations
that can be readily programmed.
 Example: cost of heat exchanger
CE  1.218CB FD FMC FP
 CE is exchange cost
 CB is base cost of a carbon steel, floating head exchanger, 150
psig design pressure
 FD is design type cost factor, (if different design)
 FMC is material of construction cost factor (if different material
than carbon steel)
 FP is design pressure cost factor (if different pressure than 150
psig)
 Base cost:

CB  exp 8.821  0.30863ln A  0.0681ln A
2

A is heat transfer area between 150 to 12000 ft2.
 Design type factor FD:
Fixed head exp 1.1156  0.0906ln A
Kettle reboiler 1.35
U tube exp  0.9816  0.0830ln A
 Design pressure range (in psig), FP:
100 – 300 0.7771 + 0.04981 (ln A)
300 – 600 1.0305 + 0.07140 (ln A)
600 – 900 1.1400 + 0.12088 (ln A)
 Material of construction factor FMC:

Stainless steel 316 0.8603 + 0.23296 (ln A)
Nickel 200 1.5092 + 0.60859 (ln A)
Monel 400 1.2989 + 0.43377 (ln A)
Inconel 600 1.2040 + 0.50764 (ln A)
Cost Indexes
 If cost of equipment is known at a particular time
in history, its present cost can be estimated using
cost index
 A cost index is an index value for a given time
showing the cost at that time relative to a certain
base time.  I present 
C present  Coriginal 
I 
 original 
I
 original and Ipresent are index values at time of original
cost (Coriginal) and present.
Cost Indexes - Sample
Cost Indexes
 Marshall and Swift equipment cost index is
published in Chemical Engineering.
 Engineering News-Record construction cost index is
published in Engineering News-Record.
 Nelson-Farrar refinery construction index is
published in Oil and Gas Journal.
 Chemical Engineering Plant Cost Index (CEPCI) is
published in Chemical Engineering.
Estimation of FCI
Components of FCI and estimation methods
Corporate Cash Flow
We are here!!
Various Components of FCI
Component Range Component Range
of FCI of FCI
Direct Cost Indirect Cost
Purchased equipment 15-40% Engineering and supervision 4-20 %
Purchased equipment installation 6-14 % Construction expenses 4-17 %
Instrumentation and controls 2-12 % Legal Expenses 1-3 %
(installed)
Piping (installed) 4-17 % Contractor’s Fee 2-6 %
Electrical systems (installed) 2-10 % Contingency 5-15 %
Buildings (including services) 2-18 %
Yard Improvements 2-5 %
Service facilities (installed) 8-30 %
Land 1-2 %
Contingency, 8.5% Solid-Fluid Processing Plant
Legal expenses, 0.9% Contractor's
Fee, 4.4%
Construction
expenses, 7.8%
Purchased
Equipment
Delivered, 23.0%
Engineering and
supervision, 7.4% Installation, 9.0%
Land, 1.4%
Instrumentation and
Service facilities controls (installed) ,
(installed) , 12.7% 6.0%
Piping (installed) ,
Yard Improvements ,
7.1%
2.8% Buildings (including Electrical systems
services) , 6.7% (installed) , 2.3%
25.0%
Comparison of Investment in different types of
20.0% processing plants
15.0%
10.0%
5.0%
0.0%
Solid Processing Plant Solid-Fluid Processing Plant Fluid Processing plant

Methods for Estimating FCI
Order of
Preliminary Definitive Detailed
magnitude Study Estimates
Estimate Estimate Estimate
Estimates
Richardson
Hirsch and
Turnover Ratio Lang Method Chilton Method Rapid Estimating
Glazier Method
Method
Peter and Code of

FCI per annual
Hand Method Timmerhaus Guthrie Method Accounts
ton of capacity
Method Method
Seven tenths
Wroth Method Holland Method
rule
Brown Method Happel Method
Miller Method
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
Peter and Code of

FCI per annual
Turnover Ratio
ton of capacity
Method Method
Seven tenths
rule
Miller Method
Turnover Ratio
 Turnover Ratio
Annual Gross Sales
Turnover Ratio (TOR) 
Fixed Capital Investment
 The ratio may vary from 0.2 to 5.0
 Values less than 1.0 are large volume capital
intensive industries
 Greater than 1.0 for processes with a small
number of equipment items.
 Reciprocal of turnover ratio is called capital ratio.
Turnover Ratio
Product TOR Product TOR
Benzene 8.25 Acrylonitrile 1.55
Ethyl Ether 6.05 Butanol 1.1
Styrene 5.21 Ethylene Glycol 1.1
Maleic Anhydride 4.82 Benzaldehyde 1
Nitric acid 3.95 Carbon tetrachloride 1
Ammonium Sulphate 3.82 Methanol 1
Vinyl Chloride 3.4 Ammonia 0.65
Phthalic anhydride 3.12 Sulfuric acid 0.63
Methyl Chloride 2.95 Ethylene dichloride 0.51
Urea 2.36 Polyethylene 0.4
Methyl isobutyl ketone 2.1 Sodium carbonate 0.39
Acetic Acid 1.7 Polypropylene 0.35
Butadiene 1.68
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
FCI per annual

ton of capacity FCI per annual
Hand Method
Peter and
Timmerhaus
Method
Guthrie Method
Code of
Accounts
Method
Seven tenths
rule ton of capacity
Miller Method
FCI per annual ton of capacity
 Capacity in tons / year of a plant may be available
for a particular year and FCI/annual ton capacity in
that year may be known.
 Then cost indexes may be used to extrapolate data
to present year for any capacity.
 Data is usually available in Chemical Week or
Hydrocarbon Processing.
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
FCI per annual

ton of capacity Seven tenths
Hand Method
Peter and
Timmerhaus
Method
Guthrie Method
Code of
Accounts
Method
Seven tenths
rule rule
Miller Method
Seven tenths rule
 Cost capacity data for process plants can be correlated
similar to equipment cost as
n
 SB 
C B  C A  
 SA 
 In the absence of any other information n = 0.7 gives
good estimate hence called seven tenths rule.
 Cost curves for plants can be expressed as
 CA 
CB   n S B 
n

SA 

a
 Data for a and n for many process plants is presented
in Towler and Sinnott, 2013.
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
Peter and Code of

FCI per annual
ton of capacity
Method Method
Seven tenths
Lang Method
rule
Miller Method
Lang Method
 Factors are proposed that when multiplied by delivered
equipment cost give fixed capital investment of the
plant.
 Factors include process equipment, instrumentation,
automatic control equipment, piping, insulation,
electrical, engineering cost, etc. but not contingency.
 Factors depend on type of processing plant
Type of plant Factor

Solids processing 3.10
Solids-fluid processing 3.63
Fluid processing 4.74
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
Peter and Code of

FCI per annual
ton of capacity
Method Method
Seven tenths
Hand Method
rule
Miller Method
Hand Method
 Hand Method categorize equipments on the basis of
application as every equipments installation, piping,
electrical and insulation requirement is different.
 Delivered equipment cost must be known.
 Process flow-sheet with list of major equipment
 Contingency factor is not included.
Equipment type Factor Equipment type Factor

Fractionating Columns 4 Pumps 4
Pressure vessels 4 Compressors 2.5
Heat Exchangers 3.5 Instruments 4
Fired heaters 2 Miscellaneous 2.5
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
Peter and Code of

FCI per annual
ton of capacity
Method Method
Seven tenths
Wroth Method
rule
Miller Method
Wroth Method
 Wroth Method is more detailed in costs that apply on equipment.
 Factors are applied to purchased cost of equipment and not on
delivered cost.
Equipment Factor
Centrifugal pump (motor driven, less motor) 7.0
Centrifugal pump (steam driven, incl. turbine) 6.5
Positive displacement pump (less motor) 5.0
Reactor (factor based on equivalent equipment) -
Refrigeration (packaged units) 2.5
Process tanks 4.1
Storage tanks (Receivers) 3.5
Fabricated and field erected tanks 2.0
50,000+ gallon tanks 2.0
Towers (columns) 4.0
Wroth Method
Equipment Factor
Blender 2.0
Blowers and Fans (including motor) 2.5
Centrifuge (process) 2.0
Centrifugal compressor (motor driven, less motor) 2.0
Centrifugal compressor (steam driven, incl. turbine) 2.0
Reciprocating compressor (steam and gas) 2.3
Reciprocating compressor (motor driven, less motor) 2.3
Ejector (vacuum units) 2.5
Furnaces (packaged units) 2.0
Heat Exchangers 4.8
Instruments 4.1
Motors, electric 3.5
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
Peter and Code of

FCI per annual
ton of capacity
Method Method
Seven tenths
Brown Method
rule
Miller Method
Brown Method
 Brown method includes factors for materials of
construction (Fm), instrumentation (Fi) and plant
location (Fp).
 These factors are applied along with Lang / Hand /
Garrett’s Module factor on every equipment.
 Garrett’s Module factor are more extensive than
Wroth method
 Brown’s factors along with Hand / Garrett’s factors
give better accuracy than Brown’s factors with
Lang method.
Garrett’s Module Factor
Equipment Type (carbon steel) Module Factor
Agitators: dual bladed turbines/single-blade propellers 2.0
Agitated tanks 2.5
Blowers, centrifugal 2.5
Centrifuges: solid-bowl, screen-bowl, pusher, stainless steel 2.0
Columns: distillation, absorption, etc. (Horizontal/Vertical) (3.1/4.2)
Compressors: low, medium, high pressure 2.6
Cooling towers 1.7
Electric drives/motors for fans, compressors, pumps 1.5
Electric drives/motors for other units 2.0
Gasoline drives/motors 2.0
Turbines: gas and steam 3.5
Pressure vessels (Horizontal/spherical/vertical) (3.1/3.1/4.2)
Vacuum equipment 2.2
Garrett’s Module Factor
Equipment type (carbon steel) Module Factor
Dryers (fluid bed, spray) 2.7
Dryers (rotary) 2.3
Evaporators (single effect, stainless steel) falling film 2.3
Evaporators (single effect, stainless steel) forced circulation 2.9
Fans 2.2
Filters (belt, rotary drum and leaf, tilting pan) 2.4
Filters (others) 2.8
Heat exchangers (air-cooled) 2.2
Heat exchangers (double pipe) 1.8
Heat exchangers (shell and tube) 3.2
Pumps Centrifugal 5.0
Pumps Chemical injection 2.8
Pumps Reciprocating 3.3
Turbine 1.8
Brown’s Factors
 Applied to equipment made of alloys or material
other than carbon steel.
 Price of equipment made of alloys is not just metal
price, but includes labor cost, fabricator’s cost and
other overhead.
 If the equipment is fully instrumented then a factor
of Fi = 1.2 is multiplied.
 If the location is other than USGC (US Gulf coast)
and equipment pricing is based on USGC price
then a location factor (Fp) is multiplied.
Brown’s material factor
Brown’s Location Factor
Country Region Location Factor
United States Gulf Coast 1.00
East Coast 1.04
West Coast 1.07
Midwest 1.02
Canada Ontario 1.00
Fort McMurray 1.60
Mexico 1.03
Brazil 1.14
China Imported 1.12
Indigeneous 0.61
India 1.02
Australia 1.21
Example: Study Estimate of FCI
Material
Purchased
S.No. Equipment Description ratio
Cost
alloy/CS
1 Vacuum Dryer Heater 200 ft2 U tube, 304 SS tubes and shell, 150 psig 3.5 26,000.00
2 Vacuum Dryer 2 ft diameter, 6 ft high, 304 SS, full vacuum 1.7 1,900.00
3 Vacuum Dryer Ejector 2 stage, 50 mmHg absolute pressure, 100 lb/h air flow, 304 SS 2.0 9,900.00
4 Vacuum Dryer Pump 240 gpm, 130 psi TDH, 304 SS 2.0 12,800.00
5 Still Heater U tube, 450 ft2, 304 SS shell and tube, 800 psig 3.5 50,700.00
6 Fatty acid still 10 ft diameter, 35 ft high, 304 SS, heating coil and internals included 1.7 55,000.00
7 Still Bottoms pump 100 gpm, 50 psi, 304 SS 2.0 4,000.00
8 Overhead condenser U tube, 570 ft2, 304 SS 3.5 54,000.00

9 Overhead surge tank 2 ft diameter, 4 ft high, 304 SS, 50 psig 1.7 1,600.00
10 Overhead pump 150 gpm, 120 psig TDH, 304 SS 2.0 6,000.00
11 Still steam ejector 3 stages, ejector and 15 mmHg abs, 20 lb/h, 304 SS 2.0 1,24,300.00
Estimate by Lang’s Method
Material Brown's Fully
Purchased Lang's Total Fixed
S.No. Equipment ratio material Instrumen
Cost Factor Capital
alloy/CS factor ted
1 Vacuum Dryer Heater 3.5 26,000.00 0.55 1.2 4.19 71,900.40

2 Vacuum Dryer 1.7 1,900.00 0.75 1.2 4.19 7,164.90
3 Vacuum Dryer Ejector 2.0 9,900.00 0.69 1.2 4.19 34,346.27
4 Vacuum Dryer Pump 2.0 12,800.00 0.69 1.2 4.19 44,407.30
5 Still Heater 3.5 50,700.00 0.55 1.2 4.19 1,40,205.78
6 Fatty acid still 1.7 55,000.00 0.75 1.2 4.19 2,07,405.00
7 Still Bottoms pump 2.0 4,000.00 0.69 1.2 4.19 13,877.28
8 Overhead condenser 3.5 54,000.00 0.55 1.2 4.19 1,49,331.60
9 Overhead surge tank 1.7 1,600.00 0.75 1.2 4.19 6,033.60
10 Overhead pump 2.0 6,000.00 0.69 1.2 4.19 20,815.92
11 Still steam ejector 2.0 1,24,300.00 0.69 1.2 4.19 4,31,236.48
Estimate by Hand’s Method
Purchased Hand's Total Fixed
S.No. Equipment ratio material Instrume Equipment Type
Cost Factor Capital
alloy/CS factor nted
1 Vacuum Dryer Heater 3.5 26,000.00 0.55 1.2 Heat Exch. 3.5 60,060.00
2 Vacuum Dryer 1.7 1,900.00 0.75 1.2 Pressure Vessel 4.0 6,840.00
3 Vacuum Dryer Ejector 2.0 9,900.00 0.69 1.2 Misc. Equipment 2.5 20,493.00
4 Vacuum Dryer Pump 2.0 12,800.00 0.69 1.2 Pump 4.0 42,393.60
5 Still Heater 3.5 50,700.00 0.55 1.2 Heat Exch. 3.5 1,17,117.00
6 Fatty acid still 1.7 55,000.00 0.75 1.2 Pressure Vessel 4.0 1,98,000.00
7 Still Bottoms pump 2.0 4,000.00 0.69 1.2 Pump 4.0 13,248.00
8 Overhead condenser 3.5 54,000.00 0.55 1.2 Heat Exch. 3.5 1,24,740.00
9 Overhead surge tank 1.7 1,600.00 0.75 1.2 Pressure Vessel 4.0 5,760.00
10 Overhead pump 2.0 6,000.00 0.69 1.2 Pump 4.0 19,872.00
11 Still steam ejector 2.0 1,24,300.00 0.69 1.2 Misc. Equipment 2.5 2,57,301.00
Estimate by Wroth’s Method
Purchased Wroth's Total Fixed
Cost Factor Capital
1 Vacuum Dryer Heater 3.5 26,000.00 0.55 1.2 Heat exchanger 4.8 82,368.00
2 Vacuum Dryer 1.7 1,900.00 0.75 1.2 Process Tank 4.1 7,011.00
3 Vacuum Dryer Ejector 2.0 9,900.00 0.69 1.2 Ejector (Vacuum units) 2.5 20,493.00
4 Vacuum Dryer Pump 2.0 12,800.00 0.69 1.2 Centrifugal Pump (less motor) 7.0 74,188.80
5 Still Heater 3.5 50,700.00 0.55 1.2 Heat exchanger 4.8 1,60,617.60
6 Fatty acid still 1.7 55,000.00 0.75 1.2 Process Tank 4.1 2,02,950.00
7 Still Bottoms pump 2.0 4,000.00 0.69 1.2 Centrifugal Pump (less motor) 7.0 23,184.00
8 Overhead condenser 3.5 54,000.00 0.55 1.2 Heat exchanger 4.8 1,71,072.00
9 Overhead surge tank 1.7 1,600.00 0.75 1.2 Process Tank 4.1 5,904.00
10 Overhead pump 2.0 6,000.00 0.69 1.2 Centrifugal Pump (less motor) 7.0 34,776.00
11 Still steam ejector 2.0 1,24,300.00 0.69 1.2 Ejector (Vacuum units) 2.5 2,57,301.00
Estimate by Garrett’s Module Method

Purchased Garrett's Total Fixed
Cost Factor Capital
1 Vacuum Dryer Heater 3.5 26,000.00 0.55 1.2 Shell and tube heat exchanger 3.2 54,912.00
2 Vacuum Dryer 1.7 1,900.00 0.75 1.2 Pressure Vessels vertical 4.2 7,182.00
3 Vacuum Dryer Ejector 2.0 9,900.00 0.69 1.2 Vacuum equipment 2.2 18,033.84
4 Vacuum Dryer Pump 2.0 12,800.00 0.69 1.2 Centrifugal Pump 5.0 52,992.00
5 Still Heater 3.5 50,700.00 0.55 1.2 Shell and tube heat exchanger 3.2 1,07,078.40
6 Fatty acid still 1.7 55,000.00 0.75 1.2 Pressure Vessels vertical 4.2 2,07,900.00
7 Still Bottoms pump 2.0 4,000.00 0.69 1.2 Centrifugal Pump 5.0 16,560.00
8 Overhead condenser 3.5 54,000.00 0.55 1.2 Shell and tube heat exchanger 3.2 1,14,048.00
9 Overhead surge tank 1.7 1,600.00 0.75 1.2 Pressure Vessels vertical 4.2 6,048.00
10 Overhead pump 2.0 6,000.00 0.69 1.2 Centrifugal Pump 5.0 24,840.00
11 Still steam ejector 2.0 1,24,300.00 0.69 1.2 Vacuum equipment 2.2 2,26,424.88
Study Estimation of FCI
Method Used Estimation

Lang’s Method 11,26,724.52
Hand’s Method 8,65,824.60
Wroth’s Method 10,39,865.40
Garrett’s Module Method 8,36,019.12
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
Peter and
FCI per annual Computerized
Hand Method Timmerhaus Guthrie Method
ton of capacity Methods
Method
Seven tenths
rule
FactorialWroth Method Holland Method
Step Counting
Method Brown Method Happel Method
Method
Miller Method
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
Peter and Code of

FCI per annual
ton of capacity
Method Method
Seven tenths
rule
Chilton
Method
Miller Method
Chilton Method
S.No. Items Parameter Lower Limit Range Upper Limit Factor Cost
Delivered 1
1 equipment cost 100.00
Installed 1.35-2.00
2 equipment cost 1.43 143.00
3 Solid processing Solid-Fluid processing Fluid processing
Process piping Type of plant
0.07-0.10 0.10-0.30 0.30-0.60 0.6 85.80
4 Amount of None Some Extensive
Instrumentation
instrument 0.03-0.05 0.05-0.12 0.20-0.25 0.2 28.60
5 Buildings and Site Outdoor Outdoor/Indoor Indoor
Type of plant
Development 0.10-0.30 0.20-0.60 0.60-1.00 0.2 28.60
6 Minor Addition Major Addition New Facilities
Auxiliaries Extent
0.00-0.05 0.05-0.75 0.25-1.00 0.02 2.86
7 Short Intermediate Long
Outside lines Average Length
0.00-0.05 0.05-0.15 0.15-0.25 0.02 2.86
8 Total Physical plant costs 291.72
9 Engineering and Simple Difficult
Complexity
Construction 0.20-0.35 0.35-0.6 0.3 87.52
10 Firm Subject to Change Speculative
Contingencies Process
0.10-0.20 0.20-0.30 0.30-0.50 0.15 43.76
11 large commercial > $10MM Small commercial unit $0.5MM to $10MM Experimental unit
Size factor Size of plant
0.00-0.05 0.05-0.15 0.15-0.35 0.02 5.83
12 Total fixed plant cost 428.83
Order of
Estimates
Turnover Ratio Lang Method Chilton Method Holland

Hirsch and
Glazier Method
Richardson
Rapid Estimating
Method
FCI per annual

ton of capacity
Hand Method
Peter and
Timmerhaus
Method
Method
Guthrie Method
Computerized
Methods
Seven tenths
rule
Miller Method
Holland Method
S.No. Items Parameter Lower Limit Range Upper Limit Factor Cost
Delivered 1
1 equipment cost 100.00
2 Installed Solid processing Solid-Fluid processing Fluid processing
Type of plant
equipment cost 1.45 1.39 1.47 1.43 143.00
3 Solid processing Solid-Fluid processing Fluid processing
Process piping Type of plant
0.07-0.10 0.10-0.30 0.30-0.60 0.6 85.80
4 Amount of Little Automatic SomeAutomatic
Instrumentation
instrument 0.02-0.05 0.05-0.10 0.2 28.60
5 Buildings and Site Outdoor Outdoor/Indoor Indoor
Type of plant
Development 0.05-0.20 0.20-0.60 0.60-1.00 0.2 28.60
6 Auxiliaries Minor Addition Major Addition New Facilities
Extent
Facilities 0.00-0.05 0.05-0.25 0.25-1.00 0.02 2.86
7 Existing Separated Units Scattered Units
Outside lines Average Length
0.00-0.05 0.05-0.15 0.15-0.25 0.02 2.86
8 Total Physical plant costs 291.72
9 Engineering and Simple Difficult
Complexity
Construction 0.20-0.35 0.35-0.5 0.3 87.52
10 Firm Subject to Change Speculative
Contingencies Process
0.10-0.20 0.20-0.30 0.30-0.50 0.15 43.76
11 large commercial > $10MM Small commercial unit $0.5MM to $10MM Experimental unit
Size factor Size of plant
0.00-0.05 0.05-0.15 0.15-0.35 0.02 5.83
12 Total fixed plant cost 428.83
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
FCI per annual

ton of capacity
Peters and
Hand Method
Peter and
Timmerhaus
Method
Guthrie Method
Code of
Accounts
Method
Seven tenths
rule
Timmerhaus
Method
Miller Method
Peters and Timmerhaus Method
Percentage of delivered equipment cost
Solid-Fluid Processing
Components Solid Processing Plant Fluid Processing plant
Plant
Purchased Equipment Delivered 100 100 100

Installation 45 39 47
Instrumentation and controls (installed) 18 26 36
Direct Costs
Piping (installed) 16 31 68
Electrical systems (installed) 10 10 11
Buildings (including services) 25 29 18
Yard Improvements 15 12 10
Service facilities (installed) 40 55 70
Land 6 6 6
Indirect Costs
Engineering and supervision 33 32 33

Construction expenses 39 34 41
Legal expenses 4 4 4
Contractor's Fee 17 19 22
Contingency 35 37 44
Total Direct Cost (TDC) 275 308 366

Total Indirect Cost (TIC) 128 126 144
Fixed Capital Investment (FCI) 403 434 510

Working Capital Investment (WCI) 71 77 90
Total Capital Investment (TCI) 474 511 600

Order of
Estimates
Richardson
Hirsch and
Glazier Method
Happel Method
Method
Peter and Code of

FCI per annual
ton of capacity
Method Method
Seven tenths
rule
Miller Method
Happel Method
S.No. Items Factors Factor Cost
1 Delivered equipment cost 100.00
2 labour charges for installing 0.10-0.20 0.15 15.00
3 Insulation 0.10-0.25 0.2 20.00
4 Process piping (carbon steel) 0.50-1.00 0.6 60.00
5 Foundations 0.03-0.13 0.1 10.00
6 Buildings and Site Development 0.07 0.07 7.00
7 Structure 0.05 0.05 5.00
8 Fireproofing 0.06-0.10 0.08 8.00
9 Electrical 0.07-0.15 0.12 12.00
10 Painting and Clean-up 0.06-0.10 0.08 8.00
Net factor on delivered equipment cost 1.45
Total Physical plant costs 245.00
11 Overhead, contractor's fee 0.3 0.3 73.50
12 Engineering Fee 0.13 0.13 31.85
13 Contingencies 0.13 0.13 31.85
Net factor on direct plant cost 0.56
Total fixed plant cost 382.20
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
Peter and Code of

FCI per annual
ton of capacity
Method Method
Hirsch and
Seven tenths
rule
Glazier Method Brown Method Happel Method
Miller Method
Hirsch and Glazier Method
 Algorithmic form of cost estimation where fixed capital
investment is given by
FCI  FI Ce 1  FL  FP  FM   Cerected  Calloy 
 Ce – total purchased cost of equipment (F.O.B.) (less
incremental cost for corrosion resistant alloys)
 Cerected – cost of already erected equipments
 Calloy – incremental cost of corrosion resistant alloy
 FI – indirect cost factor, (usually 1.4)
 FL – cost factor for field labor
 FP – cost factor for piping material
 FM – cost factor for miscellaneous items
 Cost factor for field labour
 Ce   Che   C fv 
log FL   0.635  0.154 log    0.992   0.506 
 1000   Ce   Ce 
 Che – total heat exchanger cost (less incremental cost
of alloy)
 Cfv – total cost of field fabricated vessels (less
incremental cost of alloy)
 Cost factor for piping material
 Ce   Che   Cp 
log FP   0.266  0.014 log    0.156   0.556 
 1000   Ce   Ce 
 Cp – total pump and driver cost (less incremental cost
of alloy)
 Cost factor for miscellaneous items
 Ce   Ct 
log FM   0.344  0.033 log    1.194 
 1000   Ce 
 Ct – total cost of tower shells (less incremental cost of
alloy
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
Peter and Code of

FCI per annual
ton of capacity
Method Method
Seven tenths
rule Guthrie
Method
Miller Method
Guthrie Method
 Module based method where in each module
consists of set of cost elements.
 Following six modules are presented
 Chemical engineering module
 Solids handling module
 Site development module
 Industrial buildings module
 Offsite facilities module
 Project indirects module

Guthrie Method
 For every module, the following calculation can be done
 Equipment cost, F.O.B. – E
 Direct field material cost – m, includes piping, concrete, steel,
instrumentation, electrical, insulation, paint, m = 0.4 to 1.25 E
 Total material cost for the equipment is M = m + E = 1.4 to 2.25 E
 Direct field labor cost for material erection and equipment
setting be L
 Direct cost, DC = M + L, summed for all equipment in the
module to get total direct cost.
 Indirect cost, includes freight, insurance, taxes, construction
overhead and engineering is IC = 0.34 DC
 Bare module cost (BMC) = 1.34 DC
 Total module cost = Contingency (8-20% of BMC) + Contractor’s
Fee (2-7% of BMC) + BMC
Unit Cost Method
 Fixed Capital Investment (FCI) required is
FCI  f F E  E     f
L Mx 
M x  f M L LM   f e H e   f d Nd 
E – Delivered purchased equipment cost, in $
 EL – Delivered equipment labor cost, in $
 fMx – Specific material unit cost, in $/kg
 Mx – Specific material quantity, in kg/unit
 fML – Specific material labour unit cost per labour hour,

in $/hour
 LM – Labour hours for the specific material, in hours
Unit Cost Method
 Fixed Capital Investment (FCI) required is
  
FCI  f F  E  EL    f M x M x  f M L LM   f e H e   f d Nd 
 fe – unit cost for engineering, in $/hour
 He – Engineering employee-hours, in hours
 fd – unit cost per drawing or specification, in
$/drawing
 Nd – number of drawings or specifications
 ff – field or construction expense factor (> 1)
 The summation is over all the equipments/

modules.
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
Peter and Code of

FCI per annual
ton of capacity
Richardson
Hand Method Timmerhaus
Method
Guthrie Method Accounts
Method
Seven tenths
rule Rapid Estimating
Method
Miller Method
Richardson Rapid Estimation
 The Richardson system covers detailed estimating
elements
 Civil engineering work – excavation, backfill and earthmoving
 Concrete – Forming, pouring, reinforcing, equipment
foundations, treatment plants, etc.
 Structural steel – Building, process equipment supports,
platforms, handrails and ladders.
 Electrical work – Conduit, wire, switchgear for process
equipment, power distribution, etc.
 Mechanical work – Piping, instrumentation, plumbing
 Process equipment – Pressure vessels, tanks, compressors,
motors, freight.
 Indirect costs – Jobsite and home office overhead, supervision,
rental equipment and tools.
Order of
Estimates
Richardson
Hirsch and
Glazier Method
Method
Peter and Code of

FCI per annual
ton of capacity
Computerized
Hand Method Timmerhaus
Method
Guthrie Method Accounts
Method
Seven tenths
rule Methods
Miller Method
Commercial Software
 Commercial Software packages –
 CostLink/CM (Building Systems Design, Inc.)
 Cost Track™ (OnTrack Engineering Ltd.)
 Aspen Process Economic Analyzer (APEA, Aspen
Technology Inc.) – ICARUS™
 PRISM Project Estimator (ARES Corp.)
 Success Estimator (US Cost)
 Visual Estimator (CPR International Inc.)
 WinEst® (Win Estimator®)
 Computer programs save time on repetitive

calculations and reduce mathematical errors.
Estimation of Other Components
Contingency
Estimation of Working Capital
Estimation of Offsite Capital
Estimation of Start-up Expenses
Contingency
 Contingency is a provision for unforeseen elements
that experience has shown are likely to occur.
 Process contingency: equipment and process related
 Project contingency: engineering, labor, construction,
weather and strikes.
 In general, smaller projects need more
contingency.
 For preliminary estimates, 15-20% project
contingency + 15-20% process contingency is
applied.
Estimation of Working Capital
 Percentage Methods
 Percentage of Capital Investment Method
 Percentage of Sales Method
 Inventory Method
Percentage Methods
 Percentage of Capital Investment Method
 Simply a percentage of the TCI is estimated as WC
 For a company working year round – 15 to 20% of TCI
 Seasonal companies – 20 to 30% of TCI
 Percentage of Sales Method

 Businesses that are labor intensive and use little
capital investment such as cosmetics, food, etc.
 Range 15 to 49%, typically 35% of annual sales
revenue.
Inventory Method
 Based on inventory of the company
 Following items are included
Item Factors
Raw materials One month’s requirement @ purchase price
Goods in process Based on retention time in tanks, calculate back to raw
material and charge @ purchase price + one half of sum of
direct and indirect production cost.
Finished products One month’s production @ selling price
Supplies and stores 10% of annual maintenance expense
Cash One month’s manufacturing expense
Accounts receivable Production cost for 1 month or 5% of annual net sales
Accounts payable One month’s average accounts payable
Estimation of Offsite Capital
 As a percentage of Free on Board (F.O.B) process
equipment cost
 Small modification of off-sites – 1 to 5%
 Restructuring of off-sites – 5 to 15%
 Major expansion of off-sites – 15 to 45%
 Grass roots plants – 45 to 150%

Estimation of Start up Expenses
 Single Factor Method
 Small plant: FCI less than $10MM – 10% of FCI
 Medium sized plant: FCI $100MM or greater – 6% of
FCI
 Large scale plant: FCI $10MM to $100MM – 8% of FCI
 Multiple Factor Method is sum of

 Labor: 2-3 months training expenses
 Commercialization cost: 5% of battery limit direct
capital cost
 Start-up inefficiency: 4% of annual operating expenses
References
 Peters, M. S., Timmerhaus, K. and West, R. E., Plant
Design and Economics for Chemical Engineers,
McGraw Hill Education, 5th Edition, 2002.
 Couper, J. R., Process Engineering Economics, CRC
Press, 1st Edition, 2003.
 Towler, G. and Sinnott, R., Chemical Engineering
Design: Principles, Practice and Economics of Plant
and Process Design, Butterworth-Heinemann, 2nd
Edition, 2013
Additional Resources
 Association of the Advancement of Cost
Engineering International (www.aacei.org)
 Project management institute (www.pmi.org)
 The U.K. Association of cost Engineers
(www.acoste.org.uk)
 International Cost Engineering Council
(www.icoste.org)

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CAPITAL COST ESTIMATION

CH-403 Process Economics and Plant Design

 Testing and adjustment of equipment

 Piping and instruments

 Initial Catalyst and Chemical Charge

 A more detailed listing of equipments is available

 Ce is the cost of purchased equipment. The values of

Tanks, Receivers Volume, pressure, vertical or horizontal

Reactors Reactor Volume, pressure type

 Material of construction factor FMC:

Solid Processing Plant Solid-Fluid Processing Plant Fluid Processing plant

Peter and Code of

Brown Method Happel Method

Peter and Code of

Brown Method Happel Method

FCI per annual

Brown Method Happel Method

FCI per annual

Brown Method Happel Method

Peter and Code of

Brown Method Happel Method

Type of plant Factor

Peter and Code of

Brown Method Happel Method

Equipment type Factor Equipment type Factor

Peter and Code of

Brown Method Happel Method

Peter and Code of

Brown Method Happel Method

8 Overhead condenser U tube, 570 ft2, 304 SS 3.5 54,000.00

1 Vacuum Dryer Heater 3.5 26,000.00 0.55 1.2 4.19 71,900.40

Material Brown's Fully

Method Used Estimation

Peter and Code of

Turnover Ratio Lang Method Chilton Method Holland

FCI per annual

Brown Method Happel Method

FCI per annual

Purchased Equipment Delivered 100 100 100

Engineering and supervision 33 32 33

Total Direct Cost (TDC) 275 308 366

Fixed Capital Investment (FCI) 403 434 510

Total Capital Investment (TCI) 474 511 600

Peter and Code of

Brown Method Happel Method

Peter and Code of

Glazier Method Brown Method Happel Method

Peter and Code of

 Site development module

 Industrial buildings module

 Offsite facilities module

 Project indirects module

 fMx – Specific material unit cost, in $/kg

 Mx – Specific material quantity, in kg/unit

 fML – Specific material labour unit cost per labour hour,

 The summation is over all the equipments/

Peter and Code of

Peter and Code of

Brown Method Happel Method

 Computer programs save time on repetitive

 Seasonal companies – 20 to 30% of TCI

 Percentage of Sales Method

 Major expansion of off-sites – 15 to 45%