TEK-501 EKONOMI TEKNIK

PLANT COST ESTIMATION

 Introduction
• Plant cost can be determined when all equipment
cost has been known.
• Step for preparing plant cost estimation
– Prepare a flow sheet for he process to be estimated
– Prepare heat and material balance
– Size all equipment precisely
– Analyze the process carefully to determine “plant cost
factor”
 Introduction
Plant Cost Estimation Accuracy
• Order of magnitude accuracy +40% up to -100%
• Study +30% up to -50%
• Preliminary +20% up to -35%
• Definitive +10% up to -15%
• Detailed +5% up to -10%
 Total Plant Cost (TPC)
Estimation Method

•Based on TPC Components (Garret, 29)

•Lang Factor
•Chart (Garret, Appendix 2)
•Cost per ton of product (Garret, 35–36)
•Capital ratio or Turn over ratio (Garret,
35-36)
 TPC:
Component Factors
1. Direct Cost
TPC Factor
(based fraction of total
Component equipment cost)
a. Purchased Equipment 1
b. Piping 0.15 - 0.70
c. Electrical 0.10 - 0.15
d. Instrumentation 0.10 - 0.35
e. Utilities 0.30 - 0.75
f. Foundation 0.07 - 0.12
g. Painting, Fireproofing, Safety 0.02 - 0.08
h. Yard Improvement 0.02 - 0.10
i. Environmental 0.05 - 0.15
j. Buildings 0.10 - 0.30
k. Land 0.00 - 0.10
subtotal 1.96 - 4.80
 TPC:
Component Factors (Continued)
2. Indirect Cost
TPC Factor
(based fraction of total
Component equipment cost)
a. Construction, Engineering 0.30 - 0.75
b. Contractors fee 0.10 - 0.45
c. Contingency 0.15 - 0.80
Subtotal 2.51 - 6.80

TPC = Direct Cost + Indirect Cost

 TPC:
Component Factors (Continued)
• Piping
– always represented a major cost in chemical plants.
– Optimize piping runs and plant design is a must
– Energy saving
– Maintenance reducing
– Corrosion and erosion resistant
– fluid material
– etc
 TPC:
Component Factors (Continued)
• Insulation
– The need to conserve energy and to maintain
temperature and heat on equipment

• Electrical
– Budget that needed to fulfill all electrical device

• Buildings
– Number of buildings are required for any plant, such as
control rooms, offices, shops, laboratory, and so on.
 TPC:
Component Factors (Continued)
• Instrumentation
– Rising labor charge and increasing computer use and
complex instrumentation control significantly increase
its value

JS 2008
 TPC:
Component Factors (Continued)
• Environmental
– Governmental jurisdiction requiring zero discharge of
any contaminant into air, water, or land.
– Green technology, extensive pollution control, treating
facilities, groundwater monitoring wells, leak detector,
hazardous waste handling.

• Painting, Fire Protection, safety Guard

– This is small factor but an important one to the
appearance and safety of the plant.
 TPC:
Component Factors (Continued)
• Yard Improvement
– Includes grading, drainage, roads, rail facilities, parking,
fences, landscaping, concrete slabs and walkways,
sump, lighting, and other nonprocess component.
• Utilities
– Required to operate the plant such as telephone, water,
gas, other fuel, steam, compressor air, inert gas,
sewage, electricity
• Land
– New land need to be purchased.
 TPC:
Component Factors (Continued)
• Construction and Engineering Expense
– Detailed engineering required for the plant design,
drawing, permit, and managing and supervising
construction.
• Contractor’s fee
– Contractor’s profit is usually negotiable
• Contingency
– Cost for Unpredictable condition
 TPC :
Lang Factor
• Simple method to predict total plant cost by multiplier a
single factor
• Frequently used to obtain order of magnitude cost
estimates

Factor for
Type of Plant Fixed Capital Investment Total Capital Investment
Solid Processing Plant 3,9 4,6
Solid-Fluid Processing Plant 4,1 4,9
Fluid Processing Plant 4,8 5,7

TPC = Lang Factor x Purchased Equipment

 TPC :
Chart Estimation
• Using appendix 2 on Garret
• CE-index 320
• Infrastructure for “grass root” plant, minor utility,
and non-plant facilities was not included
• Cost would be higher and assembled data would
be much more scattered because of each
location’s different requirement.
• The chart would be useful as a guide but not too
much confidence in their accuracy
TPC = Cost x (CE-index now/ CE-index 1987)
 TPC :
Cost per Ton of Product
• This is a ratio of the capital cost of a new plant per
annual ton of product
• Can be rough prediction when data are available
on exactly designed and sized plants
• Plant cost vary as some exponent size, so do not
use linearization that would make high error
• Only accurate for the listed plant size

TPC = factor x capacity

 TPC :
Capital Ratio (Turn Over Ratio)
• Based on yearly value of the product sold to the
initial plant capital cost
• More accurate the cost per ton of product
• Quite useful for an entire plant or totally unknown
design
• Not easy to use and may required additional
arbitrary judgments
Sales per year
TPC = --------------------
factor TOR
 Total Capital Investment (TCI)

• TCI is usually greater than TPC

• TCI components is TPC components + other cost
• Other cost are off site facilities, plant start up, and working
capital and their value are

Other Capital Investment percent of TPC

Off Site Facilities 0 - 30

Plant Start Up 5 - 10

Working Capital 10 - 20
Working capital can also be determined by 10 - 35% from manufacturing
cost
 Total Capital Investment (TCI)

• Off-Site Facilities
– Additional facilities relating to auxiliaries
– This facilities may have been included in the
previous capital cost estimate
– If the auxiliaries will only be used by production
plant than the cost should itemized in the TPC
– If the auxiliaries is to share than the cost
should itemized separately
– Below is the list of auxiliary facilities
Total Capital Investment (TCI)

JS 2008
 Total Capital Investment (TCI)

• Plant Start Up
– Cost of starting plant and bringing it to full
production
– At this period usually little saleable, not too
good quality, and little product generated.
– Required labors, materials, overhead expense
(labor’s welfare), extra engineering, equipment
modification and so on.
 Total Capital Investment (TCI)
• Working Capital
– Amount of cost available to pay the bills and
sustain the operation before product is sold and
payment is received.
– will be needed throughout the plant’s life
– should be recovered at the end of the operating
period when the plant’s totally shut down
 Total Capital Investment (TCI)
Working capital consisted of:
1. Operating expense
a. Average length of time the product is being
manufactured and in storage plant.
b. Average length of time that takes to collect for the
merchandise sold
2. Cash for wage, fringe benefit, lacal taxes, and other
current obligation
3. Inventories of raw materials, maintenance, and
operating supply
 Total Capital Investment (TCI)
• Raw material inventories method
– First and first out
• First material come then should be the first material
out
– Just in time
• All material comes will be empty in that time, no
reserved material in warehouse.
 Exercise
1. Calculate the Total Plant Cost of Acetone Plant
which has 200,000 ton/year capacity. Product
value is US$ 1.5/ton while $sales/$plant is 3.4 (see
page 36)
2. Capacity of urea plant is 200.000 ton/year,
$sales/$plant is 2.4, and $plant/annual ton is 84.
Calculate
a. sales/ton product
b. $sales/year
c. TPC (Total Plant Cost)
 Exercise
3. Acetone plant by capacity of 150,000 ton/year, runs using
OSE (on stream efficiency) 86.3%. How many plant cost
required if the plant was build on 80% grass root land. (use
chart on appendix 2)

4. An evaporation unit at sugar refinery was build at 1987. One

of this forced circulation evaporator with capacity 500 ft2
and made from mild steel was broken and need to be replace
this year (2008). It value at 1987 was US$ 350,000. the
evaporator will replace by a same type but has higher
heating are that is 1000 ft2 to anticipate in plant expansion.
a. how much the cost to develop the new evaporator until
operate
 Exercise
b. In order to adjust plant capacity. It was planned to build a
new evaporation unit with a little modification at this year.
This new plant will cost US$ 2,500,000 for buying all of the
equipment until operate. How much the cost of
b.1 direct cost
b.2 indirect cost
b.3 TPC
b.4 TCI

c. Predict the cost of plant in problem b. using Lang Factor