Page 184 - Analysis, Synthesis and Design of Chemical Processes, Third Edition

definition are at the high end, then the expected cost range would be between $1.76 and $2.36 million. If
the effort and definition are at the low end, then the expected cost range would be between $1.04 and
$3.44 million.

The primary reason that capital costs are underestimated stems from the failure to include all of the
equipment needed in the process. Typically, as a design progresses, the need for additional equipment is
uncovered, and the estimate accuracy improves. The different ranges of cost estimates are illustrated in
Example 7.2.

Example 7.2

Compare the costs for performing an order-of-magnitude estimate and a detailed estimate for a plant that
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cost $5.0 × 10 to build.

For the order-of-magnitude estimate, the cost of the estimate is in the range of 0.015% to 0.3% of the final
cost of the plant:
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Highest Expected Value: ($5.0 × 10 )(0.003) = $15,000
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Lowest Expected Value: ($5.0 × 10 )(0.00015) = $750

For the detailed estimate, the cost of the estimate is in the range of 10 to 100 times that of the order-of-
magnitude estimate.

For the lowest expected cost range:
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Highest Expected Value: ($5.0 × 10 )(0.03) = $150,000
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Lowest Expected Value: ($5.0 × 10 )(0.0015) = $7500

For the highest expected cost range:
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Highest Expected Value: ($5.0 × 10 )(0.3) = $1,500,000
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Lowest Expected Value: ($5.0 × 10 )(0.015) = $75,000

Capital cost estimates are essentially paper-and-pencil studies. The cost of making an estimate indicates
the personnel hours required in order to complete the estimate. From Table 7.2 and Examples 7.1 and 7.2,
the trend between the accuracy of an estimate and the cost of the estimate is clear. If greater accuracy is
required in the capital cost estimate, then more time and money must be expended in conducting the
estimate. This is the direct result of the greater detail required for the more accurate estimating
techniques.

What cost estimation technique is appropriate? At the beginning of Chapter 1, a short narrative was given
that introduced the evolution of a chemical process leading to the final design and construction of a
chemical plant. Cost estimates are performed at each stage of this evolution.

There are many tens to hundreds of process systems examined at the block diagram level for each process
that makes it to the construction stage. Most of the processes initially considered are screened out before
any detailed cost estimates are made. Two major areas dominate this screening process. To continue
process development, the process must be both technically sound and economically attractive.

A typical series of cost estimates that would be carried out in the narrative presented in Chapter 1 is as