Page 189 - Analysis, Synthesis and Design of Chemical Processes, Third Edition

In the last two examples, the relative costs of equipment of differing size were calculated. It is necessary
to have cost information on the equipment at some “base case” in order to be able to determine the cost of
other similar equipment. This base-case information must allow for the constant, K, in Equation 7.2, to be
evaluated, as shown in Example 7.5. This base case cost information may be obtained from a current bid
provided by a manufacturer for the needed equipment or from company records of prices paid for similar
equipment.

Example 7.5

2
The purchased cost of a recently acquired heat exchanger with an area of 100 m was $10,000.

Determine
a. The constant K in Equation 7.2
b. The cost of a new heat exchanger with area equal to 180 m 2

From Table 7.3: n = 0.59: for Equation 7.2:
n
2 0.59
a. K = C /(A ) = 10,000/(100) 0.59 = 661 {$/(m ) }
b
b
b. C = (661)(180) 0.59 = $14,100
a
There are additional techniques that allow for the price of equipment to be estimated that do not require
information from either of the sources given above. One of these techniques is discussed in Section 7.3.

7.2.2 Effect of Time on Purchased Equipment Cost

In Figures 7.1 and 7.2, the time at which the cost data were reported (2006) is given on the figure. This
raises the question of how to convert this cost into one that is accurate for the present time. When one
depends on past records or published correlations for price information, it is essential to be able to
update these costs to take changing economic conditions (inflation) into account. This can be achieved by
using the following expression:

(7.4)

where C = Purchased cost

I = Cost index

Subscripts: 1 refers to base time when cost is known

2 refers to time when cost is desired