Page 269 - Chemical engineering design

244
CHEMICAL ENGINEERING
and a more detailed estimate would be made, if time permitted. With experience,
and where a company has cost data available from similar projects, estimates of
acceptable accuracy can be made at the flow-sheet stage of the project. A rough P
and I diagram and the approximate sizes of the major items of equipment would
also be needed.
3. Detailed (Quotation) estimates, accuracy š5 10 per cent, which are used for project
cost control and estimates for fixed price contracts. These are based on the completed
(or near complete) process design, firm quotations for equipment, and a detailed
breakdown and estimation of the construction cost.
The cost of preparing an estimate increases from about 0.1 per cent of the total project
cost for š30 per cent accuracy, to about 2 per cent for a detailed estimate with an accuracy
of š5 per cent.

6.3. FIXED AND WORKING CAPITAL
Fixed capital is the total cost of the plant ready for start-up. It is the cost paid to the
contractors.
It includes the cost of:

1. Design, and other engineering and construction supervision.
2. All items of equipment and their installation.
3. All piping, instrumentation and control systems.
4. Buildings and structures.
5. Auxiliary facilities, such as utilities, land and civil engineering work.
It is a once-only cost that is not recovered at the end of the project life, other than the
scrap value.
Working capital is the additional investment needed, over and above the fixed capital,
to start the plant up and operate it to the point when income is earned.
It includes the cost of:

1. Start-up.
2. Initial catalyst charges.
3. Raw materials and intermediates in the process.
4. Finished product inventories.
5. Funds to cover outstanding accounts from customers.
Most of the working capital is recovered at the end of the project. The total investment
needed for a project is the sum of the fixed and working capital.
Working capital can vary from as low as 5 per cent of the fixed capital for a simple,
single-product, process, with little or no finished product storage; to as high as 30 per
cent for a process producing a diverse range of product grades for a sophisticated market,
such as synthetic fibres. A typical figure for petrochemical plants is 15 per cent of the
fixed capital.
Methods for estimating the working capital requirement are given by Bechtel (1960),
Lyda (1972) and Scott (1978).