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COSTING AND PROJECT EVALUATION
“battery limits” is used to define a contractor’s responsibility. The main processing plant,
within the battery limits, would normally be built by one contractor. The utilities and other
ancillary equipment would often be the responsibility of other contractors and would be
said to be outside the battery limits. They are often also referred to as “off-sites”.
6.7. ESTIMATION OF PURCHASED EQUIPMENT COSTS

The cost of the purchased equipment is used as the basis of the factorial method of cost
estimation and must be determined as accurately as possible. It should preferably be based
on recent prices paid for similar equipment.
The relationship between size and cost given in equation 6.2 can also be used for
equipment, but the relationship is best represented by a log-log plot if the size range is
wide. A wealth of data has been published on equipment costs; see Guthrie (1969, 1974),
Hall et al. (1982), Page (1984), Ulrich (1984), Garrett (1989) and Peters et al. (2003).
Articles giving the cost of process equipment are frequently published in the journals
Chemical Engineering and Hydrocarbon Processing. Equipment prices can also be found
on various web sites, such as: MatchesMSN@msn.com.
The cost of specialised equipment, which cannot be found in the literature, can usually
be estimated from the cost of the components that make up the equipment. For example, a
reactor design is usually unique for a particular process but the design can be broken down
into standard components (vessels, heat-exchange surfaces, spargers, agitators) the cost of
which can be found in the literature and used to build up an estimate of the reactor cost.
Pikulik and Diaz (1977) give a method of costing major equipment items from cost
data on the basic components: shells, heads, nozzles, and internal fittings. Purohit (1983)
gives a detailed procedure for estimating the cost of heat exchangers.
Almost all the information on costs available in the open literature is in American
journals and refers to dollar prices in the US. Some UK equipment prices were published in
the journals British Chemical Engineering and Chemical and Process Engineering before
they ceased publication. The only comprehensive collection of UK prices available is
given in the Institution of Chemical Engineers booklet, IChemE (2000).
Up to 1970 US and UK prices for equipment could be taken as roughly equivalent,
converting from dollars to pounds using the rate of exchange ruling on the date the prices
were quoted. Since 1970 the rate of inflation in the US has been significantly lower than
in the UK, and rates of exchange have fluctuated since the pound was floated in 1972.
If it can be assumed that world market forces will level out the prices of equipment,
the UK price can be estimated from the US price by bringing the cost up to date using
a suitable US price index, converting to pounds sterling at the current rate of exchange,
and adding an allowance for freight and duty.
If an estimate is being made to compare two processes, the costing can be done in
dollars and any conclusion drawn from the comparison should still be valid for the United
Kingdom and other countries.
The cost data given in Figures 6.3 to 6.7, and Table 6.2 have been compiled from
various sources. They can be used to make preliminary estimates. The base date is
mid-2004, and the prices are thought to be accurate to within š25 per cent.