Page 290 - Chemical engineering design

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COSTING AND PROJECT EVALUATION
the cost of each man should include an allowance for holidays, shift allowances, national
insurance, pension contributions and any other overheads. The current wage rates per
hour in the UK chemical industry (mid-2004) are £15 20, to which must be added up to
50 per cent for the various allowances and overheads mentioned above.
Chemical plants do not normally employ many people and the cost of operating labour
would not normally exceed 15 per cent of the total operating cost. The direct overhead
charges would add 20 to 30 per cent to this figure.
Wessel (1952) gives a method of estimating the number of man-hours required based
on the plant capacity and the number of discrete operating steps.

Supervision
This heading covers the direct operating supervision: the management directly associated
with running the plant. The number required will depend on the size of the plant and
the nature of the process. The site would normally be broken down into a number of
manageable units. A typical management team for a unit would consist of four to five
shift foremen, a general foreman, and an area supervisor (manager) and his assistant. The
cost of supervision should be calculated from an estimate of the total number required and
the current salary levels, including the direct overhead costs. On average, one “supervisor”
would be needed for each four to five operators. Typical salaries, mid-2004, are £20,000
to £45,000, depending on seniority. An idea of current salaries can be obtained from the
salary reviews published periodically by the Institution of Chemical Engineers.

Laboratory costs

The annual cost of the laboratory analyses required for process monitoring and quality
control is a significant item in most modern chemical plants. The costs should be calculated
from an estimate of the number of analyses required and the standard charge for each
analysis, based on experience with similar processes.
As a rough estimate the cost can be taken as 20 to 30 per cent of the operating labour
cost, or 2 to 4 per cent of the total production cost.

Plant overheads

Included under this heading are all the general costs associated with operating the plant not
included under the other headings; such as, general management, plant security, medical,
canteen, general clerical staff and safety. It would also normally include the plant technical
personnel not directly associated with and charged to a particular operating area. This
group may be included in the cost of supervision, depending on the organisation’s practice.
The plant overhead cost is usually estimated from the total labour costs: operating,
maintenance and supervision. A typical range would be 50 to 100 per cent of the labour
costs; depending on the size of the plant and whether the plant was on a new site, or an
extension of an existing site.

Capital charges
The investment required for the project is recovered as a charge on the project. How
this charge is shown on an organisation’s books will depend on its accounting practices.