Page 43 - Chemical process engineering design and economics

Production and Capital Cost

Estimation

Before initiating the development of a process, at various stages in its develop-
ment, and before attempting the design of a process and plant, process engineers
must make economic evaluations. The evaluation determines whether they should
undertake a project, abandon it, continue with it (but with further research), or take
it to the pilot plant stage. If they decide to proceed with process development, an
economic evaluation will pinpoint those parts of the process requiring additional
study. Winter [1] has stated that the economic evaluation of a project is a continu-
ous procedure. As the process engineer gathers new information, he can make a
more accurate evaluation followed by a reexamination of the project to determine
if it should continue.
Even if insufficient technical information is available to design a plant com-
pletely, we must still make an economical evaluation to determine if it is economi-
cally and financially feasible. A project is economically feasible when it is more
profitable than other competing projects, and financially feasible when manage-
ment can raise the capital for its implementation. Although calculations may show
that a given project could be extremely profitable, the capital requirements may
strain the financial capabilities of the organization. In this case, the project may be
abandoned unless partners can be found to share the risk. The economic evaluation
of a process proceeds in several steps [1]. These are:

1. preparing a process flow diagram
2. calculating mass and energy flows
3. sizing major equipment
4. estimating the capital cost

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