Page 62 - Chemical process engineering design and economics

Production and Capital Cost Estimation 47

According to Table 2.1, the fixed capital cost equals the sum of the depre-
ciable capital cost, land cost, and land development cost. Land cost is 0.015 times
the depreciable capital cost and land development is 0.0211 times the depreciable
capital cost for a fluid processing plant. Thus,

C F = C D + 0.015 C D + 0.0211 C D =0.103 $/kg (0.0467 c/kg)
Solving for C D, we obtain

= 0.0994 $/kg (0.0451 $/lb)
C D
After, calculating the operating labor cost and depreciable capital cost, use
the procedure outlined in Table 2.1 to calculate all other costs, except for the ad-
ministrative, marketing, and research and development costs. First, calculate the
production cost by summing up all the costs given in Table 2.1.1. These costs are
the direct cost, indirect cost, administrative cost, marketing cost, financing cost,
and the research and development cost. Thus, the production or manufacturing
cost is,

CM = 86.4 + 11.9 + 0.045 C M + 0.135 C M + 1.24 + 0.0575 C M

Solving for C M, we obtain

C M = 131 c/kg (59.4 c/lb)
We can now complete Table 2.1.1 for those items that depend on the pro-
duction cost. The production cost for this process, reported by Kohn [12], is 119
c/kg (54.0 c/lb). Because the estimation of N in the operating labor cost requires
judgment, we should expect that process engineers will differ in their estimates. If
we estimate N to be 8 instead of 7, the production cost is 132 c/kg (59.9 c/lb),
which is not significant.

CAPITAL COST ESTIMATION
Calculating the production cost requires estimating the depreciable capital cost and
fixed capital cost. Before estimating the depreciable capital cost, the process engi-
neer must first calculate mass and energy flow rates to size process equipment. He
can then estimate the cost of all equipment and finally the depreciable and fixed
capital costs. Besides sizing equipment he must also calculate utility requirements
from the mass and energy flow rates. Two methods for estimating capital costs
will be discussed: one is the average factor method and the second is the individ-
ual factor method. At the early stages of developing a process, you can use these

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