Page 63 - Chemical process engineering design and economics

48 Chapter 2

simple methods. As the process development advances, then you should use more
accurate methods.

DEPRECIABLE CAPITAL COST

Factor Methods
Figure 2.4 divides the depreciable capital costs into several categories. The two
major categories are direct and indirect costs. Peters and Timmerhaus [4] and
Humphreys [5] list these costs. Reference [3] gives a more detailed breakdown.
As Figure 2.4 shows,

depreciable capital cost = the cost of:
delivered equipment
+ equipment placing
+ piping connections between equipment and to utilities
+ electrical equipment and wiring
+ instrumentation and controls
+ buildings
+ auxiliary facilities (offsites)
+ engineering
+ construction contractor's fee
+ contingency (2.2)
In the factor methods for cost estimating, first calculate the purchased or
delivered cost of all major equipment, for example, distillation columns, reactors,
pumps, heat exchangers, etc. Then multiply the total equipment cost by factors to
estimate the various other components of the depreciable capital cost given in
Equation 2.2, such as piping and electrical wiring. Thus, we arrive at the cost of
installing all the equipment and supplying all the services needed to produce an
operational process.
It helps to visualize the process of constructing a plant to understand the
calculation of depreciable capital cost. First, a purchasing agent orders equipment
from various manufacturers from all over the world. The manufacturers then de-
liver the equipment to the plant site. Shipping charges, insurance, and taxes add to
the cost of equipment, resulting in the delivered equipment costs.
After arriving at the plant site, construction workers set the equipment in
place. This entails placing the equipment on concrete or steel structural supports,
prepared in advanced. Because some equipment could weigh tons, a crane will lift
the equipment onto supports. Then, construction workers secure the equipment in
place. A factor will account for this cost.
Next, pipe fitters connect the equipment to other equipment and to steam
and cooling water distribution systems. Piping and valves, which could weigh

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