Page 189 - Plant design and economics for chemical engineers

COST ESTIMATION 163
TABLE 3
Cost indexes as annual averages

Chemical
Marshall ~ Nelson-Farrar engineering
Marshall antand Swift
installed-equipment
installed-equlpmenr Eng. News-Record refinery plant cost
I2lg. NC)
indexes, 1926 = 100 c0nstruc1 construction index
indexes, 1926 = 100
construction index
1913
1%
1949
All-
All- Process- 1913 1949 1967 index, 1957-1959
Process-
Year industry industry =loo =loo =loo 1946=100 = loo
1975 444 452 2412 464 207 576 182
1976 472 479 2401 503 224 616 192
1977 505 514 2576 540 ?A1 653 204
1978 545 552 2776 582 259 701 219
1979 599 607 3003 630 281 757 239
1980 560 675 3237 679 303 823 261
1981 721 745 3535 741 330 904 297
1982 746 774 3825 802 357 977 314
1983 761 786 4066 852 380 1026 317
1984 780 806 4146 869 387 1061 323
1985 790 813 4195 879 392 1074 325
1986 798 817 4295 900 401 1090 318
1987 814 830 4406 924 412 1122 324
1988 852 870 4519 947 422 1165 343
1989 895 914 965 429 1194 355
1990
(J&n.) 924 979 435 1203 356
t AlI costs presented in this text are based on this value of the Marshall and Swift index
unless otherwise indicated.

COST INDEXES
Most cost data which are available for immediate use in a preliminary or
predesign estimate are based on conditions at some time in the past. Because
prices may change considerably with time due to changes in economic condi-
tions, some method must be used for updating cost data applicable at a past
date to costs that are representative of conditions at a later time.? This can be
done by the use of cost indexes.
A cost index is merely an index value for a given point in time showing the
cost at that time relative to a certain base time. If the cost at some time in the
past is known, the equivalent cost at the present time can be determined by
multiplying the original cost by the ratio of the present index value to the index
value applicable when the original cost was obtained.

tSee Chap. 11 for a discussion of the strategy to use in design estimates to consider the effects of
inflation or deflation on costs and profits in the future.