Page 206 - Plant design and economics for chemical engineers

180 PLANT DESIGN AND ECONOMICS FOR CHEMICAL ENGINEERS
time required to prepare such a detailed-item estimate, this type of estimate is
almost exclusively only prepared by contractors bidding on lump-sum work from
finished drawings and specifications.

METHOD B UNIT-COST ESTIMATE. The unit-cost method results in good
estimating accuracies for fixed-capital investment provided accurate records
have been kept of previous cost experience. This method, which is frequently
used for preparing definitive and preliminary estimates, also requires detailed
estimates of purchased price obtained either from quotations or index-corrected
cost records and published data. Equipment installation labor is evaluated as a
fraction of the delivered-equipment cost. Costs for concrete, steel, pipe, electri-
cals, instrumentation, insulation, etc., are obtained by take-offs from the draw-
ings and applying unit costs to the material and labor needs. A unit cost is also
applied to engineering employee-hours, number of drawings, and specifi tions.
A factor for construction expense, contractor’s fee, and contingency is esti tated
from previously completed projects and is used to complete this type of
estimate. A cost equation summarizing this method can be given as?

where C, = new capital investment
E = purchased-equipment cost
EL = purchased-equipment labor cost
c material unit cost, e.g., fP = unit cost of pipe
= specific material quantity in compatible units
fi = specific material labor unit cost per employee-hour
Mf = labor employee-hours for specific material
i = unit cost-for engineering
= engmeermg employee-hours
fi = unit cost per drawing or specification
d, = number of drawings or specifications
fF = construction or field expense factor always greater than 1
Approximate corrections to the base equipment cost of complete, main-plant
items for specific materials of construction or extremes of operating pressure
and temperature can be applied in the form of factors as shown in Table 16.

METHOD C PERCENTAGE OF DELIVERED-EQUIPMENT COST. This method
for estimating the fixed or total-capital investment requires determination of the
delivered-equipment cost. The other items included in the total direct plant cost
are then estimated as percentages of the delivered-equipment cost. The addi-
tional components of the capital investment are based on average percentages
of the total direct plant cost, total direct and indirect plant costs, or total capital

tH. C. Bauman, “Fundamentals of Cost Engineering in the Chemical Industry,” Reinhold Publish-
ing Corporation, New York, 1964.