Page 208 - Plant design and economics for chemical engineers

182 PLANT DESIGN AND ECONOMICS FOR CHEMICAL ENGINEERS

investment. This is summarized in the following cost equation:
c, = [= + UfIE +f*E +f& + . ..~l~f.> (3)
where f,,fi...= multiplying factors for piping, electrical, instrumentation, etc.
fi = indirect cost factor always greater than 1.
The percentages used in making an estimation of this type should be
determined on the basis of the type of process involved, design complexity,
required materials of construction, location of the plant, past experience, and
other items dependent on the particular unit under consideration. Average
values of the various percentages have been determined for typical chemical
plants, and these values are presented in Table 17.
Estimating by percentage of delivered-equipment cost is comma ly used
for preliminary and study estimates. It yields most accurate results whe applied
to projects similar in configuration to recently constructed plants. For c mpara-
i
ble plants of different capacity, this method has sometimes been reported to
yield definitive estimate accuracies.

Example 3 Estimation of fixed-capital investment by percentage of delivered-
equipment cost. Prepare a study estimate of the tied-capital investment for the
process plant described in Example 1 if the delivered-equipment cost is $100,000.

Solution. Use the ratio factors outlined in Table 17 with modifications for
instrumentation and outdoor operation.

Components cost
Purchased equipment (delivered), E $100,000
Purchased equipment installation, 39% E 39,000
Instrumentation (installed), 28% E 28,000
Piping (installed), 31% E 31,000
Electrical (installed), 10% E 10,000
Buildings (including services), 22% E 22,000
Yard improvements, 10% E 10,000
Service facilities (installed), 55% E 55,000
Land, 6% E 6,000
Total direct plant cost D 301,000
Engineering and supervision, 32% E 32,000
Construction expenses, 34% E 34,000
Total direct and indirect cost (D + I) 367,000
Contractor’s fee, 5% (D + I) 18,000
Contingency, 10% (D + I) 37,000
Fixed-capital investment $422,000

METHOD D “LANG” FACTORS FOR APPROXIMATION OF CAPITAL INVFST-
MENT. This technique, proposed originally by Lang-/’ and used quite frequently
to obtain order-of-magnitude cost estimates, recognizes that the cost of a

tH. J. Lang, Chem. Eng., 54(10):117 (1947); H. J. Lang, Chem. Eng., 55(6):112 (1948).