CHAPTER - 9
COST ESTIMATION
EQUIPMENTS:-
1. Jaw Crusher
2. Roll Crusher
3. Screen
4. Hopper
5. Rotary Kiln
6. Cyclone Separator
7. Cooler
8. Storage Tank
Table 5
YEAR CEPCI Index
2002 395.6
2007 525.4
2013 564.3
2014 588.6
(Ref:-capci_2012_py.pdf) [13]
9.1 Capital Cost
9.1.1 Jaw Crusher
By Graph: (Pg , Fig , Timmerhaus)
Flow rate = 1.517 kg/sec
Cost of Jaw Crusher in 2002 = $60,000
Using formula:
C
1
/C
2
=(
)
60000/C
2
= (395.6/588.6)
C
2
= $89271.99 (2014)
CEPCI (2002) --- 395.6
CEPCI (2014) --- 588.6
Now according to conversion rate
1$ = Rs. 60
Cost = 89271.99*60
= Rs 5356319.515
9.1.2 Roll Crusher
Flow rate = 1.517 kg/sec
Cost of Roll Crusher in 2002 = $18000 (from Graph)
Using formula:
C
1
/C
2
= (
)
18000/c
2
= (395.6/588.6)
C
2
= $26781.59 (2014)
CEPCI (2002) --- 395.6
CEPCI (2014) --- 588.6
Now according to conversion rate
1$ = Rs. 60
Cost = 26781.59*60
= Rs 1606895.85
9.1.3 Screen
Cost of screen in 2007 in $ =20800 (from graph)
C=20,800 (588.6/525.4) *60
=Rs 1398121.02 (2014)
9.1.4 Hopper
Volume of Hopper = 430.181 ft
3
Material of Construction = Carbon steel
So, Cost of Hopper in 2014 = $ 10800 (from Matche.com)
$1 = Rs 60
So, 10800 * 60 = Rs 648000
9.1.5 Rotary Kiln
Total Heat Duty = 16Million BTU/hr
Flow rate = 2.5 tons/hr
Inclination = 3%
Heat input = 1371.289 kW = 4679030.048 =4*10
6
Btu/hr
From graph:
Cost = $ 424060 (1987)
Now, Cost Index in 1987 = 320
So, applying the formula we get;
C
1
/C
2
= (
)
424060 / C
2
= (320 / 588.6)
Cost of Kiln in 2014 = $ 780000
$1 = Rs 60
So, Cost of Kiln = Rs 46800000
9.1.6 Cyclone Separator
Q = 3156.476 ft
3
/sec = 189388.5621 ft
3
/min
From graph
Cost = $38000 (1987)
Now, Cost Index in 1987 = 320
So, applying the formula we get;
C
1
/C
2
= (
)
38000 / C
2
= (320 / 588.6)
Cost of Cooler in 2014 = $ 70000
$1 = Rs 60
So, Cost of Cooler = Rs 4200000
9.1.7 Cooler
Area = 63.9268 ft
3
Working pressure = 16.1695 psig
Cost in 2002 =$ 7500
Cost in 2014 = $ 11158.99 = Rs 669539.4
9.1.8 Storage Tank
Volume of Storage Tank = 18.026 m
3
(Assuming storage for 1 day.)
Cost in 2002 = $ 15000
Now, applying the formula =
C
1
/C
2
= (
)
15000/c
2
= (395.6/588.6)
= $ 22,295.4545
$1 = Rs 60
So, Cost of Storage Tank = Rs 1337727.27
Total purchased cost = Rs 62016601.67
9.2 Total Capital Investment
TCI = Fixed Capital Investment + Working Capital + Start up.
FCI = Total direct cost + Total indirect cost
Total direct cost = Total offsite cost + Total onsite cost.
Table 6
Direct cost Fraction of delivered
equipment
Cost(Rs)
Purchased equipment Rs. 62016601.67
a. Onsite Cost
Land 20000m
2
(Rs 250/m
2
) Rs. 5000000
Delivery(% of PEC) 0.10 Rs. 6201660.167
Delivered Equipment
cost
PEC + (0.10 *PEC) Rs. 68218261.84
Purchase Installation 0.45 DEC Rs. 30698217.83
IPC 0.18 DEC Rs. 12279287.13
Piping 0.16 DEC Rs. 10914921.89
Electric system 0.10 DEC Rs. 6821826.184
b. Offsite cost
Building 0.25 DEC Rs. 17054565.46
Yard 0.15 DEC Rs. 10232739.28
Service Facilities 0.40 DEC Rs. 27287304.74
Total Direct Cost Rs. 189308784.5
Indirect Cost
Engg. & Supervision 0.33 DEC Rs. 22512026.41
Cost expansion 0.41 DEC Rs. 27969487.35
Legal expansion 0.04 DEC Rs. 2728730.47
Contractors fees 0.22 DEC Rs. 15008017.6
Contingent cost 0.35 DEC Rs. 23876391.64
Total Indirect Cost Rs. 92094653.47
FCI = Total Direct Cost + Indirect Cost
= Rs.189308784.5 + 92094653.47
= Rs. 281403438
Working Capital = 0.70 of DEC
= Rs. 47752783.29
Start up = 0.10 * FCI
= Rs. 28140343.8
Total Capital Investment = FCI + WC + Start up
=Rs 357296565.1
9.3 Estimation of Total Product Cost
Total Product Cost = Manufacturing Cost + General Expenses
Now,
MC=Direct production cost + Fixed charges + Plant overheads
Now, 1
st
we need to find cost of RM used
Table 7
Raw Mat.
Qty.
(kg/yr)
Price
(Rs/kg)
Cost per year(Rs)
MgCO
3
43269345.5 (kg/yr) 36 1557696438
According to mass balance,
MgCO
3
= 5463.27 kg/hr * 330 * 24
= 43269345.5 kg/yr
Cost = Rs. 36 / kg
= Rs. 1557696438
Now, Raw Material Cost is 20 - 70 % of Total Production Cost, considering Raw material cost to be 60% of
total production cost we have:
TPC = 1557696438/0.60 = Rs. 2596160730
Direct Production Cost:
Table 8
Parameters % Factor Cost(Rs)
Operating Labour(OL) 10% of TPC Rs. 259616073
Direct Supervision & clerical labour 10% of RM Rs. 155769643.8
Utilities 10% of TPC Rs. 259616073
Maintenance 2% FC Rs. 5628068.76
Labour charge 5% of OL Rs. 12980803.65
Total direct production cost = Rs. 690910662.2
Fixed charges % Factor Cost (Rs)
Local Tax 1% of FCI Rs. 2814034.38
Prof. Tax 4% of FCI Rs. 11256137.52
Financial tax 10% of TCI Rs. 35729656.51
Depreciation 10% of FCI + 2% of Building Cost Rs. 28481435.11
Total Rs. 78281263.52
Plant Overheads
40% of Operating Labour = Rs. 103846429.2
General expenses
Administrative Cost 10% of Operating Labour Rs. 25961607.3
Distribution & Marketing Cost 2% of TPC Rs. 51923214.6
R&D 1% of TPC Rs. 25961607.3
Total Rs. 103846429.2
Manufacturing Cost = Rs. 873038354.9
Total Product Cost = Rs 873038354.9 + 103846429.2
= Rs. 976884784.1
9.4 Profitability Analysis
Total Revenue = Total production * cost/kg of MgO
= (20* 10
6
) kg * Rs 60/kg
= Rs. 1200000000
PBT = Revenue - Total Product Cost
= Rs. 1200000000 - Rs. 976884784.1
= Rs. 223115215.9
Tax rate = 33 %
Profit after Tax = (1-0.33) * PBT
= 0.67 * 223115215.9
Net Profit = 149487194.7
Rate of Return = Net Profit / Total Capital Investment
= 149487194.7 / 357296565.1
= 0.41838 = 41.84%
Payback Period = Total Capital Investment / Net profit
= 357296565.1 / 149487194.7
= 2.39 years
