Equipment Cost Estimation
A. Overview of Cost Estimation
B. Graphical Method
C. Cost Index Method
D. Six-Tenth Factor Rule
E. Capital Investment
F. Working Capital
g. Total Capital Investment
Table 6-17 Estimation of capital investment cost (showing individual
components)
I. Direct Costs = material and labor involved in actual installation of
complete facility (65-85% of fixed capital investment)
A. Equipment + installation +instrumentation + piping + electrical +
installation + painting (50-60% of fixed capital investment
1. Purchased equipment (15-40% of fixed capital investment)
2. Installation, including insulation and panting (25-55% of purchased
equipment cost)
3. Instrumentation and controls, installed (8-50% of purchased-equipment
cost)
4. Piping, installed (10-80% of purchased-equipment cost)
5. Electrical, installed (10-40% of purchased equipment)
II. Indirect Costs = expenses which are not directly involved with material
and labor of actual installation of complete facility (15-35% of fixed-capital
investment)
A. Engineering and supervision (5-30% of direct costs)
B. Legal Expenses (1-3% of fixed capital investment)
C. Construction expense and contractor’s fee (10-20% of fixed-capital)
D. Contingency (5-15% of fixed-capital)
III. Fixed-capital investment = direct cost + indirect costs Plant Design and Economics for
IV. Working capital (10-20% of total capital investment) Chemical Engineers, 5th Edition,
Peters et.al. 2004
V. Total Capital Investment = fixed-capital investment + working capital
Table 6-3. Typical percentages of fixed-capital investment values for
direct and indirect cost segments for multipurpose plants or large
additions to existing facilities
Direct Cost Ranges of FCI, %
Purchased equipment 15-40
Purchased-equipment installation 6-14
Instrumentation and controls 2-12
(installed)
Piping (installed) 4-17
Electrical systems (installed) 2-10
Buildings (including services) 2-18
Yard improvements 2-5
Service facilities (installed) 8-30
Land 1-3
Indirect Cost
Engineering and supervision 4-20
Construction Expenses 4-17
Legal Expenses 1-3
Plant Design and Economics for
Contractor's fee 2-6 Chemical Engineers, 5th Edition,
Peters et.al. 2004
Contingency 5-15
Estimating Equipment
Cost by Scaling
COST INDEXES
Index value at present
Present Cost = original cost
Index value at the time
original cost was obtained
Plant Design and Economics for
Chemical Engineers, 5th Edition,
Peters et.al. 2004
Plant Design and
Economics for
Chemical
Engineers, 5th
Edition, Peters
et.al. 2004
`
Plant Design and
Economics for Chemical
Engineers, 5th Edition,
Peters et.al. 2004
Plant Design and Economics for
Chemical Engineers, 5th Edition,
Peters et.al. 2004
Plant Design and Economics for
Chemical Engineers, 5th Edition,
Peters et.al. 2004
Plant Design and Economics for
Chemical Engineers, 5th Edition,
Peters et.al. 2004
Plant Design and Economics for
Chemical Engineers, 5th Edition,
Peters et.al. 2004
Plant Design and Economics for
Chemical Engineers, 5th Edition,
Peters et.al. 2004
• It is often necessary to estimate the cost of a piece of equipment when cost data are
not available for the particular size of capacity involved.
• Predictions can be made by using the power relationship known as the six-tenths
factor rule, if the new piece of equipment is similar to one of another capacity for
which cost data are available.
• According to this rule, if the cost of a given unit b at one capacity is known, the cost
of a similar unit a with X times the capacity of the first is X0.6 times the cost of the
initial unit
Cost of equipment a = (cost of equipment) X0.6
Cost of equipment a = (cost of equipment) X0.6
• The predicting equation indicates that a log-log plot of capacity versus cost for a
given type of equipment should a straight line with a slope equal to 0.6
• Figure 6-5 presents plot of this sort for
shell-and-tube heat exchangers.
• The application of the 0.6 rule of then for
most purchased equipment if, however, an
oversimplification, since the actual values
of the cost capacity exponent vary from
less than 0.3 to greater than 1.0
`
Plant Design and
Economics for Chemical
Engineers, 5th Edition,
Peters et.al. 2004
END
