equipment cost estimation

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TK 4103 Evaluasi Ekonomi Pabrik Kimia

September 27th, 2010

Laras Wuri Dianningrum

13007075

Cost data are stated as purchased, delivered, or installed cost. Purchased cost is the price of the

equipment FOB (free on board) at the manufacturers plant. Purchased cost includes material,

design type, design pressure, capacity, etc. Delivered cost is the price of the equipment plus

delivery charges to the purchasers plant FOB. Shipping, customs, packing, and another

transportation cost is included here. Installed cost means the equipment item has been purchased,

delivered, uncrated, and placed on a foundation in an operating department. This cost depends on

the equipment. In common, the cost includes things like freight, crane service, foundations and

supports, all labor, electrical, switch gear and controls, starters, etc.

For preliminary estimation of equipment cost, estimating charts have been used by many chemicalengineers to provide rough approximation. Even though it has many limitations compared to

detailed engineering design, it serves a useful purpose for most chemical engineers. The curve is

plotted as cost versus size data, mean that predicting the cost of another size is allowed as long as

the information of specific size is known.

To use the diagram, there are some indicators that must be considered:

1. Size factoring exponents

This is the main information obtained from the diagram.

The exponents are the slope of the cost versus size lines and given under each chart. Size

here is related to parameter chosen that affect cost primarily, such as cubic feet of gas per

minute for compressor while the others have chosen horse power. This is depends on

author.

2. Inflation cost indexes

It is defined as inflation indicator made specifically for the chemical industry to correct the

cost of each piece of equipment to the required date. The factor is known as Chemical

Engineering Plant Cost Index (CE Index).

CE Index is composed of four components, weighted as follow: equipment, machinery, and

supports (61%), erection and installation factor (22%), buildings, material, and labor (7%),



and engineering and supervision (10%). This information is based on monthly survey and

produced as yearly figure (average value).

Besides CE, there are another indexes that can be used like Marshall and Swift Cost Index

(M&S), Nelson and Farrel Index (NF), Engineering News Record Index (ENR), etc. The choice

of index to use is based upon the industry in which the person works. For generalconstruction, ENR is preferred, but NF Index is more accepted in petroleum or

petrochemical business.

3. Installation factor

This factor includes estimation of total cost to purchase the equipment until it is installed

and ready to run. Installation factor has included freight, crane service, foundations and

supports, all labor, electrical, switch gear and controls, starters, etc. It would not only cover

the actual mounting of the equipment itself without any of its support of auxiliary

equipment.

This factor can be seen under the estimation diagram.

4. Module factor

Almost similar with installation one, but module factor also includes all of the adjacent

minor equipment and connections. This factor can be seen under the estimation diagram.

For more application details about the estimation diagram, see example below.

1. Purchased cost calculation

A petrochemical company has to do routine shut down for maintenance and quality

inspection in one of its plant. There are equipments that must be replaced with new ones;

one of them is tray column. It has 15 trays and diameter of 6 ft. It is constructed from 347

stainless and bubble cap type. Tray type is turbo grid.

In estimation diagram, the first information that can be obtained is the cost per tray. For

column diameter about 6 ft, the cost is approximately $1000 (bubble cap). From the

diagram it also can be seen that bubble cap type is more expensive than valve-trough one.After that, the calculation of final purchased cost is considered factor of material, type, and

total of trays.

/tray



Because total of trays are 11, the cost above is multiply by 11.

This data is based on factors that were published in 1987, so that the cost should be

corrected by inflation cost index to fit the current date. The index of year 1987 is 320, but the same index is not provided for year 2010. It can be assumed that the value is about 400.

2. Installed cost calculation

To calculate installed cost of the tray column, just follow the procedure that has been

explained before.

equipment cost estimation

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