Plant Design and Economics Sample Chapters

Revised Study
Material
For
GATE PSU
Chemical Engineering
Plant Design and Economics
GATE Syllabus
Process design and sizing of chemical engineering

equipment such as compressors, heat exchangers,
multistage contactors; principles of process economics
and cost estimation including total annualized cost, cost
indexes, rate of return, payback period, discounted cash
flow, optimization in design.
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PLANT DESIGN AND ECONOMICS
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TABLE OF CONTENTS
Chapter 1
PLANT DESIGN
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EQUIPMENTS DESIGNING
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1.1 Engineering And Design: View Points

1.2 Process Flow Sheet
1.3 Fundamentals of Process Design
1.4 Defining Analysis
1.5 Defining Synthesis
1.6 Tools of The Design Process
1.7 Process Design
1.8 Design Documents
1.8.1 Block Flow Diagram
1.8.2 Process Flow Diagrams
1.8.2.1 Contents of a PFD
1.8.3 Piping And Instrumentation Diagrams
1.8.3.1 Contents And Function
1.8.4 Specifications
1.9 Symbols of Various Chemical Equipments
1.10 Plant Design
1.11 Design Project Procedure
1.12 Types of Designs
1.12.1 Preliminary Designs
1.12.2 Detailed Estimate Design
1.12.3 Firm Process Design
1.13 Feasibility survey
1.14 General Site Considerations
1.14.1 Plant Location And Site Selection
1.14.2 Site Layout
1.14.3 Plant Layout
1.14.4 Utilities
1.14.5 Environmental Considerations
Chapter 2
2.1 Compressors
2.1.1 Types of Compressors
2.1.1.1 Positive Displacement Pump
2.1.1.2 Dynamic Compressors
2.1.1.3 Reciprocating Compressor
2.1.1.4 Screw Compressors
2.1.1.5 Centrifugal Compressors
2.1.2 Type Selection Criteria
2.1.2.1 Axial Compressors
2.1.2.2 Centrifugal Compressors
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2.1.2.3 Reciprocating Compressors

2.1.2.4 Rotary Compressors
2.1.3 Design Criteria
2.2 Pressure Vessel Design
2.2.1 Classification of Pressure Vessels
2.2.2 Calculation of Stress For Pressure Vessels
2.2.2.1 For Cylindrical Pressure Vessels
2.2.2.2 For Spherical Pressure Vessels
2.2.2.3 For Conical Pressure Vessels
2.2.2.4 For Ellipsoid Pressure Vessels
2.2.3 Minimum Practical Wall Thickness
2.2.4 Design of Thin Walled Vessels Under Internal Pressure
2.2.4.1 For Cylindrical Vessels
2.2.4.2 For Spherical Vessels
2.2.5 Heads And Closures
2.2.5.1 Design of Flat Heads
2.2.5.2 Design of Hemispherical Heads
2.2.5.3 Design of Ellipsoidal Heads
2.2.5.4 Design of Torispherical Heads
2.2.5.5 Flanges on Domed Heads
2.2.5.6 Conical Sections And End Closures
2.2.6 Design of Vessels Subjected to External Pressure
2.3 Vessel Supports
2.3.1 Saddle Supports
2.3.1.1 Stress in The Vessel Wall
2.3.2 Skirt Supports
2.3.2.1 Skirt Thickness
2.3.2.2 Base Ring And Anchor Bolt Design
2.3.3 Bracket Supports
2.4 Types of Flange And Selection
2.4.1 Welding Neck Flanges
2.4.2 Slip Om Flanges
2.4.3 Lap Joint Flanges
2.4.4 Screwed Flanges
2.5 Example: Design of Gas Absorber
2.5.1 Absorption
2.5.2 Types of Absorption
2.5.3 Types of Absorber
2.5.4 Comparison Between Packed And Plate Column
2.5.5 Packing
2.5.6 Designing Steps For Absorption Column
2.5.7 Selection of Column
2.5.8 Design of Absorber
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Chapter 3
3.1 Introduction
3.2 Debit And Credits
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PROCESS ECONOMICS
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3.3 Cost Accounting Methods

3.3.1 Accumulation, Inventory And Cost of Sales Accounts
3.4 Cost Estimation
3.4.1 Fixed And Working Capital Investment
3.4.1.1 Fixed Capital
3.4.1.2 Manufacturing Fixed Capital Investment
3.4.1.3 Nonmanufacturing fixed capital investment
3.4.1.4 Working Capital
3.4.2 Types of Capital Cost Estimates
3.4.3 Cost Index
3.4.3.1 Estimating Equipment Costs By Scaling
3.4.3.2 Marshall And Swift All Industry And Process Industry Equipment Indexes
3.4.3.3 Engineering News Record Construction Index
3.4.3.4 Nelson Farrar Refinery Construction Index
3.4.3.5 Chemical Engineering Plant Cost Index
3.5 Estimation of Total Product Cost
3.5.1 Manufacturing Costs
3.5.1.1 Direct Production Costs
3.5.1.2 Fixed Charges
3.5.1.3 Plant Overhead Costs
3.5.2 General Expenses
3.5.2.1 Administrative Expenses
3.5.2.2 Distribution And Marketing Expenses
3.5.2.3 Research And Development Expenses
3.5.2.4 Financing Expenses
3.5.2.5 Gross Earnings Expenses
3.6 Interest And Investment Costs
3.6.1 Types of interest
3.6.1.1 Simple Interest
3.6.1.2 Ordinary And Exact Simple Interest
3.6.1.3 Compound Interest
3.6.1.4 Nominal And Effective Interest Rates
3.6.1.5 Continuous Interest
3.7 Present Worth And Discount
3.8 Annuities
3.8.1 Ordinary Annuity
3.8.2 Relation Between Amount of Ordinary Annuity And The Periodic Payments
3.9 Continuous Cash Flow And Interest Compounding
3.10 Present Worth of an Annuity
3.11 Perpetuities And Capitalized Costs
3.12 Taxes And Insurance
3.12.1 Types of Taxes
3.12.1.1 Property Taxes
3.12.1.2 Excise Taxes
3.12.1.3 Income Tax
3.13 Insurance
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Chapter 4
DEPRECIATION
4.1 Depreciation
4.2 Types of Depreciation
4.2.1 Physical Depreciation
4.2.2 Functional Depreciation
4.3 Basic Terms
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4.3.1 Depletion
4.3.2 Service Life
4.3.3 Salvage Value
4.3.4 Present Value
4.4 Methods For Determining Depreciation
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4.4.1 Straight Line Method

4.4.2 Declining Balance Method
4.4.3 Sum of Years Digit Method
4.4.4 Sinking Fund Method
4.4.5 Comparison of Straight Line, Multiple Straight Line, Sum of Years Digit And
Declining Balance Methods For Determining Depreciation
4.5 Profitability, Alternative Investments And Replacements
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4.5.1 Mathematical Methods For Profitability Evaluation

4.6 Rate of Return on Investment
4.7 Discounted Cash Flow
4.8 Capitalized Costs
4.9 Payout Period
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4.10 Optimization in Design

4.11 General Procedure For Determining Optimum Conditions
4.11.1 Procedure With One Variable
4.11.2 Procedure With Two or More Variable
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Chapter 5
LEVEL 1
LEVEL 2
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UNSOLVED QUESTIONS
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QUESTIONS (2004 TO 2015)
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Chapter 6
Chapter 7
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2005
2006
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2011
2012
2013
2014
2015
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Chapter 8
SOLUTIONS
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CHAPTER
3
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PROCESS ECONOMICS
3.1 INTEREST AND INVESTMENT COSTS

Interest is the money returned to the owners of capital for use of their capital.
3.1.1 TYPES OF INTEREST

On the basis of accounting the interests can be divided as follows:
3.1.1.1
SIMPLE INTEREST
In economic terminology, the amount of capital on which interest is paid is designated

as the principal and rate of interest is defined as the amount of interest earned by a unit
of principal in a unit of time. The time unit is usually taken as one year.
If P represents the principal, n the number of time units or interest periods and i the
interest rate based on the length of one interest period, the amount of simple interest Z
during n interest periods is
Z=Pin
The principal must be repaid eventually; therefore, the entire amount S of principal plus
simple interest due after n interest periods is
S = P + Z = P(1 + i n)
3.1.1.2
ORDINARY AND EXACT SIMPLE INTEREST
The time unit used to determine the number of interest periods is usually 1 year, and the
interest rate is expressed on a yearly basis. When an interest period of less than 1 year
is involved, the ordinary way to determine simple interest is to assume the year consists
of twelve 30-day months, or 360 days. The exact method accounts for the fact that there
are 365 days in a normal year. Thus, if the interest rate is expressed on the regular
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yearly basis and d represents the number of days in an interest period, the following
relationships apply:
=
=
3.1.1.3
360
365
COMPOUND INTEREST
If the interest were paid at the end of each time unit, the receiver could put this money
to use for earning additional returns. Compound interest takes this factor into account
by stipulating that interest is due regularly at the end of each interest period.
The total amount of principal plus compounded interest due after n interest periods and
designated as
= (1 + )
The term (1 + ) is commonly referred to as the discrete single-payment compoundamount factor.
3.1.1.4
NOMINAL & EFFECTIVE INTEREST RATES
It is desirable to express the exact interest rate based on the original principal and the
convenient time unit of 1 year. A rate of this type is known as the effective interest rate.
S represents the total amount of principal plus interest due after n periods at the
periodic interest rate i. Let r be the nominal interest rate under conditions where there
are m conversions or interest periods per year.
Then the interest rate based on the length of one interest period is r/m, and the amount
S after 1 year is
1 = (1 +
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The effective interest rate as ieff, the amount S after 1 year can be expressed in an
alternate form as
1 = (1 + )
Therefore, by combining above both the equation, we get expression for effective
interest rate in terms of nominal interest rate as
= = (1 +
And

) 1
Nominal annual interest rate = r
3.1.1.5
CONTINUOUS INTEREST
The effective annual interest rate ieff which is the conventional interest rate that most
executives comprehend, is expressed in terms of the nominal interest rate r
compounded continuously as
= 1
Continuous interest compounding at a nominal annual interest rate of r the amount S
and initial principal P will compound to in n years is as
=
3.2 PRESENT WORTH AND DISCOUNT

The present worth (or present value) of a future amount is the present principal which
must be deposited at a given interest rate to yield the desired amount at some future
date.
For compound interest:
=
1
(1 + )
For continuous interest:

=
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3.3 ANNUITIES
An annuity is a series of equal payments occurring at equal time intervals.
Payments of this type can be used to pay off a debt, accumulate a desired amount of
capital, or receive a lump sum of capital that is due in periodic installments as in some
life-insurance plan.
3.3.1 ORDINARY ANNUITY

The common type of annuity involves payments which occur at the end of each interest
period. This is known as an ordinary annuity. Interest is paid on all accumulated
amounts, and the interest is compounded each payment period.
An annuity term is the time from the beginning of the first payment period to the end of
the last payment period. The amount of an annuity is the sum of all the payments plus
interest if allowed to accumulate at a definite rate of interest from the time of initial
payment to the end of the annuity term.
3.3.2 RELATION BETWEEN AMOUNT OF ORDINARY ANNUITY AND THE

PERIODIC PAYMENTS
Let R represent the uniform periodic payment made during n discrete periods in an
ordinary annuity. The interest rate based on the payment period is i, and S is the
amount of the annuity.
=
(1 + ) 1
3.4 CONTINUOUS CASH FLOW AND INTEREST COMPOUNDING

Let r represent the nominal interest rate with m conversions or interest periods per year
so that i = r/m and the total number of interest periods in n years is mn. With m annuity
payments per year, let R represent the total of all ordinary annuity payments occurring
regularly and uniformly throughout the year so that R/m is the uniform annuity payment
at the end of each period.
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( 1)
3.5 PRESENT WORTH OF AN ANNUITY

The present worth of un annuity is defined as the principal which would have to be
invested at the present time at compound interest rate i to yield a total amount at the
end of the annuity term equal to the amount of the annuity. Let P represent the present
worth of an ordinary annuity.
For compound interest:
=
(1 + ) 1
(1 + )
For continuous interest:

=
( 1)

3.6 PERPETUITIES AND CAPITALIZED COSTS

Perpetuity is an annuity in which the periodic payments continue indefinitely. This type
of annuity is of particular interest to engineers, for in some cases they may desire to
determine a total cost for a piece of equipment or other asset under conditions which
permit the asset to be replaced perpetually without considering inflation or deflation.
If perpetuation is to occur, the amount S accumulated after n periods minus the cost for
the replacement must equal the present worth P. Therefore, letting CR represent the
replacement
Cost then present worth given as
=
(1 + ) 1
The capitalized cost is defined as the original cost of the equipment plus the present
value of the renewable perpetuity. Designating K as the capitalized cost and CV as the
original cost of the equipment then capitalized cost of the equipment is given as:
= +
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(1 + ) 1
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3.7 TAXES AND INSURANCE
3.7.1 TYPES OF TAXES

Taxes may be classified into three types:
Property taxes,
Excise taxes,
Income taxes.
3.7.1.1
PROPERTY TAXES
Local governments usually have jurisdiction over property taxes, which are commonly
charged on a county basis. In addition to these, individual cities and towns may have
special property taxes for industrial concerns located within the city limits. Property
taxes vary widely from one locality to another, but the average annual amount of these
charges is 1 to 4 percent of the assessed valuation. Taxes of this type are referred to as
direct since they must be paid directly by the particular concern and cannot be passed
on as such to the consumer.
3.7.1.2
EXCISE TAXES
Excise taxes are levied by Federal and state governments. Federal excise taxes include
charges for import customs duties, transfer of stocks and bonds, and a large number of
other similar items. Manufacturers and retailers excise taxes are levied by Federal and
state governments on the sale of many products such as gasoline and alcoholic
beverages. Taxes of this type are often referred to as indirect since they can be passed
on to the consumer. Many business concerns must also pay excise taxes for the
privilege of carrying on a business or manufacturing enterprise in their particular
localities.
3.7.1.3
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INCOME TAXES
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Income taxes are based on gross earnings, which are defined as the difference
between total income and total product cost. Revenue from income taxes is an
important source of capital for both Federal and state governments. National and state
laws are the basis for these levies, and the laws change from year to year. State income
taxes vary from one state to another and are a function of the gross earnings for
individual concerns. Depending on the particular state and the existing laws, state
income taxes may range from 0 to 5 percent or more of gross earnings.
3.8 INSURANCE
The annual insurance cost for ordinary industrial concerns is approximately 1 percent of
the capital investment. Insurance costs may represent only a small fraction of total
costs, it is necessary to consider insurance requirements carefully to make certain the
economic operation of a plant is protected against emergencies or unforeseen
developments.
Following are the types of insurance:
Fire insurance and similar emergency coverage on buildings, equipment, and all
other owned, used, or stored property. Included in this category would be losses
caused by lightning, wind- or hailstorms, floods, automobile accidents, explosions,
earthquakes, and similar occurrences.
Public-liability insurance, including bodily injury and property loss or damage, on all
operations such as those involving automobiles, elevators, attractive nuisances,
bailees charges, aviation products, or any company function carried on at a location
away from the plant premises.
Business-interruption insurance. The loss of income due to a business interruption
caused by a fire or other emergency may far exceed any loss in property.
Consequently, insurance against a business interruption of this type should be given
careful consideration.
Example 3.1 A new piece of completely installed equipment costs Rs 12,000 and will
have a scrap value of 2000 at the end of its useful life if useful life period is 10 years
and the interest is compounded of 6% per year. What is the capitalized cost of
equipment?
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Solution:
( p s)
(12000 2000)
= 12000 +
n
(1 i ) 1
(1 0.06)10 1
Capitalized cost
=p+
Capitalized cost
= 24645
Example 3.2 A sale contract signed by a chemical manufacture is expected to generate

a net cash flow of Rs 4.00,000 per year at the end of each year for a period of three
years. The applicable discount rate is 15% The net present worth of the total cash flow
is?
(C i ) n 1
n
i (1 i )
S =R
Solution:
(1.15)3 1
9,13, 290
= 4,00,000
3
0.15 (1.15
= Rs. 913290
Example 3.3 For an interest rate of 2% per month, the effective semiannual rate is
closest to:
Solution:
In this example, the i on the left-hand side of the effective interest rate
equation will have units of semiannual periods. Therefore, the r must have units of
semiannual periods (i.e., 12% per six months) and m must be the number of times
interest is compounded per semiannual period, 6 in this example.
i
(1 + 0.12 / 6)6 - 1
12.62 %
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Revised Study

Process design and sizing of chemical engineering

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