Engineering Practice

Cost Engineering:
Equipment Purchase Costs
A methodolody and examples for estimating equipment costs are presente
Thane R. Brown me to use their cost database as one of the key informa­
Procter & Gamble (retired) tion sources.
Ratioing for different capacities and size exponents.
ngineers have the responsibility to create proj­ When the cost of equipment, processes, or plants having

E ects having attractive returns on investment andthe same design features is plotted versus capacity on log-
to create economically sound designs — de­ log paper, the plot usually is a straight line. Thus, one can
signs that produce high-quality, competitively write the following equation, where n is the size exponent.
priced products. This requires the technical and eco­
nomic1 study of many different options. When doing
Costsizei
(
Capacity sUe2
)
f.

C0Stsj2ei Capacitystzel
studies, the design is usually not well defined, so one (1)
will often use factor methods for capital estimating. WithFor equipment, the average size exponent is 0.6, for
these methods, one first determines the purchase costplants 0.67.
of the equipment and multiplies that by a factor to deter­ To illustrate, if you know the price of a 500 ft2 plate-
mine the capital cost of a process or plant.2 and-frame exchanger is $10,500, you can estimate the
The accuracy of factored estimates is usually good price of an 800 ft2 exchanger using Equation (1). Refer­
enough to produce high-quality decisions. ring to Figure 6, note that the size exponent for plate-
Purchase cost data. This article presents up-to-date and-frame exchangers is 0.71. Rearranging Equation (1),
equipment purchase cost data for nine different types of the cost is:
process equipment. Cost «2 = $10,500 x (800 ft2 / 500 ft2)0-71 = $14,700.
• Agitators
• Air compressors Adjusting for inflation using the CEPCI. To keep track
• Boilers of the effects of inflation, several organizations publish
• Cooling towers cost indices. For chemical plant construction, I feel the
• Fans CEPCI is the preferred index. Chemical Engineering pub­
• Heat exchangers lishes the index each month. One can use it to escalate
• Pressure vessels costs. The relationship between costs and indices is
• Pumps, centrifugal given by Equation (2):
• Tanks, storage
The cost data are presented for each of these types of Costa[ tjme 2 lndexat time 2
equipment in Figures 1-9 on p. 52. Each begins with a Costat time 1 lndexat time 1 (2)
general specification. For example in Figure 2 (air com­
pressors) the specification is: Centrifugal, rotary screw For example, if you know the price of a 10,000-gal.
and reciprocating compressors that produce 100-150 storage tank in August 2017 (CEPCI = 570) was $33,000,
psig oil-free air. The price also includes intercoolers and
you can estimate the price in mid-2019 (CEPCI - 590)
aftercoolers, a lubrication system and a totally enclosed,using Equation (2). Rearranging (2):
fan-cooled (TEFC) motor.
Each figure contains a log-log graph plotting purchase $CEPCI, 590 = $33,000 (590/570) = $34,200.
cost versus capacity, an equation for cost as a function
of capacity, and a size exponent for capacity ratioing. Using the graph factors. Six of the graphs include fac­
Most also contain factors that permit adjusting costs fortors that permit adjusting costs for different materials of
different materials of construction, operating pressure orconstruction, different operating pressures or different
equipment type (such as API versus ANSI pumps). equipment variations. Their use is simple. To adjust a
All costs are quoted at a Chemical Engineering Priceprice, simply multiply the price by the appropriate factor.
Cost Index (CEPCI) of 570, which corresponds to AugustTo illustrate, the small boiler prices in Figure 3 are for
2017. The graphs were developed from actual purchase units generating 150 psig steam. If you wish to price a
cost or vendor quotation data. Of special note is that BSI100-hp unit that produces 15 psig steam, you would
Engineering (Cincinnati, Ohio; www.bsiengr.com) allowed multiply the cost from the graph, $82,000, by the 15 psig
1. For an economic comparison, one usually has to estimate the capital and production cost for each option and use that information to calculate
the net present value (NPV) or annualized cost (AC) of each. The NPV or AC is then used to find the economic option.
2. Brown's book [1] explains economic comparison methodology. Lang and Hand factors, plus production cost estimating in depth.

CHEMICAL ENGINEERING WWW.CHEMENGONLINE.COM JANUARY 2019 51

 Figures 1-9 depict up-to-date equipment purchase cost data for nine different types of process equipment: agita­
tors (Figure 1); air compressors (Figure 2); boilers (Figure 3); cooling towers (Figure 4); fans (Figure 5); heat ex­
changers (Figure 6); pressure vessels (Figure 7); centrifugal pumps (Figure 8); and storage tanks (Figure 9)

Figure Figure 2 Figure 3

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52 CHEMICAL ENGINEERING WWW.CHEMENGONLINE.COM JANUARY 2019

factor, which is 0.85. Hence,
s15 psig - $82,000 (0.85) = $69,700 INTRODUCING
A few examples will illustrate the use of the figures.
Example 1. Determine the purchase price, at a CEPCI of 570, of a top-en­
tering turbine agitator. The agitator will have a mechanical seal, carbon steel
-A---- NEW
shaft with two turbine blades, a gear reducer, and a 25-hp motor.
Using the graph in Figure 1, enter it at 25 hp and go up to the top-entering
NAME----IN—
curve. You then find the base price of the unit is $60,000. This price will have
to be adjusted for the mechanical seal (Fsea| = 1.3), for carbon steel metal-
—INDUSTRIAL
lurgy (Fqs = 0.8), and two turbine blades (F2.biades =1.1). Thus the purchase
price for the specified unit is: PROCESS---S<
$ = $60,000 (Fsea|) (Fqs) (F2_biades) = $60,000 X 1.3 X 0.8 x 1.1
= $68,600. —SOLUTIONS
Example 2. Estimate the purchase price, at a CEPCI of 570, of a stainless-
steel API centrifugal pump rated at 260 gallons per minute (gpm) with a total IPCO is a new name in Industrial
developed head of 310 ft. Process solutions but a business
Use Figure 8. First calculate (gpm‘ft)/1,000 to find the value of the x-axis: partner with whom many in the
gpm'ft/1,000 = (260 x 310)/1,000 = 80.6. chemical industry will already
From Figure 8, you find the cost of a carbon-steel ANSI pump to be be familiar.
$10,500. Next, you adjust this price for materials and for an API pump as
opposed to an ANSI pump. Previously operating as Sandvik
-°-25]Systems, we are now
$ss API = $10,500 x (Fss) x (Far) = $10,500 x 1.9 x [6.18 x (80.6)Process
= $41,100 an independent company
Example 3. Estimate the price of a 10,000-gal, specially designed reac­ within the Wallenberg group,
tor at a CEPCI of 600. Your reactor is to be made of carbon steel and will a business with approx. 600 000
have a pressure rating of 350 psig. In 2013 (CEPCI = 567), your company employees and in excess of €140
bought a similar reactor for $33,900. That reactor has a capacity of 7,500 billion in total sales of holdings.
gal, is made of stainless steel, and has a pressure rating of 150 psig.
Since the reactors are both pressure vessels, you decide to use the factorsWe continue to develop
in Figure 7 to adjust the 2013 price. You adjust for reactor size using Equa­ customized solutions for the
tion (1), for inflation using Equation (2), and for titanium construction and the chemical industry, with the same
higher pressure rating using the factors in Figure 7. people, skills and process
$new=$oid(Capacitynew/CapacityoW)070 x (CS factor/SS factor) x systems - including our world-
(Pressure factornew/Pressure factor0|d) x (CEPCIgOC/CEPCI2oi3) renowned Rotoform® pastillation
= $33,900 (10,000/7,500).70 (1/1.4) {[0.0023(350) + 0.66)71.0} (600/567) process - but under a new name
= $46,000. and brand.

Summary. One can use the information in this article for the following: Read more at ipco.com
• Preliminary estimating of equipment purchase costs
• Adjusting price data for equipment size, materials of construction, design
pressure, and equipment type
• Creating mathematical models used in economic option analyses •*•J
In turn, the purchase cost data can be used to create order-of-magnitude
and study grade estimates. While vendor quotations can be more accurate
than the data in the graphs, the data here are generally accurate enough
for use developing costs early in a project and when doing economic op­ % ••••
••
tion analysis. ■
Edited by Gerald Ondrey ••
References
1 Brawn, T.R., "Engineering Economics and Economic Design for Process Eng'neers," CRC Press Boca Raton, Fla.. 2006.

Author
■ Thane Brown (Email: trbnjb@earthlink.net) worked for more than 36 years for Procter &
Gamble in a variety of engineering and manufacturing roles, primarily in the food-and-bever-
age business and in health, safety and environmental engineering. In his last position there. ••••
L Brown was director of North American engineering. After retiring, he taught engineering eco-
H1 nomics at the University of Cincinnati, and plant design at the University of Dayton. Brown is
presently a member of the Chemical Engineering Advisory Committees at the University of
9 Dayton, at Miami University (Oxford, Ohio), at the University of Louisville and at the University
I of Cincinnati. He also works as a SCORE counselor, providing free assistance to small busi­
nesses in the Cincinnati area. Brown authored the book ‘Engineering Economics and Eco­
nomic Design for Process Engineers' |f], as well as a number of articles on engineering
ipco
economics, batch pressure filtration and heat transfer. He is a registered professional engineer in Ohio (inactive),
and holds a B.S.Ch.E. from Oregon State University. For default visit adllnkt.cbemervaonline.com/73O49-10

CHEMICAL ENGINEERING WWW.CHEMENGONLINE.COM JANUARY 2019 53