TEK-501 EKONOMI TEKNIK

PLANT COST
ESTIMATION
 Introduction
Plant cost can be determined when all
equipment cost has been known.
Step for preparing plant cost estimation
Prepare a flow sheet for he process to be
estimated
Prepare heat and material balance
Size all equipment precisely
Analyze the process carefully to determine
plant cost factor
 Introduction
Plant Cost Estimation Accuracy
Order of magnitude accuracy +40% up to
-100%
Study +30% up to -50%
Preliminary +20% up to -35%
Definitive +10% up to -15%
Detailed +5% up to -10%
Total Plant Cost (TPC)
Estimation Method
Based on TPC Components
(Garret, 29)
Lang Factor
Chart (Garret, Appendix 2)
Cost per ton of product (Garret,
3536)
Capital ratio or Turn over ratio
(Garret, 35-36)
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TPC:
Component Factors
1. Direct Cost
TPC Factor
(based fraction of total
Component equipment cost)
a. Purchased Equipment 1
b. Piping 0.15 - 0.70
c. Electrical 0.10 - 0.15
d. Instrumentation 0.10 - 0.35
e. Utilities 0.30 - 0.75
f. Foundation 0.07 - 0.12
g. Painting, Fireproofing, Safety 0.02 - 0.08
h. Yard Improvement 0.02 - 0.10
i. Environmental 0.05 - 0.15
j. Buildings 0.10 - 0.30
k. Land 0.00 - 0.10
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subtotal 1.96 - 4.80
 TPC:
Component Factors (Continued)
2. Indirect Cost
TPC Factor
(based fraction of total
Component equipment cost)
Construction,
a. Engineering 0.30 - 0.75
b. Contractors fee 0.10 - 0.45
c. Contingency 0.15 - 0.80
Subtotal 2.51 - 6.80

TPC = Direct Cost + Indirect Cost

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 TPC:
Component Factors (Continued)
Piping
always represented a major cost in chemical
plants.
Optimize piping runs and plant design is a
must
Energy saving
Maintenance reducing
Corrosion and erosion resistant
fluid material
etc

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 TPC:
Component Factors (Continued)
Insulation
The need to conserve energy and to maintain
temperature and heat on equipment

Electrical
Budget that needed to fulfill all electrical
device
Buildings
Number of buildings are required for any plant,
such as control rooms, offices, shops,
laboratory, and so on.
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 TPC:
Component Factors (Continued)
Instrumentation
Rising labor charge and increasing computer
use and complex instrumentation control
significantly increase its value

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 TPC:
Component Factors (Continued)
Environmental
Governmental jurisdiction requiring zero
discharge of any contaminant into air, water,
or land.
Green technology, extensive pollution control,
treating facilities, groundwater monitoring
wells, leak detector, hazardous waste handling.
Painting, Fire Protection, safety Guard
This is small factor but an important one to the
appearance and safety of the plant.

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 TPC:
Component Factors (Continued)
Yard Improvement
Includes grading, drainage, roads, rail facilities,
parking, fences, landscaping, concrete slabs
and walkways, sump, lighting, and other
nonprocess component.
Utilities
Required to operate the plant such as
telephone, water, gas, other fuel, steam,
compressor air, inert gas, sewage, electricity
Land
New land need to be purchased.
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 TPC:
Component Factors (Continued)
Construction and Engineering Expense
Detailed engineering required for the plant
design, drawing, permit, and managing and
supervising construction.
Contractors fee
Contractors profit is usually negotiable
Contingency
Cost for Unpredictable condition

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 TPC :
Lang Factor
Simple method to predict total plant cost by
multiplier a single factor
Frequently used to obtain order of magnitude cost
estimates
Factor for
Fixed Capital
Type of Plant Investment Total Capital Investment
Solid Processing Plant 3,9 4,6
Solid-Fluid Processing
Plant 4,1 4,9
Fluid Processing Plant 4,8 5,7

TPC = Lang Factor x Purchased Equipment

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 TPC :
Chart Estimation
Using appendix 2 on Garret
CE-index 320
Infrastructure for grass root plant, minor
utility, and nonplant facilities was not
included
Cost would be higher and assembled data
would be much more scattered because of
each locations different requirement.
The chart would be useful as a guide but
not too much confidence in their accuracy
TPC = Cost x (CE-index
JS 2008 2008/ CE-index 1987)
 TPC :
Cost per Ton of Product
This is a ratio of the capital cost of a new
plant per annual ton of product
Can be rough prediction when data are
available on exactly designed and sized
plants
Plant cost vary as some exponent size, so
do not use linearization that would make
high error
TPC =accurate
Only factor x capacity
for the listed plant size

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 TPC :
Capital Ratio (Turn Over Ratio)
Based on yearly value of the product sold
to the initial plant capital cost
More accurate the cost per ton of product
Quite useful for an entire plant or totally
unknown design
Not easy to use and may required
additional arbitrary judgments
Sales per year
TPC = --------------------
factor TOR
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 Total Capital Investment (TCI)
TCI is usually greater than TPC
TCI components is TPC components + other cost
Other cost are off site facilities, plant start up, and
working capital and their value are

Other Capital Investment percent of TPC

Off Site Facilities 0 - 30

Plant Start Up 5 - 10

Working Capital 10 - 20

Working capital can also be determined by 10 - 35% from manufacturing

cost
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 Total Capital Investment (TCI)

Off-Site Facilities
Additional facilities relating to auxiliaries
This facilities may have been included in
the previous capital cost estimate
If the auxiliaries will only be used by
production plant than the cost should
itemized in the TPC
If the auxiliaries is to share than the
cost should itemized separately
Below is the list of auxiliary facilities
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Total Capital Investment (TCI)

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 Total Capital Investment (TCI)

Plant Start Up
Cost of starting plant and bringing it to
full production
At this period usually little saleable, not
too good quality, and little product
generated.
Required labors, materials, overhead
expense (labors welfare), extra
engineering, equipment modification
and so on.
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 Total Capital Investment (TCI)
Working Capital
Amount of cost available to pay the bills
and sustain the operation before
product is sold and payment is received.
will be needed throughout the plants
life
should be recovered at the end of the
operating period when the plants totally
shut down

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 Total Capital Investment (TCI)
Working capital consisted of:
1. Operating expense
a. Average length of time the product is being
manufactured and in storage plant.
b. Average length of time that takes to collect
for the merchandise sold
2. Cash for wage, fringe benefit, lacal taxes, and other
current obligation
3. Inventories of raw materials, maintenance, and
operating supply

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 Total Capital Investment (TCI)
Raw material inventories method
First and first out
First material come then should be the first
material out
Just in time
All material comes will be empty in that
time, no reserved material in warehouse.

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 Exercise
1. Calculate the Total Plant Cost of Acetone
Plant which has 200,000 ton/year
capacity. Product value is US$ 1.5/ton
while $sales/$plant is 3.4 (see page 36)
2. Capacity of urea plant is 200.000
ton/year, $sales/$plant is 2.4, and
$plant/annual ton is 84. Calculate
a. sales/ton product
b. $sales/year
c. TPC (Total Plant Cost)

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 Exercise
3. Acetone plant by capacity of 150,000 ton/year,
runs using OSE (on stream efficiency) 86.3%. How
many plant cost required if the plant was build on
80% grass root land. (use chart on appendix 2)

4. An evaporation unit at sugar refinery was build at

1987. One of this forced circulation evaporator
with capacity 500 ft2 and made from mild steel
was broken and need to be replace this year
(2008). It value at 1987 was US$ 350,000. the
evaporator will replace by a same type but has
higher heating are that is 1000 ft2 to anticipate in
plant expansion.
a. how much the cost to develop the new
evaporator until operate
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 Exercise
b. In order to adjust plant capacity. It was planned
to build a new evaporation unit with a little
modification at this year. This new plant will cost
US$ 2,500,000 for buying all of the equipment
until operate. How much the cost of
b.1 direct cost
b.2 indirect cost
b.3 TPC
b.4 TCI

c. Predict the cost of plant in problem b. using Lang

Factor
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