Equipment Design - 4th year Chapter Three Assist. Prof. Ihsan Habib Dakhit 4, Finished product inventories. 5. Funds to cover outstanding accounts from customers Most of the working capital is recovered at the end of the project. The total investment needed for a project is the sum of the fixed and working capital 3.4 Cost Inflation All cost-estimating methods use historical data, and are themselves forecasts of future costs, Some method has to be used to update old cost data for use in estimating at the design stage, and to forecast the future coastruction cost of the plant. Cost index in year A Cost in year A = Cost in year B x y ” Gost index in year B Many methods had been adopted for estimating the values of the cost index. One is the process engineering index To estimate the future cost of a plant some prediction has to be made of the future annual rate of inflation. This can be based on the extrapolation of one of the published indices, tempered by the engineer’s own assessment of what the future may hold. 120 15 110 Index 100 9% 90 oa8 1037 1008 1009 2000 2001 2002 9008 2004 Year Fig. (3.1) Process Engineering Index ED ae bet: wl SEN Hal NeW lane gost | Legh AE jel fleEquipment Design - 4th year Chapter Three Assist. Prof. Ihsan Habib Dakhit A composite index for the United States process plant industry is published monthly in the journal Chemical Engineering, the CPE plant cost index. The longer the period over which the correlation is made the more unreliable the estimate. Between 1970 and 1990 prices rose dramatically. Since then the annual rise has slowed down and is now averaging around 2 - 3 % per year. 420 410 400 390 Index 380 870 360 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year Fig. (3.2) CPE index Example 3.1: ‘The purchased cost of a shell and tube heat exchanger, carbon shell. stainless steel tubes, heat transfer area 500 m”, was £7600 in January 1998; estimate the cost in January 2006. Use the Process Engineering plant index Solution From Process Engineering Index figure (3.1) : Index in 1998 = 106 2000 = 108, 100 (change of base) 2004=111 So, estimated cost in January 2000 = 7600 « 108/106 = £7743 and in 2004 = 7743 = 111/100 = £8595 From Process Engineering Index figure (3.1) The average increase in costs = (111-100)/4= 2.75 per year. ED oe gel ola SN ALN lie gt | gh AY il SleEquipment Design - 4th year Chapter Three Assist. Prof. Ihsan Habib Dakhit Use this value to predict the exchanger cost in 2006. The cost index in 2006 = 2 « 2.75+111=1165 Cost in 2006 = 8595 « 116.5/111 = £9021 say £9000. 3.5 Historical Costs An approximate estimate of the capital cost of a project can be obtained from knowledge of the cost of earlier projects using the same manufacturing process. The capital cost of a project is related to capacity by the equation “(g) Cc. capital cost of the project with capacity, S capital cost of the project with capacity, S, The value of the index n is traditionally taken as 0.6; the well-known six- tenths rule. This value can be used to get a rough estimate of the capital cost if there are not sufficient data available to calculate the index for the particular process. This equation is only an approximation, and if sufficient data are available the relationship is best represented on a log-log plot. Garrett (1989) has published capital cost-plant capacity curves for over 250 processes. ‘Sulphutic acid 30 Plant cost $10° 100 7000 Plant capacity ton(US)iday (From Garrett (1989)) ED oe gel ola SN “ ALN lie gt | gh AY il SleEquipment Design - 4th year Chapter Three Assist. Prof. Ihsan Habib Dakhit 3.6 Estimating Equipment Costs by Scaling The six-tenths rule should only be used for heat exchangers in the absence of other information. In general, the cost-capacity concept should not be used beyond a tenfold range of capacity, and care must be taken to make certain the two pieces of equipment are similar with regard to type of construction, materials of construction, temperature and pressure operating range, and other pertinent variables. Table 1 contains values for other units: ‘Table (3.1): Typical exponents for equipment cost vs. capacity BD cae sheets whatlshea _ Exquipment Sie range Exponent Blender, double cone rotry. @, 0.250 f og Blewer, —ceaifisel, 107-10 f/min 059 Cestifige, solid bowl. ¢g, 10-102 lp sive 067 Coystallizer, vacmm betch, 68, 500-7000. 037 CCompresor, reciprocating. a" evoled, two-stage 50 psi is 10-400 #9/min 0.89 Compressor, roiay, single-stage, siding vane 50 psi discharge 102-10? f2/min on Diyer, dium, single vaca 10-10? f? 016 Dryer, drum, single atmospheric 10-10 fy? 040 Evaporaior (instilled), horizontal tank 10°10 fr? ost Fan, ccntifagal 10°-10° °/min on Fan, ceutilugal 2x 1047 x 104 ft/min 7 Heat exchanger, shell and tube, floating head, ¢s, 100400 ft? 0.60 Heat eschonger, shell ond mite, feed sheet gg, 10-400? on \ Ketle, cast irm, jacketed 250800 gal 07 eile. glass Tint jacketed 200-800 gal 031 olor, squunel cage, induction, 440 vols, explosion proof 20 bp 00 Moiot, squinel caze. inetion, 44 vol, ‘explosion proof 20200 bp 099 Pump, recigrveaing, bovizotal east ison tauchules mtr) 24100 gpm 034 Pump, central, orizontal, cast stel (inches motor) 10410 gpm x psi 033 Reactor, glass lined, jacketed (without dive) 50-€00 gal ost Reiter, 8. 300 psi 10°10" eal 036 Separator, centnfuzel. 6s, 50-250 ft 09 Tak, fat bred 8, 102-108 gal os? Took cs. glass lined 1010? eal 049 Tower, cs, 10°-2.x 10° tb 08 Tres, babble cup, 8, 3-10 ft diameter 10 Trey, sive, es. 3-10 ft diameter 086 Hal NeW lane gost | Legh AE jel fle