COSTING AND PROJECT EVALUATION 253

“battery limits” is used to define a contractor’s responsibility. The main processing plant,
within the battery limits, would normally be built by one contractor. The utilities and other
ancillary equipment would often be the responsibility of other contractors and would be
said to be outside the battery limits. They are often also referred to as “off-sites”.

6.7. ESTIMATION OF PURCHASED EQUIPMENT COSTS

The cost of the purchased equipment is used as the basis of the factorial method of cost
estimation and must be determined as accurately as possible. It should preferably be based
on recent prices paid for similar equipment.
The relationship between size and cost given in equation 6.2 can also be used for
equipment, but the relationship is best represented by a log-log plot if the size range is
wide. A wealth of data has been published on equipment costs; see Guthrie (1969, 1974),
Hall et al. (1982), Page (1984), Ulrich (1984), Garrett (1989) and Peters et al. (2003).
Articles giving the cost of process equipment are frequently published in the journals
Chemical Engineering and Hydrocarbon Processing. Equipment prices can also be found
on various web sites, such as: MatchesMSN@msn.com.
The cost of specialised equipment, which cannot be found in the literature, can usually
be estimated from the cost of the components that make up the equipment. For example, a
reactor design is usually unique for a particular process but the design can be broken down
into standard components (vessels, heat-exchange surfaces, spargers, agitators) the cost of
which can be found in the literature and used to build up an estimate of the reactor cost.
Pikulik and Diaz (1977) give a method of costing major equipment items from cost
data on the basic components: shells, heads, nozzles, and internal fittings. Purohit (1983)
gives a detailed procedure for estimating the cost of heat exchangers.
Almost all the information on costs available in the open literature is in American
journals and refers to dollar prices in the US. Some UK equipment prices were published in
the journals British Chemical Engineering and Chemical and Process Engineering before
they ceased publication. The only comprehensive collection of UK prices available is
given in the Institution of Chemical Engineers booklet, IChemE (2000).
Up to 1970 US and UK prices for equipment could be taken as roughly equivalent,
converting from dollars to pounds using the rate of exchange ruling on the date the prices
were quoted. Since 1970 the rate of inflation in the US has been significantly lower than
in the UK, and rates of exchange have fluctuated since the pound was floated in 1972.
If it can be assumed that world market forces will level out the prices of equipment,
the UK price can be estimated from the US price by bringing the cost up to date using
a suitable US price index, converting to pounds sterling at the current rate of exchange,
and adding an allowance for freight and duty.
If an estimate is being made to compare two processes, the costing can be done in
dollars and any conclusion drawn from the comparison should still be valid for the United
Kingdom and other countries.
The cost data given in Figures 6.3 to 6.7, and Table 6.2 have been compiled from
various sources. They can be used to make preliminary estimates. The base date is
mid-2004, and the prices are thought to be accurate to within š25 per cent.
254 CHEMICAL ENGINEERING

Shell and tube heat exchangers

Time base mid 2004
1000.0

Exchanger cost, £1000

3
100.0 2

10.0

1.0
10.0 100.0 1000.0
Heat transfer area, sq m
(a) Pounds sterling

Shell and tube heat exchangers

Time base mid 2004
1000.0

4
3
Exchanger cost, $1000

2
100.0
1

10.0

1.0
10.0 100.0 1000.0
Heat transfer area, sq m
(b) US dollars

Materials Pressure factors Type factors

Shell Tubes
1 10 bar ð 1.0 Floating head ð 1.0


1 Carbon steel Carbon steel 10 20 ð 1.1 Fixed tube sheet ð 0.8


2 C.S. Brass 20 30 ð 1.25 U tube ð 0.85


3 C.S. Stainless steel 30 50 ð 1.3 Kettle ð 1.3


4 S.S. S.S. 50 70 ð 1.5

Figure 6.3a, b. Shell and tube heat exchangers. Time base mid-2004
Purchased cost D (bare cost from figure) ð Type factor ð Pressure factor
 COSTING AND PROJECT EVALUATION 255
Time base mid 2004
10,000.0

Equipment cost, £

1000.0
1.0 10.0 100.0 1000.0

Heat transfer area

(a) Pounds sterling

Time base mid 2004

100,000.0
Equipment cost, $

10,000.0

1000.0
1.0 10.0 100.0 1000.0
Heat transfer area
(b) US dollars

Type Area scale Material

(1) Gasketed plate m2 Stainless steel

(2) Double pipe m × 10
2
Carbon steel

Figure 6.4a, b. Gasketed plate and frame and double pipe heat exchangers, Time base mid-2004
256 CHEMICAL ENGINEERING

Time base mid 2004

1000.0

Equipment cost, £1000

100.0

4
10.0
3
2
1

1.0
1.0 10.0 100.0
Vessel height, m
(a) Pounds sterling

Time base mid 2004

1000.0
Equipment cost, $1000

100.0

4
3
10.0
2
1

1.0
1.0 10.0 100.0
Vessel height, m
(b) US dollars

Diameter, m Material factors Pressure factors

1 0.5

3 2.0 C.S. ð 1.0 1 5 bar ð 1.0
S.S. ð 2.0 5 10 ð 1.1


2 1.0

4 3.0
Monel ð 3.4 10 20 ð 1.2
S.S. clad ð 1.5 20 30 ð 1.4
Monel ð 2.1 30 40 ð 1.6
clad 40 50 ð 1.8
50 60 ð 2.2
Temperature up to 300° C

Figure 6.5a, b. Vertical pressure vessels. Time base mid-2004.

Purchased cost D (bare cost from figure) ð Material factor ð Pressure factor
 COSTING AND PROJECT EVALUATION 257

Time base mid 2004

100.0

Equipment cost, £1000

10.0

4
3
2
1
1.0
1.0 10.0 100.0
Vessel length, m
(a) Pounds sterling

Time base mid 2004

100.0
Equipment cost, $1000

10.0 4
3
2
1

1.0
1.0 10.0 100.0
Vessel length, m
(b) US dollars

Diameter, m Material factors Pressure factors

1 0.5

3 2.0 C.S. ð 1.0 1 5 bar ð 1.0
S.S. ð 2.0 5 10 ð 1.1


2 1.0

4 3.0
Monel ð 3.4 10 20 ð 1.2
S.S. clad ð 1.5 20 30 ð 1.4
Monel ð 2.1 30 40 ð 1.6
clad 40 50 ð 1.8
50 60 ð 2.2
Temperature up to 300° C

Figure 6.6a, b. Horizontal pressure vessels. Time base mid-2004.

Purchase cost D (bare cost from figure) ð Material factor ð Pressure factor
258 CHEMICAL ENGINEERING

Time base mid 2004

10000.0

Cost per plate, £

1000.0

3
2

100.0 1
0.1 1.0 10.0
Plate diameter, m
(a) Pound sterling

Time base mid 2004

10000.0
Cost per plate, $

1000.0

3
2
1

100.0
0.1 1.0 10.0
Plate diameter, m
(b) US dollars

Type Material factors

1 Sieve C.S. ð 1.0


2 Valve S.S. ð 1.7


3 Bubble cap

Figure 6.7a, b. Column plates. Time base mid-2004 (for column costs see Figure 6.4)
Installed cost D (cost from figure) ð Material factor
 COSTING AND PROJECT EVALUATION 259
Table 6.2. Purchase cost of miscellaneous equipment, cost factors for use in equation 6.7. Cost basis mid 2004
Equipment Size Size Constant Index Comment
unit, S range C,£ C,$ n
Agitators
Propeller driver 5 75 1200 1900 0.5
Turbine power, kW 1800 3000 0.5
Boilers
Packaged oil or gas fired
up to 10 bar kg/h steam
5 50 ð 103 70 120 0.8
10 to 60 bar 60 100 0.8
Centrifuges
Horizontal basket dia., m 0.5 1.0 35,000 58,000 1.3 carbon steel
Vertical basket 35,000 58,000 1.0 ð1.7 for ss
Compressors
Centrifugal driver 20 500 1160 1920 0.8 electric,
power, kW max. press.
Reciprocating 1600 2700 0.8 50 bar
Conveyors
Belt length, m 2 40
0.5 m wide 1200 1900 0.75
1.0 m wide 1800 2900 0.75
Crushers
Cone t/h 20 200 2300 3800 0.85
Pulverisers kg/h 2000 3400 0.35
Dryers
Rotary area, m2 5 30 21,000 35,000 0.45 direct
Pan 2 10 4700 7700 0.35 gas fired
Evaporators
Vertical tube area, m2 10 100 12,000 20,000 0.53 carbon steel
Falling film 6500 10,000 0.52
Filters
Plate and frame area, m2 5 50 5400 8800 0.6 cast iron
Vacuum drum 1 10 21,000 34,000 0.6 carbon steel
Furnaces
Process
Cylindrical heat abs, kW 103 104 330 540 0.77 carbon steel
Box 103 105 340 560 0.77 ð2.0 ss
Reactors
Jacketed, capacity, m3 3 30 9300 15,000 0.40 carbon steel
agitated 18,500 31,000 0.45 glass lined
Tanks
Process capacity, m3
vertical 1 50 1450 2400 0.6 atmos. press.
horizontal 10 100 1750 2900 0.6 carbon steel
Storage
floating roof 50 8000 2500 4350 0.55 ð2 for
cone roof 50 8000 1400 2300 0.55 stainless

Table 6.3. Cost of column packing. Cost basis mid 2004

Cost £/m3 ($/m3 )

Size, mm 25 38 50
Saddles, stoneware 840 (1400) 620 (1020) 580 (960)
Pall rings, polypropylene 650 (1080) 400 (650) 250 (400)
Pall rings, stainless steel 1500 (2500) 1500 (2500) 830 (1360)
260 CHEMICAL ENGINEERING

To use Table 6.2, substitute the values given for the particular type of equipment into
the equation:
Ce D CSn
6.7
where Ce D purchased equipment cost, £,
S D characteristic size parameter, in the units given in Table 6.2,
C D cost constant from Table 6.2,
n D index for that type of equipment.

6.8. SUMMARY OF THE FACTORIAL METHOD

Many variations on the factorial method are used. The method outlined below can be
used with the data given in this chapter to make a quick, approximate, estimate of the
investment need for a project.

Procedure
1. Prepare material and energy balances, draw up preliminary flow-sheets, size major
equipment items and select materials of construction.
2. Estimate the purchase cost of the major equipment items. Use Figures 6.3 to 6.6
and Tables 6.2 and 6.3, or the general literature.
3. Calculate the total physical plant cost (PPC), using the factors given in Table 6.1
PPC D PCE
1 C f1 C Ð Ð Ð C f9 
6.8
4. Calculate the indirect costs from the direct costs using the factors given in Table 6.1.
5. The direct plus indirect costs give the total fixed capital.
6. Estimate the working capital as a percentage of the fixed capital; 10 to 20 per cent.
7. Add the fixed and working capital to get the total investment required.

6.9. OPERATING COSTS

An estimate of the operating costs, the cost of producing the product, is needed to judge
the viability of a project, and to make choices between possible alternative processing
schemes. These costs can be estimated from the flow-sheet, which gives the raw material
and service requirements, and the capital cost estimate.
The cost of producing a chemical product will include the items listed below. They are
divided into two groups.
1. Fixed operating costs: costs that do not vary with production rate. These are the
bills that have to be paid whatever the quantity produced.
2. Variable operating costs: costs that are dependent on the amount of product produced.

Fixed costs
1. Maintenance (labour and materials).
2. Operating labour.
3. Laboratory costs.
4. Supervision.
5. Plant overheads.