Manufacture

Cost Estimation

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 Cost of Manufacture (COM)
 COM = DMC + FMC + GE
• COM is the sum of Direct (DMC) and Fixed
(FMC) Manufacture Costs and General
Expenses (GE)
• Cost of Manufacture (COM) estimated
from:
– fixed capital investment (FCI),
– cost of operating labor (COL ),
– cost of utilities (CUT ),
– cost of waste treatment (CWT ), and
05/15/10 – cost of raw materials (CRM ). 2
 Manufacture (Operating)
Cost
COM

GE

FMC

DMC

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 Cost of Manufacture
• FCI, COL , CUT , CWT , and CRM are
typically determined from:
– material and energy balances,
– a knowledge of the type of plant
being considered,
– the size of the facility,
– the nature of the raw materials and
their commodity costs, etc.

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 Direct Manufacture Costs
 DMC = CRM (DMC)
+ CWT + CUT + 1,33
COL
+ 0,03 COM + 0,069 FCI


– Raw materials, CRM ; Waste treatment

CWT ;
Utilities, CUT ; Operating labor, COL  
– direct supervisory & clerical labor, CSC =  α SC COL
( α SC = 0,18)
– maintenance/repair, CMR = α MR FCI (α MR = 0,06)
– operating supply, COS = α OS CMR = α OS α MR FCI  (α OS
05/15/10
= 0,15) 5
– laboratory charges, C = α C   (α = 0,15)
 Fixed Costs (FMC)
 FC = 0,708 COL + 0,068 FCI + dep
• Factors not affected by production
rate
– Depreciation
• CDEP = α DEP FCI 
– local taxes and insurance
• CTI = α TI FCI  (α TI = 0,032)
– plant overhead costs
• CPO = α PO (COL + CSC + CMR ); (α PO =
0,6) 
05/15/10 = α PO (COL + α SC COL + α MR FCI)6
 General Expenses (GE)
 GE = 0,177 COL + 0,009 FCI + 0,16
COM


• administration costs
– COL = α AD (COL + CSC + CMR ); (α AD =
0,15)
• distribution and sales costs
– CDS = α DS COM;  (α DS = 0,11)
• R&D
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– CRD = α RD COM; (α RD = 0,05) 7
 Cost of Manufacture (COM)
 COM = DMC + FMC + GE


 COM = CRM + CWT + CUT + 1.33 COL +

0,03COM + 0,069 FCI + 0,708 COL +
0,068 FCI + dep + 0,177 COL +
0,009FCI + 0,16 COM


 COMd = 1,23(CRM +CWT +CUT ) + 2,73 COL +

0,180 FCI


 The subscript in COMd indicates

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 Cost of Operating Labor
COL

(C#OLof)operators per
is based on the
shift (NOL ), estimated as proportional
to the number of processing steps,
where solids (P) and non-solids steps
(Nnp ) are considered separately:
N OL = ( 6,29 + 31,7 P + 0,23N np )
2 0,5

N np = ∑ equipment
compressors
towers
reactors
heaters
exchangers

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 Utility Costs
• Utilities may include:
– Air, Steam, Cooling tower water,
Electrical, Fuels, Refrigeration,
Thermal systems (hot oil, molten
salt, etc)
• Use rate comes from material/energy
balance
• Unit consumption cost basis
presented (and in some cases
calculated) in PRACTICE 6 using
Ulrich correlations based in actual
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 Raw Material Costs
• RM$ = (use rate)  ($ / unit
consumption)
• Use rate comes from material/energy
balance
• Unit consumption cost based on
market value
– Chemical Market Reporter
– cost basis should be considered
(f.o.b., barge, rail)
• Must apply stream factor to PFD
rates to account for down time
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 Waste Treatment Costs
• WT$ = (production rate)  ($ / unit
treatment)
• Production rate comes from material
balance
• Unit production cost based on
treatment cost
– on-site vs. off-site
• Cost magnitude dictated by nature of
the waste and the treatment process
– Ton of hazardous ($200-$2000) vs non
($36)
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– 1000 m3 of waste water by primary