PROJECT COSTING

Chemical Engineering Handbook 8th Edition p. 9-11

 COST OF EQUIPMENT
COSTING PARAMETERS
COST DATA FROM EQUIPMENT
MANUFACTURERS AND SUPPLIERS
COST DATA FROM PUBLISHED BOOKS AND
LITERATURES, JOURNALS, WEBPAGE,
BROCHURES, MAGAZINES
COST INDEX
COST CAPACITY EXPONENT
COST INDEX
 Chemical
Marshall & Swift Installed Equipment Indexes, Eng. News Record Nelson-Farrar
Engineering Plant
1926 = 100 Construction Index Refinery Index
Cost Index

YEAR All Industries Process Industries 1967=100 1946=100 1959=100

2000 1089.0 1097.7 579 1542.7 394.1

2001 1093.9 1106.9 591 1579.7 394.3
2002 1102.5 1116.9 604 1599.2 390.4
2003 1124.7 1145.1 1675.0 402.0
2004 1194.1 1218.9 1750.0 444.2
2005 1274.8 1313.4 1895.0 468.2
2006 1353.8 1399.2 2000.0 499.6
2007 1399.2 1452.3 525.4
2008 1431.7 1491.7 575.4
2009 521.9
2010 550.8
2011 585.7
2012 584.6
2013 567.3
2014 576.1
2015 556.8
2016 541.7
2017 567.5
2018 603.1
2019
COST INDEX
 Most cost data which are available for immediate use in a preliminary or predesign
estimate are based on conditions at some time in the past.
 Because prices may change considerably with time due to changes in economic
conditions, some method must be used for updating cost data applicable at a past
date to costs that are representative of conditions at a later time. This can be done
by the use of “cost indexes”.
 A cost index is merely an index value for a given point in time showing the cost at
that time relative to a certain base time.
 If the cost at some time in the past is known, the equivalent cost at the present
time can be determined by multiplying the original cost by the ratio of the present
index value to the index value applicable when the original cost was obtained.

 Different types of Cost Indices:

• Marshall and Swift all-industry and process-industry equipment index
• Chemical Engineering Plant Cost Index
• Nelson-Farrar Refinery Construction Index
• Engineering News-Record Construction Index
 Cost Capacity Exponents
(William’s Six-Tenths Factor)
C𝐨𝐬𝐭 𝐨𝐟 𝐄𝐪𝐮𝐢𝐩𝐦𝐞𝐧𝐭 𝐀
𝐗
𝐂𝐚𝐩𝐚𝐜𝐢𝐭𝐲 𝐨𝐟 𝐄𝐪𝐮𝐢𝐩𝐦𝐞𝐧𝐭 𝑨
= 𝐂𝐨𝐬𝐭 𝐨𝐟 𝐄𝐪𝐮𝐢𝐩𝐦𝐞𝐧𝐭 𝑩
𝐂𝐚𝐩𝐚𝐜𝐢𝐭𝐲 𝐨𝐟 𝐄𝐪𝐮𝐢𝐩𝐦𝐞𝐧𝐭 𝑩
Where:
X = exponent that may vary between 0.4 to 0.9 depending
on the type of equipment and given capacity range.
= in the absence of exponent value and outside the given
range, it is usually taken as 0.60
(P & T p. 243)
CHE HB (7th ed) p. 9-69
CHE HB (7th ed) p. 9-69
CHE HB (7th ed) p. 9-74
CHE HB (7th ed) p. 9-68
CHE HB (8th ed) p. 9-12
 PROJECT COSTING
CHE HB (7th ed) p. 9-68-9-70 / (8th ed) p. 9-13 to 9-16/PD & Eco for ChE-5th ed. (Peters) p. 251-254

A. LANG METHOD
 Table 6-9 p. 251/ Also, Ch.E HB (7th ed) p. 9-70
(Plant Design and Economics for Ch.E by Peters, Timmerhaus and West- 5th Ed.)
Ratio Factors (Lang) to convert Delivered-Equipment Cost into Fixed Capital Investment
Percent of delivered-equipment cost
Solid Process Solid-Fluid Process Fluid Process
 Direct Plant Cost
Purchased Equipment (Del) 100 % 100 % 100 %
Installation 45 39 47
Instrumentation and Controls 18 26 36
Piping 16 31 68
Electrical System 10 10 11
Buildings (incl. services) 25 29 18
Yard Improvements 15 12 10
Service Facilities 40 55 70
Total Direct Plant Cost 269 % 302 % 360 %
 Indirect Plant Cost
Engineering and Supervision 33 32 33
Construction Expenses 39 34 41
Legal Expenses 4 4 4
Contractor’s Fee 17 19 22
Contingency 35 37 44
Total Indirect Plant Cost 128 % 126 % 144 %
Fixed Capital Investment 397 % 428 % 504 %
B. HAND METHOD
A refinement of the Lang factor method is the Hand method. The Hand
factors are found in Table 9-11. Equipment is grouped in categories, such as
heat exchangers and pumps, and then a factor is applied to each group to
obtain the installed cost; finally the groups are summed to give the battery-
limits installed cost.
C. WROTH METHOD:
Compiled a more detailed list of installation factors; a selection of these can be
found in Table 9-12. The Lang and Hand methods start with purchased
equipment costs whereas the Wroth method begins with delivered equipment
costs, so delivery Charges must be included in the Lang and Hand methods. At
best the Lang and Hand methods will yield study quality estimates, and the
Wroth method might yield a preliminary quality estimate.
 COST
OF
VARIOUS EQUIPMENT
 GRASS-ROOT vs. BATTERY-LIMIT PLANT
A grass-roots plant is defined as a complete plant
erected on a new site. Investment includes all costs of
land, site development, battery-limit facilities, and
auxiliary facilities.
A geographical boundary defining the coverage of a
specific project is a battery limit. Usually this
encompasses the manufacturing area of a proposed
plant or addition, including all process equipment but
excluding provision of storage, utilities, administrative
buildings, or auxiliary facilities unless so specified.
Normally this excludes site preparation and therefore,
may be applied to the extension of an existing plant.
Chemical Engineering Handbook 8th Ed. p. 9-14
Lang Factor
CHE HB (7th ed) p. 9-69