Cost-Estimation Methods for Drying

53 Zbigniew T. Sztabert and Tadeusz Kudra

CONTENTS

53.1 Introduction ....................................................................................................................................... 1247

53.2 Free-on-Board Cost and Installed Cost of the Equipment ................................................................ 1247
53.3 Fixed Cost .......................................................................................................................................... 1252
53.4 Variable Cost ..................................................................................................................................... 1252
53.5 Drying Cost Estimate: A Worked Example ....................................................................................... 1255
Summary ...................................................................................................................................................... 1258
Acronyms ..................................................................................................................................................... 1258
References .................................................................................................................................................... 1258

53.1 INTRODUCTION Cost components of drying are usually divided

Reliable estimates of the fixed capital investment (FCI)
of a drying system as well as the system’s fixed and
operating costs are essential in the preliminary equip-
ment selection or when comparing different competing
systems. In general, estimation of the costs involved in a
drying process follows the well-known methods used
widely in the process industries [1–9]. This chapter pro-
vides the empirical information on shortcut methods
that may be used to quicken the predictions of FCI and
operating costs on the basis of the previously prepared
process balances and one-parameter equipment sizing.
The method described here is useful for preparing the
rough cost estimates applicable to many conventional
drying systems. However, extending this information to
unique or newest methods of drying must be regarded
with caution. When capital cost estimates of a definitive
investment are required to obtain budget authorization,
competitive quotes from vendors have to be requested,
as these quotes are the most reliable estimates.
A dryer itself is only one component of the overall
drying system. The system may comprise preprocessing
equipment (extruders, grinders, mixers, and blenders),
feeders, product-discharge devices, and postprocessing
equipment such as gas cleaners (cyclones, filters, and
scrubbers) and solvent-recovery systems (condensers
and separators). In some cases, heat-recovery systems
(exhaust-gas recycle, run-around coil, heat pump, or
heat wheel) may also be used. Thus, drying systems
for the same end product can be different. Therefore,
the total fixed costs as well as the operating costs should
be calculated for the complete drying system.
into the following two groups:
1. Fixed costs (fixed charges), which are incurred for
a long period of time, tend to be unaffected by
fluctuations in the level of production activity.
They include: depreciation of equipment and
buildings, interest charges for the investment cap-
ital, plant protection, insurance, fixed part of
taxes and rents, fixed part of maintenance costs,
and executive salaries (administration, overhead).
2. Variable costs (operating costs) tend to vary
with the production level. They include: cost
of raw materials, cost of product degradation,
costs of energy and utilities, direct labor (oper-
ating, works transport, supervision, and la-
boratory control), interest on working capital,
royalties, variable part of maintenance costs,
and miscellaneous direct costs.
The estimation process of drying costs is schemat-
ically shown in Figure 53.1. The following is a
detailed presentation of the method for preliminary
estimates preparation, together with a worked ex-
ample of cost estimates.
53.2 FREE-ON-BOARD COST AND
INSTALLED COST OF THE EQUIPMENT
Equipment-price data concern the free-on-board
(FOB) cost and the installed cost of the equipment.
The installed cost of a drying system covers the cost

ß 2006 by Taylor & Francis Group, LLC.

 Drying system
version

Calculations: Prediction of plant cost: Preliminary

1. Mass and heat 1. FOB cost of equipment estimation of fixed
balances 2. Installed cost of system and variable costs
2. One-parameter 3. Total direct cost of system of drying
equipment sizing 4. Fixed capital investment

FIGURE 53.1 The steps of preliminary estimation of drying cost.

of the purchased equipment, cost of equipment instal-
lation, and costs of piping, wiring, and instrumentation.
These costs can be estimated on the basis of vendors’
data or, with less accuracy, on the basis of known
costs for the equipment or system built previously,
assuming a great degree of similarity.
Data for equipment costs obtained from technical
literature are usually based on the technical and eco-
nomic conditions of the past. Among the various
methods accounting for price changes due to inflation
and inevitable fluctuations in economic conditions,
the method of the Chemical Engineering Plant Cost
Index (based on the 1957/1959 cost level and abbre-
viated as CE Index) and the method of the Marshall
and Swift All-Industry Equipment Cost Index (for-
merly known as the Marshall and Stevens Index) are
the most commonly used. This last inflation index
(formulated in the US market in the year 1926 with
the set value of 100, and abbreviated as M&S Index)
is recommended for updating the costs of high-level
process equipments [4,10]. The updated M&S Index
as well as the CE Index are listed regularly in Chem-
ical Engineering, a periodical published by McGraw-
Hill, New York [11], and are valid for cost updating
in US$ and for the US market. A part of such listing
for the equipment-cost indices over the period 1989–
2004 is given in Table 53.1. The following formula
using M&S Index is widely accepted for equipment-
cost updating:
different capacity can be predicted approximately
from the following empirical correlation:
Predicted cost ¼ Original cost
[desired capacity=original capacity]n
(53:2)
where desired capacity is the capacity of the equip-
ment for which the cost is to be estimated and original
capacity is the capacity of the same-type equipment
for which the cost is known (original cost). Values of
the exponent n for the typical equipment used in
drying systems are listed in Table 53.2 [10]. If not
given here or in the reference literature (e.g., [4,13]),
n ¼ 0.6 can be taken for rough estimation. The expo-
nent n may vary with the design details. For example,
in the case of cloth dust collectors, n ranges from 0.70
to 0.86. The cost estimated according to Equation
53.2 must be corrected not only for the inflation
index according to Equation 53.1 but also for the
TABLE 53.1
Marshall and Swift All-Industry Equipment Cost
Index and Chemical Engineering Plant Cost Index
(1989–2004)
Year M&S CE Index Year M&S CE
Index Index Index

1989 895.1 355.4 1997 1056.8 386.5

Updated cost ¼ Original cost 1990 915.1 357.6 1998 1061.9 389.5
M&S Index at updated time 1991 930.6 361.3 1999 1068.3 390.6

M&S Index at the time of original cost 1992 943.1 358.2 2000 1089.0 394.1
(53:1) 1993 964.2 359.2 2001 1093.9 394.3
1994 993.4 361.1 2002 1104.2 395.6
The M&S Index and the CE Index can also be used 1995 1027.5 381.1 2003 1123.6 402.0
for world-price comparison, if the changes in costs 1996 1039.2 381.7 2004 1178.5 444.2
according to the local economics, type of industry, Source: Marshall and Swift Equipment Cost Index. Chem. Eng.,
and kind of equipment (besides time) are accounted last pages of every issue (excerpted by special permission from
for [12]. Chemical Engineering (2005). Copyright 2005, by Access
For scale-up or scale-down of the drying system, Intelligence, New York, NY 10038).
the cost of the equipment of the same type but of

ß 2006 by Taylor & Francis Group, LLC.

 Aside from the general formula, numerous data
TABLE 53.2
on dryer cost dependence on evaporation capacity
Typical Exponents Relating Equipment Cost
exist in literature for the given dryers and definite
to Capacity
operating parameters [13,21,22]. For example, cost
Equipment Capacity Range Unit Exponent of a spray dryer with a pressure nozzle atomizer,
residence time of 16 s, inlet- and outlet-air tempera-
Centrifugal fan 0.4–40 m3/s 0.44 ture of 538 and 1218C, respectively, can be calculated
Cyclone 0.01–4 m3/s 0.61
as [21]:
Multiple cyclone 4–94 m3/s 0.66
Dust collector (cloth) 1–470 m3/s 0.78
Electrostatic precipitator 23–470 m3/s 0.74 Price ¼ 13793:8
(53:4)
Gravity spray scrubber 0.7–189 m3/s 0.66  E 0:435 (first-quarter-1995 US$)
Venturi scrubber 3.3–38 m3/s 0.46
Impingement scrubber 1–23 m3/s 0.78 where E is the evaporative load (181 < E < 38,780
Centrifugal scrubber 3.3–47 m3/s 0.73 kg/h) and the price includes the 304-stainless steel
Ribbon blendera 0.2–7 m3 0.54 dryer body, the access platform, support steel, burner,
Cage-type disintegrator 0.3–6 kg/s 0.68 air-heater shell, feeding system, and instrumentation.
Roll crusher 3–66 kg/s 0.97
Insulation, refractory material, fan, and solids-recov-
Screen (vibrating) 0.2–6 m2 0.66
ery system are not included.
Bucket elevatora 3–50 m 0.52
Belt conveyora 5–19 m2 0.50
The above method of prices presentation is
Screw conveyorb 0.4–0.8 m2 0.53
restricted to a narrow range of technology. Taking
Pan dryer 1–19 m2 0.50 into account that dryer cost depends mainly on its
Vacuum-shelf dryer 1.4–92 m2 0.54 size and the material of construction, drying indices
Tunnel dryer 2–10 m2 0.50 such as dryer throughput, evaporation rate, or unit
Roto-Louvre rotary dryer 4–93 m2 0.62 heat consumption should not be used as parameters
a for cost estimation, mainly because the same indices
Carbon steel.
b
Stainless steel, conveyor length  diameter.
may be obtained for dryers of different size by
Source: Sztabert, Z.T., in A.S. Mujumdar, Ed., Drying of Solids, manipulating the operating conditions. This situation
Sarita Prakashan, New Delhi, 1990, pp. 136–153. changes when a contract relating to technology and
equipment is considered—then a dependence of dryer
cost on evaporation capacity can be a valuable criter-
ion for dryer selection.
The best characteristic parameters for preliminary
local economic situation when installation will be cost estimation of most dryers are:
erected in a country other than the United States
[14]. Plavsic [12] has given a number of useful refer- . The volume of the drying chamber (e.g., for
ences [15–20] and provided a simplified ‘‘direct factor- spray or rotary dryers)
ing’’ method for converting the US data to numbers . The surface area of the supporting grid, shelves,
that are applicable elsewhere. However, further dis- belt conveyors etc.
cussion of this aspect is beyond the scope of this . The heat-transfer area in case of contact dryers
chapter.
Very approximate cost of carbon steel dryers can Usually, the estimated fabrication cost of a dryer can
be calculated as [4] be calculated from the following correlation:
 
W P ¼ (M&S Index)  A  Qc
C ¼ (M&S Index) 30 þ 36:74 (53:3) (53:5)
(17:77 þ T ) (US$ in the year of M&S Index)

where C is the installed cost (US$ in the year of the
M&S Index) covering the dryer and auxiliaries, includ-
ing foundations and erection, but no secondary dust
collectors or building; W is the evaporation capacity,
kg moisture/h; and T is the inlet-air temperature (8C).
This relation, however, does not reflect the material
properties, so the calculated prices are underestimated.
The graphs according to Equation 53.3 are presented
in Figure 53.2 for the M&S Index equal to 1100.
where Q is the capacity of a dryer defined either by its
effective volume (V) or by its characteristic surface
area (S ), depending on the dryer type. Values of the
coefficient A and exponent c for some common
dryers, determined from the available cost data, are
listed in Table 53.3.
The fabrication cost of a drying unit besides its
size depends also on the material of construction; it is
the lowest for carbon steel. If the process requires a

ß 2006 by Taylor & Francis Group, LLC.

 320,000

270,000 W = 20 kg/h

W = 100 kg/h

220,000 W = 500 kg/h

Cost, (US$)

170,000

120,000

70,000

20,000
70 100 130 160 200 250 300
T, (⬚C)
FIGURE 53.2 The dependence of dryer cost on evaporation capacity in kg moisture/h and inlet-air temperature in 8C,
according to Equation 53.3 (M&S Index ¼ 1100).

TABLE 53.3
Parameters A and c in Equation 53.5 for Selected Dryers

Dryer Type Capacity Range Parameter Construction Equipment Included

A c

Cabinet (atmospheric) 16 < V < 160 7 0.50 Aluminum Heater, instrumentation

Cabinet (low vacuum) 5 < V < 30 18 0.62 Aluminum Heater, instrumentation, vacuum pump
Vacuum with unheated agitator 0.02 < V < 9 66 0.30 Carbon steel
Vacuum with unheated agitator 0.02 < V < 9 103 0.42 304-stainless steel
Vacuum double-cone tumbler 0.1 < V < 14 80 0.70 304-stainless steel
Indirect rotary (steam tube) 3 < V < 300 55 0.58 Carbon steela Instrumentation
Drum (single or double) 1 < Sb < 40 21 0.50 Cast iron Drive, fan
Belt conveyor (through-flow) 18 < Sc < 50 21 0.59 304-stainless steel Drive, fan, steam heater
Direct rotary, flue-gas heated 20 < S < 300 17 0.68 Carbon steeld Drive, burner, heat exchanger, fan, dust
collector, instrumentation
Direct rotary, hot-air heated 20 < S < 300 14 0.66 Carbon steeld Drive, burner, heat exchanger, fan, dust
collector, instrumentation
Fluid bed (batch) 0.003 < Ve < 0.66 141 0.47 304-stainless steel Heater, fan, filter, instrumentation
Spray 1 < V < 300 47 0.52 304-stainless steel Heater, atomizer, fan, filter,
instrumentation
Vibrated bed 1 < Sf < 12 9 0.70 Carbon steelg
a
For 304-stainless steel, cost is multiplied by 1.7.
b
Drum peripheral surface area.
c
Deck surface area.
d
For 304-stainless steel, cost is multiplied by 1.5.
e
Bed volume.
f
Surface area of vibrated grid.
g
For 304-stainless steel, cost is multiplied by 1.64.
Note: Dryer capacity is defined by dryer volume V in m3 or surface area S in m2.

ß 2006 by Taylor & Francis Group, LLC.

more chemical-resistant material, a cladding may be
applied in some cases. In certain drying operations,
optimum design of the equipment as well as product-
quality requirements calls for the use of not only more
durable but also more expensive materials. In general,
drying equipment built of 304-stainless steel typically
costs from 1.5 to 1.7 times more than that made of
carbon steel and 2 to 3 times more if built of titanium.
The cost depends also on the auxiliary equipment,
and this is a reason for some uncertainty in cost
prediction from literature sources without vendors’
data. Figure 53.3 presents, as an example, the pur-
chase cost for several dryers in relation to their cap-
acity that is updated to the year 2000 with the M&S
Index equal to 1089.
Once the FOB costs of all equipment comprising
the drying system are established, the installed cost
and other costs of the plant, as well as fixed costs, can
be estimated using the factor method of cost estima-
tion. Usually, the following components of installed
cost are considered:
1. FOB cost (vendors’ prices or estimated prices)
2. Assembly, piping, wiring, instrumentation using
vendors’ data, or the following factors:
. Fully equipped compact system—25 to 30%
of FOB cost
. Fully equipped system, delivered in many
parts—40 to 45% of FOB cost
1,000,000
800,000
600,000
Cost, (US$)
6 5
400,000
200,000
0
0 20
FIGURE 53.3 FOB costs (US$, in the year 2000) vs. dryer volume in m3 of selected dryers according to Equation 53.5: 1,
atmospheric cabinet dryer (aluminum); 2, vacuum cabinet dryer (aluminum); 3, spray dryer fully equipped (304-stainless
steel); 4, steam tube rotary dryer (carbon steel) with instrumentation; 5, vacuum dryer with unheated agitator (304-stainless
steel); 6, double-cone tumbler dryer (304-stainless steel).
ß 2006 by Taylor & Francis Group, LLC.
Equipment delivered without piping and in-
.
strumentation—71 to 99% of FOB cost
3. Freight (function of transport method, weight,
and distance, or 7% of [component 1 þ com-
ponent 2])
The total direct cost of the plant expressed in
terms of the ‘‘battery limits’’ is much higher than the
installed cost of the equipment because of additional
costs such as
. Buildings, laboratories, warehouses
1. If a dryer system is installed inside a build-
ing, the cost of the building is factored in as
20 to 35% of the installed cost.
2. If a dryer system is outside of the building,
the cost of the building is factored in as 15%
of the installed cost.
. Utility-supply facilities, site development,
other direct expenses (20 to 40% of the in-
stalled cost).
To roughly estimate the total direct cost of the dry-
ing installation, it is recommended to multiply the
equipment FOB cost by a factor of 2.25 if the equip-
ment is made of carbon steel or by 2.75 if stainless-steel
equipment is used [22]. These figures include the cost of
piping, instrumentation, electrical connections, insula-
tion, building space, and engineering when applied to
3
2
1
40 60 80 100 120
V, (m3)
spray, flash, rotary, or fluid-bed continuous dryers. In
specific cases, however, different factors may have to be
used. For instance, the costs of instrumentation and
piping may be included in the purchase price of a fully
equipped dryer [23].
Besides the total direct cost, the FCI of a drying plant
contains
. Contractor’s fee (10 to 27% of direct plant cost)
. Insurance, customs, taxes, land, and other
owner’s costs (as per local regulations or 7% of
direct plant cost)
. Contingencies (10 to 30% of direct plant cost)
. Procurement, supervisory, administration, and
other owner expenses related to the plant (5 to
15% of direct plant cost)
Overall, the FCI of a drying plant that is sensitive
to the dryer type and the product processed may be
much higher, even by 3 times of the equipment cost.
A number of dryers that form multistage, combined,
or hybrid drying systems are often assembled from the
components purchased from different suppliers.
Therefore, the cost of the entire installation is not
directly related to the dryer capacity but depends
greatly on the cost of the ancillary equipment. When
other operations such as conveying, grinding, or
screening must be performed simultaneously with dry-
ing, the investment and operating costs can be reduced
significantly by allowing for a partial write-off of the
dryer cost for these secondary functions [13].
53.3 FIXED COST
Fixed costs (fixed charges) of a drying process are
incurred for a long period of time and tend to be
unaffected by fluctuations in the production level.
The factor method of fixed-cost estimating is based
on some simplifications such as:
. Fixed cost of drying is a function of installed
cost of a drying system and FCI.
. Variable part of maintenance cost is given to-
gether with fixed part as a percentage of FCI.
The factors depend on the current economic conditions
that should be analyzed up front, especially interest
charges for the investment. Also the inflation index for
local currency should be taken into account. In devel-
oped countries, the estimation of an annual fixed cost for
drying can be made on the basis of the following factors:
. Depreciation of equipment—7 to 9% of in-
stalled cost
ß 2006 by Taylor & Francis Group, LLC.
. Depreciation of buildings, utility facilities, site
improvement—5% of these costs
. Interest charges on the investment—3 to 5% of
FCI
. Fixed taxes and rent—2% of FCI
. Plant protection, insurance—1% of FCI
. Maintenance cost (fixed and variable):
1. Complex system, explosive or toxic raw ma-
terials, significant number of rotating or vi-
brating parts—10% of FCI
2. Simple system—5% of FCI
. Executive salaries and other fixed costs 6%
of FCI
53.4 VARIABLE COST
The variable cost of drying is the last item in the cost-
estimation process and it is predicted on the basis of
heat and mass balances, shortcut factors, or, if avail-
able, vendors’ data, unit cost of raw materials, labor,
and utilities.
The cost of raw material depends on the applied
technology and required characteristics of the end
product. In any case, this cost should take into ac-
count the transportation costs to the considered site.
When one compares several drying methods for the
same product, it may be convenient to judge only
costs of the lost and degraded material.
The cost of labor depends significantly on the
mode of a drying process: batch or continuous. The
labor cost of batch processes depends on the quantity
of handled material, the type of the equipment, the
method of material transportation, the method of
feeding, and the schedule of plant operation. Rough
estimation can be made considering the following
rule: 2 man-hour/(m3 of dried material) þ 1/3 man/
dryer/shift. The unit cost of labor should reflect the
local economic conditions and the cost should include
the insurance, taxes, and social charges. The labor
cost of continuous drying with an automatic process
control is almost independent of the production rate
because supervision of control panels and supervision
of the feeding and discharge systems do not depend
on the throughput of the drying system. Overall, with
the increasing automation, the direct labor cost de-
creases, but they are somewhat offset by the increase
in labor cost to maintain the control devices and
higher initial capital costs. Rough estimation can be
made considering the following rule: 1/2 man/dryer/
shift þ operating labor of the other equipment in add-
ition to the dryer.
The utilities costs are usually estimated on the
basis of mass and heat balances, on the equipment
characteristics, and on the utilities’ prices. The prices
of utilities have to be corrected for local conditions
and historical trends. The main constraint at this
point is the cost of energy because of unstable prices
of fuels, which may significantly vary both in the long
and short terms. The historical trends are shown in
Figure 53.4, where one can see the well-known effects
of the Iranian Revolution and the Iran–Iraq War
during 1979–1980 on the crude oil and secondary
fuel prices. Besides fuel-price fluctuation caused by
historical events, there is also a seasonal fluctuation
influenced by supply and demand. For example, price
of heating oil given by NYMEX increased from 32
c/ /L in September 2004 to 40 c/ /L in October and
November 2004, and then decreased to 34 c/ /L in
January 2005 [24].
Fuel-prices data and estimation for the years 2001–
2006 in the US market are presented in Table 53.4 [25].
Trends of electricity prices indicate slower increase
than the increase of natural gas and oil prices [26].
In long terms, the most stable prices are characteris-
tically for electricity and coal though the cost of coal
delivery and managing may be significant. Average
costs of coal receipts at electric-utility plants in
the United States by some states in dollars (Spring,
2000) per short ton are presented in Figure 53.5.
More information on fuel prices can be found on the
250
200
US /Gallon ; US$ /Short Ton
150
100
50
0 0
1975
FIGURE 53.4 Average US first-purchase price of crude oil (1996 US$/barrel)—the right scale, gasoline price (1995 USc/ /
gallon)—the left scale, and bituminous coal in 1996 US$/short ton—the left scale. (From US Energy Information Agency
(http://www.eia.doe.gov).)
ß 2006 by Taylor & Francis Group, LLC.
following websites: http://www.coaltrade.com, http://
www. eia.doe.gov, http://www.energyshop.com, http://
www. oilnergy.com, http://www.wtrg.com/prices.htm.
The problem of energy price volatility can be re-
solved by dividing the utility price into separate terms,
each of them being a product of a certain coefficient
and the price parameter [27]. The first term reflects
the conventional inflation rate while the second one
represents the contribution from the fuel price:
Putility ¼ A  (CE Index) þ B  Pfuel (53:6)
The utility cost coefficients A and B are characteristic
of the considered utility and can be given either by a
single number, as in the case of purchased electricity
(A ¼ 0.00013 and B ¼ 0.01), or by a correlation, as in
the case of compressed air (A ¼ 0.00005 q0.3 ln p
and B ¼ 0.0009 ln p, where q and p are the total air-
plant capacity and the delivered air pressure, respect-
ively). Tabulated data on the utility cost coefficients
are given by Ulrich [27,28]. The CE Index in Equation
53.6 is the Plant Cost Index reported monthly in
Chemical Engineering.
The variable maintenance cost, according to the
previous assumption, is estimated together with a
fixed part in relation to FCI.
60
Gasoline
Crude oil
50
Bitum. Coal
40
US$ /Barrel
30
20
1 Barrel, petroleum (US) = 158.987 L
10
1 Gallon (US) = 3.785 L
1 Short Ton = 907.185 kg
1980 1985 1990 1995 2000
Year
ß 2006 by Taylor & Francis Group, LLC.

TABLE 53.4
Fuel Prices for the Years 2001–2006 (United States)

Year 2001 2002 2003 2004 2005 2006

Crude oil spot prices (FOB) ($/barrel) 21.2 (March) 22.5 (March) 26.5 (March) 31.1 (March) 47.6 (March)
Crude oil West Texas intermediate ($/barrel) 31.12 (year) 41.44 (year) 58.77 (year prediction) 63.46 (year prediction)
No. 2 heating oil, wholesale ($/gallon) 0.76 (year) 0.69 (year) 0.88 (year) 1.13 (year) 1.70 (year prediction) 1.76 (year prediction)
Natural gas, City Gate ($/thousand cubic feet) 5.72 (year) 4.12 (year) 5.8 (year) 6.6 (year) 7,18 (June)
Natural gas, average Wellhead ($/thousand cubic feet) 4.01 (year) 2.95 (year) 4.89 (year) 5.50 (year) 7.81 (year prediction) 7.64 (year prediction)
Natural gas residential average price ($/thousand cubic feet) 9.63 (year) 7.89 (year) 9.51 (year) 10.74 (year) 13.03 (year prediction) 15.33 (year prediction)
Electricity nominal industrial average retail prices ( c/kWh)
/ 5.04 (year) 4.88 (year) 5.13 (year) 5.11 (year) 5.71 (June)
Electricity residential average prices ( c/kWh)
/ 8.62 (year) 8.46 (year) 8.70 (year) 8.92 (year) 9.22 (year prediction) 9.37 (year prediction)
Imported coal average prices ($/short ton) 33.72 (year) 35.51 (year) 31.45 (year) 37.52 (year) 46.49 (June)
Coal (11,700 Btu, 0.8 lb SO2/mm Btu) spot price ($/t) 18 (September) 17 (September) 30 (September) 37 (September)
Coal for electric power sector ($/million Btu) 1.23 (year) 1.25 (year) 1.27 (year) 1.35 (year) 1.55 (year prediction) 1.62 (year prediction)

Source: http://www.eia.doe.gov/.
 Natural gas: US$/100 MJ
0 10 20 30 40 50

US total
Massachusetts
New York
New Jersey
Michigan
Arkansas
Pennsylvania
Indiana
Illinois
Wisconsin
Kansas
Oklahoma
Iowa
Nebraska
North Dakota

0 10 20 30 40 50
Coal: US$/short ton
FIGURE 53.5 Average delivered cost of fossil fuel receipts at US Electric Utility Plants by state; coal: April–June 2000, US$/
short ton; gas: 1999, US$/100 MJ. (From Federal Energy Regulatory Commission, FERC Form 423, ‘‘Monthly Report of
Cost and Quality of Fuels for Electric Plants.’’)

Servicing the working capital depends on the
credit value and its type, as well as on the interest
rate. It is reasonable to assume the credit to be equal
to the variable cost of a drying process. In developed
countries the interest charges on the working capital
can be estimated as 4 to 7% of the annual credit, but it
is strongly recommended to consider local conditions.
Royalties usually do not occur; but when a
profit is calculated on the basis of new technology,
royalties should be taken into consideration as a
cost item.
When comparing the competing drying technolo-
gies, it is recommended to relate the capital invest-
ment (FCI) and the annual drying costs to the annual
production rate. Usually, comparable estimates are
made on optimistic and pessimistic assumptions of
the level of costs (level of factors). With progress in
computer-aided design, a number of software pro-
grams have been custom-developed in order to provide
the engineers with an efficient tool for calculations
of approximate cost [29,30]. Although such software
programs are necessarily provided without warranty
of any kind, the reliability of the estimate of +30%
covers the majority of the cases tested. An implemen-
tation of a process simulator with a cost evaluator is
useful for the analysis of variants of a new plant,
especially for
. Process calculation and equipment sizing
. Estimating fixed investment cost
. Performing a scheduling calculation, including
direct and indirect labor costs
. Providing a detail evaluation of production cost
. Evaluating project profitability
53.5 DRYING COST ESTIMATE:
A WORKED EXAMPLE
The following example of the cost-estimate procedure
made in the year 2005, for example, illustrates the
method of a preliminary cost evaluation for a drying
process.
Problem description: Based on the previously cal-
culated balance and one-parameter dryer sizing, the
‘‘factored estimate’’ for a cost of the laundry detergent
formulating and drying in a spray dryer is to be done.
The system will be located in Pennsylvania in the year
2006. The required capacity of the dryer is 4.9 t of the
product per hour (production period: 7,200 h/y; 35,280
t of dry product per annum) of which the moisture
content should be about 7% w/w. The feed moisture
content is 32.5% w/w, the feed temperature is 808C,
and the price of raw materials in the slurry in the year
2003 was US$1.48/kg (dry weight).

ß 2006 by Taylor & Francis Group, LLC.

 1400 550
M&S Index
1200
CE Index 500
1100

M&S Index

CE Index
450
1000
400
900

800 350

700 300
1989 1992 1995 1998 2001 2004 2007
Year

FIGURE 53.6 Trends in the M&S Index (left scale) and the CE Index (right scale) in the years 1989–2004 with extrapolation
to the year 2006.

The task is to predict the cost of drying in a spray
system in the year 2006.
Solution: Based on the data presented in Table
53.1, the M &S Index and the C E Index in the
year 2006 are predicted by linear extrapolation,
as shown in Figure 53.6. The values of the indices
are:
M&S Index2006 ¼ 1221.7
CE Index2006 ¼ 432.1
From previous experience, it is known that the
laundry detergent can effectively be formulated and
dried in a countercurrent spray dryer using combus-
tion gases at 240 and 1208C at the dryer inlet and

Exhaust

Bag filter

Slurry tank

Pressure
nozzle

Fuel
tank Feed pump
Spray
dryer

Fuel pump

Air

Burner with a
mixing chamber Product
Conveyor
FIGURE 53.7 Flow sheet of the system for drying of the laundry detergent slurry.

ß 2006 by Taylor & Francis Group, LLC.

outlet, respectively. The volumetric evaporation rate
under these conditions is 3.5 kg H2O/m3 h.
For the preliminary cost estimate, an assumption
is made that ambient air is heated by the combustion
of fuel oil; the flue gases are then mixed with fresh air
to ensure the required gas temperature. Taking into
account the specifics of the drying technology, mois-
ture content of the feed, as well as fines that are
likely to be entrained with the drying gas, the drying
plant should consist of a slurry feeding system, an oil
burner with a secondary air-mixing chamber, a dryer
with pressure nozzles, and an exhaust-gas cleaning
system (Figure 53.7). As product cooling, mixing of
supplements, and packaging are downstream pro-
cesses, they are outside of the battery limits of the
considered project. The basic material of construction
should be stainless steel.
The following values are known from the heat and
mass balances:
The mass flow rate of the flue gas–air mixture
entering a dryer: 44,000 kg/h
The quantity of fuel oil fed to the burner: 300 L/h
(including heat losses)
The power of electrical motors: 190 kW
According to the specified values of the dryer
capacity and the volumetric evaporation rate (3.5 kg
H2O/m3 h), the dryer volume should be 570 m3.
Hence, the dryer FOB cost in the year 2006 can be
calculated from Equation 53.5:
P ¼ 1221:7  47  5700:52 ¼ 1,554,000
(in the year 2006, US$)
According to the data presented in Table 53.3, the
above value includes the cost of a dryer, a fan, a filter,
a heater, and the instrumentation. The cost of the
remaining equipment calculated on the basis of the
past cost data is US$201,000 (in the year 2006). Then
the cost of the entire drying system is to be
US$1,757,000. The installed cost of the system should
contain the components presented in Table 53.5. As a
result of calculations, the fixed cost for drying of
35,280 t/y of the laundry detergent is predicted for
the year 2006 at the level of US$1,449,780 per annum,
resulting with US$41.09/t of dried product.

TABLE 53.5
Application of the Factor Method for Predicting Fixed Capital Investment and Fixed Cost of Drying (Data
for the Presented Example)

It. Cost Factor Range and Cost Basis Estimate (US$)

A FOB cost of equipment Vendors’ data or actualized 1,757,000

previous data
B Assembly, piping, wiring, instrumentation (1,757,000  0.4) 30–99% of FOB cost 702,000
C Freight ([1,757,000 þ 702,000]  0.07) Weight, distance, or 7% of (A þ B) 172,200
D Installed cost (A þ B þ C) 2,632,000
E Building (2,632,000  0.3) 15–35% of installed cost 789,600
F Utility facilities, site development (2,632,000  0.2) 20–35% of installed cost 526,400
G Direct cost of plant (D þ E þ F) 3,948,000
H Insurance, custom, taxes (3,948,000  0.07) 7% of direct cost 276,360
I Contractor’s fee (3,948,000  0.2) 10–27% of direct cost 789,600
J Contingencies (3,948,000  0.15) 10–30% of direct cost 592,200
K Procurement, supervisory, administration, 5–15% of direct cost 276,360
and other owner expenses related to the plant (3,948,000  0.07)
L Fixed capital investment (G þ H þ I þ J þ K) 5,882,520
1 Depreciation of drying system (2,632,000  0.09) 7–9% of installed cost 236,880
2 Depreciation of building, utility facilities and site improve 5% of building, utility facilities 65,800
([789,600 þ 526,400]  0.05) and site improve costs
3 Interest charges on the investment (5,882,520  0.055) 3–5% of FCI 294,130
4 Constant taxes and rent (5,882,520  0.02) 2% of FCI 117,650
5 Plant protection, insurance (5,882,520  0.01) 1% of FCI 58,830
6 Maintenance (4,843,000  0.055) 5–10% of FCI 323,540
7 Executive salaries and other fixed costs (5,882,520  0.06) 6% of FCI 352,950
8 Fixed cost of drying (annual) 1,449,780
9 Unit fixed cost of drying 41.09/t

ß 2006 by Taylor & Francis Group, LLC.

TABLE 53.6
Predicted Variable Cost of Drying (Data for the Presented Example)

It. Cost Cost Basis Estimate (Annual, US$)

A Fuel 300 L/h  7200 h  46.5 c/L

/ 1,004,400
B Electricity 190 kW  7200 h  6.3 c/kWh
/ 86,184
C Labor 2 workers  8760 h  $27/h 473,040
D Royalties Neglected 0
E Lost of raw material 5 kg/h  7200 h  $1.59/kg 57,240
F Working capital servicing (A þ B þ C þ D þ E)  4% 64,835
G Variable cost 1,685,699
H Unit variable cost of drying (G/35,280 t) 47.78/t

According to the forecast for the year 2006, the
cost of fuel oil (loco system) will probably approxi-
mate 46.5 c/ /L and the unit cost of electrical energy
will be of about 6 c/ /kWh. The unit cost of raw
materials in the year 2006 predicted on the basis of
the price in the year 2003 as US$1.48/kg (dry weight)
as well as the values of the CE Index 2003 and the
predicted CE Index2006 is
 
432:1
1:48 ¼ $1:59=kg
402:0
tom) and legislative requirements, must be considered
carefully on a case-by-case basis to estimate the dry-
ing costs at different locations using the published
cost data for the United States. Also, no warranty
can be made concerning the accuracy of the published
correlations or data on costs of dryers, ancillary equip-
ment, as well as fuel and energy costs, but these data
are very useful for the shortcut methods of cost ana-
lyzing and for preliminary prediction of costs of a
drying process on optimistic and pessimistic levels.

The unit labor cost with insurance, tax, social, and
other personal expenses is expected at US$27/h and
the interest rate of about 4%. The variable cost items
for drying of the laundry detergent slurry calculated
according to the presented method are summarized in
Table 53.6. The predicted variable cost is about
US$1,685,699 per annum and US$47.78/t of dried
product. Then, the expected unit cost of drying of the
laundry detergent in the year 2006 will most likely be
US$41:09=t þ US$47:78=t ¼ US$88,87=t
Because the fixed part of the unit cost includes the
variable part of the maintenance cost (as in the as-
sumption), the value to be compared with the costs of
alternative technologies for drying of the laundry
detergent should be the sum of both costs, i.e.,
US$0.089/kg.
SUMMARY
Very often, the published cost data (a primary re-
source is Chemical Engineering) refer to a specific
year and apply to a location of the plant in North
America. It is therefore necessary to correct the cost
estimate for the inflation index and also for different
geographical locations. Local cost of energy, as well
as the local regulations (environmental, taxes, cus-
ACRONYMS
CE Index Chemical Engineering Plant Cost Index
FCI Fixed capital investment
FOB Free-on-board
M&S Index Marshall and Swift Index
w/w Weight by weight
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