Class 17

14-03-2023
Class 17
Process Equipment Sizing and Costing
14-03-2023 CL 306 Process Engineering & Economics, Dr. Sumit kumar IITG 215
Process Equipment Sizing and Costing for different process units
 Process Alternatives Synthesis (candidate flowsheet)

 Analysis (Preliminary mass and energy balances)
 SIZING (Sizes and capacities)
 COST ESTIMATION (Capital and operation)
 Economic Analysis (economic criteria)
SIZING
• Calculation of all physical attributes that allow a unique costing of this unit
- Capacity, Height - Pressure rating -Cross sectional area – Materials of construction
• Short-cut, approximate calculations (correlations)  Quick obtaining of sizing parameters
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 Preliminary Equipment Sizing is done for equipment Capital Cost Estimation
The need for equipment sizing

• Before one can carry out capital cost estimates on process Equipment Types
equipment, the process engineer must carry out a preliminary • Towers
sizing of the equipment. • Heat Exchangers
• Although each process will have some unique pieces of • Instrumentation
equipment there are some general categories applicable to • Tanks
most designs. • Vessels
• Pumps
• Compressors
• Fired Heaters
• Others
Types of Cost Estimates
Sl. No Type Remarks Accuracy
1 Order of Magnitude estimate. Extrapolate similar plant cost over 30%
2 Study Estimate. Knowledge of major pieces of equipment ± 30%
3 Preliminary Estimate. Enough for budget authorization ± 20%
4 Definitive Estimate. Based on basic Engineering and quotes ± 10%

from suppliers and contractors
5 Detailed Estimate Based on detailed engineering. ± 5%
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Types of Cost Estimates
• The first three types serve as a cost indicator at a very early stage of the project design stage
first look at project cost.
• The preparation of a preliminary estimate is done by an estimator based on his assessment of the
design, past cost estimates, in-house estimating information, and previous contracts and purchase
orders.
• Even with the advent of sophisticated estimating software it is sometimes simply easier to
manually approximate an equipment cost.
• Definitive and Detailed cost estimates are full-blown exercises that are undertaken to produce a
competitive bid submission or otherwise produce an accurate (plus or minus 10% or better) cost
estimate,
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Table: Cost-Capacity Parameters a
Process design
(material and energy balances to determine the
quantities of material processed and the amount
of energy transferred)
Preliminary equipment sizing

(Before equipment costs can be obtained, it is necessary to calculate
equipment sizes, specify operating temperatures and pressures as well
as materials of construction)
preliminary cost of equipment

f(equipment sizes, variation, operating temperatures and pressures and materials of construction)
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Process Equipment Costing
Format for equipment cost-capacity data:

1. Equation Format
2. Graphical Presentation Format
3. Algorithm Format
 Size factor cost estimation

 Time factor cost estimation
1. Equation Format
Simple convenient method of presenting cost data is by an equation (Capacity correlation):
Where
C1 = cost for equipment capacity S1
C2 = cost for equipment capacity S2
n = cost-capacity exponent that varies between 0.30 and 1.20 depending on the type of equipment
• The above equation is known as the six-tenths or 0.6 rule.

• This equation permits the user to obtain a cost for an equipment item of a different size when the
cost for given size is known.
• For most process equipment, the exponent (n) varies between 0.4 and 0.8 with an average value of
about 0.6 (When the exponent is unknown, this value may be used)
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Typical equipment cost-capacity exponents (n)  Table: Cost-Capacity Exponents
Example:
Recently a cast iron leaf pressure filter with 100 ft2 was purchased for clarifying an inorganic liquid stream for
$15,000. In a similar application, the company will need a 450 ft2 cast iron leaf pressure filter. The size
exponent for this type filter is 0.6. Estimate the purchased price of the 450 ft2 unit.
2. Graphical Presentation Format

Equipment cost data are presented in the literature by Guthrie, Hall et al., Hall et al., Peters and
Timmerhaus , Garrett, and Page as logarithmic plots of cost as a function of equipment capacity.
Figure: Compressors cost-capacity plot.

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• If possible, before using any cost-capacity data, it is

advisable to determine how the data were obtained and
correlated.
• The data accuracy may be high over a very narrow range of
capacity, usually in the middle of the range.
Economy of scale: Figure: Variations of n in a cost-capacity plot.

• The economy of scale is reflected in the exponent.
• If the n < 1.0  there is an economy of scale.
• As n approaches the value of 1  the economy of scale disappears.
• An n >1.0  a negative economy of scale and multiple equipment units should be used.

3. Algorithm Format: Cost correlation based
• More convenient way to display cost-capacity data
• Readily adaptable in computer cost-estimating programs.
• Cost data may be represented by using an equation with equation modifiers to account for pressure,
temperature, materials of construction, equipment design type, etc.
Cost correlation equation for purchased cost:

Chilton’s Correlation (1949)
Guthrie's correlation (1968)   Douglas Book  Appendix E.2
..
..
Peter and Timmerhaus  Commercial software (Aspen etc.)
In-house cost & Installation correlation
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Sizing
correlation
Purchased cost Installed cost
Need another set of factors  Installation factors
 Installation factors
• provide separate accountings for the piping required, instrumentations, structural support, building,
electrical equipment, insulation etc..
• Independent of pressure, Temperature, material of construction etc..

• Purchased & delivered cost (uninstalled cost) = Base cost*Factor (P,T,MC etc) = BC*MFP
MFP: Material & Pressure correlation factor
• BC* Module Factor (MF) = BC + Installation cost including insulation, piping, electricity, building etc.
• Installation cost including insulation, piping, electricity, building etc. =BC*MF - BC
• Installed cost = Purchased & delivered cost (uninstalled cost) + Installation cost
• Installed cost = (BC*MF – BC) +BC*MFP = BC (MF +MPF-1)

Guthrie's correlation
• Updated Installed cost/bare module cost (BMC) = Installed cost *Update Factor  Douglas Book 
Appendix E.2
Note:
• Module Factor (MF) is also called Installation Factor (IF)
• Installed cost is also called capital cost/investment for a process equipment
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The total Installed equipment cost = ~ 4 * total purchased cost
Module Factor (MF) / Installation Factor (IF)
Different for kinds of processing equipments:

• Distillation column, Pressure vessels, pumps and instruments  4
• Heat exchanger  3.5
• Compressor  2.5 Hand’s Factor
• Fire heater  2
• Miscellaneous equipment  2.5

 Peter and Timmerhaus  Commercial software (Aspen etc.)
For example, a shell-and-tube heat exchanger cost developed for ASPEN plus may be estimated from the
following basic correlation equation:
CE =1.218 CB * FD * FMC * FP (1.218  updated time to time)
where
CE = exchanger cost
CB = Base cost of a carbon steel, floating-heads exchanger, 150 psig design pressure
FD = Design-type cost factor if different from that in CB
FMC = material of construction cost factor
FP = design pressure cost factor
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3. Algorithm Format…
Correlations for base cost, design type factor, material of construction factor, and design pressure factor
can be developed as secondary algorithms:
In-house cost & Installation correlation:

• Called Company cost correlation
• These are frequently developed by using purchase repository, vendor’s quotation and recent construction costs.
• Must always be used when available
Read following article to have better understanding
https://doi.org/10.3390/en14092665
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Update Factor:
It is necessary to bring the cost obtained from the above relationships (original cost) to the present time cost.
• Original 𝑰𝒏𝒔𝒕𝒂𝒍𝒍𝒆𝒅 𝒄𝒐𝒔𝒕 are presented as of a specific date.

• They are adjusted through the use of cost indexes that are based upon constant dollars in a base year and actual dollars
in a specified year.
• Projections of cost data into the near future have to take into account not only inflation rates but also short-term
estimates of what an index might be.
𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑐𝑜𝑠𝑡 𝐼𝑛𝑑𝑒𝑥
𝑷𝒓𝒆𝒔𝒆𝒏𝒕 𝒄𝒐𝒔𝒕 / 𝑼𝒑𝒅𝒂𝒕𝒆𝒅 𝑰𝒏𝒔𝒕𝒂𝒍𝒍𝒆𝒅 𝒄𝒐𝒔𝒕/ BMC UF =
𝑶𝒓𝒊𝒈𝒊𝒏𝒂𝒍 𝑰𝒏𝒔𝒕𝒂𝒍𝒍𝒆𝒅 𝒄𝒐𝒔𝒕 ∗ Update Factor (UF) 𝑂𝑟𝑖𝑔𝑖𝑎𝑙 𝑐𝑜𝑠𝑡 𝑖𝑛𝑑𝑒𝑥
Cost Indexes:
• Cost indexes are used to perform an estimate of the actual cost of a process unit if the cost of the same unit,
referred to a past period, is known.
• It is generally not recommended to use cost indexes when the time interval is longer than 10 years.
• The cost index can also be used to extrapolate the present value of a process unit or a whole plant in the near
future (for instance at the expected time of purchase compared to the design time).

Cost Indexes
• Many cost indexes are published on a regular basis.
The most commonly used cost indexes in the process industry are:
 Marshall & Swift (M&S): All industries and Process Industry (base 100 in 1926)
 Nelson-Farrar: Refinery construction index (base 100 in 1946)
 Chemical Engineering (CEPCI): Plant cost index (base 100 in 1959)
 Vatavuk (VAPCCI): Air pollution Control (base 100 in 1994)
Indexes apply only to labor and materials in specialized fields:

 Bureau of Labor Statistics (BLS)
 Mining and Metallurgical Index
 EPA–STP Treatment Plant Index
 OFJ–Morgan Pipeline Index
 Foreign Indexes
 Company Indexes
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Cost Indexes..
Table: Cost Index
Example: cost of purchase equipment
An oil at a rate of 490,000 lb/hr is to be heated from 100 to 170 F with

145,000 lb/hr of kerosene at initially at 390 F from another plant unit.
The oil stream enters at 20 psig and the kerosene stream at 25 psig.
The physical properties are:
Oil 0.85 sp. gr.; 3.5 cP at 135 F; 0.49 sp.ht.
Kerosene 0.82 sp.gr.; 0.4 cP; 0.61 sp.ht.
Estimate the cost of an all carbon steel exchanger in late 2001.

Assume a counter flow shell-and-tube heat exchanger.
Figure: Shell-and-Tube Heat Exchanger
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Heuristics or rules of thumb may be used for a preliminary sizing and cost estimate.
Table: Cost Index
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Figure: Purchased cost of double-pipe heat exchangers

Figure: Purchased cost of multiple-pipe heat exchangers
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Figure: Purchased cost of U-tube heat exchangers with 0.0254-m (1 -in.) OD tubes x 0.0254-m (1-
in.) square pitch and 4.88-m (16-ft) bundles operating at 1035 kPa (150 psia)
Figure: Purchased cost of fixed-tube-sheet heat exchangers with 0.019-m (|-in.) OD x 0.025-m (1-in.) square
pitch and 4.88- or 6.10-m (16- or 20-ft) bundles and carbon steel shell operating at 1035 kPa (150 psia)
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Figure: Purchased cost of floating-head heat exchangers with 0.019-m OD x 0.025-m (3/4 in. OD x 1in.)
square pitch and 4.88-m (16-ft) bundles of carbon-steel construction
“EQUIPMENT COSTS” accompanying Plant Design and Economics for Chemical Engineers, 5th edition, Peters,
Timmerhaus, and West 
http://www.mhhe.com/engcs/chemical/peters/data/
Look for example similar to Heat Exchanger…and figure out sizing and costing
Equipment Costs  Cost Information for a designed process
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Process Equipment Sizing
• https://processdesign.mccormick.northwestern.edu/index.php/Equipment_sizing
• FluidFlow Equipment Sizing Handbook https://fluidflowinfo.com/wp-
content/uploads/2018/04/FluidFlow-Equipment-Sizing.pdf
• Chapter 4, Process Engineering Economics by James Riley Couper
• https://pressbooks.bccampus.ca/chbe220/chapter/purchased-equipment-pe-cost/
• Process Engineering Economics by James Riley Couper
Cost diagram and

Screening of process alternatives
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Cost diagram and screening of process alternatives
Base case design  process alternatives  detailed cost analysis
• Process synthesis and analysis  Process Flowsheets as alternatives (set of case studies)
 Estimate the optimum design conditions
 selection of more profitable process alternative
• Every alternative is associated with costs  cost information
• Cost diagram is an approach to summarize the cost information
Cost diagram and screening of process alternatives

 Cost information:
• Summery of cost information related to equipments and operation
• Table of equipment cots coded to flowsheet
• Cost grouping
• Table for equipments of similar type Total Capitol Cost
• Table for operating costs  Total Operating Cost
• Provide investment/installed cost summary and operating cost summary for process
alternatives
• Process alternative screening
Cost information:
Table form Cost diagram
• Constrained to look at • A system viewpoint: look at

individual piece of equipment the total system
• Conventional approach of • Modern approach of cost
cost allocation allocation
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Cost information
For any process alternative:
Pumps Capital cost Exchanger Capital cost

Investment/installed cost summary ($)
P1 x$ E1 x$
Reactor $ P2 y$ E2 y$
Furnaces $ P3 z$
Compressor $ Spare E11 $
Pumps $ Total: $ Total: $
Exchanger $
Trays $ Compressor Capital cost
Towers $ C1 x$
Total: $ C2 y$
Total: $
Costs of smaller items are neglected during screening alternatives.

Cost lumping is also done to develop expression for total cost associated with a process step.
Cost information
For any process alternative:
Operating cost summary ($/year)
Utility
Power $
Steam $
Fuel $
Water $
Total: $
Labor $
Supervision $
Taxes, insurance $
Repairs $
Miscellaneous $
Payroll charges $
Total: $
Catalyst $
Total: $
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Cost diagram
An alternating way of summarizing the most important processing cost in the pictorial form is to
put all the costs on the flowsheet  called Cost diagram:
1. Annualized, installed cost  inside the box of flow diagram Cost diagram provides visual picture:
2. Annual operating costs are  attached to the stream arrows • on how the costs are distributed throughout the
process.
• Used to spot error and visualize/identify potential
3. Per unit annualized installed and operating cost improvements by flowsheet modification
• A system viewpoint
Cost information:
Table form Cost diagram
• Constrained to look at • A system viewpoint: look at

individual piece of equipment the total system
• Conventional approach of • Modern approach of cost
cost allocation allocation
Cost diagram
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Cost diagram
Figure: Cost diagram of Dehydrogenation of isopropanol to produce

acetone.
Quick screening of process alternatives
Using Cost diagram, quick screening of process alternatives is possible:
Hierarchical Approach of process design

(systematic procedure for developing a process design)
Level 2
List of design decision during base-case design Level 3
development and associated decision change Numerous process
Level 4a
alternatives
Level 4b
Level 5
Process alternatives
Example: Process alternatives for the
HDA process
Cost diagram as tool to make some estimates of
economic importance of each process alternatives
Quick screening of process alternatives
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Preliminary designs
a) Used as a basis for determining whether further
work should be done on a proposed process.
Types of process design: b) Approximate process methods and approximate
1. Order of magnitude of design cost estimates are prepared.
2. Study of factored design c) Design details and the time spent on calculations
3. Preliminary designs are kept to a minimum.
4. Detailed-estimate designs Detailed-estimate designs
5. Final process designs a) This is done when preliminary design shows good prospect.
b) Here the cost-and-profit potential of the process is determined.
c) Exact specification are not given for the equipment.
d) Piping and layout work is minimized.
Final process designs
a) Undertaken if the detailed-estimate design indicates commercial success.
b) Complete specifications are presented for all components of the plat.
c) Accurate cost analysis based on quoted price is done.
d) Profit analysis and plant-wide controllability studies are done.
e) Includes detail documentation for immediate construction of project.
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14-03-2023

Process Equipment Sizing and Costing for different process units

 Process Alternatives Synthesis (candidate flowsheet)

• Short-cut, approximate calculations (correlations)  Quick obtaining of sizing parameters

Process Equipment Sizing and Costing for different process units

 Preliminary Equipment Sizing is done for equipment Capital Cost Estimation

The need for equipment sizing

Process Equipment Sizing and Costing for different process units

Types of Cost Estimates

Sl. No Type Remarks Accuracy

1 Order of Magnitude estimate. Extrapolate similar plant cost over 30%

2 Study Estimate. Knowledge of major pieces of equipment ± 30%

3 Preliminary Estimate. Enough for budget authorization ± 20%

4 Definitive Estimate. Based on basic Engineering and quotes ± 10%

5 Detailed Estimate Based on detailed engineering. ± 5%

Process Equipment Sizing and Costing for different process units

Process Equipment Sizing and Costing for different process units

Process Equipment Sizing and Costing for different process units

Table: Cost-Capacity Parameters a

Process Equipment Sizing and Costing for different process units

Preliminary equipment sizing

preliminary cost of equipment

Process Equipment Sizing and Costing for different process units

Process Equipment Costing

Format for equipment cost-capacity data:

 Size factor cost estimation

Process Equipment Sizing and Costing for different process units

• The above equation is known as the six-tenths or 0.6 rule.

Process Equipment Sizing and Costing for different process units

Typical equipment cost-capacity exponents (n)  Table: Cost-Capacity Exponents

Process Equipment Sizing and Costing for different process units

2. Graphical Presentation Format

Figure: Compressors cost-capacity plot.

Process Equipment Sizing and Costing for different process units

• If possible, before using any cost-capacity data, it is

Economy of scale: Figure: Variations of n in a cost-capacity plot.

Process Equipment Sizing and Costing for different process units

Cost correlation equation for purchased cost:

In-house cost & Installation correlation

Process Equipment Sizing and Costing for different process units

Purchased cost Installed cost

Need another set of factors  Installation factors

Process Equipment Sizing and Costing for different process units

• Installation cost including insulation, piping, electricity, building etc. =BC*MF - BC

• Installed cost = (BC*MF – BC) +BC*MFP = BC (MF +MPF-1)

3. Algorithm Format: Cost correlation based

The total Installed equipment cost = ~ 4 * total purchased cost

Module Factor (MF) / Installation Factor (IF)

Different for kinds of processing equipments:

Process Equipment Sizing and Costing for different process units

 Peter and Timmerhaus  Commercial software (Aspen etc.)

CE =1.218 CB * FD * FMC * FP (1.218  updated time to time)

Process Equipment Sizing and Costing for different process units

Process Equipment Sizing and Costing for different process units

In-house cost & Installation correlation:

Read following article to have better understanding

Process Equipment Sizing and Costing for different process units

• Original 𝑰𝒏𝒔𝒕𝒂𝒍𝒍𝒆𝒅 𝒄𝒐𝒔𝒕 are presented as of a specific date.

Process Equipment Sizing and Costing for different process units

Indexes apply only to labor and materials in specialized fields:

Process Equipment Sizing and Costing for different process units

Table: Cost Index

Process Equipment Sizing and Costing for different process units

• Installed cost = (BCMF – BC) +BCMFP = BC (MF +MPF-1)