3

PLANT COST ESTIMATES

Once individual equipment costs are known from either manufacturers' price
quotations or estimating charts as discussed in the previous chapter, they can
be utilized to form preliminary total plant cost estimates. A suggested sequence
for obtaining such estimates is as follows:

1. Prepare a flow sheet for the process or operation to be estimated, showing

all of the major equipment and whatever of the basic auxiliary or general
plant facilities that directly affect the process (i.e., boilers for steam;
cooling towers; special electric requirements, unusual storage facilities,
transportation equipment, etc.).
2. Prepare heat and material balances around each piece of equipment to the
degree of accuracy and detail required to size the equipment.
3. Size all of the equipment with the precision required to obtain the param-
eters needed for manufacturers' cost quotations or to estimate costs from
charts.
4. Analyze the process carefully to determine what "plant cost factors"
should be used, and then prepare a detailed breakdown of the total plant
cost package. This will be discussed in the following sections.

ACCURACY AND COSTS OF ESTIMATES

The American Association of Cost Engineers (AACE) has published a listing
of different types of cost estimates, and the accuracy that such estimates theoret-
ically have when estimated by professionals. It is shown in Table 3-1, along
with perhaps a more realistic prediction of the accuracy range of a working
engineer or contractor's estimates, and what management might actually count
on for all estimates. A graph showing the possible spread in the accuracy of
these estimates is shown in Figure 3-1. If it is assumed that what has just been
done on equipment cost estimating, and will soon be done for plant costs is the
first item, order of magnitude or very preliminary estimates, then the AACE
(professional) accuracy figure would appear to be totally beyond the confidence
22

D. E. Garrett, Chemical Engineering Economics

© Van Nostrand Reinhold 1989
 Table 3-1
Characteristics and Possible Accuracy of Chemical Plant Capital Estimates
Possible Accuracy"

Type of More
Estimate Usually Basis for Result; Possible AACE Realistic
(AACE Name) Common Names Usual Basis Prepared by Estimate Approval for 1974 Estimate

Order of Very preliminary Estimating Individual Basic idea Inexpensive 40 40-100

magnitude estimate charts; engineer study
previous cost
information
Study Detailed prelimi- Some vendor Project Following Expensive 25 30-50
nary, or quotations; group initial study study
factored estimating
estimate charts, etc.
Preliminary Initial budget, Vendor quotes Contractor" Following final Detailed 12 20-35
scope estimate on all major (profes- study design;
equipment sional market
esti- research
mating)
Definitive Project control Detailed Contractor" Complete Construct plant 6 10-15
estimate quotes, labor, design
material drawings
estimates; not
complete
drawings
Detailed Firm estimate, Competitive Contractor" Most equip- Continue 3 5-10
contractor's vendor ment construction
estimate quotes, purchased
complete
drawings and
specifications
N
Co) 'Or company engineering department.
b ± % of total cost.