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Cost Estimation and Drawing a PFD

  • Overview of Topics
    • Cost estimation techniques in chemical engineering
    • Importance of drawing a Process Flow Diagram (PFD)
    • Need for economic evaluations in project assessment
    • Types of capital cost estimates
    • Understanding operating costs
    • Exam review details

Drawing a PFD

  • Importance of PFDs
    • Essential for design interviews and presenting proposed designs.
    • Should be electronic and adhere to standard formats as per handout guidelines.
    • Efficient information transfer if well-labeled.
  • Requirements for PFD
    • Must include mass balances by hand, based on conversions and separation efficiencies.
    • Flow rates must be represented accurately in the PFD.
  • Software Tools
    • Recommended tools:
    • Microsoft Visio (available on engineering computers)
    • draw.io (available as free download/open source)
    • Caution against using ASPEN for drawing PFDs.

Economic Evaluations

  • Applications of Economic Evaluations
    • Selecting capital projects.
    • Determining sale price of new products.
    • Making decisions on purchasing or producing feedstocks.
    • Evaluating research and development processes.
    • Conducting economic optimization in process design.
    • Selecting plant locations.
    • Used in pro forma financial statements by bankers for project financing.

Capital Cost Estimates

  • Components of Capital Cost Estimates
    • Equipment costs.
    • Direct costs, including field materials and labor.
    • Indirect costs.
    • Initial charges for catalysts and chemicals.
    • Contingency provisions and design allowances.
    • Contractors' fees.
    • Owners' costs.

Estimate Types

  • Types of Estimates and Their Accuracy
    1. Ratio Estimate
      • Accuracy: ±40%
    2. Factored Estimate
      • Accuracy: ±25%
    3. Detailed Estimate
      • Accuracy: ±5%

Ratio Estimates

  • Calculation Formula
    • C1=Cbimes(S1Sb)xC_1 = C_b imes \bigg( \frac{S_1}{S_b} \bigg)^{x}
    • Where:
      • C1C_1 = New plant cost
      • CbC_b = Base plant cost
      • S1S_1 = New plant capacity
      • SbS_b = Base plant size
      • xx = Ratio factor, typically 0.6 for many plants.
  • Example Calculation
    • Given a 400,000 MTA vinyl chloride plant that cost $150 MM, calculate the cost of a 600,000 MTA plant:
    • Cn=150imes106imes(600,000400,000)0.6=191imes106C_n = 150 imes 10^6 imes \bigg( \frac{600,000}{400,000} \bigg)^{0.6} = 191 imes 10^6

Capital Cost Estimating

  • Methodology
    • Utilize Guthrie’s 1968 article as a foundational reference.
    • Update costs using the Chemical Engineering magazine’s Cost Index for current figures.

Bare Equipment Cost Calculation

  • Formula for Bare Equipment Cost
    • CB=CE(FD+Fp)FMC_B = C_E (F_D + F_p) F_M
    • Where:
      • CBC_B = Bare equipment cost corrected for pressure, design type, and material
      • CEC_E = Uncorrected equipment cost
      • FDF_D = Design type factor
      • FpF_p = Pressure factor
      • FMF_M = Material factor

Equipment Module Cost Calculation

  • Formulas
    • Direct Field Cost: CD=CB(1+FF+FL)C_D = C_B (1 + F_F + F_L)
    • Module Cost: CM=CB((1+FF+FL)(1+FI)+FT)C_M = C_B \bigg( (1 + F_F + F_L)(1 + F_I) + F_T \bigg)
    • Where:
      • CDC_D = Direct Field Cost
      • CMC_M = Module Cost
      • FFF_F = Field material factor
      • FLF_L = Field labor factor
      • FIF_I = Indirects factor
      • FTF_T = Freight, taxes, and insurance

Material and Labor Factors

  • Components Factored in Direct Material and Labor Costs
    • Concrete for foundations and structures.
    • Structural steel.
    • Underground piping (including sewers, water, and firewater).
    • Above-ground piping.
    • Instrumentation.
    • Electrical installations.
    • Insulation.
    • Paving and painting.

Indirect Cost Factors

  • Details of Indirect Costs
    • Project management costs.
    • Home office engineering expenses.
    • Project purchasing costs.
    • Construction labor fringes, burdens, and benefits.
    • Administrative costs related to construction.
    • Field engineering costs.
    • Security costs for the site.
    • Temporary facilities (fencing, parking, roads).
    • Costs for cranes and construction equipment.
    • Temporary buildings, telecommunication, and supplies.
    • Warehousing costs.
    • Job site cleanup expenses.

Factored Estimate

  • Example Calculation
    • Installed cost for a 2000 sq. ft. floating head shell and tube heat exchanger:
    • Variables:
      • FD=1.00F_D = 1.00
      • Fp=0.00F_p = 0.00
      • FM=1.00F_M = 1.00
      • CB=CE=14,000C_B = C_E = 14,000
    • Calculation:
    • CM=14,000imes(3.291)=46,074C_M = 14,000 imes (3.291) = 46,074

Total Capital Cost

  • Components of Total Capital Cost
    • Total module cost (TMC) consists of cost of all modules.
    • Total capital cost includes several components:
    • Contractor’s fee: 2-5% of TMC
    • Owner’s cost: 1-5% of TMC
    • Design allowance: 0-10% of TMC
    • Contingency: 15% for factored estimate

Lang Factor

  • Lang Factor Calculation
    • CT=CBimesFGC_T = C_B imes F_G
    • Where:
      • CTC_T = Total cost
      • CBC_B = Bare equipment cost
      • FGF_G = Lang factor used:
      • 3.9 for solids processing
      • 4.1 for solids-fluids processing
      • 4.8 for fluids processing

Items Not Covered by Cost Factors

  • Limitations of Cost Estimating Methods
    • Costs for first-of-a-kind plants.
    • High temperature or pressure operations.
    • Unique site conditions (weather, geography).
    • Construction camps or remote locations.

Capital Cost Updating

  • Cost Updating Methodology
    • Chemical Engineering magazine provides monthly cost indexes based on a 1957-1959 baseline of 100.
    • Example: Mid-1968 index was 113.7.
    • To get current total capital cost, multiply the ratio of the current index to that in 1968 by the total cost from 1968.

Additional Capital Costs

  • Other Costs to Consider
    • Start-up and fix-it costs: 2% of total capital cost.
    • Working capital: two months of operating costs.
    • Other costs not included in on-site modular estimates:
    • Site preparation expenses.
    • Building construction costs.
    • Offsite facilities requirements.

Offsites Include

  • Examples of Offsite Facilities
    • Steam generation plants.
    • Power distribution systems.
    • Fuel oil/gas systems.
    • Blowdown and flare systems.
    • Pollution control facilities.
    • Fire loops and hydrants.
    • Waste treatment facilities.
    • Yard lighting and related infrastructure.
    • Receiving, storage, and shipping operations.

Operating Costs

  • Estimation Approach
    • Operating costs could be estimated based on constructing a new plant adjacent to an existing operation, assuming utilities can be provided with minimal additional expense; this minimizes the need for estimating offsite costs.

Exam #1 CPE 613, Lect. 15

  • Exam Details
    • Date: Monday, March 2, from 3-5 PM in 2001 Malott Hall.
    • No lecture on that day; covers all lectures 1-14 and refrigeration.
    • Relevant book chapters: 1, 2, 3, and 10 (focus on lectures and homework).
    • Exam format: closed-book, closed-notes, closed-internet, and no collaborative help allowed.
    • Allowed: One single-sided, handwritten sheet of notes; formulas will be provided.

Exam Topics

  • Key Topics for Exam #1
    • Decision-making hierarchy in process design.
    • Flowsheet synthesis and PFDs.
    • Methods for solving mass and energy balances for process flowsheets.
    • Flash calculation algorithms.
    • Levels of column calculations.
    • Unit operation models.
    • Simulation modes and algorithms for process simulation.
    • Heat exchanger network synthesis.
    • Basic computation of Material and Energy Requirements (MER).
    • Stream matching optimization approaches.
    • Grand Composite Curve findings.
    • Exergy and efficiency assessments for chemical engineering processes.
    • General design project topics will also be relevant.