CHE 448

1
CHE 448 Chemical Engineering Design
Spring 2006
2
Components of Total Capital Investment CTCI
CWC CTPI

• Working Capital CWC
• Total Permanent Investment CTPI
• CTPI CTDC CLand Croyal Cstartup
• Total depreciable Capital CTDC
• CTDC CDPI CContingencies
• Direct Permanent Investment CDPI
• CDPI CTBM Csite Cservices Calloc
• Site preparationCSite
• Service facilities CServices
• Utility plants and related facilitiesCalloc
• Total Bare Module Costs
• Equipment, Machinery, Spares, Storage and
  Catalysts.

3
(No Transcript)
4
Factored cost method (Guthrie, 1969)

• Bare-module cost of equipment
• CBMcost of equipmentcost of install.
• Direct Materials and Labor, CM CL
• Concrete, steel, piping, etc
• Site erection versus pre-fabricated
• Indirect Costs, CIECFITCOCE
• Freight, Insurance, taxes
• Constructor overhead
• Constructor engineering expenses

5
Cost of Equipment
6
Equipment cost factors Heat exchangers
7
(No Transcript)
8
Bare-Module Factors for Equipment
Equipment FBM
Furnaces and direct-fired heaters, shop 2.19
Furnaces and direct-fired heaters, field 1.86
Shell Tube Heat Exchangers 3.17
Vertical pressure vessels 4.16
Horizontal pressure vessels 3.05
Pumps and drivers 3.3
Gas compressors and drivers 2.15
Centrifuges 2.03
Mills 2.3
Evaporators 2.45
Filters 2.32
9
Bare-Module Investment CostsCTBMCFECPMCspare
CstorageCcatalyst

• Fabricated Equipment
• Process Machinery
• Spares
• Storage tanks
• Surge vessels
• Startup equipment
• Catalysts charges

10
Direct Permanent Investment Costs
CDPICTBMCsiteCservCutil

• Total Bare-Module investment
• Site preparation survey, clearing, rock
  blasting, excavation, grading, piling, plus
  sewer, fire protection and landscaping
• Service facilities Utility lines, control rooms,
  laboratory, maintenance
• Utility plants and related facilities Steam,
  electricity, cooling water, wastewater treatment,
  inert gases.

11
Cost for utility plants and related facilities
Utilities Capital cost rate
Steam 50/(lb/hr)
Electricity 203/kW
Cooling Water 58/gpm
Process Water 347/gpm
Refrigeration 1330/ton
Liquid waste disposal 0.006/gpy
12
Total Depreciable CapitalCTDCCDPICcont

• Direct Permanent Investment
• Contingencies and contractors fees
• Contingencies typically 15 of CDPI
• How well is the process known?
• How complete is design?
• How accurate are estimates for equipment?
• Are equipment conventional?
• Contractors fees, 3 of CDPI

13
Total Permanent InvestmentCTPICTDCClandCroyal
Cstartup

• Total depreciable costs, CTDC
• Cost of land (non-depreciable).
• Cost of royalties
• One-time fee
• Annual royalty fee /lb(operating cost).
• Startup costs (10 of CTDC)
• Old process and skilled opts. (2)
• New process and untrained labour force (30)

14
Investment site factorsCTPICTPI FISF

• Investment site factors for different locations

U. S. Gulf Coast 1.0
U. S. Southwest 0.95
U. S. Northwest 1.10
U. S. Midwest 1.15
U. S. West Coast 1.25
Western Europe 1.20
Mexico 0.95
Japan 1,15
Pacific Rim 1.0
India 0.85
15
Total Capital InvestmentCTCICTPICWC

• Total permanent investment
• Working capital
• Raw materials
• Labor
• Inventory of materials, products and byproducts.
• Related to Cost Sheet

16
Study estimate Guthrie (1969)

• Flowsheet with mass and energy balances and
  equipment sizing.
• Selection of materials of construction.
• Basic control configuration (Preliminary PID)

17
Design estimate steps

• Step 1 Equipment list, materials of
  construction, design T and P.
• Step 2 Compute updated fob price of equipment
• Step 3 Compute bare-module costs using factors.
• Step 4 Compute total bare module costs and use
  it to estimate site, building and facilities
  costs.
• Step 5 Compute Total Capital Investment

18
Chapter 17 Profitability Analysis

• Estimate annual costs, annual cash flow and
  working capital
• Compute profitability measures such as Return on
  Investment (ROI), Payback period (PBP), Venture
  profit (VP) and annualised cost CA.
• Compute present and future worth of single
  payments and annuities
• Compute cash flow and depreciation, and use them
  to project the net present value and investors
  rate of return (IRR).

19
Investment, return and risk

• Return on investment should be better than
  interest rate. How much better is determined by
  level of risk
• Is this a new chemical? Are market predictions
  correct?
• If it is an established chemical, is this a new
  technology? Are environmental, safety issues
  under control?
• Is availability/price of feedstocks ensured?
• Low risk 10-15 over PRI
• High risk 25-50 over PRI