Chemical Engineering January 2019 - 51

Engineering Practice
Cost Engineering:
Equipment Purchase Costs
A methodolody and examples for estimating equipment costs are presented
Thane R. Brown
Procter & Gamble (retired)
E
ngineers have the responsibility to create projects
having attractive returns on investment and
to create economically sound designs - designs
that produce high-quality, competitively
priced products. This requires the technical and economic1
study of many different options. When doing
studies, the design is usually not well defined, so one
will often use factor methods for capital estimating. With
these methods, one first determines the purchase cost
of the equipment and multiplies that by a factor to determine
the capital cost of a process or plant.2
The accuracy of factored estimates is usually good
enough to produce high-quality decisions.
Purchase cost data. This article presents up-to-date
equipment purchase cost data for nine different types of
process equipment.
* Agitators
* Air compressors
* Boilers
* Cooling towers
* Fans
* Heat exchangers
* Pressure vessels
* Pumps, centrifugal
* Tanks, storage
The cost data are presented for each of these types of
equipment in Figures 1-9 on p. 52. Each begins with a
general specification. For example in Figure 2 (air compressors)
the specification is: Centrifugal, rotary screw
and reciprocating compressors that produce 100-150
psig oil-free air. The price also includes intercoolers and
aftercoolers, a lubrication system and a totally enclosed,
fan-cooled (TEFC) motor.
Each figure contains a log-log graph plotting purchase
cost versus capacity, an equation for cost as a function
of capacity, and a size exponent for capacity ratioing.
Most also contain factors that permit adjusting costs for
different materials of construction, operating pressure or
equipment type (such as API versus ANSI pumps).
All costs are quoted at a Chemical Engineering Price
Cost Index (CEPCI) of 570, which corresponds to August
2017. The graphs were developed from actual purchase
cost or vendor quotation data. Of special note is that BSI
Engineering (Cincinnati, Ohio; www. bsiengr.com) allowed
me to use their cost database as one of the key information
sources.
Ratioing for different capacities and size exponents.
When the cost of equipment, processes, or plants having
the same design features is plotted versus capacity on loglog
paper, the plot usually is a straight line. Thus, one can
write the following equation, where n is the size exponent.
Equations
! " #$%&'()
! " #$%&'(*
=
! " #$23 3&5( )
! " #$23 3&5( *
!,-,./$0%&'()
!,-,./$0%&'(*
=
1
(1)
(1)
For equipment, the average size exponent is 0.6, for
plants 0.67.
To illustrate, if you know the price of a 500 ft2 plateand-frame
exchanger is $10,500, you can estimate the
price of an 800 ft2 exchanger using Equation (1). Referring
to Figure 6, note that the size exponent for plateand-frame
exchangers is 0.71. Rearranging Equation (1),
the cost is:
Cost800 ft2 = $10,500 × (800 ft2 / 500 ft2)0.71 = $14,700.
6178923 3&5( )
6178923 3&5( *
(2)
Adjusting for inflation using the CEPCI. To keep track
of the effects of inflation, several organizations publish
cost indices. For chemical plant construction, I feel the
CEPCI is the preferred index. Chemical Engineering publishes
the index each month. One can use it to escalate
costs. The relationship between costs and indices is
given by Equation (2):
Equations
! " #$%&'()
! " #$%&'(*
=
! " #$23 3&5( )
! " #$23 3&5( *
!,-,./$0%&'()
!,-,./$0%&'(*
=
1
(1)
6178923 3&5( )
6178923 3&5( *
(2)
(2)
For example, if you know the price of a 10,000-gal.
storage tank in August 2017 (CEPCI = 570) was $33,000,
you can estimate the price in mid-2019 (CEPCI ~ 590)
using Equation (2). Rearranging (2):
$CEPCI, 590 = $33,000 (590/570) = $34,200.
Using the graph factors. Six of the graphs include factors
that permit adjusting costs for different materials of
construction, different operating pressures or different
equipment variations. Their use is simple. To adjust a
price, simply multiply the price by the appropriate factor.
To illustrate, the small boiler prices in Figure 3 are for
units generating 150 psig steam. If you wish to price a
100-hp unit that produces 15 psig steam, you would
multiply the cost from the graph, $82,000, by the 15 psig
1. For an economic comparison, one usually has to estimate the capital and production cost for each option and use that information to calculate
the net present value (NPV) or annualized cost (AC) of each. The NPV or AC is then used to find the economic option.
2. Brown's book [1] explains economic comparison methodology, Lang and Hand factors, plus production cost estimating in depth.
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