Chemical Engineering July 2021 - 27

drivers may also be used to prepare
Class 5 estimates.
Preparation of analogy estimates
rely on the use of cost ratios and
metrics derived from various analyses
of historical data for similar projects.
The estimate may be developed
based on a comparison with a
single project or may be dependent
on evaluating comparisons with multiple
similar facilities. Table 1 provides
a framework for developing analogybased
estimates.
The identification of similar analogous
projects and the comparison
of project characteristics (capacity,
technology, metallurgy and so on) to
support effective adjustments to the
costs of the analogous project is essential
to obtain a sufficiently accurate
estimate. The estimator should have
the capability to appropriately adjust
costs for the differences in project
characteristics, but may need to rely
on technical experts, such as process
and discipline engineers, to assist
in the identification and assessment
of those differences.
Adjustments for capacity, metallurgy
and other physical characteristics
will often rely on objective and
established estimating adjustment
factors. However, some adjustments
for variances, such as complexity of
the facility or other performance factors
affecting installation, may require
significant subjectivity to address the
resulting cost impacts to the new
project estimate. There are various
techniques involved with analogy
estimating, which are summarized in
Table 2.
The Class 5 estimate prepared
at the end of the FEL 1 projectdevelopment
stage represents the
first evaluation of project cost that
is based on both estimating and
engineering input. The value of the
Class 5 estimate will typically become
a management target cost for
the project development as it continues
through the stage-gate project
development process leading to
final authorization. Estimating and
engineering must work together to
ensure that the full scope of the project
is understood and reflected in
the cost estimate. Often, the inside
battery-limit (ISBL) process units are
adequately addressed. However, the
outside battery limit (OSBL) areas
(for example, offsites, utilities and
infrastructure) are less well-defined,
which may lead to under-estimation
of project cost.
Class 4 estimates
During FEL-2, project definition has
generally progressed to generate
technical deliverables that more specifically
define the project scope, including
preliminary equipment lists,
process and utility flow diagrams,
heat and material balances, preliminary
plot plans and general arrangement
drawings. As chemical process
facilities
tend
to
facility
be
projects
equipmenttend
to
centric,
most Class 4 estimates for
chemical
use equipment-factored estimating
methodologies or prepared using
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