Chemical Engineering July 2021 - 28

FIGURE 5. Equipment-factor estimating techniques will take into account
equipment size and metallurgy, as well as the process conditions to
which the equipment will be exposed. For example, the equipment-factor
multiplier for a stainless-steel heat exchanger will differ from that for a
carbon-steel unit
commercially available advanced
engineering-estimating models.
Equipment-factored estimating
techniques will typically depend on
cost estimating relationships that
relate the installed cost of a piece
of equipment (including supply and
installation of all associated bulk
materials) to the purchase cost of
the equipment item. For example,
the installed cost of a pump may
be estimated as 3.4 times the purchase
cost of the pump. The cost
multiplier is intended to account for
the installed cost of the foundations,
supports, piping, electrical connections,
instruments and coating requirements
that are associated with
the equipment item - essentially all
costs within a battery limit around the
single equipment item [5, 9].
The equipment-factor multipliers
will vary by equipment type -
there will be a different equipmentfactor
multiplier for a column versus
a heat exchanger versus a pump.
The equipment-factor multipliers will
also vary based on the size, metallurgy
and design conditions (pressure,
temperature and so on) of the
equipment item. As an example,
the equipment-factor cost multiplier
for a stainless-steel heat exchanger
will be a smaller multiplier than for
a carbon-steel heat exchanger, as
the associated costs for foundation,
supports and electrical connections
do not increase proportionally with
the increased purchase prices of the
stainless-steel exchanger (Figure 5).
Other considerations that need
to be considered by the estimator
28
(typically as adjustments
to the default
equipment factors)
are project-specific
site and process
conditions. If the plot
area of the facility is
constrained, requiring
closer placement
of equipment than is
typical, that may necessitate
adjustment
to the equipment
factors to account
for the shorter runs
of piping, conduit
and wiring than for
the average plant.
Poor soil conditions or installation in
an active seismic zone may involve
adjustments to increase the piling
and foundation costs for the equipment
item. The equipment-factor
multipliers may need to be adjusted
for equipment installed in modules
versus a stick-built approach.
For the equipment-factored approach
described thus far, the installed
costs of the equipment are
factored from the purchase cost of
the equipment (a cost-to-cost relationship).
Depending on the granularity
of the equipment factors, the
factored costs may be in aggregate
for the piece of equipment (a single
total installed cost) or may generate
costs by discipline that aggregate to
the total installed cost for the associated
equipment item.
Engineering-estimating models are
usually commercial estimating applications
that incorporate engineering
modeling capabilities. Typically,
the design parameters for a piece of
equipment are entered into the application,
and then the embedded
engineering models will generate the
quantities of the associated bulk materials
(such as foundations or piping)
based on default (but customizable)
P&IDs and design specifications. The
equipment itself may be priced from
the estimating application (or directly
input if a budgetary quotation price
is available). Costs for installation are
priced from the internal estimating
databases based on the equipment
and generated bulk materials.
With either equipment-factored estimating
approach (equipment factor
multipliers or engineering-estimating
models), the costs for plant facilities
not included within the estimating
factors or not generated by the engineering-estimating
model will need
to be accounted for separately. For
example, the costs of general site
preparation, interconnecting pipeways,
buildings, utility connections
and underground firewater loops will
often need to be estimated separately.
The engineering-estimating
model may be capable of generating
these costs with additional design
input; however, the costs for these
items are not generally correlated directly
with equipment items.
Engineering support is required
by the estimator to ensure that the
equipment list is complete and comprehensive,
including all design parameters
available. Although major
equipment should be defined by the
FEL 2 stage supporting the Class 4
estimate, auxiliary equipment may
not yet be identified. Engineering will
need to support estimating in the
identification of auxiliary equipment
costs that needs to be accounted
for and included in the estimate. It
will also be important to identify the
level of design and sizing allowances
that have been associated with the
equipment items. It is common for
equipment to be sized at 100% of
operating duty during FEL 2, but in
FEL 3 or detailed design, the sizing
may be increased to account for
some percentage of oversizing to
meet project specifications.
Pricing of the equipment is also
critical, especially with the equipment-factor
multiplier approach. If
the installed cost for a pump, for example,
is factored using a 3.4 multiplier,
then if the price of the pump
is under-estimated by $1,000, the
overall estimate is underestimated
by $3,400. Both engineering and
procurement should support estimating
in the determination of the
equipment pricing for the estimate.
The Class 4 estimate is typically
used at the FEL 2 gate review to
ensure that the cost of the selected
design alternative (and the associated
economic analyses) continue to
meet financial targets to support the
decision to continue to FEL 3. Gate
2 provides the project owner the opCHEMICAL
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