Before the plant to be operated, specified money must be supplied to purchase and install the equipment. The capital needed to supply the necessary plant facilities is called fixed capital investment while that for the operation of the plant is called the working principal and sum of two capitals is called total capital investment.
9.1:COST INDEX
Is and index value for a given point in time showing the cost at that time relative to certain base time. if the cost at any time in past is know , the equivalent cost at the present time can be determined by multiplying the original cost by the ratio of present of index value to the index value applicable when the original cost was obtained. There are many types of cost indexes and the most commune type are marshall and swift all industry and process industry equipment indexes and engineering News Record construction index.
Present cost = Original cost *cost index value at present time/cost index value at past.
9.2: PURCHASE cost of major equipments
The cost of purchased equipments is used as basis of factorial method of cost estimation and must be determined as accurately as possible. Purchase cost of equipments is calculated from graphs and charts available.
Purchase cost =bare cost from fig. * Factors
There are different factors used which are Material factor, Pressure factor etc.
Cost of different equipments is calculated as under.
1. Pressure Vessel
Purchase cost = (bare cost from fig.) * (material factor) * (pressure factor)
= 9100 * 1.0 * 1.1
= $15400
2. Pre-heater
PCE3 = (base cost) * (type factor) * (pressure factor)
= 3300 * 1.1 * 0.85
= $3085
3. Reactor
Area of tube bundle = 1.2 m2
= (base cost) * (type factor) * (pressure factor)
= 18000 * 0.85 * 1.1
= $16830
4. Long Tube Vertical Evaporator
Purchase cost(single Effect )= (bare cost from fig.) * (material factor) * (pressure factor)
=1.15*106 * 1 *1
=$1150000
For three effects = $1150000*3
=$3450000
5. Light end column(Distillation Column No.1)
Cost of base vessel = (cost from Fig.) * (material factor) * (pressure factor)
= 15700* 1.0 * 1.0
= $15700
Cost of plates
Cost = (cost from Fig.) * (material factor)
= 1100 * 1.0
= $1100/plate
Cost of total plates = 1100 * 12
= $13200
Cost of distillation column = $28900
Reboiler (kettle Reboiler)
Cost = 70650*1.0*1.3
= $91845
Condenser
Cost = 21980 * 1.0 * 0.85
= $18683
6. EG Refiner (Distillation column 2)
Cost of base vessel
= (cost from Fig.) * (material factor) * (pressure factor)
= 94200 * 1.0 * 1.0
= $94200
Cost of plates
Cost = cost from Fig. * Material factor
= 1100 * 1.0
= 1100 * 47
=$51700
Cost of distillation column 2 = column cost + plate cost
= 94200 + 51700
= $145900
Reboiler
Cost = base cost * pressure factor * type factor
= 31400*1.0*1.3
= $31400
Condenser
Cost = 15700*1.0*.80
= $12560
Total Purchased cost of Equipments=PCE=$3814603
9.3: FIXED Capital Cost
Cost that do not vary with production rate. These are the bills to be paid whatever the quantity produced is.
Major equipment, total purchased cost
Equipment erection 0.4
Piping 0.70
Instrumentation 0.20
Electrical 0.10
Building process 0.15
Utilities 0.50
Storages 0.15
Site development 0.05
Ancillary building 0.15
Total = 3.40
Physical plant cost = PPC = PCE* (Total)
PPC = 3814603*3.40
=$129696502
Design and engineering 0.30
Contractor’s fee 0.05
Contingency 0.10
Total 1.45
Fixed Capital = PPC * 1.45
= 129696502* 1.45
= $18805992.8
Fixed Capital Cost =FCC= $18805992.8
Cost in year 2008=Cost in year 1998*Cost index in year 2008/Cost index in 1998
Cost index in year 2005=1305
Cost index in year 1998=132
Fixed Capital Cost in year 2008= $185922883
\
9.4:Operating Costs
Maintenance cost = 0.10 * fixed capital cost
= 0.10 * $185922883
= $18592288.3
Miscellaneous = 0.10 * maintenance cost
= 0.10 * $18592288.3
=$1859228.83
Operating labor = $5*10^5
Laboratory cost = 0.20* labor cost=$1*10^5
Supervision =0.20* labor cost=$1*10^5
Plant overheads = 0.50 * labor cost =$2.5*10^5
Capital charges = 0.15 * fixed capital cost =0.15*$185922883= $27888432
Local taxes = 0.02 * fixed capital cost =0.02*185922883=$3718457.6
Insurance = 0.01 * fixed capital cost=0.01*185922883=$1859228.8
9.5:Production cost
Variable cost
Raw materials = 0.30 * 173329200
= $51998760
Miscellaneous =$1859228.83
Shipping and packing negligible
Sub total = A = $175188428.8
Fixed costs
Maintenance cost = $18592288.3
Operating labor = $5*10^5
Laboratory cost =$1*10^5
Supervision =$1*10^5
Plant overheads = $2.5*10^5
Capital charges = $27888432
Local taxes =$3718457.6
Insurance =$1859228.8
Sub Total B =$53008406.7
Direct Production Cost = A+B= $228196835.5
Sales expense, General overheads, R&D=C=0.25* Direct Production Cost
= $257049209
Annual Production Cost =A+B+C= $485246044.
Production cost/Kg=$2.4/Kg
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