Cost Estimating Manual

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December 1998

Manual sponsor: For information or help regarding this manual, contact Daniel E. Moore at (925) 842-2120


Cost Estimating Manual

First Edition April 1995

Second Edition November 1997

Third Edition June 1998

Fourth Edition December 1998

The information in this Manual has been jointly developed by Chevron Corporation and its Operating Companies. The Manual has been written to assist Chevron personnel in their work; as such, it may be interpreted and used as seen fit by operating management.

Copyright  1989, 1990, 1992, 1995, 1997, 1998 CHEVRON CORPORATION. All rights reserved. This document contains proprietary information for use by Chevron Corporation, its subsidiaries, and affili-ates. All other uses require written permission.

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This material is transmitted subject to the Export Control Laws of the United States Department of Commerce for technical data. Furthermore, you hereby assure us that the material transmitted herewith shall not be exported or re-exported by you in violation of these export controls.


Cost Estimating Manual

The following list shows publication or revision dates for the contents of this manual. To verify that your manual contains current material, check the sections in question with the list below. If your copy is not current, contact the Technical Standards Team, Chevron Research and Technology Company, Richmond, CA (510) 242-7241.

Section Date

Title Page December 1998

Front Matter December 1998

Table of Contents April 1995

Section 50 (Preface) April 1997

Section 100 Section 101 April 1995 Section 102 April 1995 Section 103 April 1995 Section 104 April 1995 Section 105 April 1995 Section 200 Section 201 April 1995 Section 202 April 1995 Section 203 April 1995 Section 204 April 1995 Section 205 April 1995 Section 206 December 1996 Section 210 Section 211 April 1995 Section 212 April 1995 Section 220 Section 221 April 1995 Section 222 April 1995 Section 223 April 1995 Section 224 April 1995 Section 300 Section 301 December 1998 Section 302 April 1995 Section 303 April 1995 Section 304 April 1995 Section 305 April 1995


Section 311 April 1995 Section 312 April 1995 Section 313 April 1995 Section 400 Section 401 April 1995 Section 402 April 1995 Section 403 December 1995 Section 404 April 1995 Section 405 December 1998 Section 406 April 1995 Section 407 April 1995 Section 408 April 1995 Section 410 Section 411 April 1995 Section 420 Section 421 April 1995

Section 422 March 1995 (draft)

Section 423 March 1995 (draft)

Section 424 December 1998 Section 500 Section 501 April 1995 Section 510 Section 511 April 1995 Section 512 April 1995 Section 520 Section 521 April 1995 Section 522 December 1998 Section 523 April 1995 Section 600 Section 601 April 1995 Section 602 April 1995 Section 603 April 1995 Appendices Appendix A April 1995 Appendix B April 1995 Appendix C April 1995 Appendix D April 1995 Appendix E April 1995


Cost Estimating Manual

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Cost Estimating Manual

We are very interested in comments and suggestions for improving this manual and keeping it up to date. Please use this form to suggest changes; notify us of errors or inaccuracies; provide information that reflects changing technology; or submit material (drawings, specifications, procedures, etc.) that should be considered for inclusion.

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List of Current Pages

50 Using this Manual 50-1 100 Introduction to Cost Estimating 100-1 200 Primary Methods—Process Plants 200-1 210 Primary Methods—Offplot Facilities 210-1 220 Primary Methods—Other Facilities 220-1 300 Secondary Methods—Individual Cost Adjustments 300-1 310 Secondary Methods—Bottom-Line Cost Adjustments 310-1 400 Direct Cost Data—Equipment (Major Material) 400-1 410 Direct Cost Data—Bulk Materials (Minor Material) 410-1 420 Direct Cost Data—Construction Labor 420-1 500 Indirect Costs and Special Charges—Indirect Field Costs 500-1 510 Indirect Costs and Special Charges—Technical Services 510-1 520 Indirect Costs and Special Charges—Special Charges 520-1 600 Estimate Presentation and Review 600-1 Appendices

Appendix A Estimating Checklists

Appendix B Process Licensors' Sales Factors Appendix C Code of Accounts (EG-2757)

Appendix D Code of Accoounts for Buildings Projects Appendix E Glossary

This document contains extensive hyperlinks to figures and cross-referenced sections. The pointer will change to a pointing finger when positioned over text which contains a link.



he intent of the Cost Estimating Manual is to provide uniform procedures and

accompanying data for developing cost estimates for capital projects throughout

Chevron. We hope that the material in this manual will contribute to a common

understanding and consistent application of the cost-estimating process.

Using This Manual

The manual is arranged to follow the flow of a typical cost estimate: Chapter 100 provides an overview of cost estimating, estimate classes and estimating methods.

Chapter 200 describes the principal methods for making cost

estimates—primarily for process plants, but also for offplot and other types of facilities. Method-specific data is also included.

Chapter 300 includes factors and data to use with two or more methods described in the previous chapter.

Chapter 400 contains instructions and data for estimating individual components of direct costs. The data includes material, labor, and subcontract costs associated with purchasing and erecting the physical facilities.

Chapter 500 covers indirect costs and special charges. Indirect costs include construction indirect, engineering, and project management costs. Special charges are costs that may be unique to a project and, therefore, require specific identification and analysis.

Chapter 600 contains guidance for reviewing, presenting, and documenting completed cost estimates.

The Appendices contain general estimating reference materials, including checklists and a glossary.

This manual is sponsored by Project Resource Services, Project Resources. Questions, comments, and suggestions for improvement are welcome and encouraged, and may be addressed to the Manager, Project Resource Services, San Ramon.




Cost Estimating in General


Cost Estimating and the Phases of a Project


The Classes of Cost Estimates


Methods of Cost Estimating


Selecting a Method


Cost Estimating in General


ebster defines an estimate as an approximate computation of probable cost.

According to the American Association of Cost Engineers (AACE), cost

estimating is the predicting or forecasting ... of the costs required to construct and

equip a facility, to manufacture goods, or to furnish a service. The latter definition

more closely aligns with the objectives of this manual.

Objectives of this Manual

While the concept of estimating is familiar to most people, the process may not be familiar. To help you estimate projects for Chevron, the objectives of this manual are to

explain the various types of estimates and techniques for making them provide you with estimating data and guidance

Although this manual is written primarily for major downstream projects, it can also be applied to upstream projects and smaller downstream projects.

Reasons for Cost Estimating


Construction Generally, you associate estimates with capital construction projects to establish capital budgets

evaluate project economics obtain funding approval

monitor and control the execution of work

Annual Budgets Chevron operating companies and staffs base their annual operating expense budgets on estimates.

Other Acitivities Activities such as these also require estimates: Shutting down refinery plants for maintenance Overhauling tankers


Providing technical services for studies Writing computer programs

Planning business trips

The AACE definition points out that you may make a variety of types of estimates. In the next section, you’ll see how estimates fit into the different phases of Chevron project management.


Cost Estimating and the Phases of a Project


ost estimates are important in all phases of project management. In Figure 102-1,

note the role of estimating (shown in bold italic) in the Chevron Project

Development and Execution Process (CPDEP).

Phase 1 2 3 4 5

CPDEP1 Phase Identify & Assess Opportunities Select Alternative(s) Develop Alternative(s)

Execute Operate & Evaluate

CPMP2 Phase Concept Development

Feasibility Front-End Engineering

Execution Operation & Evaluation OBJECTIVES Identify Opportunities

Clearly Frame Goal Test for Strategic Fit Preliminary Overall Plan

Preliminary Assessment Plan for Phase 2

Generate Alternatives Preliminary Development of Alternatives Develop Preliminary Project Economics Identify Preferred Alternative(s) Plan for Phase 3

Fully Define Scope Develop Detailed Execution Plans Refine Estimate Develop Final Project Economics Submit Request for Funding Approval Plan for Phase 4

Implement Execution Plan

Finalize Operating Plan

Business Plan for Phase 5 Project Review Operate Asset Monitor and Evaluate Performance Identify New Opportunities

DELIVERABLES Business Objectives & Project Framework Block Flow Diagram & Preliminary Capacity Preliminary Milestone Schedule Class 1 Estimate

Preliminary Facility & Project Objectives Process Flow Diagrams & Equipment Lists Preliminary Project Schedule Class 2 Estimate

Final Facility & Project Objectives P&IDs, Plot Plans, One-Line Diagrams Detailed Schedule Class 3 Estimate Operating Facility Documentation Lessons Learned Class 4 (& perhaps 5) Estimates and Final Project Cost

Post-Project Assessment Lessons Learned & Best Practices Benchmark Performance


Set & Freeze Business Objectives Concept

Development FEL Checklist

Freeze Capacity, Technology & Site Feasibility FEL Checklist Freeze Definition Documents Front-End Engineering FEL Checklist Freeze Design Details Execute Post-Project Assessment Review & Share Lessons Learned

1 CPDEP = Chevron Project Development and Execution Process

2 CPMP = Chevron Project Management Process (Downstream Adaptation of CPDEP)


The Classes of Cost Estimates


hevron has adopted a series of cost estimate classifications as a part of the

CPDEP. These classifications establish a common understanding among

estimators, project managers, and their clients regarding these factors:

Variability in the information required

Appropriate estimating methods for each class

Resulting estimate quality

The Five Classes

Figure 103-1 summarizes the five classes. The first three are linked to the three phases of CPDEP Front-End Loading, where their purpose is to provide information to assist decision-makers.

Classes 1 & 2 Because the first two project phases may extend over a long time (two to three years for large projects), several Class 1 and Class 2 estimates may be necessary as the project team studies various alternatives.

Class 3 Class 3 is often called an appropriation estimate because it is the basis for preparing an appropriation request. Again, large projects may have more than one Class 3 estimate, especially if the first one exceeds the funds budgeted for the project. In that case, the team must adjust the scope of the project.

Classes 4 & 5 Contractors usually prepare the last two classes of estimates during project execution. Contractors may call the Class 4 a control estimate because it establishes a basis for managing (controlling) the contractor’s work during the construction phase. Class 5 is appropriate only for very large, multi-year projects. It is really a re-forecast of remaining work (and thus the final cost) because much of the cost is fixed by that time.



The values shown in the Contingency column of Figure 103-1 indicate relative requirements only and show the benefit of improvement to the project definition as projects progress.

For Classes 1 and 2, especially, the typical contingencies shown apply to facilities known at the time of the estimate. Estimates can double or triple as the definition of required facilities evolves. You should not use this table to determine the actual contingency required for any estimate, but determine it from the characteristics of the specific project and estimate (see Section 313).


Class &

Project Phase Engr’g

Con-tingency Information Required

Estimate Methods Used/Cost Basis Major Equipment Other Materials Labor Class 1

Concept Development2

<1% 30-50%1 - Block flow diagrams - Facility capacity

- Preliminary major equipment list

- General location and site conditions

- Preliminary timing and schedule

- General business climate

Overall project or plant cost

a. Cost capacity data b. Historical cost data c. Industry published data d. Licensor estimate e. Installation factor times major equip. Class 2


1-5% 15-40%1 Same as Class 1 plus: - Preliminary process design - Preliminary major equipment sizing

- Offplot description - Site specific plot plan

- Cost curves - Vendor tel. quotes - Recent purchases - Published estimating data - Other estimating guides - By ratio to major equipment - By ratio from similar facility based on historical data - By labor/ material ratio for similar work

- Productivity, taxes, wage rate, etc., in the area factor Class 3

Front-End Engineering2

15-30% 10-15% - Complete process design (PDC)

- Preliminary P&IDs, plot plan and one-line electrical diagrams

- Complete site survey and soils data

- Firm major equipment sizes - General projects specs - Defined offplot facilities - Preliminary utility balance - Environmental compliance plan

- Completed mat’ls selection - Contracting plan - Written equipment quotes - Escalation defined By ratio to major equipment - Escalation defined - Key quantities identified - By labor/ material ratio for similar work - Manhour units or other parameters - Productivity for area - Wage rates Class 4 Execution: Detailed Design 30-50% 5-10% - Approved P&ID’s - Plot plans issued for construction

- Detailed contracting plan - Minor contracts and final schedule

- Completed engineering data sheets

- Ordered major equipment costs - Major equipment ordered - Deliveries evaluated - Detailed quantity takeoff3

- Firm unit cost quotes - Schedule revised - Construction plan complete - Manhours by craft - Wage rates - Productivity - Defined indirects Class 5 Execution: Construction 90-95% 5-15% of unex-pended funds - Construction contracts awarded

- Ordered bulk materials costs - Construction 40-60% complete

Actual or committed costs to date

- All bulks ordered - Deliveries assessed - Scheduled updated

- Firm bid contracts or detailed evaluation of field manhours - Labor availability assessed - Field productivity included

1 Data from Chevron and the industry shows considerable scope growth (as much as 200 percent) as project definition evolves

during the Concept Development and Feasibility phases.

2 These three phases include the completion of Project Scope Packages, Project Execution Packages, and Project Decision-Making

Packages. These are described in several checklists in the Front-end Loading Handbook.

3 A quantity takeoff is a count of the quantities of bulk materials to be installed.


Methods of Cost Estimating


hevron uses various methods of cost estimating. Each has several components

(Figure 104-1), which are described in this manual.

Process Plants

Curve A curve estimate is based on finding the costs and capacities of plants similar to the one to be estimated. The estimator adjusts that data for date, location, and common facilities; calculates the new cost; and makes further adjustments to develop the estimate for the new facility. See Section 202, “Curve Estimates.”

Factored A factored estimate is based on determining the total cost of a plant (excluding special charges, escalation, and contingency) by assessing the cost of the tagged process (or utility) equipment and multiplying that total cost by a single factor. See Section 203, “Factored Estimates.”

Ratio A ratio estimate is possible only if the estimator has or can approximate ratios for similar facilities. The estimator assesses the cost of tagged process (or utility) equipment and then applies a series of ratios to that assessment to determine the costs of bulk material, direct labor, field indirects, design, and project management. The total is the plant cost excluding special charges, escalation, and contingency. See Section 204, “Ratio Estimates.”

Detailed/ Semi-Detailed

A detailed estimate is based on a complete definition of the work—when every element is identified and quantified, and engineering is 30-50 percent complete. Usually, you prepare this estimate to check project cost against budget or to manage the construction effort.

A semi-detailed estimate is a five-step process based on assessing only the direct costs in limited detail and then applying ratios to the direct costs to determine the indirect costs.


C o s t E s t i m a t i n g C l a s s i f i c a t i o n s F a c t o r M e t h o d E q u i p m e n t C o s t s B u l k M a t e r i a l C o s t s I n d e x e s M u l t i p l i c a t i o n F a c t o r M o d e r n i z a t i o n F r e i g h t S a l e s T a x M a t e r i a l s / E q u i p . R a t i o s L a b o r M a n h o u r s / M a t e r i a l C o s t R a t i o s L a b o r H o u r l y R a t e s L a b o r R e w o r k S u b - c o n t r a c t C o s t P r o d u c t i v i t y C u r v e M e t h o d R a t i o M e t h o d D e t a i l e d M e t h o d E q u i p m e n t C o s t s E q u i p m e n t C o s t s I n d e x e s I n d e x e s I n d e x e s A l l o w a n c e s A l l o w a n c e s F r e i g h t F r e i g h t S a l e s T a x S a l e s T a x U n i t M a n h o u r R a t e s L a b o r H o u r l y R a t e s P r o d u c t i v i t y I n d i r e c t F i e l d C o s t s A l l o w a n c e s E n g / M g m t C o s t s S p e c i a l C h a r g e s A r e a F a c t o r E s c a l a t i o n C o n t i n g e n c y I n d i r e c t F i e l d C o s t s E n g / M g m t C o s t s S p e c i a l C h a r g e s E s c a l a t i o n C o n t i n g e n c y E s c a l a t i o n C o n t i n g e n c y A r e a F a c t o r E s c a l a t i o n C o n t i n g e n c y P r o j e c t D e f i n i t i o n & S c o p e C o s t E s t i m a t i n g S p e c i a l C h a r g e s S p e c i a l C h a r g e s


Offplot Facilities

Many offplot facilities are estimated using the methods given above for process plants. Class 1 estimates can use the curve method (using offplot data) or a percent of onplot data. Class 2-3 estimates use the semi-detailed method and Class 3 or later estimates use the detailed method. For more information, refer to Section 211.


Selecting a Method


n general, the method of cost estimating you choose is based on

what you are estimating

the phase of the project

the information you have available or can obtain


To make a cost estimate, you need the following information: Knowledge of the scope of the project.

For curve estimates, the capacity of the new plant, and the costs and capacities of two or more similar, completed plants.

For factored estimates, a sized list of equipment for all process and utility equipment.

For ratio estimates, the same as for factored estimates, plus cost and labor-hour ratios for similar plants.

For detailed estimates, every element of the planned work.

Awareness of direct costs (Chevron Group II)—equipment, materials, and installation labor directly involved in physical construction. Awareness of indirect costs1(Chevron Group I)—construction-related costs such as supervision, equipment rental, and temporary facilities; engineering and project management costs for both contractors and Chevron.

Awareness of special charges2 (catalyst, ocean freight, operating company G&A charges, dismantling, and so on); sometimes categorized as expense or working capital rather than as capital. See Sections 202–205, 211, and 221–224 for more information on methods of estimating.

See Appendix C, “Code of Accounts (EG-2757),” for more detail on these cost categories.

1 Not a final part of the installation but required for the orderly completion of the installation.

2 Unique to the Chevron system. Vary widely among projects. Segregated to avoid distorting the ratios and relationships



You can order a variety of manuals and other resources, such as the CRTC Consultants’ Card and the engineering design (gray) manuals, from CRTC Technical Standards Team.




Estimating Major Material (Equipment) Costs


Curve Estimates


Factored Estimates


Ratio Estimates


Detailed Estimates


Electronic Estimating: Questimate


Estimating Major Material (Equipment) Costs


or three of Chevron’s estimating methods—factored, ratio, and detailed, you must

first assess the cost of purchasing and delivering tagged equipment items (also

known as major material). These items fall under cost accounts C-G and K. See

Appendix C, “Code of Accounts (EG-2757).”

Estimating Cost Components for Equipment

Overview The total cost of equipment when making an estimate with the factored, ratio, or detailed method is the sum of the base cost, design allowance, freight, and taxes for each equipment item.

Information Needed Be sure you have an equipment list with each item sized and materials of construction specified. Also review the resources listed in Figure 201-1.

For This Manual Other Sources

Sources of Equipment Costs 401–408 - Purchase orders for the current project - Commercial data sources (e.g., Richardson or Questimate)

Cost Indexes 301

Design Allowances 303 Freight: Domestic & Ocean 304 Sales Tax Rates 305

Duty, Importation 521 - The Corporate Tax Department for current information on applicable duty on U.S.-imported equipment

- Chevron operating company sponsoring the project or a major international contractor for duty on material Chevron imports into a foreign country


Steps in Estimating Cost of Equipment

Figure 201-2 is a composite of the steps involved in assessing tagged equipment. Detailed procedures follow.


Obtain or develop a complete equipment list, with sizing and metallurgical specifications.

For early (Class 1 or 2) estimates, you may have to create an equipment list from a preliminary flowsheet, which often omits essential process and utility equipment items. To compensate, add appropriate items or systems from Figure 201-3, modifying the list to suit your plant. By the time you begin to make a detailed (Class 3, 4, or 5) estimate, you should have access to a complete equipment list (including items in Figure 201-3). If the equipment list is cross-referenced to the approved P&IDs, estimating is easier.

Determine the cost of items on the equipment list (see Figure 201-4). If your sources are not current, then adjust the costs to the current date with an index, such as EDMI. See Section 301. Choose EDPI for field-erected equipment, such as large tanks, columns, and cooling towers.


Compensate for the difference between the estimate and the probable final cost of equipment by including a design allowance, usually between 3 percent and 15 percent (see Section 303). Incomplete specifications are the most common reason for cost variances.



Domestic Freight

Review the source of the cost data to determine whether or not freight is included in that price. Shipping can be a separate line item in a contractor’s estimate or shown on a formal quotation or purchase order.

See Section 304 for guidance on how to estimate domestic and ocean freight. Large process equipment requires a specific transportation plan that may include unusual routing and costly restrictions.

Boiler feedwater pumps (with or without a deaerator)

Condensate flash drums and pumps Condensers for large steam turbines (including jet ejectors and condensate pumps)

Desuperheaters (attemperators) Emergency product coolers

Equipment spares, such as spare pumps —installed and warehouse spares Feed surge drum

Feed booster pumps Flush oil systems Fuel gas knockout drums Fuel oil filters

Heat recovery equipment (energy savings) Interstage coolers/condensers and K.O. drums for reciprocating compressors (if not supplied by compressor vendor)

Jacket/tempered water systems

Lube and seal oil systems (often part of centrifugal compressor or high pressure pump packages)

Oil mist generators

Power recovery turbines (energy savings) Relief system knockout drum and pump Solids handling equipment

Sour water, caustic and/or acid flash drums and pumps

Start-up equipment

Steam separators (for ejectors, superheating coils, and some steam generators)

Suction and discharge pulsation dampers for reciprocating compressors

Sump pumps

Vent separators and condensers Note: Modify this list to suit other types of plants.

Figure 201-3. List of Items Often Omitted from Refinery Process Flow Diagrams

1. Purchase orders for the current project 2. Formal vendor quotations for the current project 3. Recent purchase orders for similar equipment 4. Recent formal quotes for similar equipment 5. Informal vendor estimates/phone quotes for the current project

6. Data correlations in this manual (or a similar database from a contractor)

7. Commercial data sources (e.g., Richardson or Questimate)

Figure 201-4. Sources for Estimating Equipment in Order of Quality & Preference


Ocean and Foreign Land Freight (see Section 521)

Estimate ocean freight concurrently with the equipment.

Deduct ocean freight for ratio or factored estimating methods before applying the ratios or factors, and then add it later. Ocean freight is considered a special charge in the Chevron system (see Section 521). Include insurance, packing/blocking/crating, port handling/clearance costs (at both ends), and carrier costs.

Identify as a special charge any foreign land freight costs, such as delivering the equipment from a foreign port to a construction site. See Section 521.


Add a sales or use tax to the delivered cost of the equipment for most domestic locations.

See Section 305 for recent information on applicable tax rates for many Chevron locations.

Imported or Foreign

Contact the Corporate Tax Department for current information on applicable duty on U.S.- imported equipment.

Contact either the Chevron operating company sponsoring the project or a major international contractor for the duty on material Chevron imports into a foreign country.

As with ocean freight, import duties are considered special charges (see Appendix C, “Code of Accounts (EG-2757),” Item 77). Before applying factors or ratios for those types of estimates, you must set them aside and add them separately after applying the factors or ratios.


Curve Estimates


hen making an early Class 1 estimate, you will probably choose the curve

method. The premise of curve estimates is that costs vary exponentially with

capacity for many types of plants.

The Curve Method

Overview A curve estimate is based on finding the costs and capacities of plants similar to the one being estimated. The estimator adjusts that data for date, location, and common facilities; calculates the new cost; and makes further adjustments to develop the estimate for the new facility.

Information Needed To make a curve estimate of the cost of a new plant, you need to gather data on the capacity of the new plant and the cost and capacity for two or more similar plants.

Also review the resources listed in Figure 202-1.

Theoretical Basis The form of the cost-capacity equation is as follows:

y = a × (x)b


y = cost

a(coefficient) = specific to plant type

x = capacity

b(exponent) = specific to plant type (close to 0.6 but can range from 0.3 to 1.0)

Resources In This Manual Adjusting to Common or Current Date Sections 301, 302 Adjusting to Common or New Location Section 311 Adding Special Charges Section 521 Adding Escalation Section 312 Adding Contingency Section 313 Figure 202-1. Resources for Curve Estimating


Graphically, this equation will plot as a straight line on log-log paper. In practice, the curve may not be smooth but may be stepped at certain points, such as when limitations of equipment size require twinning (using a parallel piece of equipment) or adding a second train.

Because the exponent (slope of the graph) changes from a very low number (perhaps 0.3 at low capacities to nearly 1.0 at high capacities), extrapolation beyond known

capacities can lead to a significant error in estimating.

Applicability The curve method is

suitable for geographically confined plants, such as process plants and

some utilities.1

unsuitable for new technology plants that do not have cost histories.2

Steps in a Curve Estimate

The steps in a curve estimate are described below and shown in Figure 202-3.

An example of a sour water stripper with a feed rate of 200 gallons per minute (gpm) is included to illustrate the steps.


The terminology for operating capacity is given in Figure 202-2.

Typical Operating Capacity

Typical Plant Terminology Abbreviation

Thousands of barrels per operating day MBPOD Most Refinery Plants

Millions of standard cubic feet per day MSCFD Hydrogen Mfg., Gas Processing Short tons per day ST/D Sulfur, Coker

Millions of pound per year MPY Chemical Plants Figure 202-2. Typical Operating Capacity Terminology & Abbreviations by Type of Plant

1 Less-accurate cost-capacity equations for offplot facilities (such as tank fields) are given later in this chapter. 2 If the factored method is unsuitable, refer to the detailed method and semi-detailed method (later in this section).



Check the data for process and offplot plants later in this section. If your plant is shown, use that data and skip to step 7.

If the data in those sections does not meet your needs, find the costs and capacities for similar plants from actual project cost data (see Figure 202-4) or from journals or other literature.

Identify the construction period associated with the costs (for converting to current or future costs).



If the data is older than 1983, modernize it by following the instructions in Section 302. See the example in Figure 202-5.


See Figure 202-6 and Section 311.

Determining Data for Similar Plants: Sour Water Stripper1

Refinery GPM Original Cost Date EDPI Burnaby 85 $1.00 M 2/75 473.6 Pascagoula 165 $6.41 M2 8/74 449.8 El Segundo 240 $1.27 M 11/74 466.4 Richmond 350 $0.87 M 2/75 473.6

1 This example shows how we developed the sour waterdata used

to illustrate this method.

2 Includes H

2S recovery facilities.

Figure 202-4. Example of Project Cost Data

Adjusting Reference Plant Costs to Common Date:1 Sour Water Stripper

Refinery Original Cost Adjusted Cost

Burnaby $1.00 M $3.21 M2

Pascagoula $6.41 M $22.09 M

El Segundo $1.27 M $4.18 M

Richmond $0.87 M $2.79 M

1 EDPI for 1991 = 1100 (for example only).

2 Adjusted Cost = Original Cost x (1100/473.6) x (1.048.25) for Burnaby.

Figure 202-5. Example of Adjusting Costs to a Common Date

1 While Richmond is a standard reference, the common location may be any other place, such as the proposed plant site or



Compare the process flow diagram for the proposed plant with those of the reference plants and note differences.1

Adjust the costs of the reference plants to a common facilities basis.2 See the example in Figure 202-7.

Adjusting Reference Plant Costs to Common Location (Richmond): Sour Water Stripper

Refinery Area Factor1, 3 Adjusted Cost2

Burnaby 1.15 $2.79 M

Pascagoula 0.95 $23.26 M

El Segundo 1.07 $3.91 M

Richmond 1.00 $2.79 M

1 Area factor relative to Richmond = 1.00

2 Adjusted Cost = Cost from Figure 202-5

Area Factor

3 Area factors shown apply only to the plants & dates for this

example; may differ from Section 311.

Figure 202-6. Example of Adjusting Costs to a Common Location

Adjusting Reference Plant Costs to Common Facilities Basis for Sour Water Stripper Refinery Adjusted Cost1

Burnaby $3.30 M

Pascagoula $4.69 M

El Segundo $5.73 M

Richmond $6.98 M

1 All reference plants require equipment additions or

deletions to make them match the “standard” plants in the curve data presented later in this section. Figure 202-7. Example of Step 5

1 Examples are differences in equipment (such as number of reactors and side-stream strippers, caustic and water washers,



Plot the updated cost data for reference plants versus plant capacity on log-log graph paper (see Figure 202-8).

Draw a straight line through the data points.


You can also calculate the equation of the regression line through the data points, which is the equation for the sour water strippers given later in this section. See the example in Figure 202-9.

If only one data point is available, assume an exponent of 0.6 when creating the graph or equation. This is commonly referred to as the Six-Tenths Rule (see Figure 202-10).

Figure 202-8. Example of Onplot Cost vs. Capacity (EDPI = 1100) for Sour Water Stripper

Linear Regression Performed on the Logarithms of Costs & Capacities for Sour Water Strippers

y = 0.314 x (x)0.53


y = $M @ EDPI = 1100 x = GPM



Enter the equation or graph with the new plant’s capacity. Calculate (or read) the cost of the new plant at the common date used in step 3 (or the date of the equations shown later in this section, if used).

See the example in Figure 202-11.


You have a single data point for a plant costing $6 million and having a capacity of 10 MBPOD.

Develop equation from reference plant data based on the cost-capacity equation: y = a × (x)b

where: y = cost

a (coefficient) = specific to plant type x = capacity

b (exponent) = specific to plant type

Apply those values to the general equation: $6 M = a × (10 MBPOD)0.6 Solve this equation to give:

a = 1.51

Apply equation to similar new plant (same date): y = 1.51 × (x)0.6


y = cost in $M x = capacity in MBPOD

Figure 202-10. Sixth-Tenths Rule

Calculate the Cost of New Plant at the Common Date for 200 gpm Sour Water Stripper From the equation

y = 0.314 × (200 GPM)0.53 = $5.2M at EDPI = 1100 (1991)


y = cost

The data in this correlation covers a range of 85 - 350 gpm. To use it at 50 gpm or at 400 gpm would be risky. In our example, 200 gpm is well within the range.



See the example in Figure 202-12.


See the example in Figure 202-13. Also adjust for duplication savings. If a contractor designs multiple, identical plants at the same time, efficiencies in engineering and procurement can reduce the costs for the second and subsequent plants by 10 percent. These savings may apply even if the plants are constructed at different locations.


See Section 311 and Figure 202-14. The equations shown later in this section are based on a West Coast (Richmond) location. If the facility being estimated will be built in another part of the U.S. or overseas, you must make an area factor adjustment.

Adjust New Plant Cost to Current Date for 200 gpm Sour Water Stripper The adjusted cost at EDPI = 1200, for example, would be

y = $ 5.2 M(1200/1100) = $ 5.7 M

where: y = cost

Figure 202-12. Example of Adjusting Cost to Current Date

Adjust New Plant Cost for Facility Differences Between New & Referenced Plants for 200 gpm Sour Water Stripper

Supposition: The process flow diagram for your particular plant showed no sour water cooler or degasser. Eliminating those facilities requires a deduction of about 18 percent from the cost (see data later in this chapter).

y = $ 5.7 M x 0.82 = $ 4.7 M

where: y = cost

Figure 202-13. Example of Adjusting Cost for Facility Difference

Adjust Cost for Location for 200 gpm Sour Water Stripper

In step 4, we adjusted the reference plants to Richmond (area factor = 1.00). The unspecified location for our new plant has an estimated area factor of 0.90, thus:

y = $ 4.7 M x 0.90 = $ 4.2 M

where: y = cost



Use Section 521 as a checklist to identify possible special charges that may apply to the estimate.


If you need a then-current estimate, add escalation based on the anticipated schedule for the project (see Section 312).



Data for Curve Estimating

Cost-Capacity Coefficients and Exponents for Many Refinery Process Units

The tables that follow are to be used in an equation of the form:

Cost ($ millions, 1991) = Coefficient x (Capacity)Exponent

(EDPI = 1100)

The capacity is in thousands of barrels per day (MBPOD) except where noted.

The data comes from Company projects in the 1970s and from other sources. It has been updated to EDPI = 1100 (mid-1991). Because of the age of the underlying data, the correlations should be used with caution. Costs exclude catalyst, piling, computers, and winterizing, and are on a West Coast (Richmond) basis.

The tables contain adjustment factors that you can use in cases where plants being estimated differ slightly from the basis for the correlations.






Facility Coefficient at EDPI = 1100

Exponent Adjustments

One-Stage Crude Distillation Unit Contains an atmospheric distillation column, side cut stripping, overhead stabilizer and splitter, and either a one-stage desalter and flash drum or a two-stage desalter without flash drum.

2.837 0.700 To delete the overhead stabilizer and splitter, subtract 14%.

For a two-stage desalter with a flash drum, add 3.6%.

Two-Stage Crude Distillation Unit Adds vacuum distillation to the one-stage unit; also includes vacuum off-gas compression or vent gas scrubbing.

4.073 0.700 To delete the overhead stabilizer and splitter, subtract 10%. For a two-stage desalter with a flash drum, add 2.5%.

Vacuum Distillation Unit

Stand-alone unit similar to the second stage of a two-stage crude distillation unit.

3.300 0.700 Cost of PRCP plant was about 35% higher than this curve.

Deethanizer Depropanizer Debutanizer Deisobutanizer

LSR Splitter (Depentanizer) Gasoline Splitter (Dehexanizer) - These are single-column units that

separate the named component and lighter hydrocarbons from heavier hydrocarbons. 1.505 1.505 1.216 2.837 1.216 1.042

0.600 Units have steam reboilers and water-cooled overhead condensers.

Light Ends Recovery Unit (LER)

Combination of deethanizer and depropanizer columns.

5.836 0.580 Cost of PRCP plant was about 11% higher than this curve.

Gas Recovery Unit (GRU)

An LER with the addition of a debutanizer column.

5.385 0.600

Merox Treating

- Light straight run gasoline or cracked naphtha - Kerosene/jet 1.170 1.505 0.560 0.560 Figure 202-15. Cost-Capacity Coefficients and Exponents: Distillation and Treating Units






Facility Coefficient at EDPI = 1100

Exponent Adjustments

Naphtha Hydrotreater

Mid-Distillate Hydrotreater (SR) Light Cycle Oil (LCO) Hydrofiner Vacuum Gas Oil (VGO) Desulfurizer

These units remove sulfur and nitrogen from the oil feed by reacting it with hydrogen. The naphtha hydrotreater and mid-distillate hydrofiner include com-pression for make-up hydrogen; the other units require a high pressure hydrogen supply. Units include reactor(s) and re-cycle hydrogen compression.

4.314 4.674 5.142 4.169 0.640 0.670 0.670 0.700 Naphtha hydrotreater:

No make-up compression, subtract 7%. No make-up or recycle compression ("once-through"), subtract 13%.


The second stage of a traditional catalytic reformer (the first stage is a naphtha hydrotreater); includes four reactors and recycle compression, but no compression for product hydrogen.

5.469 0.650 Curve has been adjusted to include current metallurgy.

For 3 reactors rather than 4, subtract 8%.

Figure 202-16. Cost-Capacity Coefficients and Exponents: Hydrotreating and Reforming Units

Facility Coefficient at EDPI = 1100

Exponent Adjustments

Hydrogen Plant

Process uses steam-methane reforming to produce 95 to 97% pure hydrogen from 100 psig natural gas feed; high-pressure plants have steam turbine-driven shift gas compressors; product is delivered at 1700 psig; cost excludes catalyst. Capacity is millions of standard cubic feet per day (MMSCFD) of product hydrogen.

7.180 0.610 Cost of PRCP plant was about 6% higher than this curve.

For gas turbine drive on shift gas compressor, add 12%. For 900 psig product, subtract 10%. To produce 200-250 psig hydrogen, subtract:

For natural gas feed 21% For LPG feed 17% For naphtha feed 10%

Figure 202-17. Cost-Capacity Coefficients and Exponents: Hydrogen Manufacturing and Compression Units






Facility Coefficient at EDPI = 1100

Exponent Adjustments

Sour Water Stripper

Separates H2S from water; consists of a

reboiled stripper with a feed degasser and two injection systems; feed storage is off-plot and is excluded from the cost; capacity is gallons per minute (GPM).

The reboiler uses low pressure steam (40 -50 psig) which requires a condensate drum and pump.

The column overhead includes an air-cooled condenser with a reflux drum and reflux pump.

0.314 0.530 To delete feed sour water cooler, subtract 6%. To delete feed degasser and pumps, subtract 12%.

To delete stripped water (bottoms) trim cooler, subtract 9%.

To delete one injection system (anti-foam for column feed or corrosion inhibitor for column overhead), subtract 1%.

To delete the reboiler (and use live stripping steam), subtract 12%. To use 150 psig steam in the reboiler and delete the condensate drum and pump, subtract 6%.

To use water-cooled condensing and delete the reflux drum and pump (gravity reflux), subtract 5%.

Waste Water Treater (WWT)

Combines a sour water stripper with ammonia recovery facilities (a proprietary Chevron process); capacity is gallons per minute (GPM).

1.372 0.410

H2S Recovery

Amine (usually diethanolamine, or DEA) is used to absorb hydrogen sulfide from a gas stream; the plant contains a 50% capacity absorption column (with DEA being circulated to additional absorbers located in other process units); a regeneration column with steam reboiler and air-cooled condenser; and ammonia and caustic relief scrubbers on the overhead H2S product stream; the plant

capacity used in the cost correlation is thousands of pounds per hour of H2S


3.821 0.550 For a 100% capacity absorber in this plant, add 10%.

For a water-cooled regenerator overhead condenser and non-pumped reflux, deduct 5%.

To delete the ammonia scrubber, subtract 10%.

To delete the caustic relief scrubber, subtract 5%.

To substitute ammonia for caustic in the relief scrubber, add 15%.

Figure 202-18. Cost-Capacity Coefficients and Exponents: Hydrogen Sulfide Removal and Sulfur Recovery






Facility Coefficient at EDPI = 1100

Exponent Adjustments

Fluid Catalytic Cracker (FCC)

Reactor, regenerator, and distillation section to maximize gasoline production.

18.123 0.600

Butane Isomerization

Normal butane feed is catalytically converted (approx. 60%) to isobutane. Plant includes mole sieve driers (for both butane and hydrogen feeds), reactors, and product stabilizer.

6.340 0.588

Figure 202-19. Cost-Capacity Coefficients and Exponents: Cracking and Alkylation

Facility Coefficient at EDPI = 1100

Exponent Adjustments

Delayed Coking

Includes coke drums, on-plot coke handling and product distillation and treating. Capacity is short tons per day of coke produced.

0.832 0.700 The correlation is based on a coke yield to feed rate ratio of 50 short tons per 1000 barrels; for a different ratio of coke yield to feed rate, multiply the calculated cost by

3.02 x 

coke make, STPOD Feed rate, MBPOD

  


Figure 202-20. Cost-Capacity Coefficients and Exponents: Other Processes






Cost-Capacity Coefficients and Exponents for Refinery Offplot Facilities

Figure 202-21 contains cost-capacity coefficients and exponents for offplot facilities. We originally developed this data from 1970s Chevron experience. We updated the data to 1991 (EDPI=1100) without further validation except for adjusting the correlations of boiler plants, cooling towers, and tankfields to match experiences of projects in the early 1980’s. Facility descriptions appear on the following pages.

Facility At EDPI = 1100 Capacity Units Cost Adjustments Coeff. Exponent

Boiler Plant 0.28 0.77 M lbs/hr1 plus 2.5 percent of Onplot Investment Cooling Tower

Over 10 M GPM 0.93 0.75 M GPM1 Under 10 M GPM 2.08 0.4 M GPM1 Electrical Distribution 1.22 0.7 M KVA1 Tankfields

Crude 16.8 0.8 MM Bbl2

Other (ex. sulfur, LPG) 34.7 0.8 MM Bbl2 Sulfur

(incl. loading rack)

0.17 0.8 M Bbl2 Butane 0.38 0.7 M Bbl2 Propane 0.46 0.7 M Bbl2 Interconnecting Pipeways 8 percent of Onplot Investment Site Development 0.078 1.0 Developed Acres

Relief System 2 percent of

Onplot Investment3 Marine Facilities

(Coastal Areas Only)

Grass Roots Refinery 25.9 0.25 MBPOD Crude to Refinery Existing Refinery 0.20 1.0 MBPOD Incremental Crude to Refinery Loading Racks

Marine Location 0.10 1.0 MBPOD Incremental Crude Throughput Inland Location 0.30 1.0 MBPOD Incremental Crude

Throughput Effluent Treating

(Grass Roots Refinery)

9.9 0.3 MBPOD Crude to Refinery






Use the data in Figure 202-21 in an equation of the form:

Cost ($millions, 1991) = Coefficient x (Capacity)Exponent

The costs are on a West Coast (Richmond) basis. Facility descriptions appear on the following pages.

If you can determine the offplot facility’s size, this method gives better results than using a percentage of onplot cost (see Section 211).

While the locations and projects vary for facilities in each type of offplot plant, the following information summarizes the scope nominally

included in these estimating correlations.

Boiler Plant

Oil-fired boiler(s), with BFW treating, BFW pumps, and deaerator A fuel system (day tank, pumps, and oil heater)

Air systems (utility and instrument air compressors and auxiliaries) The cost equation is for the boiler plant’s own facilities; the additive piece, based on a percentage of the process plant costs, allows for the cost of incremental BFW capacity to support onplot steam generation.

Cooling Tower

Tower and basin, with circulating pumps, main supply and return headers serving multiple plants, and minimal water treatment Pump drivers are motors or back-pressure steam turbines

To delete main supply and return headers, subtract 23 percent. To change to condensing turbines, add 10 percent for 600 psig or 17 percent for 40 psig steam.

Electrical Distribution

Medium voltage wiring and switches, emergency power systems, and communications

No transformers or motor control centers

Assumes that power company provides high-to-medium voltage sub-station, and that plant substations are included in individual plant costs


Tankage and associated facilities within the diked area Tankfield pipeways Transfer pumps






Blending/metering facilities

Excludes process/utility area pipeways Provides for multiple tanks in each category Pressurized, refrigerated LPG tanks, as appropriate The sulfur storage cost includes sulfur loading racks.

Interconnecting Pipeways

Pipeways in the vicinity of process and utility plants

Excludes cooling water and relief headers, and tankfield pipeways

Site Development Rough grading Filling Roads Paving Bridges

Simple railroad spurs Fencing

Minor landscaping

Relief System

Free-standing elevated flare with molecular seal Knockout drum and pump

Ground flare with water seals Vent gas recovery compressor Main offplot flare header

As an alternative to using a percentage of onplot costs, consider a lump-sum cost per flare system (see Figure 202-21, Note 3).

Marine Facilities

For coastal areas only; includes piping to/from the refinery Provides product wharves for two-thirds of the products

For grass-roots only; provides a single-point mooring for crude receiving






Loading Racks

Truck and/or rail loading racks for one-third of products (marine location) or 100 percent of products (inland location)

The cost of sulfur loading racks is included in the tankfield cost for sulfur storage.

Effluent Treating

Offplot gathering system for oily water and storm water Oily water separator(s) with skim pump

Air flotation system

Activated sludge or other BOD reduction system No tertiary treatment included






Factored Estimates


he simplicity of the factored estimate makes it useful—especially for Class 1 or 2

estimates—when you have little design information, but you can identify the

equipment items from process flow diagrams.

The Factored Method

Overview When making a factored estimate, you arrive at the total cost of the plant (excluding special charges, escalation, and contingency) by doing the following:

Estimating the cost of tagged process or utility equipment items (see Section 201)

Multiplying the total equipment cost by a single factor called the

installation factor

Information Needed You need to develop or obtain a list of the tagged process or utility equipment and to review the resources listed in Figure 203-1.

Applicability The factored method is

suitable for geographically confined facilities.

The quantities of piping, electrical, and other bulk materials for facili-ties such as process plants and boiler plants are related to the normal layout of plant equipment and process flow. Bulk materials include engineered items such as instruments and electrical switchgear and shop-fabricated materials such as pipe spools and structural steel.

For This Manual

Estimating Tagged Process or Utility Equipment Section 401-408 Adjusting to Richmond Cost (Sales Tax) Section 305 De-escalating to 1991; Adjusting to Current Date Section 301 Adjusting with Area Factors Section 311 Adding Special Charges Section 521

Adding Escalation Section 312


unsuitable for scattered offplot facilities.1

The quantities (and costs) of bulk materials for facilities such as pipe-ways, relief systems, or cooling water systems are independent of the equipment and, therefore, can vary widely between projects and locations.

of limited suitability for plant modifications.

The plot space available for new equipment items is usually not opti-mal from the standpoint of plant layout or process flow. As a result, the quantities of bulk materials may be abnormally higher than for a new plant.

Sources of Data These are the four types of factors:

Cost-related. Recommended factors are those used in this procedure.

See Figure 203-2.

Specific plant type and location. CRTC Facilities Engineering Unit

has historical data by process and location for a number of Chevron refineries and chemical plants.

Figure 203-2. Average Cost-Related Factors for Equipment Based on Chevron Data

Factors on this plot are derived from Chevron’s completed process plant projects.

The total equipment cost is the final purchased cost (including domestic freight and sales taxes).

The average equipment cost is the total equipment cost divided by the number of equipment items.

The installation factor is the total plant cost (excluding special charges) divided by the total equipment cost. To develop the average equipment cost in this plot, review the Guidelines for Counting Equipment Items at the end of this section.


Type of general process (liquid, solid, or liquid and solid). While

these factors appear in the literature, Chevron does not work with them.

Specific types of equipment (e.g., pumps or heat exchangers).

Chevron does not work with this type of factor; however, one of our major contractors arrives at a total plant cost by applying standard, equipment-specific factors to develop total direct cost, and project-specific ratios to add indirect field and home office (engineering and project management) costs.

Steps in a Factored Estimate

The steps in a factored estimate are discussed below using the example of an estimate made for a distillation unit at Pascagoula during the first quarter of 1992. See Figure 203-3 for an illustration of these steps.


See Section 201, Estimating Major Material (Equipment) Costs. Include design allowance, domestic freight, and tax for the specific project location.

Use the subcontract price for field-erected equipment such as large columns.

Use the full (assembled) cost of packaged or skid-mounted equipment.

Do not reduce the equipment cost for savings expected due to the purchase of foreign or used equipment; instead, use a new U.S. cost for factoring purposes. Adjust the estimate for any savings at step 9.


The Pascagoula distillation unit consisted of a column, reflux drum, reboiler, air-cooled condenser, and three pumps with spares. The

equipment cost was estimated as $1,535M, including design allowance, freight, and Mississippi taxes.


This is principally a sales tax adjustment. Delete the local sales tax.

Add the Richmond sales tax.


By substituting California’s sales tax for Mississippi’s, the estimated equipment cost becomes $ 1,637 M.



De-escalate to 1991 (EDMI = 850) by multiplying the equipment cost by this ratio:

EDMI = 850 Current EDMI


The 1992 estimate was made at an EDMI of 856.3, so the de-escalated cost is ($ 1,637 M) x 850/856.3 = $1,625 M. Estimate Current Cost of Equipment 1 Determine the Installation Factor 6

Adjust Cost (sales tax) to Richmond, CA


De-escalate the Total Equipment Cost


Count Equipment Items 4

Calculate Average Equipment Cost


Calculate Total Plant (Installed) Cost


Adjust the Estimate 9 Adjust to Current Data


Add Special Charges 10

Add Escalation 11

Add Contingency 12



Use the Guidelines for Counting Equipment Items at the end of this section.


There were 18 equipment items, including three shells for the reboiler and seven bays for the air cooler.



Calculate the average equipment cost in 1991 as $1,625 M /18 = $ 90.3 M


Use either Figure 203-2 or the following equation:

a = (33.6) x (b)-0.386


a = installation factor at EPDI = 1100 and EDMI = 850 (1991) b = average equipment cost in $M


Using the equation, calculate the installation factor for 1991 as (33.6) x ($ 90.3 M)-0.386 = 5.91.


Multiply the de-escalated equipment cost (step 3) by the installation factor (step 6).




Use EDPI and multiply by the ratio:

Current EDPI EDPI = 1100


The EDPI at 1Q92 was 1116 so the plant cost was calculated as ($ 9,600 M) x (1116/1100) = $ 9,740 M.


Re-adjust sales tax (step 2) to return to a real-site basis.2

Adjust for savings for foreign or used equipment by subtracting the incremental cost for new equipment, including freight and tax differentials.

Adjust for plant modifications (see Cautions following step 12). Adjust for duplication savings.3

Adjust area factor considerations such as piling, winterization, or labor productivity (see Section 311).


The area factor for Pascagoula in 1992 was estimated as 0.95 relative to Richmond, including the difference in sales tax. The adjusted cost became ($ 9,740 M) x 0.95 = $ 9,250 M, or $9.3 M.



The combination of Mississippi’s Contractor Gross Income Tax and the 1992 G&A rate for Pascagoula added $200 M for a new total of $9.5 M.

1 The current EDPI should be for the same time period as the current EDMI in step 3.

2 Note that, in most locations, sales tax applies only to material, and that material might represent only 48 percent (Section

603) of the estimate.

3 If a contractor designs multiple, identical plants concurrently, efficiencies in engineering and procurement can reduce the

costs of the second and subsequent plants by 10 percent. These savings may apply even if the plants are constructed at different locations.



If you need a then-current estimate, add escalation based on the anticipated schedule for the project (see Section 312).


No escalation was considered. This estimate was reported in 1992 constant dollars.


The result of these steps is an onplot (battery limits) estimate only. Estimate any offplot requirements separately.


For this Class 1 estimate of a conventional technology plant, the estimator selected a contingency of 37 percent, yielding a total onplot estimate of $13 M.


Extrapolation. Do not extrapolate the curve beyond the plotted points

in Figure 203-2. The curve may flatten for low average equipment costs, resulting in installation factors probably not exceeding 9 or 10. Obviously, the factor cannot drop as low as 1.0 for higher-than-average equipment costs.

Complete Plants. As this method is based on actual costs for

complete new facilities with a mixture of equipment types, the factors shown in Figure 203-2 are most directly applicable to estimating similar plants.

You can, however, apply the method with a reasonable degree of accu-racy to individual equipment items (e.g., adding or deleting items for a proposed plant before it is built).

Alloy Equipment. The data for the curve came from normal refinery

and chemical process plants that have a limited amount of alloy equipment and piping. For plants with large amounts of alloy equip-ment and piping, the factored curve (equation) should still work—the average equipment cost being higher and the factor lower because the cost of most bulks (other than piping), labor, and indirects do not vary from those of a carbon steel plant. Since we have no data to verify this assumption, consider the factored method less accurate for a plant with extensive alloy materials.


Modifications. For modifications to existing plants, installation

factors may be higher or lower than for new plants. Generally, they are higher due to inefficient plant layout, dismantling, delays, work restrictions, shutdown work, and so on.

For rough estimates, apply the factored method and adjust the cost at step 9. Increase the labor cost to reflect poorer productivity due to con-gestion, work restrictions, etc. If, for example, you assume labor and related field indirect costs to be 34 per cent of the total (section 603) and anticipate 50 percent more labor hours, then increase the plant cost by 17 percent, as follows:

(0.34) x (1.50) + (1 - 0.34) = 1.17

Using the semi-detailed method covered in Section 205, estimate the direct and indirect costs (including productivity effects) for extra piping, electrical, and other bulk materials necessary because of inefficient location of the new equipment in the plant. Then estimate any dismantling costs, both permanent and temporary, for construction access.

Unusual Construction Features. Estimates for plants in a building or

with extensive vertical structures, jacketed or refractory-lined piping, sophisticated or redundant instrumentation, or concrete storage pits require larger installation factors than normal plants. Multiple-train plants have slightly smaller installation factors from savings through duplication. If storage tanks are included onplot, the installation factor is smaller than for a normal process plant.

Guidelines for Counting Equipment Items

The following counting rules were used to create Figure 203-2 so they should also be used when making an estimate. Fortunately, the results are not very sensitive to the equipment count. (A ten percent variation in equipment count changes the installation factor by only four percent.)

Do Count

Count the following items as one each:

Each reactor, column, or pressure vessel (even if stacked or with a common internal head). Be sure to count relief, fuel gas knockout, condensate flash, condensate receiver, blowdown, and steam separator drums.


Each heat exchanger or cooling tower. Each shell for shell-and-tube exchangers. Each bay for air-cooled exchangers.1

Each stack of double-pipe exchangers if there is more than one stack per service.

As one item, each set of external plate heat exchangers for one vessel or other equipment item.

Each bayonet-type exchanger.

Each furnace, boiler, in-line burner, or combustor. Each pump and each installed spare.

Each compressor and each installed spare, blower, fan, filter, mixer, agitator, venturi scrubber, cyclone, crusher, ball mill, belt or screw conveyor or feeder, weigh feeder, vibrating feeder or screen, bag house, large dust collector with fan, coke handling bucket crane, etc. Equipment used for batch operations, if permanently installed.2

Do Not Count

The following items are included in the equipment cost but not the count when deriving the average cost per piece of equipment:

Drivers (motors, steam or gas turbines, power recover turbines, diesel engines, etc.)

Items furnished as part of a package3

Items that can be considered an integral part of another item Bag house fans

Boiler and furnace fans, coils, steam and mud drums, stacks, preheaters, and stack gas treating equipment

Column, vessel and tank internals, heating coils, jackets, and floating roofs

Gas turbine inlet and exhaust facilities

Silencers and inlet air filters for blowers and compressors

1 A bay is generally limited to about 600 square feet of bare surface per tube row; e.g., for six tube rows, divide total bare

surface by 3,600. If more than one service per bay, count each service.

2 For example, for delayed coker plants, count each hoist and each power swivel for coke drum drill stems and each

unheading cart, cutting tool dolly and switch valve.

3 A “package” consists of two or more equipment items mounted on a skid or module, with substantial amounts of piping

and other bulk materials already installed. At estimating time, it is not usually known whether a package will come on one or more skids; therefore, count a package as one item even if it comes on more than one skid. Note that some systems are