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02638762/02/$23.50+0.00 # Institution of Chemical Engineers Trans IChemE, Vol 80, Part A, September 2002

NEW FACTORS FOR CAPITAL COST ESTIMATION IN EVOLVING PROCESS DESIGNS

D. J. BRENNAN 1 and K. A. GOLONKA2
1

Department of Chemical Engineering, Monash University, Melbourne, Australia 2 Kvaerner E and C, Melbourne, Australia

apital cost assessment is an integral part of an evolving process design. The assessment should consider installed equipment costs inclusive of plant bulk items and not solely purchased equipment costs. The ratio of installed equipment cost to purchased equipment cost varies much more widely for individual equipment items than for entire plants; the ratio depends on equipment class, design, size and construction materials as well as plant layout. The factored (IChemE) method outlined in the Institution of Chemical Engineers blue booklet is of immediate use and provides a basis for checking detailed estimates. Some experience in the application of the IChemE method by the authors is reviewed. Recommendations are made for broadening the inputs for estimating, and some factors are proposed for estimating installed costs of equipment of different classes. Quantitative data are also presented for cost breakdown in entire plants arising from project reviews by the authors. Keywords: capital cost estimation; plant costs; equipment costs; factored estimates; Lang factor.

INTRODUCTION Capital cost estimation is important in the contexts of a contractor bidding for a project, and an operating company gaining project approval from the board of directors. In each case an accuracy of 10% is a typical target. Such accuracy demands detailed design by a number of engineering disciplines, and requires a detailed estimate accounting for all materials and labour items. Capital cost estimation is also important in the context of developing a process design where the trading of capital and operating costs is common. Frequently it is necessary to apply cost estimation to sections of plant in an evolving plant design, for example in: exploring various purge and recycle options in a reactor= separations loop; comparing direct contact cooling of a gas stream with indirect cooling; exploring the effect of re ux ratio in distillation.

The more interactive the activities of process design and cost estimation, the greater the likelihood of generating a cost-effective design. However, the time and cost required to perform detailed engineering and translate this into plant cost estimates are seldom justi able in preliminary process designs. Moreover, the 10% accuracy necessary for project sanction is not warranted at the evolutionary process design phase. A greater range of methods and data than currently exists is needed to facilitate the interaction of cost estimation and process design. Even where computer software exists for 579

capital cost estimation, there is need for a structured and logical set of guidelines and supporting data, and a means of judging the reliability of an estimate. The total xed capital cost of a process plant may be estimated as the sum of the fully installed costs for each item of equipment, requiring an estimate of the purchased equipment cost and the additional cost of any associated plant. The installed cost de ned in this paper includes that of the equipment item purchase, the installation of the equipment item (predominantly labour), the foundations and other civils, steel structures and buildings, piping, instrumentation, electrics, painting, insulation and reproo ng. In addition, engineering overheads for design, procurement, construction and project management are included. Plant cost estimates which show the breakdown in cost between individual equipment items and various categories of plant cost are useful for targeting areas for cost reduction, and for comparing alternative designs. The breakdown in cost categories is also useful for reviewing achieved costs on completed projects. THE LANG FACTOR The installed cost of an entire process plant is often estimated in preliminary project work as a multiplier or factor of the total purchased cost of all equipment items. This approach is appealing to process engineers, since equipment speci cation is a key task of process engineering and represents an important interface between process design and more detailed plant design. The ratio of the complete plant cost to the sum of the purchased costs of all equipment has

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Table 1. Cost category Equipment Equipment installation Piping Instrumentation Electrical Civils Structural steel Buildings Insulation= reproo ng Painting Direct plant cost Engineering and project management Total project cost

BRENNAN and GOLONKA

Cost distribution for recent Australian industry projects. Average relative value 1 0.19 0.60 0.23 0.14 0.22 0.14 0.048 0.089 0.014 2.70 0.25 3.40 Standard deviation 0.06 0.19 0.11 0.08 0.1 0.09 0.075 0.066 0.011 0.52 0.065 0.68 Variability (standard deviation= average) 0 0.32 0.31 0.46 0.58 0.47 0.61 1.58 0.74 0.78 0.19 0.26 0.20

Note: Values may not sum precisely to totals shown due to rounding.

been termed the Lang factor1, which is typically in the range of 3 to 5. This has become a common rule of thumb and a useful yardstick for chemical engineers. The variability in Lang factor between different plants is typically less than the variability in the factors for cost categories making up the total cost of those plants. Further evidence for this is given in Table 1 which shows the breakdown in plant costs for 11 Australian projects spanning the late 1980s to the mid 1990s with total capital values between $20 million and $120 million ($Australian 2001). These projects are predominantly from oil and gas industries. Cost elements (or categories) are expressed as factors of purchased equipment cost. Means and standard deviations for each cost category have been calculated for the eleven plants. A measure of variability in each cost element is expressed as the ratio of standard deviation to the mean. The variability can be seen to be lowest for the overall plant Lang factor, but considerably higher for many individual cost categories. Values of Lang factor for plants can re ect the type of project, the characteristics of the process, and the predominant phase processed (solid, liquid or gas). The Lang factor can also depend on the average cost of the equipment items used and, hence, plant capacity.

IChemE METHOD The IChemE Method proceeds in a series of steps, as follows. (1) the purchased cost (C) of each item of equipment in the plant is determined; (2) the purchased cost (C) is adjusted to an equivalent cost based on carbon steel construction (Cc). This adjustment can be made by dividing the purchased cost by a factor fm to account for materials of construction, such that Cc C=fm; (3) factors are applied to Cc for equipment installation or erection (fb), piping (fp), instrumentation (f i), electrical (fe), civil (fc), structures and buildings (fs), and lagging (fl); (4) the factored costs are added to the purchased equipment cost to give a direct plant cost (DPC). Thus, DPC C Cc (fb fp f i fe fc fs fl); (5) overhead costs (M) covering engineering and project management, as well as a contingency allowance (A), are added as factors of direct plant cost to provide an estimate of total installed plant cost (IPC) for the item. Thus, IPC DPC (1 M A); (6) the procedure is repeated for all equipment items in the plant; (7) the installed cost for the plant (or section of plant) is then determined as the sum of installed costs for equipment items in the plant. Worked examples of the IChemE method are given in references 4 and 5. Values of individual factors reproduced from the Institution of Chemical Engineers booklet4 are listed in Table 2. While the factors in Table 2 are strictly only applicable to UK costs, the table is useful in several respects. (i) The table offers guidelines for selecting appropriate factors. For example, piping factors are higher for gas processes than liquid processes, re ecting the lower densities of gases compared to liquids, and hence, larger pipe diameters. The guidelines provided in the table are by no means exhaustive, and can be usefully Trans IChemE, Vol 80, Part A, September 2002

MODIFIED LANG FACTORS FOR SPECIFIC EQUIPMENT A modi ed Lang factor can be used to represent the ratio of installed cost to purchased cost for a given equipment item. Each equipment item may be represented on a piping and instrumentation diagram to provide a module for costing. Hand2 argued that ratios of installed cost to purchased cost for equipment items are distinct for each equipment class. Guthrie3 recommended a detailed breakdown of cost categories for deriving installed costs from purchased costs. In a detailed approach outlined in the Institution of Chemical Engineers publication A Guide to Capital Cost Estimation4, factors are applied to each individual equipment item, considered separately, to estimate the installed cost of the item. This approach is subsequently referred to in this paper as the IChemE Method. Worked examples of the IChemE method are shown in references 4 and 5.

FACTORS FOR CAPITAL COST ESTIMATION

Table 2. Individual factors of equipment items for estimation of installed equipment cost (IChemE5). Currency Value of individual equipment item as purchased standardized to carbon steel basis Purchased equipment item Delivery to site Installation of equipment item Much of site erection included in purchased cost Average erection Equipment requires some site fabrication (e.g. large pumps require lining up serpentine coolers) Equipment requires much site fabrication (e.g. large distillation columns, furnaces) Piping including installation Ducting and chutes Small bore piping or service piping Average bore piping and service piping (e.g. mainly liquid piping) Large bore piping and service piping (e.g. mainly gas) Average bore piping with complex system (e.g. much manifolding, recirculation) Large bore piping with complex system Multiplying factor for materials Steam tracing Instrumentation Local instruments only 1 controller and instruments 2 controllers and instruments 3 controllers and instruments Electrical Lighting only Lighting and power for ancillary drives (e.g. conveyors, stirred vessels, air coolers) Lighting and power excluding transformers and switchgear for machine main drives (e.g. pumps, compressors, crushers) Lighting and power including transformers and switchgear for machine main drives Civil Average civil work, including plant and structure foundations, oors, services Above average civil work, complicated machine blocks, special oor protection, elevator pits in oors, considerable services Multiplying factor for piling Structures and buildings Negligible structural work and buildings Open air plant at ground level with some pipe bridges and minor buildings Open air plant within a structure Plant in a simple covered building Plant in an elaborate building on a major structure within a building Lagging Lagging for service pipes only Over 300,000 1 0.013 0.05 0.08 100,000 300,000 1 0.03 0.08 0.1 Pounds sterling January 2000 40,000 to 100,000 1 0.04 0.1 0.13 20,000 to 40,000 1 0.06 0.11 0.15 6000 to 20,000 1 0.075 0.13 0.18 3000 to 6000 1 0.09 0.15 0.2

581

Under 3000 1 0.25 0.38 0.48

0.3

0.38

0.45

0.56

0.67

0.77

1.13

0.03 0.06 0.16 0.2 0.2 0.25 1.3 0.03 0.09 0.13 0.18 0.03 0.09 0.13

0.05 0.13 0.26 0.33 0.33 0.41 1.3 0.04 0.13 0.2 0.33 0.03 0.1 0.18

0.1 0.26 0.4 0.49 0.49 0.61

0.18 0.43 0.66 0.78 0.78 0.96

0.28 0.69 0.98 1.11 1.11 1.38

0.43 1.04 1.4 1.58 1.58 1.96 1.3 0.43 0.65 0.79 0.96 0.13 0.41 0.51

0.59 1.4 1.76 1.94 1.94 2.43 1.3 0.75 1 1.14 1.38 0.19 0.6 0.63

as appropriate for piping material speci ed 1.3 1.3 1.3 0.06 0.22 0.33 0.43 0.03 0.14 0.25 0.13 0.34 0.45 0.6 0.06 0.26 0.33 0.24 0.49 0.6 0.77 0.1 0.34 0.43

0.19

0.25

0.34

0.46

0.6

0.74

0.08 0.15

0.1 0.21

0.14 0.31

0.17 0.4

0.22 0.5

0.28 0.6

0.35 0.85

1.3 0.012 0.06 0.14 0.19 0.35

1.3 0.025 0.08 0.24 0.29 0.48

1.3 0.025 0.1 0.31 0.39 0.63

1.3 0.04 0.14 0.41 0.48 0.76

1.3 0.05 0.17 0.5 0.56 0.9

1.3 0.06 0.21 0.59 0.69 1.06

1.3 0.08 0.26 0.74 0.85 1.38

0.012

0.03

0.04

0.06

0.1

0.15

0.23

Trans IChemE, Vol 80, Part A, September 2002

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BRENNAN and GOLONKA

Table 2. Continued

Currency Value of individual equipment item as purchased standardised to carbon steel basis Average amount of hot lagging on pipes and vessels Above average amount of hot lagging on pipes and vessels Cold lagging on pipes and vessels Over 300,000 0.03 0.04 0.06 100,000 300,000 0.04 0.06 0.1

Pounds sterling January 2000 40,000 to 100,000 0.08 0.1 0.15 20,000 to 40,000 0.14 0.17 0.25 6000 to 20,000 0.21 0.26 0.31 3000 to 6000 0.31 0.35 0.41 Under 3000 0.38 0.4 0.56

Table 3. Other considerations for factored cost estimation. Check list for IChemE method Installation of equipment item Much of site erection included in purchase cost Average erection Equipment requires some site fabrication (e.g. large pumps require lining up serpentine coolers) Equipment requires much site fabrication (e.g. large distillation columns, furnaces) Other considerations Equipment weight, height, complexity, fragility Number and complexity of internals (trays, catalyst, etc) Ease of access; plant layout Weather, labour productivity and cost Green eld=brown eld site New plant or modi cation to existing plant; if existing plant, extent of availability for modi cation work Extent of shop assembly Extent to which unit is packaged Weight, material, pressure (and temperature) rating Extent of ttings, instrument connections Packaged unit? Some piping included? Above ground=underground Height of equipment item Stand alone=clustered (i.e. shared pipe rack) or addition to existing rack Above ground or underground piping. Number of branches on equipment Spacing between equipment=plant layout Number of valves; valve design, materials, size, complexity Packaged unit? Some instruments included? Extent of alarms, trips, interlocks Transmission Cost of measuring instrument analyser, temperature, pressure, owrate, level Computer hardware and software costs Some materials factors for on stream instruments Ground space, equipment height, security=safety Considerations for lighting Number of ancillaries requiring power Number of starter stations Size of electric motors Spacing between equipment=plant layout Plant electrical class or zone e.g. explosion proof

Piping including installation Ducting and chutes Small bore piping or service piping Average bore piping and service piping (e.g. mainly liquid piping) Large bore piping and service piping (e.g. mainly gas) Average bore piping with complex system (e.g. much manifolding, recirculation) Large bore piping with complex system Multiplying factor for materials Steam tracing Instrumentation Local instruments only 1 controller and instruments 2 controllers and instruments 3 controllers and instruments

Electrical Lighting only Lighting and power for ancillary drives (e.g. conveyors, stirred vessels, air coolers) Lighting and power excluding transformers and Switchgear for machine main drives (e.g. pumps, compressors, crushers) Lighting and power including transformers and switchgear for machine main drives Civil Average civil work, including plant and structure Foundations, oors, services Above average civil work, complicated machine blocks, Special oor protection, elevator pits in oors, considerable services Multiplying factor for piling Structures and buildings Negligible structural work and buildings Open air plant at ground level with some pipe bridges and minor buildings Open air plant within a structure

Weight, height of equipment Wind loadings Load bearing properties of soil Large momentum components (large, high speed compressors, centrifuges), reciprocating or vibrating machinery Opportunity for shared structures between similar items, e.g. columns, exchangers Size, height, complexity of equipment Buildings to house noisy equipment

Trans IChemE, Vol 80, Part A, September 2002

FACTORS FOR CAPITAL COST ESTIMATION

Table 3. Continued Check list for IChemE method Plant in a simple covered building Plant in an elaborate building on a major structure within a building Lagging Lagging for service pipes only Average amount of hot lagging on pipes and vessels Above average amount of hot lagging on pipes and vessels Cold lagging on pipes and vessels Painting Corrosion protection (function of plant environment) Surface area of plant. Function of equipment supply Miscellaneous considerations of general applicability Single equipment items or items in parallel Solid, liquid or gas processing Safety and environmental standards Operating cost inputs Utilities consumptions: utility related investment into piping (steam and cool, water) electrics (electric power) Prevailing business environment in engineering industry Previous experience; extent to which design is duplicated or modi ed from previous project or is completely new Capability, experience of engineering team and its management Productivity, salary, payroll overheads of personnel Quality and extent of project de nition, especially at commencement of project Extent of client, consultant involvement vs autonomy Other considerations Explosion proof buildings, control rooms Special provisions for on-site maintenance

583

Insulation for noise Process temperatures

Home of ce costs Design, engineering, procurement, project management

supplemented as experience and data from projects allow. For example, more precise piping estimates would re ect the number of connecting pipes to a vessel, or the spacing between equipment items. A list of such considerations proposed by the authors is provided in Table 3. (ii) Table 2 accounts for the in uence of equipment size or cost on the value of the factor employed. For example, instrumentation for a small diameter column implies a larger factor than for the same instrumentation on a larger diameter column. This is to be expected, since the instrumentation cost is largely independent of column size. (iii) The approach accounts for the in uence of materials of construction for an equipment item. This is incorporated into step 2 of the IChemE method outlined above. As an illustration, foundations for a carbon steel tower would be similar to those of a stainless steel tower of the same weight and external dimensions. Hence, the foundations cost are a higher proportion of equipment cost for a carbon steel tower than for the stainless steel tower. In some cases, allowances should be made for the effect of materials on piping and instrumentation.

(a) To estimate direct plant costs for two completed petroleum re ning projects (A and B). Very good agreement (within 3% of the actual achieved plant cost) was obtained for Project A which was a brown elds site project. However, when an estimate was made using the IChemE method for Project B, a revamp project, the agreement was poor; reasons for the poor agreement are discussed later when considering cost of revamps. (b) To estimate factors for a range of equipment categories. Table 5 summarizes these estimates which have been derived from the factors and considerations outlined in Tables 2 and 3. Table 4 shows a more detailed breakdown of the various modi ed Lang factors for the speci c case of a rotating gas compressor. (The reference currency adopted for Tables 4 and 5 were 1991 $Australia, selected to match a particular data set for equipment costs). The estimated factors were then applied on the basis of the average cost of equipment in particular equipment classes for selected projects. The selected projects included: a gas project, which showed close agreement between the cost predicted by the IChemE method and that predicted by the conventional detailed estimating approach; two distillation intensive projects where the cost estimated by the IChemE method was 80% of the achieved cost, due to differences in piping costs; a minerals processing project, where the IChemE method underestimated the achieved cost because of unusually high civils and structures costs for that project, associated with the need for piling.

SOME APPLICATIONS OF THE IChemE METHOD The IChemE method has been applied by the authors in two ways. Trans IChemE, Vol 80, Part A, September 2002

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BRENNAN and GOLONKA

Table 4. Factors for installed cost of compressors.

Value of individual equipment item as purchased standardized to carbon steel basis $ 1991 Aust Purchased equipment itemcarbon steel basis Installation Minimal site fabrication, but alignment, tolerances, balancing important and time consuming Piping Large bore piping with moderate complex system Instrumentation Capacity control, trips, alarms, interlocks, often complex for main process gas compressors (less sophisticated for ancillary air blowers) Electrical Lighting and power for electrical motor drive (less for turbine drive but more for installation, piping) Civil Moderate for rotating equipment More extensive for reciprocating equipment Structures and buildings Simple covered building for maintenance Lagging Assumed negligible Total direct plant cost (rotating equipment) Total installed cost (equipment materials factor 1 and overheads cost 0.25 direct plant cost)

Over $529,000 1 0.19

$176,000 to $529,000 1 0.24

$70,500 to $176,000 1 0.29

$35,000 to $70,500 1 0.35

$10,600 to $35,000 1 0.42

$5300 to $10,600 1 0.48

Under $5300 1 0.81

0.25

0.41

0.61

0.96

1.38

1.96

2.43

0.18

0.33

0.43

0.6

0.77

0.96

1.38

0.13

0.18

0.25

0.33

0.43

0.51

0.63

0.12

0.15

0.21

0.25

0.33

0.42

0.52

0.19

0.29

0.39

0.48

0.56

0.69

0.85

2.06 2.58

2.6 3.25

3.18 3.98

3.97 4.96

4.89 6.11

6.02 7.53

7.62 9.53

Table 5. Overall installed cost factors for different types of equipment. Value of purchased equipment item standardized to carbon steel basis $ 1991 Aust Compressors Pumps Heat exchangers Pressure vessels Tray columns Packed columns Fired heaters Size reduction Solids conveyor Average Standard deviation Standard deviation=average Packaged equipment Over $529,000 2.58 2.23 2.05 2.15 2.96 2.45 2.74 2.62 2.85 2.51 0.32 0.13 1.74 $176,000 to $529,000 3.25 2.66 2.43 2.56 3.94 3.01 3.51 3.22 3.52 3.12 0.50 0.16 2.07 $70,500 to $176,000 3.98 3.29 2.98 3.18 4.95 3.73 4.3 4.03 4.37 3.87 0.64 0.17 2.48 $35,000 to $70,500 4.96 4.13 3.76 4.08 6.55 4.71 5.60 5.05 5.49 4.93 0.88 0.18 3.20 $10,600 to $35,000 6.11 5.13 4.7 5.06 8.33 5.85 6.91 6.25 5.78 6.01 1.10 0.18 4.02 $5300 to $10,600 7.53 6.39 5.83 6.26 10.58 7.25 8.48 7.65 8.26 7.58 1.44 0.19 5.00 Under $5300 9.53 7.95 7.41 8.01 13.49 9.24 10.90 10.05 10.63 9.69 1.88 0.19 6.50 3.57 1.72 0.48 Standard deviation 2.48 2.08 1.94 2.12 3.79 2.44 2.91 2.64 2.75 Std Dev =Avg 0.46 0.46 0.47 0.47 0.52 0.47 0.48 0.47 0.47

Average 5.42 4.54 4.17 4.47 7.26 5.18 6.06 5.55 5.84

Note: 1. There is potentially more variability in installed cost factor due to equipment value than equipment type. 2. Engineering, project management overheads have been assumed as 25% of direct plant cost.

The last two cases emphasize the potential in uence of intrinsic features of the site or process technology on the achieved cost. OBSERVATIONS It is evident from Tables 2, 4 and 5, that the ratio of installed cost to purchased cost for an equipment item

depends on the magnitude of purchased equipment cost, which in turn depends on the size of the equipment item, as well as the equipment class. For any given process plant, there is usually a wide distribution of equipment class and sizes, and a corresponding wide range in the ratios of installed to purchased cost for the various equipment items. This range of ratios is characteristically much wider than the range in overall Lang factors for different types and Trans IChemE, Vol 80, Part A, September 2002

FACTORS FOR CAPITAL COST ESTIMATION designs of entire process plants where there is an averaging effect derived from the range of equipment classes and sizes present. In turn, the Lang factor for an overall plant will depend on the average purchased equipment cost, and hence, on the plant capacity. This con rms an expected higher Lang factor for pilot plants (as high as 10) than for large scale plants (as low as 2.5). This implied dependence of Lang factor (L) on ) is consistent with claims of average equipment cost (C others (for example Montfoort and Meijer6 who reported 0.22). L/C Factored estimates can be usefully supplemented in various components of the estimate where data permits by costing quantities of materials and labour. For example estimates for piping materials ($=m) and piping installation (workhours=m and $=workhour) can be used as a cross check for factored piping costs; estimates of cost per control loop or per alarm or trip system may likewise be useful as a cross check for instrumentation. Conversely, factors for individual cost categories such as piping may be used to selectively check aspects of detailed estimates in order to identify irregularities in the estimate. The irregularities may re ect unusual aspects of design or cost structure, or in some cases may result from errors or oversights. Care needs to be taken in applying the materials factor fm to bring the purchased cost back to a carbon steel basis. Often such factors are quoted as single values. However, the factor may often differ for small and large items, re ecting the differing contributions of materials and labour costs. For example the factor for a stainless steel vessel might be 1.2 for a 1 tonne vessel, and 2.2 for a 50 tonne vessel of similar design but larger size. A caveat lies in the importance of having representative equipment cost data prior to factor application. A reliable cost data base is essential, since a particular quotation may be skewed by an extreme business environment or may result from a genuine error by an equipment supplier. There are also cases where second hand equipment is used, implying purchased costs well below those for new equipment. One further consideration is to allow for equipment purchased as packaged items. Such items are usually delivered with instrumentation, connecting piping, and in some cases structural members. A large proportion of packaged items in a plant could decrease the apparent Lang factor for the plant.

585

often incur additional component costs and high engineering and construction costs. Many revamp projects incorporate major improvements in process control leading to high instrumentation costs relative to purchased cost of new equipment. Modi cations to plant layout may incur increased piping costs. Since plant downtime is often a critical consideration, construction labour may be employed on a continuous basis. Such costs may be very high, particularly where downtime scheduling is complicated or uncertain. Since the objectives and constraints for revamps are so diverse, cost structures are likely to be far more variable than for new plants, and conventional factors used in factored estimates become far less reliable. Detailed knowledge of the existing plant and its site are important inputs to cost estimating for revamps. SOURCES OF COST DATA Guides to sources of published cost data for plant and equipment are provided in Gerrard 4 and Brennan5. A useful publication on equipment costs with particular emphasis on Australian equipment is the publication by Breuer and Brennan7. Approaches to correlating equipment cost data are also critically reviewed by Brennan5 and Breuer and Brennan7. CONCLUDING REMARKS Chemical engineers require short-cut estimating methods in order to guide their process design decisions. Powerful cost estimating packages, which may be adjunct to or interface directly with process simulator packages, are now available to chemical engineers. However, the factored approach to estimating capital costs of plants remains a useful technique in its own right, and also provides a means of checking the validity of estimates made by more detailed methods. Chemical engineers need to appreciate the layers of assumptions built into factored estimating approaches, and critically review the assumptions, even where approximate approaches are used. DISCLAIMER The views expressed in this paper are those of the authors and not necessarily of their respective organizations. The authors have attempted to rigorously review cost estimating approaches. However, neither the authors, Kvaerner E and C Australia, nor Monash University accept any legal liability for the use or misuse of methods or data presented in this paper.

COST OF REVAMPS A project involving the revamp of an existing plant may be expected to have a different cost structure than that for a new plant on either a green eld or brown eld site. Due to the imposed constraints of an existing plant and site, the engineering design, project management and construction labour costs of a revamp may be much higher as a proportion of plant costs than for a new plant. While much existing equipment may be re-used without modi cation, a number of equipment items typically do require modi cation; vessels may need new internals, compressors and pumps may need to be increased in speed, and so on. Such equipment modi cations save on equipment costs, but Trans IChemE, Vol 80, Part A, September 2002

REFERENCES
1. Lang, H. J., 1948, Simpli ed approach to preliminary cost estimates, Chemical Engineering, June: 112113. 2. Hand, W. E., 1958, From owsheet to cost estimate, Petroleum Re ner, 37(9): 331334. 3. Guthrie, K. M., 1969, Data and techniques for preliminary capital cost estimating, Chemical Engineering, March 24: 114142. 4. Gerrard, A. M. (ed), 2000, A Guide to Capital Cost Estimating, 4th Edition (IChemE, Rugby, UK).

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BRENNAN and GOLONKA ADDRESS

Correspondence concerning this paper should be addressed to Dr D. J. Brennan, Monash University, Wellington Rd, Clayton, Victoria, 3800, Australia. E-mail: david.brennan@eng.monash.edu.au The manuscript was received 27 July 2001 and accepted for publication after revision 25 March 2002.

5. Brennan, D. J., 1998, Process Industry Economics, An International Perspective (IChemE, Rugby, UK), pp 294. 6. Montfoort, A. G. and Meijer, F. A., 1983, Improved lang factor approach to capital cost estimating, Process Economics International, Vol iv(1): 2021. 7. Breuer, P. L. and Brennan, D. J., 1994, Capital Cost Estimation of Process Equipment (Institution of Engineers Australia), pp 65.

ACKNOWLEDGEMENTS
The authors gratefully acknowledge the permission of Kvaerner E and C Australia to include data related to previous projects and case studies.

Trans IChemE, Vol 80, Part A, September 2002