[Topic 7] Estimating Plant and Equipment Cost

Question 1

Index value for a given time showing the cost at that time relative to a certain base time.

Answer 1

Cost Index Method

Question 2

Original cost times the ratio of present index value to index value applicable when the original cost was obtained.

Answer 2

Cost Index Method

Question 3

This can be done when data for future indexes are not available.

Answer 3

Extrapolating the Data

Question 4

If equipment cost is a function of time, Present cost can be solved by?

Answer 4

Dividing the index value at present by index value at time of the original cost and then multiply it to the Original cost.

Question 5

Where do you get cost indices?

Answer 5

Records of the movement of costs through time by various organizations or institutions.

Question 6

Movement of costs through time includes?

Answer 6

1. Cost of equipment in different industries
2. Cost of constructing various buildings and industries
3. Cost of constructing refinery plants
4. Cost of making ChE equipment and ChE plants

Question 7

Different Cost Index

Answer 7

1. Marshall & Swift Equipment Cost Index
2. Engineering News-Record Construction Index
3. Nelson-Farrar Refinery Construction Index
4. Chemical Engineering Plant Cost Index

Question 8

Originally known as Marshall and Stevens Index and was established in 1926 with a value of 100.

Answer 8

Marshall & Swift Equipment Cost Index

Question 9

This involves a composite of two major components: process industry equipment average and all-industry equipment average.

Answer 9

Marshall & Swift Equipment Cost Index

Question 10

Some industries considered in the process-industry equipment average.

Answer 10

Chemicals, petroleum products, rubber, and paper.

Question 11

The all-industry average encompasses of how many?

Answer 11

47 different types of industrial, commercial, and housing equipment

Question 12

How often was the Marshall and Swift Equipment Cost index published in each issue of chemical engineering?

Answer 12

Published monthly until April 2012

Question 13

An American weekly magazine that provides news, analysis, data and opinion for the construction industry worldwide.

Answer 13

Engineering News-Record Construction Index

Question 14

Its subscribers include contractors, project owners, engineers, architect, public works officials and industry suppliers.

Answer 14

Engineering News-Record Construction Index

Question 15

It covers the design and construction of high-rise buildings, stadiums, airports, long-span bridges, dams, tunnels, power plants, industrial plants, water and wastewater projects, and toxic waste cleanup projects.

Answer 15

Engineering News-Record Construction Index

Question 16

It also covers the construction industry’s financial, legal, regulatory, safety, environmental, management, corporate, and labor issues.

Answer 16

Engineering News-Record Construction Index

Question 17

Originally known as the Nelson Refinery Construction Indexes and established in 1946 with a value of 100, the index is more suitable for petroleum or petrochemical business. Published once a month in the Oil and Gas Journal.

Answer 17

Nelson-Farrar Refinery Construction Index

Question 18

Composed of four major components: equipment, construction labor, buildings, and engineering and supervision.

Answer 18

Chemical Engineering Plant Cost Index

Question 19

The index is employed primary as a process plant construction index, was established using a base period of 1957-1959 as 100.

Answer 19

Chemical Engineering Plant Cost Index

Question 20

It is updated monthly and it lags in time by about 3 months.

Answer 20

Chemical Engineering Plant Cost Index

Question 21

It was revised in 1982, to account for changes in labor productivity and again, in 2002. Published in each issue of chemical engineering.

Answer 21

Chemical Engineering Plant Cost Index

Question 22

Used for similar equipment with different capacities.

Answer 22

Formula for equipment cost as a function of capacity

Question 23

If equipment cost is a function of capacity, how can equipment cost is solved?

Answer 23

Equipment A cost is equal to the product of equipment B’s cost multiplied by X to the power of n.
Where X is the relative capacities of Equipment A and B (Capacity of Equipment A over Capacity of Equipment B)
n is the cost-capacity index or exponent, empirical data. Use the 6/10 rule if no data.

Question 24

It is the total cost of building a facility.

Answer 24

Fixed Capital Investment (FCI)

Question 25

Purchase of equipment may not include this and you need to separately pay for it.

Answer 25

Installation cost