Capital projects cost estimation

H. Baron, 2014
Welcome to this presentation. It explains the 3 methods
commonly used or estimatin! the cost o an "il # $as
acility.
Comments are most %elcome at her&e.'aron(!mail.com.
Purpose of estimate:
Concept screening
Study of feasibility
Decision to invest
Estimate type:
Capacity factored
Equipment factored
Analytical
Cost estimate
Capacity factored
C
1
/C
2
= (P
1
/P
2
)
e
e ~ 0.6
C
i
: Cost of facility with production
capacity P
i
Exercise: what is the increase in cost for +50% capacity increase?
Exercise: what is the increase in cost for +50% capacity increase?
In your opinion, what is the limit of such estimate?
Capacity factored
C
1
/C
2
= (P
1
/P
2
)
e
e ~ 0.6
C
i
: Cost of facility with production
capacity P
i
Equipment factored
C = f M
C: total installed cost of facility
M: cost of main equipment
f: factor
Cost estimate
Cost estimate
Equipment factored
C = f M
C: total installed cost of facility
M: cost of main equipment
f: factor
Note: Typical figures for Petrochemical Plant
Cost estimate
Whats the main equipment?
Equipment factored
C = f M
C: total installed cost of facility
M: cost of main equipment
f: factor
Cost estimate
Equipment factored
C = f M
f: factor
Cost estimate
Equipment factored
C = f M
f: factor
f depends on
Type of facility (petrochemical, refining, LNG, off-shore)
Cost estimate
How does f varies with facility size?
Equipment factored
C = f M
f: factor
f depends on
Type of facility (petrochemical, refining, LNG, off-shore)
Size
Cost estimate
How does f varies with facility size?
Equipment factored
C = f M
f: factor
f depends on
Type of facility (petrochemical, refining, LNG, off-shore)
Size
Cost estimate
How does f varies cost of Main Equipment?
Equipment factored
C = f M
f: factor
f depends on
Type of facility (petrochemical, refining, LNG, off-shore)
Size
Cost of Main Equipment
Cost estimate
How could the method be refined?
Equipment factored
C = f M
f: factor
f depends on
Type of facility (petrochemical, refining, LNG, off-shore)
Size
Cost of Main Equipment
Cost estimate
Equipment factored
C = f
i
M
i
M
i
Cost of all type i Main equipment
f
i
: factor
Cost estimate
Equipment factored
C = f
i
M
i
M
i
Cost of all type i Main equipment
f
i
: factor
Why do you think justifies such an approach?
Cost estimate
Equipment factored
C = f
i
M
i
M
i
Cost of all type i Main equipment
f
i
: factor
Why do you think justifies such an approach?
Cost estimate
Equipment factored
C = f
i
M
i
M
i
Cost of all type i Main equipment
f
i
: factor
In your opinion, what is the limit of such estimate?
Analytical
Main equipment supply + install
Piping supply + install
Electrical supply + install
Instrumentation & Control system supply + install
Civil Works
Steel structures
Painting, Insulation
Temporary construction facilities
Engineering & Project Management
Miscellaneous
Cost estimate
Cost estimate
Analytical
Establish the bill of quantities (BOQ) in each trade: equipment,
civil, piping, structural steel etc.
BOQ = Material Take-Off (what is measured from available
drawings at this stage) + allowances for design development +
allowances for what is not yet on drawings + contingencies
Apply ratios to get supply + installation cost
Installation cost = qty * manhours/ton ratio * labour cost
Labour cost is all in, i.e., includes construction equipment (crane,
scaffolding)
The ratio is based on standard manhours, i.e., home country,
Localization factor (productivity) to be applied, i.e., actual
installation manhours = ratio * productivity
Example: piping installation cost, ratio: 250 std h / ton
Western Europe, labour cost $100/hr yields $20k/ton
Middle East, labour cost $18/hr, productivity 2.5 yeilds $16k/ton
Analytical
Main equipment supply + install
Piping supply + install
Electrical supply + install
Instrumentation & Control system supply + install
Civil Works
Steel structures
Painting, Insulation
Temporary construction facilities
Engineering & Project Management
Miscellaneous
Cost estimate
Main equipment supply + install
Supply
Cost estimate
Main equipment supply + install
Supply: process (dimensions) & mechanical (weight)
design
Cost estimate
Main equipment supply + install
Supply: process (dimensions) & mechanical (weight)
design
Rate?
Cost estimate
Main equipment supply + install
Supply: process (dimensions) & mechanical (weight)
design
Rate: USD 4/kg for CS
USD12/kg for SS
USD 300-500 /m
2
for Shell & Tube HX / Air-coolers
USD 1000/kW for pumps
Cost estimate
Important note: these ratios and the
following ones - are the ones obtained
by large EPC Contractors ordering
large quantities.
Main equipment supply + install
Supply: process (dimensions) & mechanical (weight)
design
Installation
Cost estimate
Main equipment supply + install
Supply: process (dimensions) & mechanical (weight)
design
Installation ratios: % supply cost, typ., 8%
Cost estimate
Main equipment supply + install
Supply: process (dimensions) & mechanical (weight)
design
Transport: project specific
Installation ratios: % supply cost, typ., 8%
30 h/ton (includes labour and equipment)
Cost estimate
Analytical
Main equipment supply + install
Piping supply + install
Electrical supply + install
Instrumentation & Control system supply + install
Civil Works
Steel structures
Painting, Insulation
Temporary construction facilities
Engineering & Project Management
Miscellaneous
Cost estimate
Piping supply + install
Qty: ratio (eqt weight), typ. 40%
Cost estimate
Piping supply + install
Qty: ratio f (eqt number)
Cost estimate
Piping supply + install
Qty: ratio f (eqt number)
Cost estimate
Piping supply + install
Qty: ratio f (eqt number)
Remark: Unit vs Interconnection
Cost estimate
Piping supply + install
Qty: ratio (eqt number, eqt weight)
MTO
Cost estimate
Piping supply + install
Qty: MTO
Cost estimate
Piping supply + install
Qty: MTO
Item count: P&IDs
Lengths: Piping Layout
Cost estimate
Piping supply + install
Qty: MTO
Item count: P&IDs
Lengths: Piping Layout
Both Process & Utility lines
Both Above Ground & Underground lines
Cost estimate
Piping supply + install
Qty: MTO
Item count: P&IDs
Lengths: Piping Layout
Both Process & Utility lines
Both Above Ground & Underground lines
Allowances added for:
Cost estimate
Piping supply + install
Qty: MTO
Item count: P&IDs
Lengths: Piping Layout
Both Process & Utility lines
Both Above Ground & Underground lines
Allowances added for:
what is not taken-off, e.g., small diameter and design
development (P&ID completion) to obtain quantities
to erect
Cost estimate
Piping supply + install
Qty: MTO
Item count: P&IDs
Lengths: Piping Layout
Both Process & Utility lines
Both Above Ground & Underground lines
Allowances added for:
what is not taken-off, e.g., small diameter and design
development (P&ID completion) to obtain quantities
to erect
Cost estimate
Piping supply + install
Qty: MTO
Item count: P&IDs
Lengths: Piping Layout
Both Process & Utility lines
Both Above Ground & Underground lines
Allowances added for:
what is not taken-off, e.g., small diameter and design
development (P&ID completion) to obtain quantities
to erect
cut and losses to obtain quantities to be supplied
Cost estimate
Cost estimate
Piping supply + install
Qty: ratio (eqt number, eqt weight)
MTO
Rate Supply
Cost estimate
Piping supply + install
Qty: ratio (eqt number, eqt weight)
MTO
Rate Supply $ /kg, typ. USD 3 /kg for CS
Piping supply + install
Qty: ratio (eqt number, eqt weight)
MTO
Rate Supply $ /kg, typ. USD 3 /kg for CS
Install
Cost estimate
Piping supply + install
Qty: ratio (eqt number, eqt weight)
MTO
Rate Supply $ /kg, typ. USD 3 /kg for CS
Install std mhrs/ton, typ. 200-250 in unit,
100 on interconnecting pipe-racks,
applied to the total piping weight,
including fittings, valves etc.
Cost estimate
Electrical supply + install
Price ratio % Main equipment, typ. 15-20%
Cost estimate
Electrical supply + install
Price ratio % Main equipment, typ. 15-20%
Quantities: Consumers list
Rate (supply+install): USD 50k / consumer (w/o generation)
USD 520 / installed kW
Cost estimate
Instrumentation & Control system supply + install
Price ratio % Main equipment, range: 40-120%
Cost estimate
Instrumentation & Control system supply + install
Price ratio % Main equipment, range: 40-120%
Qties
Cost estimate
Instrumentation & Control system supply + install
Price ratio % Main equipment, range: 40-120%
Qties nb equiv. loops (CV, 0.5 ON/OFF, Analyser)
Cost estimate
Instrumentation & Control system supply + install
Price ratio % Main equipment, range: 40-120%
Qties nb equiv. loops (CV, 0.5 ON/OFF, Analyser)
Rate
Cost estimate
Instrumentation & Control system supply + install
Price ratio % Main equipment, range: 40-120%
Qties nb equiv. loops (CV, 0.5 ON/OFF, Analyser)
Rate supply: $ /equivalent control loops, typ. 90k
install: hrs / equivalent control loops, typ. 750
Cost estimate
Instrumentation & Control system supply + install
Price ratio % Main equipment, range: 40-120%
Qties Instrument list
Cost estimate
Instrumentation & Control system supply + install
Price ratio % Main equipment, range: 40-120%
Qties Instrument list
Rate Supply+install: $ / I/O, typ. 1000
Cost estimate
Civil Works
Price Ratio % Main equipment cost, typ. 15-20%
Cost estimate
Civil Works
Price Ratio % Main equipment cost, typ. 15-20%
Qty
Cost estimate
Civil Works
Price Ratio % Main equipment cost, typ. 15-20%
Qty Dimensions/Weight of equipment &
structure => size of foundations (m3)
Cost estimate
Civil Works
Price Ratio % Main equipment cost, typ. 15-20%
Qty Dimensions/Weight of equipment &
structure => size of foundations (m3)
Rate
Cost estimate
Civil Works
Price Ratio % Main equipment cost, typ. 15-20%
Qty Dimensions/Weight of equipment &
structure => size of foundations (m3)
Rate all-in (materials & labour) rate $/m3, typ. 1000
Cost estimate
Civil Works
Price Ratio % Main equipment cost, typ. 15-20%
Qty MTO: excavation, formwork, rebar, etc.
Cost estimate
Civil Works
Price Ratio % Main equipment cost, typ. 15-20%
Qty MTO: excavation, formwork, rebar, etc.
Rate Mhrs/operation * labour cost
Cost estimate
Cost estimate
Steel structures
Price Ratio % Main equipment cost, typ. 10-30%
Cost estimate
Steel structures
Price Ratio % Main equipment cost, typ. 10-30%
Qty Ratio pipe-racks: 90% of piping weight
platforms: 10% of equipment weight
Cost estimate
Steel structures
Price Ratio % Main equipment cost, typ. 10-30%
Qty Ratio pipe-racks: 90% of piping weight
platforms: 10% of equipment weight
Cost estimate
Steel structures
Price Ratio % Main equipment cost, typ. 10-30%
Qty Ratio pipe-racks: 90% of piping weight
platforms: 10% of equipment weight
Rate Supply $ / kg, typ. 2
Erection $ /kg, typ. 1 (includes crane)
Cost estimate
Steel structures
Price Ratio % Main equipment cost, typ. 10-30%
Qty Ratio pipe-racks: 90% of piping weight
platforms: 10% of equipment weight
Rate Supply USD / kg, typ. 2
Erection 20 std manhours/t
Analytical
Main equipment supply + install
Piping supply + install
Electrical supply + install
Instrumentation & Control system supply + install
Civil Works
Steel structures
Painting, Insulation
Cost estimate
Cost estimate
Painting, Insulation
Price ratio % eqt, piping, str cost, typ. 5% each
Cost estimate
Painting, Insulation
Price ratio % eqt, piping, str cost, typ. 5% each
Qty ratio % eqt / piping weight
Cost estimate
Painting, Insulation
Price ratio % eqt, piping, str cost, typ. 5% each
Qty ratio % eqt / piping weight, typ. XXX
Rate supply + install h / m
2
typ. 0,5 for painting 1,5 for (hot) insul.
Analytical
Main equipment supply + install
Piping supply + install
Electrical supply + install
Instrumentation & Control system supply + install
Civil Works
Steel structures
Painting, Insulation
Temporary construction facilities
Engineering & Project Management
Miscellaneous
Cost estimate
Cost estimate
Temporary Construction facilities
Ratio % total cost, typ. 5% for new site
Detailed
Analytical
Main equipment supply + install
Piping supply + install
Electrical supply + install
Instrumentation & Control system supply + install
Civil Works
Steel structures
Painting, Insulation
Temporary construction facilities
Engineering & Project Management
Miscellaneous
Cost estimate
Cost estimate
Engineering & Project Management = all Project services
Price ratio % total cost, typ. 15%
Cost estimate
Engineering & Project Management = all Project
services
Price ratio % total cost, typ. 15%
Qty ratio
Cost estimate
Engineering & Project Management = all Project
services
Price ratio % total cost, typ. 15%
Qty ratio hrs / eqt item, typ. 1800 for Refining,
2500 for gas, 4000 for LNG
Cost estimate
Engineering & Project Management = all Project
services
Price ratio % total cost, typ. 15%
Qty
Cost estimate
Engineering & Project Management = all Project
services
Price ratio % total cost, typ. 15%
Qty home office: tasks list * manhours * rates
field supervision: ratio to labour, typ. 1/7
Analytical
Main equipment supply + install
Piping supply + install
Electrical supply + install
Instrumentation & Control system supply + install
Civil Works
Steel structures
Painting, Insulation
Temporary construction facilities
Engineering & Project Management
Miscellaneous
Contractors cost
Cost estimate
Cost estimate
Miscellaneous
Earthworks: always specific
Special foundations
Infrastructures: roads, buildings
Spare parts, typ. 5% main equipment cost
First fill (catalyst, lubes, chemicals)
Analytical
Main equipment supply + install
Piping supply + install
Electrical supply + install
Instrumentation & Control system supply + install
Civil Works
Steel structures
Painting, Insulation
Temporary construction facilities
Engineering & Project Management
Miscellaneous
Contractors cost
Cost estimate
Cost estimate
Contractors cost
profit,
risks,
sales cost,
Cost estimate
Contractors cost
profit, typ. 7%
risks,
sales cost,
typ. 10-15%
Main equipment supply + install
Piping supply + install
Electrical supply + install
Instrumentation & Control system
supply + install
Civil Works
Steel structures
Painting, Insulation
Temporary construction facilities
Engineering & Project Management
Miscellaneous
Contractors cost
Cost estimate
Cost estimate
Main features:
Different level of Cost estimate accuracy
Feasibility study +/-30% accuracy
Final Investment Decision (FID) +/- 10%
Which of the methods we have seen would you use for
each case?
Cost estimate
Main concepts:
Different level of Cost estimate accuracy
Factored / Detailed
Qty estimate: allowances for design development
Rates:
In-house historical data similar Plant
Cost estimate: Contingencies for cost escalation
Inquiries + provisions for cost adders (supplies),
additional works/re-works (construction)
Direct costs / Indirect costs
Cost estimate
Historical evolution:
+ Increased instrumentation & control systems
costs
- Engineering low cost centers
- Low cost sourcing 20% cheaper
- Increase in productivity (3D model)
+ Additional requirements: safety, environment
Going further
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