Where in the world?
15 Jan 2000
Investment for capital projects obviously differs according to the location of the project. But the difference is not just a function of the geography, nationality or currency exchange rates. It depends also on less tangible factors such as productivity and labour relations. Most engineers preparing cost estimates rely on publications to obtain the relevant ratios for all these factors, but these are at best a year or so out of date.
To aid the engineer in his or her quest for a more reliable method of comparison, the simple model that follows should be more usable than more complex versions. Location factors are, after all, only ratios and there should be no need to waste too much time and effort on unnecessary factors, elements and computer programs.
The main problem with any plant model, however, is its composition. This will vary from industry to industry, but we have chosen one based on a typical chemical plant, although the same approach has been applied to projects of mechanical, civil, electronic and aeronautical compositions.
{{A conceptualised model of a chemical plant can be expressed as:
Main equipment 33%Instruments 7%Piping 15%Electrical 4%Civil 10%Painting/insulation 2%Design & engineering 29%}}
This model can be altered easily to suit the norm for whichever industry is involved. But, having established the basic model weightings, more detail is needed to identify and quantify the various elements and parameters making up the basic elements. For the chemical plant model, we can arrive at the breakdown given opposite.
From this analysis based on individual weightings we can therefore arrive at a total model cost for any number of locations. Taking one as the reference location, all other location models can be converted to this using established exchange rates, and thus a set of ratios can be calculated. It is important, however, that the location factors are related to the exchange rate at the time of computation. PE
{{CONCEPTUALISED BREAKDOWN OF TYPICAL CHEMICAL PLANT
BASIC PARAMETER PARAMETERITEM WEIGHTING WEIGHTING DEFINITION
Main equipment 33 (a) Vessels 20 Cost of fabricated vessel in carbon steel delivered site FOB. Weight 5tonne
(b) Pumps 13 Cost of designated electric driven pump. Quantity 1, delivery head 60m, SG1.5, including 3kW electric motor
Instruments 7 (a) Flow 1.25 Flow, temperature, (b) Temperature 1.25 pressure, level (c) Pressure 1.25 indicator, recording (d) Level 1.25 controller. Totally installed with 50mm control valve
(e) Analytical 2 GC instrument installed
Piping 15 (a) Welded 10 Installed cost of carbon steel 25m of 50mm sch 40 line pipe with 15 butt welds
(b) Screwed 5 Installed cost of carbon steel above with 30 threaded joints
Electrical 4 3kW motor 4 Installation of p/b station, 75m of cable with starter
Civil 10 (a) Concrete 7 Cost of 3m3 with reinforcement (b) Steelwork 3 Cost of 1tonne medium steelwork erected
Painting/ insulation 2 (a) Painting 1 3 coats to 20m2 CS vessel (b) Insulation 1 30mm thick to 10m of 50mm pipe
Design 30 (a) Design 10 Cost per hour (b) Draughting 15 Cost per hour (c) Supervision 5 Cost per hour}}
