COST ESTIMATION

5.1 SIZING OF EQUIPMENT

Table 5.1: Cost of heat exchangers (HE)
Item A (ft2) Material Pressure Cost ($)
1) HE-1 1103.4 Carbon steel 450 psi 32400
2) HE-2 1327.4 Carbon steel 450 psi 33900
3) HE-3 297.0 Carbon steel 450 psi 27600
4) HE-4 273.4 Carbon steel 600 psi 27000
5) HE-5 142.4 Carbon steel 600 psi 23100
Total cost 144000

Table 5.2: Cost of remaining units

Item Material Pressure Cost ($)
6) Reactor Stainless Steel 900 psi 89300
7) Mixer Carbon steel 450 psi 48000
8) Distillation column-1 Carbon steel 150 psi 75000
9) Distillation column-2 Carbon steel 150 psi 56000
10) Distillation column-3 Carbon steel 150 psi 50000

Estimation of Equipment purchasing cost ($)

In this section, the purchasing cost of the units is found for the year 2009.
Item Purchase cost ($)
Reactor (2007) 89300
Mixer (2007) 48000
5 Heat Exchangers (2007) 144000
Total (2007) 281300
3 Distillation column (2002) 181000
Assume the cost of raw materials storage tanks (2009) 100000

For heat exchangers, reactor and mixer:

Cost index (2009) = 1446.4
Cost index (2007) = 1373.3
cos t index ( 2009)
Purchase Cost( 2009) Cost ( 2007) x
cos t index ( 2007)
Purchase cost in 2009 = 281300*1446.4/1373.3 = 296273.4 $

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For the distillation columns:
Cost index (2009) = 1446.4
Cost index (2002) = 1104.2
Purchase cost in 2009 = 181000*1446.4/1104.2 = 237093.3 $

Total purchase cost = 296273.4 + 237093.3 = 633366.7 $

Assume Location Factor = 1.3

Total Purchase Cost (2009) = 1.3x633366.7 = 823376.7 $

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5.2 FIXED CAPITAL INVESTMENT (FCI)

Table 5.3: Calculations of FCI

Item Cost factor % of FCI Cost ($)
Direct Costs
Purchased equipments delivered 100 823377
Purchased equipments installation 47 386987
Instrumentation and controls 18 148208
Piping (installed) 66 543429
Electrical (installed) 11 90571
Buildings 18 148208
Yard improving 10 82338
Service facilities 70 576364
Land 6 49403
Total direct costs 346 2848884
Indirect Costs
Engineering and supervision 33 271714
Construction expenses 41 337584
Total direct and indirect plant costs 420 3458182
Contractor's fee 21 172909
Contingency 42 345818
FCI 483 3976910

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5.3 TOTAL CAPITAL INVESTMENT (TCI)

TCI = FCI + WCI

Assuming, WCI = 0.15xTCI

TCI = FCI/0.85 =3976910/0.85

TCI = 4678717.2 ($)

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5.4 TOTAL PRODUCTION COST (TPC)

Capacity = 250000 tons/year of cumene

Working hours per year = 330*24 = 7920 h

Let;
MC = Manufacturing Cost
GE = General Expenses
BPC = By-Products Credit

DPC = Direct Production Cost

FC = Fixed Charges
POC = Plant Overhead Cost

AC = Administrative Cost
DMC = Distribution & Marketing Cost
RDC = Research & Development Cost

TPC = MC + GE BPC
MC = DPC + FC + POC
GE =AC + DMC + RDC

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5.4.1 Manufacturing Cost (MC)

MC = DPC + FC + POC

Direct Production Cost

1- Raw Materials: Cost $/ton Tons/year $/Year
Cost of Benzene = 850*176708 = 850 176708 150201800
Cost of Propylene = 800*108171 = 800 108171 86536800
Cost of Propane = 750*12591 = 750 12591 9443250
Total Raw Materials Cost (TRMC) 246181850

Item % TPC
2- Utilities 10
3- Operating Labor 10
4- Direct Supervisory & Electrical Labor 1.5
5- Laboratory Charges 1.5
6- Patents & Royalties 3
Subtotal 26
Item % FCI
7- Operating Supplies 0.7
8- Maintenance & Repairs 6
Subtotal 6.7

Direct Production Cost (DPC) = TRMC + 0.26TPC + 0.067FCI

Fixed Charges (FC)

Item % FCI
1- Depreciation 10
2- Insurance 0.6
Total Fixed Charges 10.6

Plant Overhead Cost (POC) = 5% of TPC

Manufacturing Cost (MC) = 246181850 + 0.31TPC + 0.173FCI

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5.4.2 General Expenses (GE)
GE =AC + DMC + RDC

Item % TPC
1- Administration Cost (AC) 4
2- Distribution & Selling Cost (DMC) 5
3- Research & Development (RDC) 3
Total GE 12

General Expenses (GE) = 0.12TPC

5.4.3 By-Product Cost

By-Product Cost (BPC) = 0

=====================================================
TPC = MC + GE BPC

TPC = 246181850 + 0.31TPC + 0.173FCI + 0.12TPC

TPC = 246181850 + 0.43TPC + 0.173FCI

0.57xTPC = 246181850 + 0.173x3896890

TPC = 246869855.4 $/year

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5.5 PROFITABILITY ANALYSIS

Selling price of cumene ($/ton) = 950

Selling price of diisopropylenebenzene ($/ton) = 350

Cumene produced (ton/y) = 250000

Diisopropylenebenzene produced (ton/y) = 29361

Revenues from cumene ($/year) = 950x250000 = 237500000

Revenues from diisopropylenebenzene ($/year) = 350x29361 = 10276350
Total Revenues ($/year) = 247776350

Profit = Revenues - Production Cost = 906494.63 ($/year)

Assume Tax rate of 2.5% of gross profit

Net Profit = 920338.1x(1-0.025) = 883832.26 ($/year)

Rate of Return (ROR), % = net profit/TCI*100 =18.9 %