1. CHPE404 Engineering Economy Estimation of Manufacturing Costs
Dr Mustafa Nasser

2. Outline

5. Estimation of Manufacturing Costs

6. Direct Costs

7. Fixed Costs

8. General Expenses Administration Costs Distribution and Selling Costs
Research and Development

9. Manufacturing Costs

10. Manufacturing Costs - examples
Cost associated with management level and administrative activities not directly related to the manufacturing process.

11. Manufacturing Costs

14. Manufacturing Costs
with depreciation as 10% FCI
(8.1)
(8.2)
COM without Depreciation

15. How Do We Get…..

18. Cost of Operating Labor
NOL = the number of operators per shift
P = particulate processing steps
Nnp = non-particulate processing steps – compression, heating/cooling, mixing, separation, and reaction
Important note – Above equation based on data from chemical plants and refineries where number of particle processing steps is low. For units with more than 2 solids processing steps ignore middle term and add 1 operator per solids step

19. Example 8.2: Estimate the operating labor requirement and costs for the
Toluene hydrodealkylation facility shown in fig 1.3 and 1.5

20. Example 8.2 solution
Pumps & Vessels are Not counted in evaluating Nnp

21. Example 8.2 solution

22. Example 8.2 solution

23. Cost of Raw Materials, Utilities, and Waste Treatment

24. Stream Factor
not kmol/hour

25. Utilities – Fuel and Electricity

26. Cost of Fuel – Utility costs
This graph clearly shows the recent trend in petroleum based fuels. This data is prior to the $140 per barrel surge that occurred in 2008 so the costs for ng and fuel oil are even higher. Not the relatively stable cost of coal.

28. Utilities - Steam

39. Can you see the huge difference between part d & e?

45. On the Utilities Summary of CAPCOST, each piece of equipment that may use a utility is flagged. For drives (compressor) and pumps, the electrical load is calculated. For fired heaters and exchangers the utilities must be specified. For example the exchanger above is using mps at a rate of 10,000 MJ/h. This data is input and the yearly utility cost is calculated.
Note – for utilitiy generators such as a waste heat boiler use a negative duty (negative cost = revenue)

46. Likewise, other equipment are added and the annual utility costs is calculated. Note that in the users section of the CAPCOST program, the user may specify the efficiencies of the different equipment and the cost of different utilities as shown on the following slide

47. Unit costs for utilities
All these values may be changed by the user to customize a process
User specified equipment efficiencies
Cost of labor