Engineering | Architecture | Design-Build | Surveying | GeoSpatial Solutions

World Bio Congress

Capital Cost Estimating

Presented By:

Dr. Alan Propp, P.E.

07/21/15

Merrick Fast Facts

Headquartered in Greenwood Village, CO

International engineering, architecture, design-build, surveying & geospatial solutions firm

Founded in 1955

Employee owned; $120 Million

16 offices (12 in US; 2 in Mexico; 1 in Canada, 1 in the U.K.)

55+ LEED Accredited Professionals

Overview

Good capital expenditure (Capex) estimates are crucial

100% of our clients underestimate the capex of their projects.

Capex estimating requires engineering

Merrick adheres to the approach of the Association for the Advancement of Cost Estimating (AACE)

AACE Guidelines

AACE categorizes capex estimates into five classes, 5 through 1, from lowest to highest fidelity

Class 5: concept screening

Level of project definition: 0- 2%

Methodology: Capacity factored, parametric models, judgement or analogy

Degree of accuracy: - 30 to +100%

AACE Guidelines

Class 4: study or feasibility

Level of project definition: 1-15% (FEL 2)

Methodology: Aspen Capital Cost Estimator

Degree of accuracy: -30 to +50%

AACE Guidelines

Class 3: budget authorization

Level of project definition: 10-40% (FEL 3)

Methodology: Preliminary unit costs and line diagrams

Degree of accuracy: -20 to +30%

AACE Guidelines

Class 2: control or bid/tender

Level of project definition: 30-70% (FEL 3+)

Methodology: Detailed unit costs and forced detailed take offs.

Degree of accuracy: -15 to +20%

AACE Guidelines

Class 1: check estimate or bid/tender

Level of project definition: 30-70% (detailed design)

Methodology: Detailed unit costs and forced detailed take offs.

Degree of accuracy: -10 to +15%

AACE guidelines have engineering deliverables list associated with each cost estimate class.

Rules of Thumb

Estimate equipment costs, then multiply by 3 to 5 to get the total installed cost (TIC)

Can get a rough idea of scale up cost using the following formula:

X = Y*(x/y).6

Where: X is the scaled capital cost

Y is known capital cost

x is the new plant capacity

y is the known plant capacity

Example

X = Y*(x/y).6

Where: X is the scaled capital cost

Y is $20 million

x is 25 million gallons per year

y is 1 million gallons per year

X = $20 million*(25/1).6 = $138 million

Aspen Capital Cost Estimator

Merrick employs Aspen CCE to quickly and inexpensively arrive at Class 4 estimates.

Aspen CCE is usually used based on an Aspen process model, but can be used without one.

It is very comprehensive and is updated once per year.

Each Equipment Item has a Default P&ID

Example Reactor

Plant Bulk Components

Utility headers/stations

Additional pipe racks

Firewater system

Additional Electrical/

Instrumentation Bulks

Ladders/Platforms

Perimeter lighting

Security Systems

Alarm Systems

Steel Structures

Thank You

Contact info:

Dr. Alan Propp, P.E.

Merrick & Company

alan.propp@merrick.com

720-346-4882