GERARDO ANTONIO DE LEON IZEPPI*, CHRISTIAN DREXLER, DIRK KIRSCHNECK
*Corresponding author
Microinnova Engineering GmbH, Allerheiligen bei Wildon, Austria

Abstract

While continuous manufacturing is more efficient than batch processes, the impact of economic uncertainty can kill any project before it has even started. This document assesses three different methods for estimating capital investments and two polymer plants are used as case study (batch versus continuous manufacturing). Capital costs were determined using capacity, parametric and equipment factored models and operating costs were determined using additional factors. This case study shows that these methods are easy to use in early stages of a project. Under these assumptions, it was found that the continuous plant is more profitable.

INTRODUCTION

The ultimate goal of all investments is to maximize the economic benefits. The cost of producing a product must not exceed its market price in order to be able to make a profit. The total product cost involves several aspects, as it can be seen in Figure 1.

Estimating costs in early stages of a project is not a trivial task (2). New technologies can make this task even more difficult due to lack of experience and information (2, 3). Both overestimating and underestimating have a negative impact on the project. Taking into consideration the inherent inaccuracy of cost estimation, sensitivity analysis can be used. Sensitivity analysis allow to improve the robustness of the estimations.

COST ESTIMATION

There are five different classes of capital cost estimations according to the Association of Advancement of Cost Engineers (AACE), which can be seen in Table 1. 

Capacity factored estimates are extrapolated data from existing plants (5). Capacity factored estimates can be calculated with the following equatio ...