Title: Preparing a Cost Analysis
1Preparing a Cost Analysis
- March 10, 2009
- John Calcagni
2Preparing a Cost Analysis
- Overview
- Identify all capital costs necessary to get
control device operational - Annualize capital costs
- Identify all annually recurring costs associated
with control device - Identify and value any recovered product (energy,
sulfuric acid, gypsum, etc)
3Direct Capital Expenses
- Purchased Equipment
- Auxiliary Equipment (including instrumentation
and ductwork) - Buildings, foundations and supports
- Site Preparation
- Direct Installation (electrical, piping,
insulation, painting) - Sales Tax
- DO NOT INCLUDE LAND
4Indirect Capital Expenses
- Engineering
- Contractor fees
- Start-up
- Performance testing
- Contingencies
5Direct Cost Factors for Fabric Filters
- Purchased Equipment As Estimated, A
- Instrumentation 0.10A
- Sales Tax 0.03A
- Freight 0.05A
- Purchased Equipment Cost 1.18A, B
6Direct Capital Cost Factors for Fabric Filters
(Cont.)
- Direct Installation Costs
- Foundation and Supports 0.04B
- Erection 0.50B
- Electrical 0.08B
- Piping 0.01B
- Insulation for auxiliaries 0.07B
- Painting 0.04B
- Site Prep As estimated
- Buildings As Estimated
- Total Direct Installation Cost 1.74 B SP Bldg.
7Indirect Capital Cost Factors for Fabric Filters
- Engineering 0.10B
- Construction and Field 0.20B
- Contractor Fees 0.10B
- Start-up 0.01B
- Performance Tests 0.01B
- Contingencies 0.03B
- Total Indirect Capital Cost 0.45B
- Total Capital Investment 2.19B SP Bldg.
8Direct Equipment Cost Factors for ESP
- Purchased Equipment As Estimated, A
- Instrumentation 0.10A
- Sales Tax 0.03A
- Freight 0.05A
- Total PEC 1.18A, B
9Direct Capital Cost Factors for ESP (Cont.)
- Direct Installation Costs
- Foundation and Supports 0.04B
- Erection 0.50B
- Electrical 0.08B
- Piping 0.01B
- Insulation for auxiliaries 0.02B
- Painting 0.02B
- Site Prep As estimated
- Buildings As Estimated
- Total Direct Installation Cost 1.67 B SP Bldg.
10Indirect Capital Cost Factors for ESP
- Engineering 0.20B
- Construction and Field 0.20B
- Contractor Fees 0.10B
- Start-up 0.01B
- Performance Tests 0.01B
- Model Study 0.02B
- Contingencies 0.03B
- Total Indirect Capital Cost 0.57B
- Total Capital Investment 2.24B SP Bldg.
11Adjusting Purchased Equipment Estimates
- Sometimes Purchased Equipment Cost estimates for
similar projects are used with adjustment for
size and/or inflation - Size - 0.6 power rule
- PEC1PEC2gas flow rate1/gas flow rate20.6
- Inflation Use industrial construction cost
inflation index such as CEN, Marshall and Swift,
or Vatavuk index - Limit adjustments to 20 or 3-4 years
12Annualizing Capital Costs
- Capital costs need to be annualized to be useful
in calculating /ton - Key Parameters
- Useful life 20 years for most equipment.
- DO NOT USE IRS depreciation life for equipment
(10 -15 years) - Cost of Capital 7 for large firms, slightly
higher for smaller firms. - DO NOT USE company internal expected rates of
return or hurdle rates (15-20)
13Annualizing Capital Costs
- Applied like mortgage amortization table
- Multiply Total Capital Investment by appropriate
amortization rate for time and interest rate - Examples
- 15 years _at_ 7 0.1098 _at_ 9 0.1241
- 20 years _at_ 7 0.0944 _at_ 9 0.1096
- 25 years _at_ 7 0.0858 _at_ 9 0.1018
- DO NOT ALLOW
- 10 years _at_ 15 0.1993
14Direct Annual Costs
- Materials
- Operating Labor
- Supervisory Labor
- Maintenance
- Electricity
- Water
- Fuel
- Waste Disposal
15Indirect Annual Costs
- Property Taxes
- Insurance
- Overhead
- Administrative
16Estimating Direct Annual Costs for Fabric Filters
- Operating Labor 2-4 hrs/shift
- Supervisory Labor - 15 of Operator
- Materials N/A
- Maintenance
- Labor 1-2 hrs/shift
- Materials 100 of Maintenance Labor
17Estimating Direct Annual Costs for Fabric Filters
(cont.)
- Replacement Parts filter bag cost depends on
design - Cost of replacement bags and labor for
replacement should be amortized 2-4 yrs - Utilities local factors based on design and/or
experience - Dust Disposal often reused otherwise local
landfill cost
18Estimating Indirect Annual Costs for Fabric
Filters
- Overhead 60 of labor costs (operating,
supervisory, and maintenance) - Administrative 2 of TCI
- Property Tax 1 of TCI
- Insurance 1 of TCI
19Estimating Direct Annual Costs for ESP
- Operating Labor 3 hrs/day Coordinator time
- Supervisory Labor - 15 of Operator
- Materials N/A
- Maintenance
- Labor 15 hr/week
- Materials 1 of PEC
20Estimating Direct Annual Costs for ESP (cont.)
- Utilities local factors based on design and/or
experience - Dust Disposal often reused otherwise local
landfill cost
21Estimating Indirect Annual Costs for ESP
- Overhead 60 of labor costs (operating,
supervisory, and maintenance) - Administrative 2 of TCI
- Property Tax 1 of TCI
- Insurance 1 of TCI
22Recovery of Product
- Recovered products often have value
- Ash Road Bed Aggregate
- CaSO4 Gypsum/Wallboard, kiln feed
- Metal fines reprocessed
- H2SO4 Saleable product
- Recovered product should be added back at market
price
23References
- EPA Cost Manual http//www.epa.gov/ttn/catc/produ
cts.htmlcccinfo - Clean Air Technology Center
- http//www.epa.gov/ttn/catc/products.html