Chapter 8 PDF

CPE604 - EH220
Chapter 8
Estimation of
Manufacturing Costs
Companion to Turton/Shaeiwitz/Bhattacharyya/Whiting, Analysis, Synthesis, and Design of Chemical Processes, Fifth Edition, © 2018 Pearson Education, Inc. 1
Introduction
• The cost associated with the day-to-day operation of a
chemical plant
• The primary components of the cost of manufacture are raw

materials, utilities, and waste treatment
Estimation of Manufacturing Costs
• Direct Costs
– Include expenses directly associated with the manufacturing operation
– Vary with production rate but not necessarily directly proportional
• Fixed Costs
- expenses that remain practically constant from year to year
– Do not vary with production rate but relate “directly” to production function
• General Expenses
– Functions to which operations must contribute – overhead burden
– For hospital and medical services, general plant maintenance and overhead etc.
– Do not vary with changes in production rate
Direct Costs Fixed Costs General Expenses
• Raw Materials • Depreciation – • Administration costs

• Waste Treatment cover as a separate • Distribution and selling
• Utilities topic in Chapter 9 costs of products
• Operating Labor • Local taxes and • Research and
• Supervisory and Clerical insurance development expenses
Labor • Rent such as salaries,
• Maintenance and Repairs special equipment,
• Operating Supplies research facilities and
• Laboratory Charges consultant fee
• Patents and Royalties
Refer to Table 8.1 - Description of items
Cost of Manufacture (COM)
= Direct Manufacturing Costs (DMC) + Table 8.2
Fixed Manufacturing Costs (FMC) +
General Expenses (GE)
The cost of manufacturing, COM, can be

determined when the following costs are known
or can be estimated:
1. Fixed capital investment (FCI) (CTM or CGR)
2. Cost of operating labor (COL)
3. Cost of utilities (CUT)
4. Cost of waste treatment (CWT)
5. Cost of raw materials (CRM)
with depreciation as 10% FCI
COM  0.280 FCI  2.73COL  1.23 CUT  CWT  CRM  (8.1)
COM d  0.180 FCI  2.73COL  1.23CUT  CWT  C RM  (8.2)
COM without depreciation – we use

this since we calculate depreciation
more accurately in Chapter 9 • FCI – Chapter 7 (CTM or CGR)
• COL
• CRM Look at these
• CUT separately
• CWT
Cost of Operating Labor (COL)
N OL  (6.29  31.7 P 2  0.23N np )0.5
NOL = the number of operators per shift

P = particulate processing steps – (Eg. transportation and
distribution, particulate size control, & particulate removal)
Nnp = non-particulate processing steps – (Eg: 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
Cost of Operating Labor (COL)
Example - acetone process
• NOL = [6.29 + (31.7)(0)2+ (0.23)(13)]0.5 = 3.05
• Number of operators required for one

operator per shift :
= (49 wk/yr)(5 shifts/operator/wk)
= 245 shifts/year/operator
• Total shifts per year = (365)(3 shifts per day)

= 1095 shifts/year
1095 / 245 = 4.5 operators (for a single shift)
• Total Operators = (3.05)(4.5) = 13.75  14
2 0.5 • S$59,580/yr (2010 Gulf-Coast average)

N OL  (6.29  31.7 P  0.23N np )
COL = (59,580)(14) = $834K
Cost of Utilities, Waste Treatment &
Raw Materials
• Costs
– Utilities and waste treatment - Table 8.3 – see Section Cost of Utilities, CUT
8.6 for utilities estimation Cost of water treatment, CWT
– Common chemicals – Table 8.4, Chemical Market
Cost of raw material, CRM
Reporter, http://www.icis.com/StaticPages/a-e.htm#top
• Flowrates
– Get these from PFD – use stream factor Yearly Cost
• Stream Factor
§ The fraction of time that the plant is
operating in a year Stream Factor (SF)
§ Operating hours/days per year divided by Number of days plant operate per year

total hours/days per year 365
Companion to Turton/Shaeiwitz/Bhattacharyya/Whiting,
Analysis, Synthesis, and Design of Chemical Processes, Fifth 9
Edition, © 2018 Pearson Education, Inc.
Cost of Utilities (CUT)
• Fuel for Fired Heaters Cost of Fuel
– PFD gives process load (energy balance)
but total flow is more due to efficiency –
70-90% from Table 11.11 – item 13.
– Fuel costs may vary wildly – Figure 8.1
• Electricity for pumps and compressors –

Figure 8.7
– Shaft power – fluid power/efficiency
– Power to drive – shaft power/drive
efficiency
* PFD usually gives shaft power

– but be careful!
Figure 8.7 Efficiencies for

Pumps and Compressor
Drives (Data from Couper
et al. [18], Chapter 4)
Utilities - Steam Table 8.5 Theoretical Steam Requirements
(kg steam/kWh)
• Pressure levels
– Low (30 – 90 psi)
– Medium (150 – 250 psi)
– High (525 – 680 psi)
• Available saturated but sometimes superheated
• Large chemical complexes generate high-
pressure steam and use excess pressure to
generate electricity – Figure 8.6.
• Steam can be used as a drive medium for
compressors and pumps
– Thermodynamic efficiency – Table 8.5
– Drive efficiency – Figure 8.7
Utilities - Steam
Figure 8.6 Typical steam producing

system for a large chemical facility
Note: Modern supercritical power

plants operate to give steam at 250
bar (3675 psi) and 1075◦F (580◦C)
Utilities - Steam and Boiler Feed Water
Condensate Return If Steam Lost in Process Steam Generated in Process
Just use steam costs Use steam cost + BFW Take credit for (steam – BFW)
since condensate is not returned
Utilities - Cooling water
• Make-up based on DT (40 - 30)C

• Should charge cw based on energy used
§ Table 8.3
• Does not matter (much) if cw returned at
40C or 45C – same energy
• 45C is absolute max – due to fouling
Utilities - Refrigerated Water / Refrigerant
• Same as previous slide in that

energy costs are not DT
dependent – but cost based on
5°C supply temperature
• Other refrigerants are possible
and costas Temperature
• Generation of refrigeration
requires a refrigeration cycle
• Figure 8.4 shows cost of
refrigeration as a function of
temperature
Utilities - Refrigerated Water / Refrigerant
• Costs ($/GJ)
§ CW = 0.354
§ RW = 4.43
§ -20C = 7.89
§ -50C = 13.11
Example 8.9
Solution - Example 8.9
Cost of Raw Material (CRM)
Example 8.8
Evaluation of Cost of Manufacture
• FCI
• COL
• CUT From these get COMd See Example 8.10
• CWT
• CRM
Example 8.10
The cost of manufacture for the
production of benzene via the
toluene HDA process
Calculate the cost of manufacture

without depreciation (COMd) for
the toluene hydrodealkylation
process using the PFD in Figure
1.5 and the flow table given in
Table 1.5
Table E8.10 Summary of Utility Requirements for the

Equipment in the Toluene Hydrodealkylation Process
(From Example 8.2)
From Problem 7.21 (using CAPCOST), we find that the fixed capital investment
(CGR) for the process is $ 11.7 × 106.
FCI = $ 11.7 × 106

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CPE604 - EH220

• The primary components of the cost of manufacture are raw

Direct Costs Fixed Costs General Expenses

• Raw Materials • Depreciation – • Administration costs

Refer to Table 8.1 - Description of items

The cost of manufacturing, COM, can be

COM  0.280 FCI  2.73COL  1.23 CUT  CWT  CRM  (8.1)

COM d  0.180 FCI  2.73COL  1.23CUT  CWT  C RM  (8.2)

COM without depreciation – we use

N OL  (6.29  31.7 P 2  0.23N np )0.5

NOL = the number of operators per shift

Important note – Above equation based on data from chemical plants

• Number of operators required for one

• Total shifts per year = (365)(3 shifts per day)

• Total Operators = (3.05)(4.5) = 13.75  14

2 0.5 • S$59,580/yr (2010 Gulf-Coast average)

• Electricity for pumps and compressors –

* PFD usually gives shaft power

Figure 8.7 Efficiencies for

Figure 8.6 Typical steam producing

Note: Modern supercritical power

Condensate Return If Steam Lost in Process Steam Generated in Process

• Make-up based on DT (40 - 30)C

• Same as previous slide in that

Solution - Example 8.8

Calculate the cost of manufacture

Table E8.10 Summary of Utility Requirements for the

(From Example 8.2)

FCI = $ 11.7 × 106

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