Plant Cost Ratio Estimate

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Another quick method to estimate a project is called Plant Cost Ratio Estimate. This estimate is a part of Feasibility Estimates. This estimate is more refined than the order-of-magnitude estimate and should provide a narrower range for the estimate. These estimates, if performed carefully, should be within ±20 to 30%. To achieve this increase in accuracy over the order-of-magnitude estimate requires substantially more effort and more knowledge about the project.

Plant Cost Ratio Estimate

Plant Cost Ratio Estimate

James E. Rowings, Jr. explained that this method utilizes the concept that the equipment proportion of the total cost of a process facility is about the same, regardless of the size or capacity of the plant, for the same basic process. Therefore, if the major fixed equipment cost can be estimated, the total plant cost can be determined by factor multiplication. The plant cost factor or multiplier is sometimes called the Lang factor (after the man who developed the concept for process plants).

Plant Cost Ratio Estimate Example

Assume that a historical plant with the same process cost $2.5 million, with the equipment portion of the plant costing $1 million. Determine the cost of a new plant if the equipment has been determined to cost $2.4 million.

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C = 2.4/(1.0/2.5)
C = 6 million dollars

We hope that you understand the Plant Cost Ratio Estimate method above. This is quite easy and practical to do for our daily life in construction world. Please subscribe for more article about construction estimate.

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