Cost - Estimation Chem Plant

Cost Estimation
An acceptable plant design must present a process that is capable of operating

under conditions which will yield a profit. Since Net Profit equals total income minus all
expenses, it is essential that the Chemical Engineer be aware of the many different types of
costs involved in manufacturing processes.
A Capital Investment is required for any industrial process and determination of the
necessary investment is an important part of a plant design project. The total investment for any
process consists of Fixed Capital Investment for physical equipment and facilities in the plant plus
working capital which must be available to pay salaries, keep raw materials and products on
hand and handle other special items requiring a direct cash outlay. Thus in an analysis
including income taxes must be taken into consideration.
This report includes a detailed estimation of Costs incurred in a Manufacturing Plant
for the production of Active Pharmaceutical Ingredients (API's) extracted from Natural Plant
Sources. A detailed list required (based on the current data) has been included in each sheet,
making it feasible to add or delete data shown in "Yellow".
After successful addition or deletion of data in the sheets, a detailed spreadsheets,
Profitability Analysis Reports can be obtained providing Average Net Profit, Pay Back Period,
Rate of Return, Unit Product Cost.
All the amounts taken in the worksheets are in Rs.
Cost Estimation
Estimation of Capital Investment
A detailed estimate is carried out based on the current data available.
The Break down of Fixed Capital Investment items are detailed as follows.
1) Purchased Equipment
S. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Equip. Name
RE
RFE
WFE
36" Centrifuge
24" Centrifuge
24" Centrifuge GMP
SS316 Reactor 5.0KL
SS304 Reactor 1.2KL
SS304 Reactor 630lts
SS304 ST 4.0KL
SS304 HE 6m2
SS304 ST 7.0KL
SS304 ST 1.0KL
SS304 ST 500lts
SS304 Steam pan 150lts
SS304 HE 10m2
SS304 H Receiver 300lts
SS304 P Tank 200lts
SS304 Receiver 200lts
SS304 HE 2m2
SS304 ST 500lts
Nos.
1
1
1
1
1
1
1
2
2
3
1
1
9
2
1
2
1
1
1
1
10
8
3
Price in Rs.
654,300
570,000
458,010
274,806
196,290
412,209
536,735
348,088
238,165
404,357
117,774
78,516
288,546
236,857
35,332
67,262
20,934
52,344
18,059
12,432
124,317
136,095
96,182
Total Cost of Purchased Equipment =
6,196,531
S. No.
24
25
26
27
28
29
30
31
32
33
34
Equip. Name
SS304 Stand
MS ST 6.0KL
MS ST 500lts
SS304 VTD 24 Trays
SS304 GMP VTD-24T
SS304 Multi Mill GMP
SS304 MM GMP R&D
SS304 Candle Filters
Nos.
3
1
1
2
2
1
1
1
1
2
1
Price in Rs.
29,836
7,852
9,160
70,664
25,518
257,139
310,793
39,258
22,900
26,172
19,629
2) Purchased Equipment Installation

Installation of all equipments listed, structural supports, insulation, paint
(Taken as 25% of the Purchased equipment cost)
1549132.75
3) Instrumentation and Controls

S. No.
1
2
3
4
5
6
7
8
9
10
11
12
Description
Pressure Gauge 0-7kg/cm2
Pressure Gauge 0-10kg/cm2
Temp. Gauge 4-50 deg C
Vacuum Gauge 0-760mm Hg
Water Flow Switch
U syphon & Cock
Safety Valves
Temp. Controller
Temp. Indicator
PID Controller
FLP Temp. Scanner
2/2 Pheumatic P.O valve
Nos.
44
7
6
21
1
55
8
3
8
1
2
4
Total Cost of Instrumentation and Controls =
Price in Rs.
11,918
2,184
8,206
5,897
1,352
4,576
2,080
8,486
38,896
18,252
26,343
62,400
190,590
4) Piping
a) Process Piping
S. No.
1
2
3
4
Description
MS Pipes (all sizes)
SS Pipes (all sizes)
PVC Pipes and Fittings
GI Pipes
Total Cost of Process Piping
Nos. Price in Rs.

360
460,789
77.3
667,462
Lumpsum
48,627
48
21,375
1,198,253
S. No.
Description
Nos. Price in Rs.
b) Pipe Hangers, Fittings, Valves, Beams, Channels etc.

S. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
Description
H Beams, Channels, Angles, Checkered Plates etc.
MS Flanges E-type
MS Dummy/Blind Flanges E-type
MS Short Bends
MS Long Bends
MS Threaded Nipples
MS Ball Valve
Gun Metal Steam Valves
MS Ball Valve E-type
MS T
MS Reducer
MS GI Coated Nuts & Bolts
GI U Clamps
Spirax Steam Trap 3/4"
Gun Metal Steam Traps 3/4"
Anchor Bolts
MS Couplings
MS Foundation Bolts
PVC Foot Valve 3"
Packing Sheet Non Metallic 3mm thick
CI Butterfly Valves
CI Y-Strainer E-type
Non Return Valves (Vertical type)
4'x6'x2.5mm thick MS Sheet
SS 316 S40 Short Bends
SS 316 S40 Threaded Nipples
SS 304 Flanges E-type
SS 316 S40 T
SS 304 Ball Valves E-type
SS 304 Flush Bottom Valves
SS 316 S40 Reducer
SS 304 Couplings
SS 304 Ball Valves
SS 316 View Glass
SS 304 Dummy Flanges E-type
SS 316 Welding Rods ESAB 308
GI Flat 25x6mm
Teflon Tape
MS welding rods
SANT C3 PRV Valve 40mm
SANT Bronze PRV S/E 1"
ESAB Tig Rod 16.30 SS316
CI Ball Valves 3/4"
MS Dummy Plugs 3/8"
GI T
GI Long Bends
Nos.
Price in Rs.
16,550kgs
558,563
1579
182,047
85
12,926
626
35,325
40
1,575
282
17,910
172
135,450
25
33,750
10
11,250
8
180
49
6,818
495kgs
21,718
10kgs
225
10
24,470
12
27,000
170
1,530
146
1,800
16
1,040
3
506
73.5kgs
5,374
17
37,800
9
16,875
15
15,700
140kgs
3,938
249
111,787
165
23,186
934
174,994
52
7,054
6
31,500
6
33,750
141
63,562
10
562
157
248,200
22
34,200
49
7,627
10
22,500
477.8kgs
14,675
100
3,150
1
208
1
14,625
1
12,375
35kgs
19,687
16
9,000
20
225
60
1,969
101
2,576
S. No.
47
48
49
50
51
52
53
54
55
Description
GI Union
GI Dummy Plugs
GI Threaded Nipple
Hold tite
GI Coupling
PDSPSA102A Float Trap 1"
PDSPSA204A Y-type S/E Strainer
14"x14" CI Man holes
GI U Clamps
Nos.
Price in Rs.
35
2,137
4
67
155
6,806
500gms
113
48
945
4
27,000
4
11,250
10
7,875
Lumpsum
563
Total Cost of Pipe Hangers, Fittings, Valves, Beams, Channels etc.
2,047,938
c) Insulation - Piping, Equipment

S. No.
1
2
3
4
5
6
7
8
Description
Nos.
Price in Rs.
Mineral Wool
40bags
36,000
GI Mesh
8 Rolls
4,500
GI Wire
15kgs
506
Sheet metal screws
10pkts
563
Bitumen 85/25
110kgs
24,750
GI Sheets 24gauge
109kgs
7,357
Aluminium Coil 24gx3' 772kgs
156,330
Thermocol Pipes
1500mts
135,000
Total cost of Insulation -
Total Cost of Piping including a, b, & c =
365,006
3,611,197
5) Electrical Equipment and Materials

a) Electrical equipment - switches, motors, conduit, wire, fitting etc.,
S. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Description
Panel Boards
Electrical Access. In panel boards
Lighting, lamps, tubes & Gen. Fitting
FLP Light Fittings
FLP RV lamps on-off switch type
FLP Push button station on-off type
Armoured Cable
FCG' well glass 2x25W FLP lights
FCG make bulk head fitting
120x3mm copper flat
FLP Glands
320 wire (Fine cab)
Exhaust Fan (FLP)
Fresh Air Fan (NFLP)
Galvanized Perforated Cable Trays
Nut Bolt Washers
Zeuzer Pumps(2.0hp)(Double M.Seal
CG 5.0HP Monobloc pumpset
Twin screw pump 1.0HP (Tushaco)
Twin screw pump 1.5HP (Tushaco)
Kirloskar 3.0HP Monobloc pumpset
CG 7.5HP FLP Motor
CG 1.0HP FLP Motor
CG 1.0HP NFLP Motor
CG 2.0HP FLP Motor
Centrifugal process pumps 1.0HP
Centrifugal process pumps 2.0HP
High Vacuum Pump 5.0HP
Total Cost of Electrical Equipment
Nos.
5
Lumpsum
Lumpsum
10
12
30
4275mts
2
2
14.2kgs
200
15coils
3
3
125mts
320sets
2
6
3
2
1
1
1
1
7
4
2
11
2
1
3,320,927
Price in Rs.
281,250
112,500
168,750
56,250
60,750
20,250
1,715,625
225
2,250
799
3,937
8,438
15,750
4,500
45,000
337
104,000
124,800
78,000
35,360
89,278
89,278
15,600
27,480
109,200
54,080
41,600
28,600
6,240
20,800
b) Electrical materials and labor

S. No.
1
2
Description
Labor of Excavation
Labor for Electrical wiring
Total Cost for Electrical Materials and labor
Nos.
Lumpsum
Lumpsum
Price in Rs.
2,250
112,500
114,750
Total Cost for Electrical Equipment and Materials including a and b =
3,435,677
6) Buildings (Including Services)

a) Process Buildings
Total Price incurred in constructing Process Buildings =
4,000,000
b) Auxiliary Buildings
Total Price incurred in Auxiliary buildings
c) Maintenance Shops
Total Price incurred in Maintenance Shops
d) Building Services
S.No.
Description
1
Plumbing work (labor charges)
2
Air Handling Units (HVAC)
3
Paint Material
4
Labor charges for painting
Total cost for Building services
Nos.
Lumpsum
2
Lumpsum
Lumpsum
Price in Rs.
15,000
337,500
10,912
20,000
383,412
Total Cost for Buildings including a, b, c & d
4,383,412
7) Yard Improvements
Site Development - site clearing, grading, roads, walkways etc.
S. No.
1
2
3
4
Description
Site Clearing
Roads
Walkways
Landscaping
Total Cost for Yard Improvements
Nos.
Lumpsum
Lumpsum
Lumpsum
Lumpsum
Price in Rs.
10,000
30,000
15,000
15,000
70,000
8) Service Facilitites
a & b) Utilities and Facilities
S. No.
1
2
3
4
5
6
7
8
9
10
11
12
Description
Borewell and Pumpset
POLYSTOL HDPE tanks
Distribution Transformer 400KVA
24TR aircooled packaged chiller
SS water jet vacuum system
70KVA kirloskar make generator
ELGI air cooled Air Compressor
1.0HP monobloc vacuum pumps
Heating bath and Accessories
Cold rooms with panels
SS304 Pass box
Cooling Towers
Nos.
Lumpsum
2
1
1
5
1
1
2
1
2
2
2
Price in Rs.
50,000
10,125
302,550
489,375
84,375
168,750
22,500
16,875
33,750
587,650
45,000
78,750
Total Cost of Utilities and Facilities
1,889,700
c) Non Process Equipment

S. No.
1
2
3
4
5
6
7
8
9
10
Description
FC 1800 FRP Fume Chamber and base
Pharma Room Doors (Steel Doors)
Doors and Windows
Granite
Labor charges for laying granite
Glazed Tiles
Labor charges for laying tiles
Fire Extinguishers
Miscellaneous Laboratory Equipment
Office furniture and equipment
Nos.
1
2
Lumpsum
3000sft
3000sft
2000sft
2000sft
3
Lumpsum
Lumpsum
Price in Rs.
165,877
47,250
50,000
151,875
54,000
45,000
16,000
33,750
225,000
33,750
Total Cost of Non Process Equipment
822,502
d) Distribution and Packaging

Already Included in Item No. 1 and 6
Total Cost of Service Facilities including a, b, c & d =
2,712,202
9) Land - Surveys and fees, Property cost

The cost of Land is taken as 4% of the Total Purchased Equipment cost =
247861.24
Total Direct Costs (D)

S. No.
1
2
3
4
5
6
7
8
9
Description
Purchased Equipment
Purchased Equipment Installation
Instrumentation and Controls
Piping
Electrical Equipment and Materials
Buildings (Including services)
Yard Improvements
Service Facilities
Land
Grand Total in Rs.

6,196,531
1549132.75
190,590
3,611,197
3,435,677
4,383,412
70,000
2,712,202
247861.24
22,396,603
Indirect Costs
1) Engineering and Supervision
Total Engineering and Supervision cost is taken as 8% of the Total Direct Cost
1791728.239
1567762.209
1119830.15
2337036.834
2) Construction Expenses
Total Construction Expenses cost is taken as 7% of the Total Direct Cost
3) Contractor's Fee
Total Contractor's fee is taken as 5% of the Total Direct Cost
4) Contingency
Total Contingency cost is taken as 8% of the Total Direct and Indirect cost
Total Indirect Costs (I)

S.No.
1
2
3
4
Description
Engineering and Supervision
Construction Expenses
Contractor's Fee
Contingency
Grand Total in Rs.

1791728.2392
1567762.2093
1119830.1495
2337036.83373913
6816357.43173913
Fixed Capital Investment (FCI), D + I
29,212,960
Working Capital (WC), 15% of TCI
5155228.30971867
Total Capital Investment (TCI)
34368188.7314578
Spreadsheet for Estimation of Total Capital Investment

S. No.
Description
Direct Costs
1
Purchased Equipment
2
Purchased Equipment Installation
3
Instrumentation and Controls
4
Piping
5
Electrical Equipment and Materials
6
Buildings (Including services)
7
Yard Improvements
8
Service Facilities
9
Land
Indirect Costs
10
Engineering and Supervision
11
Construction Expenses
12
Contractors Fee
13
Contingency
Fixed Capital Investment (FCI), D + I
Working Capital (WC), 15% of TCI
Total Capital Investment (TCI)
Cost in Rs.
Cost in Rs.
Cost in Rs.
6,196,531
1549132.75
190,590
3,611,197
3,435,677
4,383,412
70,000
2,712,202
247861.24
22,396,603
1791728.2392
1567762.2093
1119830.1495
2337036.83373913
6816357.43173913
29,212,960
5155228.30971867
34368188.7314578
Spreadsheet for Estimation of Total Product Cost

S. No.
Description
Manufacturing Costs
Direct Production Costs
1
Raw Materials
2
Operating Labor
3
Operating Supervision
4
Power and Utilities
5
Maintenance and Repairs
6
Operating Supplies
7
Laboratory Charges
8
Patents & Royalties
9
Catalysts and Solvents
Total Direct Production Costs
Fixed Charges
10
Depreciation
11
Taxes
12
Insurance
13
Rent
Total Fixed Charges
Plant Overhead Costs
14
Total Plant Overhead Costs
Total Manufacturing Costs (M)
General Expenses
15
Administrative Expenses
16
Distribution & Marketing Expenses
17
Research & Development
18
Financing (Interest)
Total General Expenses (G)
Total Product Cost, M + G
Cost in Rs.
Cost in Rs.
Cost in Rs.
11250000
1404000
1164000
3156000
185895.93
27884.3895
280800
0
5471250
22939830.3195
4513446.42326087
292129.604217391
292129.604217391
0
5097705.63169565
826168.779
826168.779
28863704.7301956
351000
3246078.30335507
0
0
3597078.30335507
32460783.0335507
TOTAL PRODUCT COST

Determination of the necessary Capital Investment is only one part of a complete cost estimate. Another
equally important part is the estimation of costs for operating the plant and selling the products. These costs
can be grouped under the general heading of Total Product Cost
The Total Product Cost is calculated for the known production process, which can be produced in the above
installed plant. This production process is basically related to the product of Active Pharmaceutical Ingredient
(API) produced from the naturally occuring plants. The basic Raw Material for the process is Duboisia Leaves.
Basis
1) The Total Product Cost is calculated based on the Annual Cost Basis
2) Number of days working per year is taken as 300 days
3) Plant is running in 3-shifts I.e. 24hrs per day
4) Capacity of the plant per year of the API, in Kg
2,400
Manufacturing Costs
1) Direct Production Costs
a) Raw Materials
S. No.
Description
1
Duboisia Leaves
Quantity per annum, Kg

90,000
Total Cost of Raw Materials
Cost per unit in Rs.

125
Total Annual cost in Rs.

11250000
0
0
0
0
0
0
0
11250000
b) Operating Labor
S. No.
Description
1
Skilled Labor
2
Unskilled Labor
3
Watch men
Total Cost of Operating Labor
No, Required
30
10
6
Monthly Salary in Rs.

3000
1500
2000
1404000
Total Annual Salary in Rs.

1080000
180000
144000
0
0
0
0
0
c) Operating Supervision
S. No.
1
2
3
4
Description
In-charge
Supervisor - Plant
Supervisor - Stores
Supervisor - Maint.
No, Required
3
6
1
1
Total Cost of Operating Supervision
Monthly Salary in Rs.

12000
7500
6500
9500
Total Annual Salary in Rs.

432000
540000
78000
114000
0
0
0
0
0
0
0
0
0
0
1164000
d) Power and Utilities

S. No.
Description
1
Steam
2
Electricity
3
Water
No. of Units/year
2,15,205Kg
3,60,000KWH
4,320m3
Total Annual Cost of Power and Utilities
Cost / unit (in Rs.)

6.97
4
50
Total Annual Cost in Rs.

1500000
1440000
216000
3156000
e) Maintenance and Repairs (MR)

Annual cost of maintenance and Repairs is aausmed as
3% of the Total Equipment Cost
185895.93
f) Operating Supplies
Annual cost of operating supplies is assumed as 15% of
the Total cost of Maintenance and Repairs
27884.3895
g) Laboratory Charges
Annual cost of laboratory charges is assumed as 20% of
the Total cost of Operating Labor
280800
h) Patents and Royalties

Annual cost of patents and royalties
I) Catalysts and Solvents
S. No.
1
2
3
4
5
6
7
8
9
Description
Methanol, Lts
D.M.Water, Lts
Hydrochloric Acid, Lts
Chloroform, Lts
Ammonia, Lts
n-Butylbromide, Lts
Acetonitrile, Lts
Activated Charcoal, Kgs
Hyflow, Kgs
Quantity per Annum

466,000
120,000
1,500
78,000
4,000
7,500
7,500
300
6,500
Total Annual Cost of Catalysts and Solvents
Total Annual Direct Production Cost

S. No.
1
2
3
4
5
6
7
8
9
Description
Raw Materials
Operating Labor
Operating Supervision
Power and Utilities
Maintenance and Repairs
Operating Supplies
Laboratory Charges
Patents & Royalties
Catalysts and Solvents
Total Direct Production Cost =
Total Annual Cost in Rs.

11250000
1404000
1164000
3156000
185895.93
27884.3895
280800
0
5471250
22939830.3195
Cost per Unit Total Annual Cost in Rs.

8
3728000
1
120000
4.5
6750
15
1170000
7
28000
25
187500
18
135000
60
18000
12
78000
0
0
0
0
0
0
0
0
5471250
2) Fixed Charges
a) Depreciation
i) Annual cost of Depreciation for Machinery and Equipment is
assumed as 10% of the Fixed Capital Investment
2921296
ii) Annual cost of Depreciation for buildings is taken as

3% of the Initial Cost of buildings
131502
iii) Annual cost of Depreciation for Instrumentation & Controls, piping,

Electrical equipment and Materials is assumed as 5% of FCI
1460648
292130
292130
826169
b) Taxes
Annual property taxes for plant is assumed as 1% of the
Fixed Capital Investment
c) Insurance
Annual cost of Insurance is assumed as 1% of the
Fixed Capital Investment
d) Rent
Annual cost of Rent for Land and Buildings
Total Annual Fixed Charges
S. No.
1
2
3
4
Description
Depreciation
Taxes
Insurance
Rent
Total Fixed Charges

4513446.42326087
292129.604217391
292129.604217391
0
5097705.63169565
3) Plant Overhead Costs

Annual Plant Overhead Costs is assumed as 30% of the total
cost of operating labor, supervision and maintenance
Total Manufacturing Costs (M)

S. No.
1
2
3
Description
Direct Production Cost
Fixed Charges
Total Manufacturing Costs

22939830.3195
5097705.63169565
826168.779
28863704.7301956
General Expenses
1) Administrative Expenses
Annual cost of Administrative expenses is assumed as 25% of
the total cost of operating labor
351000
3246078
2) Distribution and Marketing Expenses

Annual cost of Distribution & Marketing expenses is assumed
as 10% of the Total Product Cost
3) Research and Development
Annual cost of Research and Development
4) Financing (interest)
Annual cost of Financing (interest)
Total General Expenses (G)
S. No.
1
2
3
4
Description
Administrative Expenses
Distribution and Marketing Expenses
Research and Development
Financing (interest)
Total Cost of General Expenses
Total Product Cost (TPC), M + G

351000
3246078.30335507
0
0
3597078.30335507
32460783.0335507
Profitability Analysis
To Calculate Profitability Analysis two methods have been employed.
Method 1 : Based on Fixed Known Selling Price of the Finished Product API at 75% Capacity
Method 2 : Based on Selling Price of the Finished Product API calculated at 100%, 75% & 50% Capacity.
Method - 1
Revenue Through sales
At present the market value of the Finished Product API manufactured under this
facility per Kg
Annual Revenue through sales at 75% capacity
Gross Profit
= Annual Revenue through sales
Gross Profit
= 57539216.96645
Net Profit
= Gross Profit x (1 - tax%)
Assuming tax percent =

Net Profit
20
46031373.57316
Total Investment / ( Net Profit + Depreciation )
where Total Investment = Fixed Capital Investment

Pay Back Period
0.578 years
Rate of Return
Rate of Return
Rate of Return
( Net Profit / Total Investment ) x 100

=
158 %
50,000
90000000
Annual Operating Cost
Pay Back Period

Pay Back Period
Method - 2
Product Unit Cost
The Total Product Cost estimated in the facility is, Rs.
=
This amount should be compensated by the annual sales of the Product
The Unit Cost per Kg of the Finished Product API
32460783.034 per year
13525.33 per Kg
Pay Back Period

In order for the Total Investment to have low level of risk,
the minimum acceptable return should be
=
Pay Back Period
16 %
= Depreciable Fixed Capital Investment / ((Average profit/yr) + (Average Depreciation/yr))
Depreciable Fixed Capital Investment
= Sum of Sl.Nos. 1,3,4,5 & 6 of Spread Sheet No.1

=
Average Profit / Year
17,817,407
Minimum Acceptable return x Fixed Capital Investment
= 4674073.667
Average Depreciation / Year
where Number of years
= FCI / Number of years (N)

=
10
= 2921296.042
Pay Back Period
2.346 years
Selling Price for Different Plant Capacities

To estimate Selling Price (Rs/Kg) of the Finished Product API, average net profit is to be determined.
A calculation table is prepared to perform this at 100%, 75% & 50% capacity.
Assumptions
Evaluation time (N) is taken as
10 years
Salvage Values (Vs) are assumed as
0
Capacity for the First and Second year is taken as 50% and 75% respectively.
Contd
Profitability Analysis Contd.
Table 1 : Calculation Table for 100% Capacity
1
50
2
75
3
100
4
100
5
100
6
100
7
100
8
100
9
100
10
100
Sum
A. Capacity of the Plant %

B. Product Rate, tons/year
1.2
1.8
2.4
2.4
2.4
2.4
2.4
2.4
2.4
2.4
22.2
C. All Variable Costs, (10)6 Rs/year
16.23 24.35 32.461 32.461 32.461 32.461 32.461 32.461 32.461 32.461 300.262
D. All Fixed Costs, (except

Depreciation), (10)6 Rs/year (*)
5.0075 5.008 5.0075 5.0075 5.0075 5.0075 5.0075 5.0075 5.0075 5.0075 50.0751
E. Depreciation, (10)6 Rs/year
2.9213 2.921 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213
F. Total Product Cost (C+D+E)

24.159 32.27 40.39 40.39 40.39
(10)6 Rs/year
(*) indicates, consider sum of costs from Sl.No. 11 to 18 of spreadsheet No.2
All Variable Costs
40.39
40.39
40.39
40.39
40.39
29.213
379.55
Product Rate x Unit Cost of Finished Product API per Kg
Depreciation is calculated as Straight Line Method as follows :

d = (V - Vs) / N
Where, d annual depreciation, Rs/year
V = Original value of the property at start of the service life period, completely installed and
ready for use, Rs or FCI
Vs = Salvage value of property at the end of service life, Rs
N = Service life, years
1
75
2
75
3
75
4
75
5
75
6
75
7
75
8
75
9
75
10
75
Sum

1.8
1.8
1.8
1.8
1.8
1.8
1.8
1.8
1.8
1.8
18
24.346 24.35 24.346 24.346 24.346 24.346 24.346 24.346 24.346 24.346 243.456

5.0075 5.008 5.0075 5.0075 5.0075 5.0075 5.0075 5.0075 5.0075 5.0075 50.0751
2.9213 2.921 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213
29.213

32.274 32.27 32.274 32.274 32.274 32.274 32.274 32.274 32.274 32.274 322.744
(10)6 Rs/year
All Variable Costs

d = (V - Vs) / N
2
50
3
50
4
50
5
50
6
50
7
50
8
50
9
50
10
50
Sum
1
50
1.2
1.2
1.2
1.2
1.2
1.2
1.2
1.2
1.2
1.2
12
16.23
16.23
16.23
16.23
16.23
16.23
16.23
16.23 16.23

5.0075 5.008 5.0075 5.0075 5.0075 5.0075 5.0075 5.0075 5.0075 5.0075 50.0751
2.9213 2.921 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213
16.23 162.304
29.213

24.159 24.16 24.159 24.159 24.159 24.159 24.159 24.159 24.159 24.159 241.592
(10)6 Rs/year
All Variable Costs

d = (V - Vs) / N
Average Net Profit (Np,ave) is calculated as

Np, ave
(1/N) x [p x Sum (B) - Sum (F)] (1 - tax%)
Where, p is the unit selling price

N is the evaluation period
tax % is taken as 20%
Pay Back Period = Fixed Capital Investment / (Average Net Profit + Average Depreciation)
Where, Pay Back Period = 2.35 years
Average Depreciation = FCI / 10 =
2921296
The Unit Selling Price of the Finished Product API at 100% capactiy is
Therefore, Average Net Profit per year
9531876
22463.91

Np, ave

2921296
9531876
24549.57

Np, ave

2921296
9531876
Table - 4 : Minimum Selling Price for different Plant Capacities

Plant Capacity %
Minimum Selling Price (Rs/Kg)
100
22463.91
75
24549.57
50
30061.7
30061.7
References :
1) Plant Design and Economics for Chemical Engineers, 5/e by Max S. Peters, University of
Colorado, Klaus Timmerhaus, University of Colorado, Boulder, Ronald E. West, University
of Colorado, Boulder.
2) Data Available from my Professional Experience in a Bulk Drug Pharmaceutical Industry
3) Chemical Engineering Resources, website, http://www.cheresources.com
4) Profitability Analysis, websit, http://odellion.com
Note :
1 USD = Rs.45.00 (Approx)

Cost - Estimation Chem Plant

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Cost - Estimation Chem Plant

Uploaded by

Copyright:

Available Formats

Cost Estimation

An acceptable plant design must present a process that is capable of operating

Total Cost of Purchased Equipment =

2) Purchased Equipment Installation

3) Instrumentation and Controls

Total Cost of Instrumentation and Controls =

Total Cost of Process Piping

Nos. Price in Rs.

Nos. Price in Rs.

b) Pipe Hangers, Fittings, Valves, Beams, Channels etc.

Total Cost of Pipe Hangers, Fittings, Valves, Beams, Channels etc.

c) Insulation - Piping, Equipment

Total cost of Insulation -

Total Cost of Piping including a, b, & c =

5) Electrical Equipment and Materials

Total Cost of Electrical Equipment

b) Electrical materials and labor

Total Cost for Electrical Materials and labor

Total Cost for Electrical Equipment and Materials including a and b =

6) Buildings (Including Services)

Total cost for Building services

Total Cost for Buildings including a, b, c & d

Total Cost for Yard Improvements

Total Cost of Utilities and Facilities

c) Non Process Equipment

Total Cost of Non Process Equipment

d) Distribution and Packaging

Total Cost of Service Facilities including a, b, c & d =

9) Land - Surveys and fees, Property cost

Total Direct Costs (D)

Total Direct Costs (D)

Grand Total in Rs.

Total Indirect Costs (I)

Total Indirect Costs (I)

Grand Total in Rs.

Fixed Capital Investment (FCI), D + I

Working Capital (WC), 15% of TCI

Total Capital Investment (TCI)

Spreadsheet for Estimation of Total Capital Investment

Spreadsheet for Estimation of Total Product Cost

TOTAL PRODUCT COST

Quantity per annum, Kg

Total Cost of Raw Materials

Cost per unit in Rs.

Total Annual cost in Rs.

Total Cost of Operating Labor

Monthly Salary in Rs.

Total Annual Salary in Rs.

Total Cost of Operating Supervision

Monthly Salary in Rs.

Total Annual Salary in Rs.

d) Power and Utilities

Total Annual Cost of Power and Utilities

Cost / unit (in Rs.)

Total Annual Cost in Rs.

e) Maintenance and Repairs (MR)

h) Patents and Royalties

Quantity per Annum

Total Annual Cost of Catalysts and Solvents

Total Annual Direct Production Cost

Total Direct Production Cost =

Total Annual Cost in Rs.

Cost per Unit Total Annual Cost in Rs.