Competitive Pricing of Process Plants

Source: http://www.chemengonline.com/competitive-pricing-process-plants/?printmode=1

Author

Sean copySean Moran is principal consultant of Expertise Limited (Email: sean.moran@expertise-limited.co.uk; Phone: +44 1629 826482) and a former associate professor of chemical and environmental engineering and coordinator of design teaching at the University of Nottingham. Moran has twenty four years of experience in professional practice, designing, pricing, troubleshooting and commissioning water and effluent-treatment plants. Moran is the author of “An Applied Guide to Process and Plant Design,” a book published by Butterworth Heinemann in 2015.

Accurate pricing of CPI plants involves integrating technical design with economic evaluation and accounting for many types of risk. Knowledge of costing methods from the perspective of EPCs and owner-operators is critical

Engineering is, by its nature, a commercial activity. It is virtually impossible to separate the cost aspects of engineering from the design aspects. If you aren’t costing, you aren’t engineering (see section below, “Linking Costing and Design”). Engineers consider the implications of every choice they make at every stage of a project from the perspective of cost, safety and process robustness. This article is intended to improve understanding of costing methods within the context of plant-design bidding and to describe the many components that need to be considered to achieve accurate costing. Whether you are approaching cost engineering from the perspective of an engineering, procurement and construction (EPC) company that is bidding on projects, or from the perspective of a plant owner-operator, a systems-level approach to costing is required.

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Cost estimate classes

Conceptual design is sufficient for what EPC contractors would call a budget estimate of costs. If you get a budget estimate from an EPC contractor, it will probably be accurate to around ±30%, as they have a significant amount of data from equipment suppliers and genuine knowledge of just what it costs to engineer and build plants.

Beginners without this information and experience can produce estimates that are off by several hundred percent (almost always underestimates). They tend to leave out everything other than very core processes, have unrealistic ideas of the cost of engineering and construction, have no knowledge of the cost of engineering by other disciplines and so on.

Accounting for profit is also important. In educational settings, many students seem to be willing to forgo profit — a critical aspect of the business side of engineering. They certainly frequently forget to add it to their estimates.

Professionals working in contracting companies conduct a very detailed design, and price all the goods and services required to supply it, as well as considering risks, margins, contingency and so on.

Engineers have quantified this into five classes of cost estimates that are used by public bodies in the U.S. and worldwide (Table 1 [1]).

1

Academic costing practice

To decide if it makes economic sense to proceed with a particular design, a quick way to estimate capital and running costs is needed. The “main plant items (MPI)/factorial” method is almost always used in academia (though far less commonly in practice). A more sophisticated process that increases in resolution as the project progresses is that of economic potential as developed by Douglas [2].

Capital cost estimation. It is not possible to obtain supplier quotations for every piece of equipment and every item of engineering services in academia as a professional would, so a standalone costing methodology is needed for use in the academic setting. Chemical engineering departments worldwide seem to do more or less the same thing: First, estimate the cost of main plant items, usually from cost curves. Timmerhaus and Peters [3] contains many of these curves. Factors are included with the base costs for the curves to account for items like operating pressure, special materials of construction and so on.

Having added up all the main plant item costs, the installation and other engineering and construction costs as a percentage of MPI costs, can be estimated using Lang factors, such as those found in Chapter 6 of Sinnot and Towler [4]. We might then account for inflation using the Chemical Engineering Plant Cost Index (CEPCI) or similar indexes. This allows us to estimate the capital costs (capex) of the plant very roughly.

Operating cost estimation. In academia, operating costs (opex) are usually estimated as a percentage of capital costs, often a nominal ten percent. It is actually possible to get a lot closer to professional practice than this (even in a university setting).

Professionals estimate how much power, chemicals, manpower, capital and so on will be required to run the plant, and price these inputs at market rates.

Payback period and NPV. Slightly more sophisticated financial analysis such as net present value (NPV) can be undertaken in an academic setting, as well as in professional practice. Payback period tells us how long it takes to recover our capex from revenues and profits. Net present value discounts future revenues and expenditure to reflect the fact that we care less about our money in the future than we do about our money now, and also about inflation and interest rates on borrowed money.

NPV can be criticized from an ethical viewpoint, as large expenditures far in the future are automatically thought fairly unimportant. It can therefore be used to justify projects with very high future decommissioning costs (such as oil rigs and nuclear power plants) in ways that environmental groups would disagree with. Accountancy is not value-free.

Sensitivity analysis. Costing can firmed and uncertainty quantified with an honest sensitivity analysis.

Sensitivity analysis varies the costs and revenues that might apply to a system and considers the shape of the cost-benefit curves obtained. If profitability falls off sharply around assumed costs and revenues, the process economics are not very robust. In an academic setting, it is not as important that students obtain a realistic price; it is more important to understand how accurate the price is. The goal is to establish a range within which the professional price lies, plus a realistic estimate of where it is most likely to lie.

In professional practice, obtaining the right price can make the difference between a company staying in business or going bust. The price offered in a bid for a project would be selected from a range informed by sensitivity analysis.

Professional costing practice

I spent most of the first five years of my career producing proposals for turnkey plants for EPC contractors in the (ultra-competitive) international water industry. After some time, I improved to the point where I won a lot of contracts for the plants I designed and bid. This was sometimes based on price and sometimes on technical merit. Winning a contract is not always about offering the lowest price, although doing so usually helps quite a bit. From my experience in recent years, little seems to have changed other than the much increased use of computers and external design consultants than used to be the case.

Accurate estimation. Competitive bids are usually invited from potential suppliers for the various goods and services used to construct a plant before a process contractor makes a firm and fixed price offer to an ultimate client (see sidebar, Competitive Design and Pricing). A “firm price” is one not subject to negotiation (which doesn’t stop contractors from trying), and a “fixed price” is one offered only for a stated period of validity (which doesn’t stop them asking for an extension of the period).

Three is usually thought to be a good number of bids to have for any significant piece of equipment. A smaller number means that there might be a limited number of places where that item can be obtained, which adds risk (see sidebar, Evaluating Risks).

Bids returned by potential suppliers are checked against the specification, to ensure that all the aspects that have been asked for have actually been included (which is frequently not the case), and that the requested payment terms and other contract conditions have been complied with (also frequently not the case).

Once bids have been standardized, an “apples to apples” price comparison is possible, and a supplier is provisionally selected on an “or approved equal” basis. These prices constitute firm fixed offers by third parties to supply the item for a given sum. At this point, they are not estimates, but are guarantees to offer the goods for the price quoted during the validity period.

Enquiry documents need to be detailed enough to allow suppliers to understand completely what is required both technically and commercially. If they are not, suppliers may decline to quote, or may price the uncertainty into their quote, leading to high prices all around.

Purchasing companies will have their own terms, end-user client companies will have theirs and equipment vendors will have their own. It is frequently the case that enquiry documents will ask for quotations based on a combination of client and contractor terms, and vendors will offer their own terms in their offers.

This is not a trivial matter, and the differences in prices between alternative suppliers are often less than the price implications of variation in contract terms between offers. This issue will need resolving to obtain a genuinely firm price.

If you work in a process contracting organization, you may well have easy access to many firm prices for exactly the kind of equipment you are pricing from quotes received for previous jobs. The basis of even your rough budget estimates can consequently be very accurate.

Bought-in mechanical and electrical items. Professional engineers price unit operations as one or more purchased items of equipment, (known as “bought-in items” — for example, a distillation column or compressor physical plant bought as a set of discrete items) by sending enquiry documents to relevant equipment suppliers.

These prices usually have to have an amount added by those pricing the complete plant to address the bits the various suppliers have left out of their bids, so that they can be evaluated on a like-for-like basis.

They will probably also have amounts added to reflect risk. For example, the fewer potential suppliers means a greater risk that prices will rise, or that a particular piece of equipment will not be available in time or at all.

Control panels, also known as motor control centers (MCCs), can be purchased as discrete items, or along with electrical installation and software supply. Pricing these will usually require input from an in-house electrical engineer, and probably an element of in-house electrical design will be required to produce sufficiently detailed enquiry documents to obtain reasonably accurate quotations for MCCs. Computers of various types (PCs, PLCs, DCS systems, or supervisory computers) may also be bought as discrete items or integrated with the MCC.

Electric components are among the main areas in which cost overruns occur after contract award. Greater care should be taken to adjust bids for missing items, and price risk associated with electrical and electronics-related bids than those for mechanical equipment. The in-house electrical engineer should also be involved in bid evaluation.

Mechanical and electrical installation. Mechanical installers will usually supply (in addition to the skilled labor required to fix and mechanically commission the mechanical bought-in items) the pipework, bracketry, supports and so on required to make a working plant. They may also carry out a detailed design of the pipework support systems, and supply any non-specialized valves and other equipment.

These bids are, at best, only as good as the drawings the bidders have been given, although they are less prone to underestimation and price escalation than electrical installation bids.

Supply and installation of cables, emergency motor-stop buttons, site lighting and small power sources, and making connections from MCC to motors will normally be the responsibility of a specialist contractor. These elements are possibly the most prone to underestimation by beginners. It is important to issue sufficient information to installers to make sure that everything needed has been accounted for, and ideally the offer should be checked by an in-house electrical engineer.

Software and instrumentation. This may be provided in-house by some combination of MCC supplier or installation contractor, or a specialist may be used to install and commission instruments, program programmable logic controllers (PLCs), and set up supervisory control and data acquisition (Scada), distributed control systems (DCS), remote telemetry and such systems.

Great care has to be taken in pricing software and instrumentation, as it is a major potential source of cost overruns at construction stage, especially due to underestimation of the number of inputs and outputs to the system.

Design consultants. Nowadays companies are increasingly using the services of design houses to carry out design, especially of specialist items. If you are planning to do this, you will need to price it in, and allow for the strong possibility of requirements for additional design work later in the project. This can come to a surprising amount of money. At the time of writing, the going rate in the U.K. for an experienced process design engineer is£150 ($230) per hour, for example.

Project programming. Professional engineers produce a schedule or program of events that sets out the timescales for the key elements of the design-construction-commissioning phase and allocates resources against each of the tasks required. This allows pricing of those items whose costs are based entirely on their duration of use (such as, for example, hire of site trailers). The schedule also indicates how many hours will be required for each discipline, and whether the company has the resources to handle the project in-house, or will need to buy in (usually more expensive) external resources.

Man-hours estimation.The proposals engineers will have produced their estimates for how many hours of each discipline will be required to do the job, but the discipline managers within a company will also want to give their estimate of how long it will take their people to do it. Since the discipline managers are the ones who have to deliver the project, and the proposals engineer is responsible for winning the work, discipline manager estimates tend to be on the high side, and proposals engineer’s on the low side. There should be some negotiation between these parties.

Pricing risk. Once you have prices for all the goods and services you need to make the plant, you need to make sure that you have allocated money for the chances of process, financial, legal, political or other risks going against you. In addition to adding amounts of money to individual prices, as previously described, you might do this formally by buying a form of insurance known as a performance bond, which usually costs a fraction of a percent of the complete contract value. Or you might add an overall contingency, which is built into your price. Alternatively, you might declare the risk to the client, and declare a prime cost (PC) sum that you would charge if the possible adverse event materializes.

Margins. Margins vary greatly from industry to industry (see sidebar, Civil and Building Works). When I was pricing water treatment plants for a living in a very competitive sector, we were happy to get paid 22% more than our bought-in costs. Some very sharp practitioners were bidding contracts at less than cost, by leaving things out that had to be included later (under what are called variation orders at top dollar. Generally, the less money there is in a sector, the tighter the margins, and the more sharp practitioners there will be.


 

Evaluating risks

Process risk is only one of the several kinds of risk factors required to arrive at a robust pricing. It is not just a question of what the plant costs and what the labor to design and build the plant costs, all aspects of risk also need to be accounted for.

Process novelty is a key aspect of process risk — the more novel the process, the greater the chance it will underperform, or fail to perform at all. If your plant fails its performance test, your company will probably be paying penalties every day until it is fixed at your company’s expense. Performance bonds, which insure process risk, can be purchased, but they increase cost as well, and the more novel the process, the higher the costs of the performance bonds.

There are also financial risks — overseas contracts can be subject to currency fluctuations, and even domestic contracts can see significant inflation. If you have made heavy use of a material that is particularly subject to price fluctuations (which need be no more exotic than stainless steel), equipment and components can cost a lot more than expected.

Political risks also need to be considered — countries can fall out with each other, industries can be nationalized without compensation, wars can break out, and closer to home, regulation can disallow certain approaches, or make, for example, waste disposal far more expensive than originally anticipated.
Sensitivity analysis is the key to understanding these risks, and deciding how to price them. You are unlikely to win a competitive tender if you price all risks in to your offer at 100% probability, but at the same time, you need to price risks so that you won’t regret winning the job.

A reasonable guide to pricing risk is to multiply the probability of occurrence of an event by the cost of it occurring. Many competitors in a commercial situation will, however, undercut this value considerably, so it becomes important as an EPC contractor to exercise judgment based on the result of a sensitivity analysis that includes a number of these probability-cost calculations. This approach gives the best chance to win the job, but not to regret winning it.

In commercial practice, all of these factors need to be considered to produce a price estimate that is accurate within a few percent.

This price will need to be based upon a plant design that is optimized to meet the client tender evaluation criteria: whether these are the lowest price that meets the specification, the lowest lifecycle cost, the best net present value or the fastest payback period. all of these criteria affect every aspect of competitive design.

__________________________________________________________________________________

Competitive design and pricing

Design and pricing are always competitive, and I always assume that process plant designers are doing it for profit rather than fun (though it is sort of fun when you get the hang of it).

You can cut your margins of safety as far as you dare, you can negotiate with suppliers, discipline managers and financial directors at the pre-tender stage, but you can only get so far by reducing your bought-in cost and margins by either arm-twisting or charm.

The way to win better contracts more of the time is to design yourself ahead. Don’t do what everyone else is doing, but a little less well, for a little less money — do something better. That’s why good process designers get the big bucks.

You don’t need to be too radical to find all sorts of little ways to be a little bit more clever than the other guy, and if you find enough of them, you can win work with decent profit margins. Much of this approach has to do with seeing the system working together as a whole and seeing the full implications of making small changes. As with all chemical engineering, it is important to establish and maintain a system-level understanding.


 

Linking costing and design

The 19th-century American civil engineer Arthur Mellen Wellington is credited with stating that “Engineering … to define rudely, but not inaptly, is the art of doing that well with one dollar, which any bungler can do with two after a fashion.” The quote hints at both the importance of linking technical design with costing, and of the inherently competitive nature of project design. In the chemical process industries (CPI), and elsewhere, the degree of confidence that engineers have in the performance of their technical designs is the maximum degree of confidence that should placed in the costing. If you obtain a very precise costing for a vaguely described process, the potential for cost variation is all in the uncertainty of the process definition.

Sufficient effort should be put into pricing at each stage of design to allow a rational commercial decision to be made as to whether to proceed to the next stage, but ideally no more, because costing exercises themselves cost money.

In one way or another, all design is competitive. Even if you are doing an in-house design, it needs to be the best design it can be against the evaluation criteria, and you can rest assured that when it goes out to the engineering contractor, they will be redesigning it as much as they are allowed to maximize their profit, and minimize their risks.

I have worked in a few places where technical and economic evaluation have been split, and all have provided salutary lessons in why they should not be. Decision making processes were very poor, and too easily swayed by what is “in fashion” or by the whim of managers.

Edited by Scott Jenkins

References

1. AACE International: Recommended Practice no. 18r-97:cost estimate classification system–as applied in engineering, procurement, and construction for the process industries 2005 AACE international: www.aacei.org/non/rps/17r-97.pdf.

2. Douglas, J. “Conceptual Design of Chemical Processes,” McGraw-Hill, New York, N.Y., 1988.

3. Peters and Timmerhouse. “Plant Design and Economics for Chemical Engineers,” McGraw Hill, New York, N.Y., 2002.

4. Sinnot and Towler, R.K., “Chemical Engineering Design,” Vol. 6, Butterworth-Heinemann, Oxford, U.K., 2005.

Experienced Based Rules of Chemical Engineering

Source: http://www.cheresources.com/content/articles/calculation-tips/experienced-based-rules-of-chemical-engineering?pg=2

Cooling Towers

A. With industrial cooling towers, cooling to 90% of the ambient air saturation level is possible.

B. Relative tower size is dependent on the water temperature approach to the wet bulb temperature:

Table 1: Relative Size of Cooling Towers
Twater-Twb (°F) Relative Size
5 2.4
15 1.0
25 0.55

C. Water circulation rates are generally 2-4 GPM/ft2 (81-162 L/min m2) and air velocities are usually 5-7 ft/s (1.5-2.0 m/s)

D. Countercurrent induced draft towers are the most common. These towers are capable of cooling to within 2 °F (1.1 °C) of the wet bulb temperature. A 5-10 °F (2.8-5.5 °C) approach is more common.

E. Evaporation losses are about 1% by mass of the circulation rate for every 10 °F (5.5 °C) of cooling. Drift losses are around 0.25% of the circulation rate. A blowdown of about 3% of the circulation rate is needed to prevent salt and chemical treatment buildup.

Conveyors

A. Pneumatic conveyors are best suited for high capacity applications over distances of up to about 400 ft. Pneumatic conveying is also appropriate for multiple sources and destinations. Vacuum or low pressure (6-12 psig or 0.4 to 0.8 bar) is used for generate air velocities from 35 to 120 ft/s (10.7-36.6 m/s). Air requirements are usually in the range of 1 to 7 cubic feet of air per cubic foot of solids (0.03 to 0.5 cubic meters of air per cubic meter of solids).

B. Drag-type conveyors (Redler) are completed enclosed and suited to short distances. Sizes range from 3 to 19 inches square (75 to 480 mm). Travel velocities can be from 30 to 250 ft/min (10 to 75 meters/min). The power requirements for these conveyors is higher than other types.

C. Bucket elevators are generally used for the vertical transport of sticky or abrasive materials. With a bucket measuring 20 in x 20 in (500 mm x 500 mm), capacities of 1000 cubic feet/hr (28 cubic meters/hr) can be reached at speeds of 100 ft/min (30 m/min). Speeds up to 300 ft/min (90 m/min) are possible.

D. Belt conveyors can be used for high capacity and long distance transports. Inclines up to 30° are possible. A 24 in (635 mm) belt can transport 3000 ft3./h (85 m3/h) at speeds of 100 ft/min (30.5 m/min). Speeds can be as high as 600 ft/min (183 m/min). Power consumption is relatively low.

E. Screw conveyors can be used for sticky or abrasive solids for transports up to 150 ft (46 m). Inclines can be up to about 20°. A 12 in (305 mm) diameter screw conveyor can transport 1000-3000 ft3./h (28-85 m3/h) at around 40-60 rpm.

Crystallization

A. During most crystallizations, C/Csat (concentration/saturated concentration) is kept near 1.02 to 1.05

B. Crystal growth rates and crystal sizes are controlled by limiting the degree of supersaturation.

C. During crystallization by cooling, the temperature of the solution is kept 1-2 °F (0.5-1.2 °C) below the saturation point at the given concentration.

D. A generally acceptable crystal growth rate is 0.10 – 0.80 mm/h

Drivers and Power Recovery

A. Efficiencies: 85-95% for motors, 40-75% for steam turbines, 28-38% for gas engines and turbines.

B. Electric motors are nearly always used for under 100 HP (75 kW). They are available up to 20,000 HP (14,915 kW).

C. Induction motors are most popular. Synchronous motors have speeds as low as 150 rpm at ratings above 50 HP (37.3 kW) only. Synchronous motors are good for low speed reciprocating compressors.

D. Steam turbines are seldom used below 100 HP (75 kW). Their speeds can be controlled and they make good spares for motors in case of a power failure.

E. Gas expanders may be justified for recovering several hundred horsepower. At lower recoveries, pressure let down will most likely be through a throttling valve.

Download these rules of thumb in MS Excel format.

Drum Type Vessels

A. Liquid drums are usually horizontal. Gas/Liquid separators are usually vertical.

B. Optimum Length/Diameter ratio is usually 3, range is 2.5 to 5.

C. Holdup time is 5 minutes for half full reflux drums and gas/liquid separators. Design for a 5-10 minute holdup for drums feeding another column.

D. For drums feeding a furnace, a holdup of 30 minutes is a good estimate.

E. Knockout drum in front of compressors should be designed for a holdup of 10 times the liquid volume passing per minute.

F. Liquid/Liquid separators should be designed for settling velocities of 2-3 inches/min

G. Gas velocities in gas/liquid separators:

exp_rules_eq_5 Eq. (5)

where:
k is 0.35 with horizontal mesh de-entrainers and 0.167 with vertical mesh deentrainers
k is 0.1 without mesh de-entrainers
velocity is in ft/s
?L is liquid density (lb/ft3)
?V is vapor density (lb/ft3)

H. A six inch mesh pad thickness is very popular for such vessels.

I. For positive pressure separations, disengagement spaces of 6-18 inches before the mesh pad and 12 inches after the pad are generally suitable.

Drying of Solids

A. Spray dryer have drying times of a few seconds. Rotary dryers have drying times ranging from a few minutes to up to an hour.

B. Continuous tray and belt dryers have drying times of 10-200 minutes for granular materials or 3-15 mm pellets.

C. Drum dryers used for highly viscous fluids use contact times of 3-12 seconds and produce flakes 1-3 mm thick. Diameters are generally 1.5-5 ft (0.5 – 1.5 m). Rotation speeds are 2-10 rpm and the maximum evaporation capacity is around 3000 lb/h (1363 kg/h).

D. Rotary cylindrical dryers operate with air velocities of 5-10 ft/s (1.5-3 m/s), up to 35 ft/s (10.5 m/s). Residence times range from 5-90 min. For initial design purposes, an 85% free cross sectional area is used. Countercurrent design should yield an exit gas temperature that is 18-35 °F (10-20 °C) above the solids temperature. Parallel flow should yield an exiting solids temperature of 212 °F (100 °C). Rotation speeds of 4-5 rpm are common. The product of rpm and diameter (in feet) should be 15-25.

E. Pneumatic conveying dryers are appropriate for particles 1-3 mm in diameter and in some cases up to 10 mm. Air velocities are usually 33-100 ft/s (10-30 m/s). Single pass residence time is typically near one minute. Size range from 0.6-1.0 ft (0.2-0.3 m) in diameter by 3.3-125 ft (1-38 m) in length.

F. Fluidized bed dryers work well with particles up to 4.0 mm in diameter. Designing for a gas velocity that is 1.7-2 times the minimum fluidization velocity is good practice. Normally, drying times of 1-2 minutes are sufficient in continuous operation.

Electric Motors and Turbines

A. Efficiencies range from 85-95% for electric motors, 42-78% for steam turbines 28-38% for gas engines and turbines.

B. For services under 75 kW (100 hp), electric motors are almost always used. They can be used for services up to about 15000 kW (20000 hp).

C. Turbines can be justified in services where they will yield several hundred horsepowers. Otherwise, throttle valves are used to release pressure.

D. A quick estimate of the energy available to a turbine is given by:

exp_rules_eq_6 Eq. (6)

where:

?H = actual available energy, Btu/lb
Cp = heat capacity at constant pressure, Btu/lb °F
T1 = inlet temperature, °R
P1 = inlet pressure, psia
P2 = outlet pressure, psia
x = Cp/Cv

Evaporation

A. Most popular types are long tube vertical with natural or forced circulation. Tubes range from 3/4″” to 2.5″” (19-63 mm) in diameter and 12-30 ft (3.6-9.1 m) in length.

B. Forced circulation tube velocities are generally in the 15-20 ft/s (4.5-6 m/s) range.

C. Boiling Point Elevation (BPE) as a result of having dissolved solids must be accounted for in the differences between the solution temperature and the temperature of the saturated vapor.

D. BPE’s greater than 7 °F (3.9 °C) usually result in 4-6 effects in series (feed-forward) as an economical solution. With smaller BPE’s, more effects in series are typically more economical, depending on the cost of steam.

E. Reverse feed results in the more concentrated solution being heated with the hottest steam to minimize surface area. However, the solution must be pumped from one stage to the next.

F. Interstage steam pressures can be increased with ejectors (20-30% efficient) or mechanical compressors (70-75% efficient).

Download these rules of thumb in MS Excel format.

Filtration

A. Initially, processes are classified according to their cake buildup in a laboratory vacuum leaf filter : 0.10 – 10.0 cm/s (rapid), 0.10-10.0 cm/min (medium), 0.10-10.0 cm/h (slow).

B. Continuous filtration methods should not be used if 0.35 sm of cake cannot be formed in less than 5 minutes.

C. Belts, top feed drums, and pusher-type centrifuges are best for rapid filtering.

D. Vacuum drums and disk or peeler-type centrifuges are best for medium filtering.

E. Pressure filters or sedimenting centrifuges are best for slow filtering.

F. Cartridges, precoat drums, and sand filters can be used for clarification duties with negligible buildup.

G. Finely ground mineral ores can utilize rotary drum rates of 1500 lb/day ft2 (7335 kg/day m2) at 20 rev/h and 18-25 in Hg (457-635 mm Hg) vacuum.

H. Course solids and crystals can be filtered at rates of 6000 lb/day ft2 (29,340 kg/day m2) at 20 rev/h and 2-6 in Hg (51-152 mm Hg) vacuum.

Heat Exchangers

A. For the heat exchanger equation, Q = UAF (LMTD), use F = 0.9 when charts for the LMTD correction factor are not available.

B. Most commonly used tubes are 3/4 in. (1.9 cm) in outer diameter on a 1 in triangular spacing at 16 ft (4.9 m) long.

C. A 1 ft (30 cm) shell will contains about 100 ft2 (9.3 m2)
A 2 ft (60 cm) shell will contain about 400 ft2 (37.2 m2)
A 3 ft (90 cm) shell will contain about 1100 ft2 (102 m2)

D. Typical velocities in the tubes should be 3-10 ft/s (1-3 m/s) for liquids and 30-100 ft/s (9-30 m/s) for gases.

E. Flows that are corrosive, fouling, scaling, or under high pressure are usually placed in the tubes.

F. Viscous and condensing fluids are typically placed on the shell side.

G. Pressure drops are about 1.5 psi (0.1 bar) for vaporization and 3-10 psi (0.2-0.68 bar) for other services.

H. The minimum approach temperature for shell and tube exchangers is about 20 °F (10 °C) for fluids and 10 °F (5 °C) for refrigerants.

I. Cooling tower water is typically available at a maximum temperature of 90 °F (30 °C) and should be returned to the tower no higher than 115 °F (45 °C)

J. Shell and Tube heat transfer coefficient for estimation purposes can be found in many reference books or an online list can be found at one of the two following addresses:
http://www.cheresources.com/uexchangers.shtml

K. Double pipe heat exchangers may be a good choice for areas from 100 to 200 ft2 (9.3-18.6 m2)

L. Spiral heat exchangers are often used to slurry interchangers and other services containing solids

M. Plate heat exchanger with gaskets can be used up to 320 °F (160 °C) and are often used for interchanging duties due to their high efficiencies and ability to “cross” temperatures. More about compact heat exchangers can be found at: http://www.virginiaheattransfer.com/

Mixing and Agitation

A. Mild agitation results from superficial fluid velocities of 0.10-0.20 ft/s (0.03-0.06 m/s). Intense agitation results from velocities of 0.70-1.0 ft/s (0.21-0.30 m/s).

B. For baffled tanks, agitation intensity is measured by power input and impeller tip speeds:

Table 2: Power Requirements and Tip Speeds for Mixer Applications
  Power Requirements Tip Velocity
 HP/1000 gal kW/m3 ft/s m/s
Blending 0.2 0.5 0.033 0.082 ——————– ——————
Homogeneous Reaction 0.5 1.5 0.082 0.247 7.5 10.0 2.3 3.1
Reaction w/ Heat Transfer 1.5 5.0 0.247 0.824 10.0 15.0 3.1 4.6
Liquid-Liquid Mixture 5.0 0.824 15.0 20.0 4.6 6.1
Liquid-Gas Mixture 5.0 10.0 0.824 1.647 15.0 20.0 4.6 6.1
Slurries 10.0 1.647 ——————– ——————

C. Various geometries of an agitated tank relative to diameter (D) of the vessel include:
Liquid Level = D
Turbine Impeller Diameter = D/3
Impeller Level Above Bottom = D/3
Impeller Blade Width = D/15
Four Vertical Baffle Width = D/10

D. For settling velocities around 0.03 ft/s, solids suspension can be accomplished with turbine or propeller impellers. For settling velocities above 0.15 ft/s, intense propeller agitation is needed.

E. Power to mix a fluid of gas and liquid can be 25-50% less than the power to mix the liquid alone.

Download these rules of thumb in MS Excel format.

Chemical plant safety, environmental protection, sustainability, government regulations

Source: http://people.clarkson.edu/~wwilcox/Design/refsafe.htm

Sustainability, energy efficiency, green chemistry

U.S. government agencies, regulations and laws

As in other fields, use of the acronyms in parentheses below tends to identify you as someone who knows about these important matters

Non-U.S. regulations

With global commerce, companies often must also follow laws and regulations established by non-U.S. governments and organizations. For example:

  • REACH “REACH is a new European Community Regulation on chemicals and their safe use. It deals with the Registration, Evaluation, Authorisation and Restriction of Chemical substances.”

Non-governmental safety codes and standards

Often recognized in governmental regulations

Pollution control and environmental protection

Design for Safety

Operate for Safety

HAZOP (HAZard and OPerability) and Risk Assessment studies  

Software, training, consulting and facilitation are available commercially and can be found on-line. Simulators such as HYSYS, particularly in the dynamics mode (varying with time), can be quite useful in determining the influence of deviations from specified flow rates, compositions, temperatures, pressures, etc. They can also be used to test the effectiveness of control systems to automatically compensate for these deviations without relying on the intervention of a human operator.

Reactor safety

Fires, explosions, chemical reaction hazards, toxicity

  • CAMEO Chemicals Web Portal : Searchable database for over 6,000 chemicals provides physical properties, health hazards, information about air and water hazards, and recommendations for firefighting, first aid, and spill response.
  • Material Safety Data Sheets (MSDS): On reserve in library (604.7 M425);       Internet resources;   hazard.com
  • Fires:
  • Explosions:
  • Chemical reaction hazards
  • Chemical toxicity

Properties of chemicals

Source: http://people.clarkson.edu/~wwilcox/Design/refchem.htm

  • Properties of Gases and Liquids, 5th edition, by B.E. Poling, J.M. Prausnitz and J.P. O’Connell (2001 McGraw-Hill). Reference state is 1 atm, 298.15 K.

Cost estimating for chemical engineering plant design

Source: http://people.clarkson.edu/~wwilcox/Design/refcosts.htm

This color indicates a link available via Clarkson University (off-campus access)

Chemicals, raw materials and products: CAUTION: Prices for laboratory quantities are much higher than for the commercial quantities that you would use for plant design economic calculations. Don’t use the costs of raw materials and products given in the text. If you search the internet, use “price” rather than “cost.”

  • Wilson Web: on campus;       (Search price OR cost AND chemical’s name). Includes the following three:
  • Chemical Week:
    • at iMirus (See particularly the weekly CW Price Report of commodity petrochemicals and plastics.)
    • at Proquest (Search to find articles about particular chemicals, such as manufacturers, production rates, prices)
  • Chemistry and Industry (Click on one issue, and then Find to search for news about particular chemicals from many sources).
  • Purchasing.com/
  • Chemical & Engineering News. See “Facts and Figures for the Chemical Industry,” usually in June or July issue. Production rates of common chemicals versus time. Magazine: TP1 .C35
  • Noble metals (silver, platinum, rhodium, iridium) as used in small percentages in catalysts: use google or similar search engine to find price on line for quantity needed. Platinum compounds
  • Producer Price Indices U.S. Government statistics for price movement (but not actual prices): “The Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output.”
  • Polymer prices
  • Oxygen costs
  • Search “chemical name price” at http://findarticles.com/ (unfortunately with annoying popups that may not be prevented)
  • Directory of engineering products and supplies Laboratory chemical suppliers often provide prices. Suitable for rough estimation of catalyst costs. Also google “chemical suppliers.”

Utilities costs

Lower costs than those found below may be negotiated with local suppliers when large quantities are to be used. To obtain the costs per GJ required by CAPCOST, it is necessary to use the higher heating value (HHV), which is also known as “Energy content,” “Btu content,” “Heating value,” and “Calorific Value.” Basically, it is the heat of combustion with liquid water as the product. For natural gas the HHV depends on composition, and is approximately 1030 Btu/ft3 (at 30 Torr and 60oF). Fuel oil #2 is about 140,000 Btu/gal and bituminous coal is ~30 MJ/kg. See Conversion factors between energy units.

Waste treatment costs

  • Methods and costs of treating waste water and gas.
  • Waste gas: Take a credit for a combustible (fuel) waste gas that is at a concentration above the upper flammability limit as the cost of an equivalent amount of natural gas based on its lower heating value (LHV). (Tabulations of data.)   The same can be done if the combustible components are present below the lower flammability limit, but sufficient oxygen is present for catalytic combustion to recover the LHV. HYSYS gives the LHV for a stream under the Properties tab. If the gas is below the lower flammability limit and consists of components that can be burned to CO2 and H2O, assume that these components are eliminated in a flame at a cost of $0.005/kg. Any products not permitted to be exhausted (such as SO2 in many places) must be removed before the gas is released. Charge $0.20 per kg of materials that must be removed.       Assume these are 2001 prices; update the burning cost using the price of natural gas and the waste treatment cost by the price of electricity.
  • Waste water: Charge $0.25 per kg of components that must be removed before discharge of the water.       This cost is for 2001, so update using the cost of electricity.

Wages and benefits

Equipment sizing: Before the cost of equipment can be estimated its size must be determined. Similarly, the utilities requirements must be calculated. Note that HYSYS/UniSim uses inappropriate default values when the units are first entered, e.g. tower diameter and heat exchanger area. Do not use these default values for cost estimation.

  • Sizing heat exchangers Warning: The part of HYSYS/UniSim installed at Clarkson University does not calculate heat transfer coefficients correctly. It only calculates q/DTavg and gives this as UA (i.e., it sets F=1) . The shell area sometimes shown under the Sizing tab is calculated from the default dimensions of the heat exchanger, and the U given by HYSYS/UniSim is calculated by dividing UA by this meaningless A. (Make certain you know how HYSYS/UniSim calculates UA.)
  • Sizing condensers & reboilers using HYSYS/UniSim For heat exchangers that condense steam or boil water fed at saturation, the temperature of the water-steam is fixed by the pressure and would be constant if its pressure drop in the heat exchanger were 0. The flow rate of the water-steam is calculated by dividing the Q by the latent heat of evaporation at that pressure. If the boiler feed water (bfw) is below saturation, calculation of the heat exchanger should be broken into two parts — one to heat the bfw up to the saturation temperature and a second to evaporate all of it.       Similarly, if superheated steam is fed, for calculation purposes break the heat exchanger into one that cools the steam to saturation and a second that condenses it to saturated water.
  • Fired heaters: Everything you need to cost fired heaters is in most design texts, CPC texts, and Perry’s. The cost depends on the duty and the process stream heated. The utility (fuel) cost is determined by dividing the duty by the lower heating value of the fuel and the efficiency.
  • Alternate heating methods, temperatures, costs
  • When a reactor is either heated or cooled, cost it as the sum of the cost of a heat exchanger plus that of a vessel. For a plug flow reactor, you calculate the area from the tube diameter, length and numbers. For a fluidized bed reactor use the Q and Ts to calculate the area as for other heat exchangers.
  • Do not forget to have spare pumps, as they tend to require maintenance more often than other units.
  • Make certain to select the type of compressor required for your conditions, e.g. do not use a blower or fan unless the pressure increase is very small. Spare compressors are not advised.

Equipment and capital investment

  • Comparison of cost estimating software (Double-click to enlarge image)
  • Chapter 20 in Walas (pre 1990)(copied into Appendix C of Process Engineering Economics)
  • “Conceptual Cost Estimating Manual” (many graphs of cost versus size as of January 1, 1996)
  • On-line equipment cost estimator courtesy of Peters, Timmerhaus and West (2003)
  • On-line estimator with useful references, from Matche
  • Materials selection and costs
  • All costs should be for the present time, or estimated for the proposed construction time.       Use the Chemical Engineering Plant Cost Index (CE index, or CEPCI) or another cost index to update equipment costs: last page of each issue of Chemical Engineering: TP1 .C3.   For recent data on line, Chemical Engineering. Alternatives are the ENR cost indices, the Marshall & Swift Equipment Cost Index (at the Chemical Engineering link above), and the Nelson-Farrar Refinery Cost Index (search Nelson-Farrar or Economics at the Oil & Gas Journal, TN860 .O4).       Chemical Engineering magazine and the Oil & Gas Journal also include cost indices for individual types of equipment.
  • Plots of CE, Nelson-Farrar refinery cost and Marshall & Swift indices from 1970 through 2006.
  • “Richardson Process Plant Construction Cost Estimating Standards: The Richardson Rapid System,” Cost Data On Line, Inc. (CD & costdataonline.com)(2009). Excellent source of cost estimating methods. 1999 edition in the Clarkson Library at Ref 692.5 R522p
  • Use pie charts to show graphically what the major cost items are to help you decide where to work on improving the economics of the plant.       It is recommended to have one pie chart for equipment and another for manufacturing costs. Rather than include the entire raw material cost as a manufacturing expense, include only the portion that is not converted to sellable product. If you are having difficulty showing a profit, it is probably because you are converting an insufficient fraction of the raw material to sellable product because of poor selectivity in your reactor and/or because of poor separations. Take a particular look at compressors, as they are expensive to purchase and to operate. Could a pump be used instead, e.g. by first condensing the stream? Should two compressors be used with a heat exchanger in between?
  • Optimization:       Before adjusting the operating parameters of individual units to cut costs, first consider rearranging, adding or subtracting units in your pfd. Consider using more than one reactor in series and more than one heat exchanger in series. For example, if you want to cool a stream to below 0oC, you can cool it part way by boiling water in one exchanger, some more with cooling water in a second exchanger, and finally with refrigerant in a third.      
  • Capital Costs Quickly Estimated

Calculation of NPV, DCFRR and payback period.

  • Example spreadsheet & plot for cash flow profitability analysis. Simple example of use of Excel’s goal seek to calculate interest rate from periodic (annuity) payments.
  • Make certain you do your MACRS depreciation, cash flow, and discounted cash flow calculations correctly. Note that a 5-year MACRS takes place over a 6-year period, because the first and last years are considered half years. At the end of 6 years of production, the book value should be 0.
  • MACRS recovery period for chemical manufacturing ; MACRS depreciation rates (from IRS publication 946)
  • Do not show depreciation as a cost or expense, except for calculation of income tax.
  • Corporate income tax rate (for corporate taxable incomes over $18,333,333) If a state is not shown, that state does not tax corporate income, in an effort to attract industry.
  • Do not forget to estimate reasonable values for land and working capital, and indicate how you arrived at these numbers. Remember to recover these costs in the last year of operation.
  • It is a serious mistake to calculate the sum of the discounted cash flows by dividing the sum of the cash flows by (1+i)n.
  • Instructions on use of Turton et al.’s Excel program CAPCOST.

 

Heron’s fountain

Source: https://en.wikipedia.org/wiki/Heron%27s_fountain

Heron's fountain.png

Heron’s fountain is not a perpetual motion machine.[1] If the nozzle of the spout is narrow, it may play for several minutes, but it eventually comes to a stop. The water coming out of the tube may go higher than the level in any container, but the net flow of water is downward. If, however, the volumes of the air supply and fountain supply containers are designed to be much larger than the volume of the basin, with the flow rate of water from the nozzle of the spout being held constant, the fountain could operate for a far greater time interval.

Its action may seem less paradoxical if considered as a siphon, but with the upper arch of the tube removed, and the air pressure between the two lower containers providing the positive pressure to lift the water over the arch. The device is also known as Heron’s siphon.

The gravitational potential energy of the water which falls a long way from the basin into the lower container is transferred by pneumatic pressure tube (only air is moved upwards at this stage) to push the water from the upper container a short way above the basin.

The fountain can spout (almost) as high above the upper container as the water falls from the basin into the lower container. For maximum effect, place the upper container as closely beneath the basin as possible and place the lower container a long way beneath both.

As soon as the water level in the upper container has dropped so low that the water bearing tube no longer touches the water surface, the fountain stops. In order to make the fountain play again, the air supply container is emptied of water, and the fountain supply container and the basin are refilled. Lifting the water provides the energy required.