Ludwig's Applied Process Design for Chemical and Petrochemical Plants, 4th Edition

2 COST ESTIMATION AND ECONOMIC EVALUATION

2.1 INTRODUCTION

Recently, mergers and downsizing in the various chemical process industries (CPIs) have required management to make effective decisions regarding investments in strategic assets, sometimes with limited engineering participation. Due to limited capital budgets, potential projects are scrutinized stringently before funds are allocated to proceed with them; management requires reasonably accurate cost estimates at each stage of the funding. The choice as to which estimation method to use at each stage depends on the information available at the time of preparation, its desired accuracy, and the end use of the estimate.

Many industries use some form of classification system to identify ...