Capital and operating costs are important information required in the project economics study or feasibility study of every new project. Unfortunately, few engineers understand key concepts behind the cost estimation process. There are many levels of capital cost estimates at different accuracy levels according to American Association of Cost Engineers (AACE). Each level of cost estimate gives different cost accuracy and requires different degree of data/ documents. Manufacturing or operating cost estimate is also needed in the project economics. This course teaches how to estimate both capital and operating costs, starting from equipment cost estimating to plant cost estimating. Engineers should understand these things when managing projects and dealing with project owners or

Engineers e.g. chemical engineers and mechanical engineers, process design engineers, process engineers, engineering company engineers, any technical people dealing with capital & operating cost estimation and project economics and feasibility studies.

8:00 AM – 9:00 AM Register

9:00 AM – 12:00 PM
I. Cost Estimation Basics
- Concepts and terminology
- Types of estimates according to American Association of Cost Engineers (AACE): definition comparison with Class estimates
- Type of estimates vs. accuracy
- Type of estimates vs. degree of data/ documents required
II. How to Conceptualize Engineering Projects
- Development of scope
- Development of project
- Stage of project vs. cost accuracy

12:00 PM – 13:00 PM Lunch Break

13:00 PM – 17:00 PM
III. Project Economics and Feasibility Studies
- Depreciation
- Return on Investment (ROI)
- Payout period
- Discounted cash flow (DCF) or Internal Rate of Return (IRR)
IV. Manufacturing or Operating Cost Estimating
- Fixed operating costs
- Variable operating costs
- Other operating costs

8:00 AM – 9:00 AM Register

9:00 AM – 12:00 PM
V. Equipment Cost Estimating
- Purchased equipment costs
- Manufacturer’s quotations and budgetary
- Cost estimating charts
- Scaling method: Size or capacity factoring exponents
- Installation factors
- Module factors
- Cost escalation: Cost Index concepts
VI. Conceptual Plant Cost Estimating
- Factored estimates
- Scaling method: Size or capacity factoring exponents
- Cost escalation: Cost Index concepts
- Contingency applications

12:00 PM – 13:00 PM Lunch Break

13:00 PM – 17:00 PM
VII. Detailed Plant Cost Estimating
- Project management and related costs
- Detailed estimating process and methodology
VIII. Summary – Putting It All Together