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 the American Association of Cost Engineers (AACE). Each level of cost estimate provides different accuracy and requires varying degrees of data and documents. Manufacturing or operating cost estimates are also necessary for project economics. This course teaches how to estimate both capital and operating costs, starting from equipment cost estimation to plant cost estimation. Engineers should understand these concepts when managing projects and interacting with project owners or EPC contractors.

Engineers, including chemical engineers, mechanical engineers, process design engineers, process engineers, and any technical personnel involved in capital and operating cost estimation, project economics, and feasibility studies.

Day 1

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)
• Type of estimates vs. accuracy
• Type of estimates vs. degree of data and documents required

II. How to Conceptualize Engineering Projects

• Development of scope
• Development of project
• Stage of project vs. cost accuracy

12:00 PM – 1:00 PM
Lunch Break

1:00 PM – 5:00 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

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Day 2

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 costs
• Cost estimating charts
• Scaling method: Size or capacity factoring exponents
• Installation and module factors
• Cost escalation and Cost Index concepts

VI. Conceptual Plant Cost Estimating

• Factored estimates
• Scaling method
• Cost escalation
• Contingency applications

12:00 PM – 1:00 PM
Lunch Break

1:00 PM – 5:00 PM
VII. Detailed Plant Cost Estimating

• Project management and related costs
• Detailed estimating process and methodology

VIII. Summary – Putting It All Together

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