Larry R. Dysert

Cost Engineering, Vol. 45, No. 6

AACE International, Morgantown, WV, 2003

Increasingly limited capital budgets in the chemical process industries (CPI) force management to make effective, early decisions regarding investments in strategic assets, often with little or no engineering input. As potential projects are considered, these individuals often find themselves in situations where they must decide whether a specific project should be continued. At each stage of funding, management requires cost estimates of increasing accuracy. Determining which estimating method to use at each stage depends on the information available at the time of preparation, the end use of the estimate, and its desired accuracy. This article discusses various estimating methodologies, from conceptual to definitive, for calculating cost of capital projects in the CPI; and identifies the technical deliverables required to prepare each type of estimate. The techniques used for each type of estimate are discussed. These estimating methodologies, and the engineering information required to support them, should be understood by all engineers. 

Originally published by AACE International.

Reprinted with the permission of AACE International,

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