Chemical Engineering Economics, Softcover reprint of the original 1st ed. 1989

least, the author wishes to thank his constantly helpful wife Maggie and his secretary Pat Weimer; the former for her patience, encouragement, and for acting as a sounding-board, and the latter who toiled endlessly, cheerfully, and most competently on the book's preparation. CONTENTS Preface / iii 1. INTRODUCTION / 1 Frequently Used Economic Studies / 2 Basic Economic Subjects / 3 Priorities / 3 Problems / 6 Appendixes / 6 References / 6 2. EQUIPMENT COST ESTIMATING / 8 Manufacturers' Quotations / 8 Estimating Charts / 10 Size Factoring Exponents / 11 Inflation Cost Indexes / 13 Installation Factor / 16 Module Factor / 18 Estimating Accuracy / 19 Estimating Example / 19 References / 21 3. PLANT COST ESTIMATES / 22 Accuracy and Costs of Estimates / 22 Cost Overruns / 25 Plant Cost Estimating Factors / 26 Equipment Installation / 28 Instrumentation / 30 v vi CONTENTS Piping / 30 Insulation / 30 Electrical / 30 Buildings / 32 Environmental Control / 32 Painting, Fire Protection, Safety Miscellaneous / 32 Yard Improvements / 32 Utilities / 32 Land / 33 Construction and Engineering Expense, Contractor's Fee, Contingency / 33 Total Multiplier / 34 Complete Plant Estimating Charts / 34 Cost per Ton of Product / 35 Capital Ratio (Turnover Ratio) / 35 Factoring Exponents / 37 Plant Modifications / 38 Other Components of Total Capital Investment / 38 Off-Site Facilities / 38 Distribution Facilities / 39 Research and Development, Engineering, Licensing / 40 Working Capital / 40

1. Introduction.- Frequently Used Economic Studies.- Basic Economic Subjects.- Priorities.- Problems.- Appendixes.- References.- 2. Equipment Cost Estimating.- Manufacturers’ Quotations.- Estimating Charts.- Size Factoring Exponents.- Inflation Cost Indexes.- Installation Factor.- Module Factor.- Estimating Accuracy.- Estimating Example.- References.- 3. Plant Cost Estimates.- Accuracy and Costs of Estimates.- Cost Overruns.- Plant Cost Estimating Factors.- Equipment Installation.- Instrumentation.- Piping.- Insulation.- Electrical.- Buildings.- Environmental Control.- Painting, Fire Protection, Safety Miscellaneous.- Yard Improvements.- Utilities.- Land.- Construction and Engineering Expense, Contractor’s Fee, Contingency.- Total Multiplier.- Complete Plant Estimating Charts.- Cost per Ton of Product.- Capital Ratio (Turnover Ratio).- Factoring Exponents.- Plant Modifications.- Other Components of Total Capital Investment.- Off-Site Facilities.- Distribution Facilities.- Research and Development, Engineering, Licensing.- Working Capital.- Start-up Expenses.- Foreign Locations.- References.- 4. Manufacturing Cost.- Detailed Estimates.- On-Stream Efficiency.- Raw Materials.- Utilities.- Operating Labor.- Factoring Method.- Payroll Overhead.- Supervisory and Other Labor.- Maintenance.- Operating Supplies, Laboratory Charges, Royalties.- Packaging, Storage.- Environmental.- Depreciation.- Local Taxes, Fees, Insurance, Interest.- Administration, Sales, and Research and Development.- Total Manufacturing Cost.- Estimating Charts and Tables.- References.- 5. Interest Calculations: Preliminary Project Evaluation.- Interest: The Cost of Money.- Interest Calculations.- Simple Interest.- Compound Interest.- Present Worth (or Present Value).- Annuities.- Capitalized Cost.- Product Sales Value.- Market Research.- Income Tax.- Return on Investment (ROI).- Payout Period.- References.- 6. Profitability Analysis; Discounted Cash Flow (DCF).- Cash Flow.- Discounted Cash Flow Calculations.- Instantaneous Cash Flows.- Income Cash Flows.- Initial Plant Investment.- Example.- Present Worth (or Present Value).- Simplified Calculation Methods.- Data Presentation; Pro Forma Analysis.- Minimum Acceptable DCF.- Inflation.- Basic Businesses.- Sensitivity Analysis.- Effect of Borrowed Capital; Leverage.- Production Rate; Break-Even Point.- Comparison of Project Evaluation Methods.- References.- 7. Economy of the Chemical Industry.- Industry Statistics.- Chemical Process Industries (CPI).- The Chemical Industry.- Industry Data.- Profitability.- Present and Future Changes.- Cutting Costs.- Divestitures.- Mergers and Acquisitions.- Strengthening Existing Production.- Move into Higher Value-Added Products.- Foreign Trade and Production.- Diversification.- References.- 8. Accounting and Budgets.- Basic Accounting Principles.- Journals.- Ledgers.- Basis.- Financial Statements.- Assets.- Liabilities.- Equities.- Cost Accounting.- Plant Operating Statements.- Standard Costs.- Plant Management.- Budgets.- Operating Budgets.- Inventory Budgeting.- Budget Preparation.- Budget Control.- Personal Budgets.- References.- 9. Corporate Annual Reports.- Balance Sheets.- Income Statements.- Flow of Funds, Footnotes.- Ratio Analysis.- Current Ratio.- Acid Test Ratio.- Debt-to-Equity Ratio.- Return on Investment or Sales.- Pseudo-DCF.- Cash Flow Capital Spending; Book Value.- General.- References.- 10. Project Management.- Management Principles.- Planning.- Organizing.- Staffing.- Controlling.- Cost Control.- Code of Accounts.- Spending Curve.- Subprojects, Tasks.- Time Control Methods.- Bar Charts.- Network Diagrams; Critical Path Method (CPM).- PERT (Program Evaluation and Review Technique).- References.- 11. Personal Investing.- Why Invest.- How to Initiate an Investment Plan.- Budgeting.- Initial Investment Program.- Investment Strategy.- Diversification (Balanced Portfolio).- Economic Cycles.- Inflation.- Investment Types.- Mutual Funds.- Direct Stock and Bond Purchases.- Bonds.- Precious Metal, Collectibles.- Real Estate.- High-Risk Investments.- Life Insurance.- Methods of Investment.- Company Stock Purchase Plans.- Investment Clubs.- Investment Counselors.- References.- 12. Employment Considerations.- Seeking Employment.- Resumes.- Job Interviews.- Chemical Engineering Jobs.- Economic Presentations.- Informal Reports.- Informal Presentations.- References.- Appendix 1 Equipment Cost Estimates.- Appendix 2 Complete Plant Cost Estimating Charts.- Appendix 3 Manufacturing Cost.- Appendix 4 Sample Questions and Answers for Each Chapter.- Appendix 5 Conversion Factors.