The effect of time and location on chemical plant costs

Abstract

A location factor is a means of converting the capital cost of a chemical plant from one country to another. It is used to estimate the capital cost of constructing a new chemical plant in a new location based on the capital cost of an existing chemical plant. A literature survey revealed that there are several methods of calculating location factors, but most of the articles presented no results. Most companies have their own method of deriving location factors but it tends to be costly. Therefore, it was suggested that a method of updating existing location factors would be of more use. Methods published in the literature are critically appraised and analysed to identify the main influences on location factors. A capital cost model of a chemical Plant was developed based on a literature survey of chemical plant cost analyses. A method of updating existing location factors is presented and results obtained using the method are discussed. The method uses a published plant cost index for each country, as this was found to be the only published data which represented the rate at which plant costs have changed in a variety of countries. A list of updated location factors is given. The effect of the exchange rate, and labour productivity on the location factor are also investigated.