Cost Capacity Factor

Cost Capacity Factor

This quick method is tailored to the process industry. It represents a quick shortcut to establish an orderof-
magnitude estimate of the cost. Application of the method involves four basic steps:
1. Obtain information concerning the cost (C1 orC2) and the input/output/throughput or holding
capacity (Q1 or Q2) for a project similar in design or characteristics to the one being estimated.
2. Define the relative size of the two projects in the most appropriate common units of input, output,
throughput, or holding capacity. As an example, a power plant is usually rated in kilowatts of
output, a refinery in barrels per day of output, a sewage treatment plant in tons per day of input,
and a storage tank in gallons or barrels of holding capacity.
3. Using the three known quantities (the sizes of the two similar plants in common units and the
cost of the previously constructed plant), the following relationship can be developed:

4. The cost determined in the third step is adjusted for time and location by applying the appropriate
construction cost indices. (The use of indices is discussed later in this chapter.)
The cost capacity factor approach is also called the
six-tenths rule
, because in the original application
of the exponential relationship,x
was determined to be equal to about 0.6. In reality, the factors for
various processes vary from 0.33 to 1.02 with the bulk of the values for x
around 0.6.