1 reply to this topic

[Zauberberg]

Good evening to forum members,

Knowing the total surface area required for heat transfer application, materials of construction and pressure rating of specific service (assuming that all other criteria are satisfied - velocity range, pressure drop margin etc.), is it possible to obtain approximate value of equipment cost - with or without installation expenses?

Speaking of shell & tube heat exchangers for this particular case, instead of floating these queries to equipment manufacturing vendors, is there another way to calculate approximate (+/- 20% error) total cost of heat transfer equipment involved in the service?

Thank you in advance,

[Art Montemayor]

Zauber:

It is very possible to estimate heat exchangers based on their total heat transfer area. Any real, credible estimate is going to have to originate with fabricators - otherwise we are only guessing. However, a variety of many complex and related/unrelated conditions can exist at the time of the estimate. In my experience, these factors and conditions are so varied and complex that I never give any serious value to a heat exchanger estimate that is labeled as being less than 50 to 100% in accuracy. So many things are up in the air – and ultimately so many changes are made – during the course of the front-end design that any estimate is subject to large deviations in total costs. Two or three years ago when projects and capital expenditures were low, heat exchangers were approximately half the cost they are at this moment – with existing fabrication shops totally loaded with work. Later on this year, the investment picture may crater and prices may be half of what they have recently been. No one can tell – certainly not our bumbling economists. But the engineering and industrial projects arena has always been in that type of flux: we all call it "Feast or Famine". That has been the nature of society's ability to manage it's economy. And there is nothing we engineers can do about it, except bear it.

Look at the listing of just some of the many estimating factors we all are supposed to consider in weighing our engineering "estimates" in order to achieve some degree of credibility:

1. Technical Basis of estimate:
Buyer designs and specifies; fabricator only fabricates. Liability to fabricator is zero;
Buyer specifies; fabricator designs and fabricates, delivering a product guaranteed to produce according to specifications;
TEMA type of exchanger involved;
Buyer specific fabrication and procurement specifications;
Technical changes made during and after the estimate;

2. Business Basis of estimate:
Local currency or hard currency payments – in the case of a developing country;
Local market and economic conditions at the time of estimate;
Method of payments – cash, progress, or total at end of job;
Prior purchases from fabricator?
Buyer insists on Union fabrication?
Amount of fabrication backlog (shop space) for fabricator;

3. Location of Fabricator:
Developed country and marketplace;
Developing country without stable marketplace

4. Fabricator's experience and incentive
How long has fabricator been in business?
How accurate have prior estimates been?
Is fabricator estimating in competition with others?
Will fabricator get rewarded with purchase order?

5. Economic Basis of estimate:
Degree of local monetary inflation or recession at estimate time;
Financial status of fabricator;
Local Price controls?
Local government subsidies?
Privately owned fabrication shop or government-owned?
Existing economic treaties or incentives with fabricator's country?

I don't know what is the incentive or the need for you to obtain a credible 20% accurate heat exchanger cost estimate, but I seriously doubt that anyone in the engineering field can make that claim and keep a straight face. I really don't believe it is possible. Just recent world economic events in the US, European, and Far East Stock Markets show how unstable prices can be. And the tendency for instability is not going to get any better, in my opinion.

When I am being probed by my colleagues and bosses regarding cost estimates and engineering schedules I like to throw the ball right back into their court: what do we know about the ability to get a firm, guaranteed contract price from the REAL estimate professionals (Fluor-Daniels, Bechtel, KBR, Technip, etc., etc.) valid for a time period of only 6 months? We all know what we would get if we went out for such a bid: an exorbitant, inflated price bid. And rightfully so! Even the "experts" can't be expected to know exactly just how the economy will behave within six months. They have to rely on using generous, liberal contingencies to cover themselves. If they were capable of predicting future economics, they would get out of engineering business and dedicate themselves to playing the stock markets and making more profit that way.

Zaub, I really wish I could come up with more optimistic and hopeful news. But I'm afraid that even recent experience in the engineering projects I'm working reveal that my opinion is probably correct. If you want an estimate with +/- 20% accuracy, I'm afraid you will have to resort to a local fabricator you can trust – and then hold your breath as to how future prices will change. I think I know your dilemma and I empathize with you. However, world economic trends have become more unstable as our countries have become closer in communications.