Cost to Capacity Factor Development for Facility Projects

Headnote

ABSTRACT:

Cost to capacity analysis originated as a cost estimating method for equipment and process plants in the chemical industry. The study of historical construction cost experience has generally indicated that facility construction cost and project productive capacity exhibit a non-linear relationship. Cost to capacity factor development uses construction cost information from completed projects along with the associated productive capacity as a basis for developing a cost estimate for a new project. Application of the cost and capacity relationship as a cost estimating tool has expanded to include the formulation of cost estimates for a variety of industries. This article examines the development of cost to capacity factors for facility projects.

KEY WORDS: Construction, cost to capacity analysis, cost estimating, planning and design

Facility construction costs are driven by influences including project characteristics, site conditions, and design specifications. Construction cost information is frequently examined when developing cost estimates for facility projects.

A quick method of estimating facility costs during the early stages of project development is often needed when studying economic feasibility. Since the preparation of a detailed cost estimate at an early stage of project development is typically neither cost effective nor practical, alternative cost estimating techniques such as cost to capacity analysis are employed to formulate facility construction cost estimates.

Cost to capacity analysis originated as a cost estimating method for equipment and process plants in the chemical industry. The study of historical construction cost experience has generally indicated that facility construction cost and project productive capacity exhibit a non-linear relationship. Cost to capacity factor development uses construction cost information from completed projects along with the associated productive capacity as a basis for developing a cost estimate for a new project. Application of the cost and capacity relationship as a cost estimating tool has expanded to include the formulation of cost estimates for a variety of industries. This article examines the development of cost to capacity factors for facility projects.

Facility Cost Estimates

Facility cost estimates are prepared for projects at assorted planning and design stages during project development. The cost estimation process computes project costs as accurately as possible within the informational and time constraints available with the various stages of project development.

Project costs are driven by elements that influence...