Process Design and Economics
Scope
Capital and operating cost estimation, profitability analysis, and conceptual design heuristics.
Concepts to own
- Cost-capacity (six-tenths) rule: C2 = C1 (S2/S1)^0.6, with exponents from 0.4 to 0.8 depending on equipment type.
- Escalation with a cost index: C2 = C1 (I2/I1).
- Capital cost buildup: bare module versus grass roots, Lang factors, working capital, fixed versus total capital investment.
- Cash flow: depreciation (straight line, MACRS), taxes, NPV, IRR, payback, and return on investment.
- Break-even and marginal cost analysis; time-value factors (P/F, F/P, A/P).
- Design heuristics: reflux ratio 1.1–1.5 Rmin, tray spacing 18–24 in, short pump suction lines, pinch analysis for heat integration.
Traps
- Using the six-tenths rule beyond roughly a tenfold capacity range.
- Mixing annual and daily rates, or forgetting to annualize operating hours (often 8000 h/y).
- Comparing alternatives with different lives without an annualized or NPV basis.
- Inverting the cost index ratio.
Worked example
A 100 gpm pump costs $20,000. For 400 gpm: (400/100)^0.6 = 4^0.6 = 2.30, giving about $46,000. Escalating from index 550 to 800: 46,000 × 800/550 = $67,000.
Rule of thumb: get the order of magnitude right first, then refine - most exam economics items test method rather than precision.