CAPEX Estimation via Scaling Factor

How to estimate the capital cost of a project?

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⚠️ ENGINEERING NOTICE & EDUCATIONAL DISCLAIMER: This interactive calculator is provided for preliminary Class 5 / Class 4 estimation (accuracy ±30%). It is not for definitive budget appropriation.

Reference Cost ($TCI_A$)

Scaling Exponent ($E$) Commonly 0.6 to 0.7

Reference Capacity ($C_A$)

New Capacity ($C_B$)

Ref. Cost Index (Optional) e.g., CEPCI Year 1

New Cost Index (Optional) e.g., CEPCI Year 2

Estimated CAPEX ($TCI_B$): 15.00 M$
Capacity Ratio: 1.38
Cost Escalation Factor: 1.00

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Engineers are constantly estimating capital costs to determine if a project is viable. A common method is the Scaling Factor Method (also known as the "Six-Tenths Rule"), which estimates the cost of a new project based on the known cost of a past project with a different capacity.

1. STEP 1: Gather the Data

To use this methodology, you must have a reference point from a similar completed project:

Total Capital Investment ($TCI_A$) of past project A.
Capacity ($C_A$) of project A.
Desired Capacity ($C_B$) of the new project B.

2. STEP 2: Validate the Assumptions

The method is valid only if:

Similarity: Both projects use similar process technology and feedstocks.
Precision: You only need a "Order of Magnitude" estimate (Class 5, approx. ±30%).
Range: The capacity ratio ($C_B/C_A$) is usually within a factor of 0.2 to 5.0.
Currency/Time: If years have passed, inflation must be corrected using Cost Indices (e.g., CEPCI, Nelson-Farrar).

💡 Industrial Rules of Thumb: Exponents (E)

General Chemical Plant: 0.60 - 0.70
Reciprocating Compressor: 0.75 - 0.90
Centrifugal Pump: 0.55 - 0.65
Shell & Tube Heat Exchanger: 0.44 - 0.60
Storage Tanks (Carbon Steel): 0.50 - 0.65

3. STEP 3: Calculate the Estimated Capital Investment

Doubling capacity does not double the cost. The scaling factor method uses a power-law exponent ($E$) typically less than 1.0, reflecting the "economy of scale."

\[ TCI_B = TCI_A \times \left( \frac{C_B}{C_A} \right)^E \times \left( \frac{I_B}{I_A} \right) \]

Where:

$TCI_A$ = Total cost of investment of reference project A ($)
$TCI_B$ = Estimated cost of new project B ($)
$C_A, C_B$ = Capacity of projects A and B (e.g., t/y, kg/h)
$E$ = Scaling exponent (dimensionless, often 0.6 - 0.7)
$I_A, I_B$ = Cost Index at time A and time B (Optional correction for inflation)

4. Worked Example

A factory built 3 years ago ($C_A = 8000$ t/y) cost 12 M$. What is the cost for a 11,000 t/y version today?

\[ TCI_B = 12 \times \left( \frac{11000}{8000} \right)^{0.7} = 12 \times (1.375)^{0.7} \approx 15 \text{ M\$} \]

Sources:
[Chopey] Handbook of Chemical Engineering Calculations, Chopey et al., McGraw Hill, 2004.