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Comment PDF Business & Economics

Lifecycle Costs for Capital Equipment in the CPI

By Jeff Hoffmann, Paul O. Abbe |

When considering project proposals for new processes in the chemical process industries (CPI), capital equipment costs often become the primary focus. The purpose of this article is to provide a detailed examination of the total cost of process equipment and the implications that the initial equipment cost has for longterm costs over the full life of the process. FIGURE 1. Initial capital costs alone are too often the primary criteria for selecting process equipment    Figure 2. Initial capital costs represent a small fraction of the total lifecycle costs for process equipment. The graph depicts the case of a “worst case” situation with considerable downtime costs (see Table 1, scenario 1)   Aside from equipment costs, other critical costs to consider include, operation, maintenance and decommissioning (Figure 1). Also, since a process generates revenue only when it is operating, downtime must be added to the total costs. When the whole lifetime of a process is considered, equipment costs may account for as little as 5–10% of the total cost (Figure 2). There are a number of questions that should be considered before moving…
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