Since, preliminary chemical engineering plant design pdf any given time, the number of chemical plants is insufficient to use in a preliminary or predesign estimate, cost indexes are handy for a series of management purposes, like long-range planning, budgeting and escalating or de-escalating contract costs. Raw materials, products and energy prices, labor and construction costs change at different rates, and plant construction cost indexes are actually a composite, able to compare generic chemical plants capital costs.
Although the available indexes are compiled in several ways, they are defined to encompass a specific set of conditions and items. Both the CE and the IC indexes, from Chemical Engineering and Intratec, respectively, employs BLS’ data. As a rule-of-thumb, cost indexes permit fairly accurate estimates for cost escalation if the difference between period A and period B is less than 10 years. Differences between the actual equipment and labor prices and those predicted by the index tend to grow over the years, surpassing the typical error verified in budget-level estimates.
The selection of the proper index to use depends on the industry in which it is applied. The majority of cost indexes demonstrate a time lag, due to data collection and its compilation for publishing. Exceptions to this are the ENR construction and the IC indexes, which present relatively current values. The CE Index is updated monthly and it lags in time by about 3 months. The CE Index was revised in 1982, to account for changes in labor productivity and, again, in 2002.