Question

(30 pts) The total construction cost of a sewage treatment plant with a capacity of 50 million gallons per day completed 2013 in Wichita, Kansas was $6.5 million. It was proposed that a similar treatment plant with a capacity of 80 million gallons per day be built in Los Angles, California, for completion in 2020. For the additional information given below, perform an order of magnitude estimate of the cost of the proposed plant using the following steps in order (a) to (f): a. In the total construction cost for the Wichita, Kansas plant, there was an item of $0.5 million for site preparation which is not typical for similar plants. b. The variation of sizes of the refineries can be approximated by the cost-capacity factor with m

Answer 1

Since the site preparation cost is not typical for similar sites,

Cost of plant without site preparation works = $ 6.5 - $ 0.5 = $ 6.0M = $ 600,000

Equivalent Cost of 80 MGD Plant at Wichita, Kansas in 2013

Cost Capacity Equation,

C2 = 6

Where,

C2 = Cost of the new unit to be built

C1 = Cost of the unit already built

Q2 = Capacity of the new unit to be built

Q1 = Capacity of the unit already built

m = Cost – Capacity Factor

Accordingly Cost of 80 MGD Plant at Wichita, Kansas in 2013,

C2 = 600,000 (GO) = 7,954,689.64

Equivalent Cost of 80 MGD Plant at Wichita, Kansas in 2020

Formula for determining future cost with constant inflation rate,

CF = CP(1 + i)

Where,

CF = Future Cost

CP = Present Cost

i = Constant inflation rate

n = Time (Years)

For our case,

CP = $ 79,54,689.64

i = 5% = 0.05

n = 2020-2013 = 7 years

Equivalent Cost of 80 MGD Plant at Wichita, Kansas in 2020,

CF = CP(1+i)n = $ 79,54,689.64 x (1 +0.05) 7 = $11,193,047.16

Equivalent Cost of 80 MGD Plant at Los Angles, California in 2020

Equivalent cost of similar unit at any place in reference to the other place is given by below formula:

(5) 2 = *

Where,

C2 = Cost of unit at new location

C1 = Cost of unit at old location

I2 = Location Index of new location

I1 = Location Index of old location

For our case,

C1 = $ 11,193,047.16

I2 = 1.04

I1 = 0.84

Equivalent Cost of 80 MGD Plant at Los Angles, California in 2020

C2 = cz () = $ 11,193,047.16 (6:84) = $13,858,058.38

Determination of final Cost of 80 MGD Plant at Los Angles, California in 2020

Equivalent Cost of 80 MGD Plant at Los Angles, California in 2020 = $ 13,858,058.38

Additional Cost of New Air Pollution equipment = $ 700,000

Total Construction Cost = $ 13,858,058.38 +$ 700,000 = $ 14,558,058.38

Less Contingencies @ 1% at Los Angles, California = $ 145,580.58

Final Cost of 80 MGD Plant at Los Angles, California = $ 14,558,058.38 - $ 145,580.58

Final Cost = $ 14,412,477.80 or $ 14.41 Million