# W8_TH_ Index and Power Sizing Technique for CNG Compressor Cost Estimating

##### 1. Problem Definition

Electric Motor has been choosing as a prime mover type for gas station project on Blog Week 3. In 2017, company will build new gas station project with capacity is 0.5 MMSCFD. Company has budgetary quotation data from three different compressor manufactures at 2015. Since the company will be using the price for calculate conceptual economic model, then the optimum price for 0.5 MMSCFD electric motor CNG compressor must be develop.

##### 2. Develop the Feasible Alternative

There are budgetary quotation price from three different compressor manufactures, as follow:

Table 1. Budgetary Quotation Price

##### 3. Develop of the Outcome for Alternative

Author will use formula of power sizing technique (correlation between price and capacity) and index to get cost estimation for 0.5 MMSCFD electric motor CNG compressor in 2017 project.

Fig 1. Power Sizing Model Formula

For index, author will use Chemical Engineering Plant Cost Index (CEPCI) because CEPCI is one of best bench-marking index since introduction in 1963.

Fig 2. Index Formula

Fig 3. CEPCI Index

##### 4. Selection Criteria

Author will use P50 at PERT analysis to determine optimum price for 0.5 MMSCFD electric motor CNG compressor.

##### 5. Analysis & Comparison of Alternative

Based on data and formulation above, here is the analysis and calculation for correlation exponent result:

Table 2. Correlation Exponent

Using correlation exponent (m), sizing model analysis for 0.5 MMSCFD for each budgetary quotation could be calculated as follow:

Table 3. Estimate Cost 0.5 MMSCFD CNG Compressor

The calculation above show still using 2015 database and to get reflection new cost 2017 the data shall be adjusted by CEPCI index value at March 2017 (Figure 3).

Table 4. CEPCI Index Value Result

##### 6. Selection of the Preferred Alternatives

Author use PERT analysis on P50 to determine optimum price, the result as follow:

Table 5. P50 PERT Analysis Result

Based on analysis above, price for 0.5 MMSCFD CNG compressor with electric motor prime mover is \$ 313,970.

##### 7. Performance Monitoring and The Post Evaluation Result

Power Sizing Model and Index Value above is a good formula to estimate the indicative price for conceptual economic calculation. It can be using of any kind project, such as oil & gas, automotive, power plant, etc.

References:

1. Planning Planet (2017). Creating The Owners Cost Estimate (Top Down). Retrieved from http://www.planningplanet.com/guild/gpccar/creating-the-owners-cost-estimate
2. Sullivan, G. W. (2014). Engineering Economy 16th Chapter 3 – Cost-Estimation Techniques, pp. 99-110
3. Irene, Audray. (2017). W5_AI_Power Sizing Model|Emerald AACE 2018. Retrieved from http://emeraldaace2017.com/2017/09/03/power-sizing-model-and-index-value-for-offshore-regasification-facility-project-cost-estimating/
4. CEPCI June 2017 (2017), CEPCI June 2017. Retrieved from https://www.scribd.com/document/352561651/CEPCI-June-2017-Issue

## 1 thought on “W8_TH_ Index and Power Sizing Technique for CNG Compressor Cost Estimating”

1. Great case study Pak Tommy and you did a good job on it but it would have a much better posting instead of just giving us a P50 value, why didn’t you tell us what CLASS of estimate this was appropriate for and what the acceptable RANGE ESTIMATE would be?

It really is NOT a good practice to be using single numbers (point estimates) ESPECIALLY when you chose only P50. To put this in perspective, if you were going to get FIRED if your estimate was too LOW, would you still use a P50 value? Or would you give your management a RANGE ESTIMATE to help you protect your job?

Understand the point I am trying to make? We still use a lot of “less than good” practices and the reason you were sent to this course is to teach you what are the best tested and proven practices and get you to stop using the old methods which clearly are not working.

BR,
Dr. PDG, Jakarta