# OAR Box 1159 Prepped byRyan Dugan



## Document

Number: 

# 75 ) ll-A-1 4 Docket Number: 

# A-88-0 2

Printed 4/30/200811:35:05AM Sheet 75of 76 p. 1§£§ • *Vm2*« r • 

### UBRARYICOPY^

.



### U A •JV-. " 

# 1 

# p

Researc hTriangl e Park , Nort hCarolin a 2771 1 V

. . . , ,;. . ,' - 333,,:, • -•• •

. 

### Februar y 198 7

- -

.. . .P. 3

Sectio n 2 MANUA LESTIMATIN G METHODOLOG Y Willia m M
. Vatavu k Economi cAnalysi s Branch , OAQP S Thi s sectio n present s a methodolog ytha twil l enabl e th e user , havin g knowledg e o fth e sourc e bein g controlled , t o produc e study-leve l cos t estimate s fo ra contro l syste m t o contro l tha tsource . Th e methodology , whic h applie s t o eac h o fth e contro l system s include d i n thi s Manual , i s genera l enoug h t o b e use d wit h othe r"add-on " system s a s well
. Further , th e methodolog yma yals o b e applicabl e t o estimatin g cost s o ffugitiv e emissio n control s an d o fothe rnonstac k abatemen t methods
. Befor e presentin g thi s methodolog yi n detail , w e shoul d firs t discus s th e variou s kind s o fcos t estimate s an d the n defin e th e cos t categorie s an d engineerin g econom yconcept s employe d i n makin g th e estimates
. 2. 1 Type s o fCos t Estimate s A s note d above , th e cost s an d estimatin g methodolog yi n thi s Manua l ar e directe d towar d th e ."study " estimate , o f+

_30 % accuracy . Accordin g t o Perry' s Chemica l Engineer' s Handbook , a stud yestimat e i s "...
. use d t o estimat e th e economi cfeasibilit yo fa projec t befor e expendin g significan t fund s fo rpiloting , marketing , lan d surveys , an d acquisitio n .. . [However ] i t ca n b e prepare d a trelativel ylo wcos t wit h minimu m data."'* ) Specifically , t o mak e a stud yestimate , th e followin g mus tb e known : o Locatio n o fth e sourc e withi n th e plant ; o Roug h sketc h o fth e proces s flo wshee t(i.e. , th e relativ e location s o fth e equipmen t i n th e system) ; o Preliminar ysize s of , an d materia l specification s for , th e syste m equipmen t items ;2- 2

o Approximat e size s an d type s o fconstructio n o fan ybuilding s require d t o hous e th e contro l system ; o Roug h estimate s o futilit yrequirement s (e.g. , electricity) ; o Preliminar yflo wshee tan d specification s fo rductin g an d piping ; o Approximat e size s o fmotor s required.(1 ) I n addition , a n estimat e o fth e labo rhour s require d fo rengineerin g an d draftin g i s needed , a s th e accurac yo fa n estimat e (stud yo rotherwise ) i s highl ydependen t o n th e amoun t o fengineerin g wor k expende d o n th e project
. Ther e are , however , fou rothe rtype s o festimates , thre e o fwhic h ar e mor e accurat e tha n th e stud yestimate
. Thes e are:^ ) o "Order-of-magnitude"—" a rul e of-thum b procedur e applie d onl yt o repetitiv e type s o fplan t installation s fo rwhic h ther e exist s goo d cos t history"
. It s accurac yi s >+30%. (However , accordin g t o Perry's , "...n o limit s o faccurac yca n safel yb e applie d t o it." ) Th e sol e inpu t require d fo rmakin g thi s leve l o festimat e i s th e contro l system' s capacit y(ofte n measure d b yth e maximu m volumetri c flowrat e o fth e ga s passin g throug h th e system)
. So-calle d "six - tenth s factor " estimate s (no tt o b e confuse d wit h factore d estimates ) ar e example s o fthi s type . o "Scope'V'Budge t authorization'V'Pre l iminary"
. Thi s estimate , nominall yo f+

_20 % accuracy , require s more detaile d knowledg e tha n th e stud yestimat e regardin g th e site , flo wsheet , equipment , buildings , etc . I n addition , roug h specification s fo rth e insulatio n an d instrumentatio n ar e als o needed
.

_ ?P. 5

al l (t e in s pr e

wo r su e cos .2- 3
o "Projec t contro l "/"Definitive " estimates , accurat e t o withi n + 10% , •requir e ye t mor e informatio n tha n th e scop e estimates , especiall y concernin g th e site , equipment , an d electrica l requirements
. o "Firm"/"Contractor's"/"Detai1ed"
. Thi s i s th e mos taccurat e ( + 5X ) o fth e estimat e types , requirin g complet e drawings , specifications , „^ n an d sit e surveys . Further , "[t]im e seldo m permit s th e preparatio n - o fsuc h estimate s prio rt o a n approva l t o procee d wit h th e project."(* ) Fo rth e purpose s o fregulator ydevelopment , stud yestimate s hav e bee n foun d t o b e acceptable , a s the yrepresen t a compromis e betwee n th e les s accurat e "order-of-magnitude " an d th e mor e accurat e estimat e types . Th e te r forme rar e to o imprecis e t o b e o fmuc h value , whil e th e latte rar e no t onl y^^ , ver yexpensiv e t o make , bu t requir e detaile d sit e an d process-specifi ctn ( knowledg e tha t mos tManua l user s wil l no t hav e availabl e t o them
. an ( 2. 2 Cos tCategorie s Define d se ( Th e names give n certai n "categories " o fcost s an d wha tthe ycontai n p0 < var yconsiderabl ythroughou t th e literature
. Certai n word s lik e "capita l c0 ; cost " ca n hav e vastl ydifferen tmeanings , whic h ca n ofte n lea d t o confusion , , „ eve n amon g cos t estimators
. T o avoi d thi s confusio n and , a tth e sam e time , provid e uniformit yi n th e Manua l , basi cterm s ar e define d i n thi s Sectio n ian d wil l b e use d throughout
. Th e terminolog yuse d i s adapte d fro m tha to fi n , th e America n Associatio n o fCos tEngineers^ 2 )
. Althoug h i tha s bee n c o develope d fo rgenera l use , i t i s readil yadaptabl e t o ai rpollutio n eontro l e s syste m costing
. f a 2.2. 1 Element s o fTota l Capita l Investmen t w 0 First , tw o genera l kind s o fcost s ar e estimated , tota l capita l investmen t i t (TCI ) an d tota l annua l cos t (TAC)
. Th e tota l capita l investmen tinclude s f a


# YP. 6



## : D 2- 4 al l cost s require dt o purchas e equipmen t neede dfo r th e contro l syste m (terme d"purchase dequipment " costs) , th e cost s o f labo r an dmaterial s fo r installin g tha t equipmen t (terme d"direc t installation " costs) , sit e preparation , buildin g costs , an dcertai nothe r cost s whic har e terme d "indirec t installation " costs . Direc t installatio ncost s includ e cost s fo r foundation s an

dsupports , erectin g an dhandlin g th e equipment , electrica l work , piping , insulation , an dpainting . Indirec t installatio ncost s includ e suc hcost s a s engineerin g costs ; constructio nan dfiel dexpense s (i.e. , cost s fo r constructio nsupervisor y personnel , offic e personnel , renta l o f temporar y

offices , etc.) ; contracto r fee s (fo r constructio nan dengineerin g firm s involve dinth e project) ; start-u pan dperformanc e tes t cost s (t o ge t th e contro l system

runnin g an

dt o verif y

tha t i t meet s performanc e guarantees) ; an dcontingencies . Contingencie s i s a catch-al l categor y tha t cover s unfore see ncost s tha t ma y arise , includin g (bu t certainl y no t limite dto ) ".. . possibl e redesig nan dmodificatio no f equipment , escalatio nincrease s i n cos t o f equipment , increase s infiel dlabo r costs , an ddelay s encountere d instart-up."( 2 ) Thes e element s o f tota l capita l investmen t ar e displaye di nFigur e 2-1 . Not e tha t th e su m o f th e purchase dequipmen t cost , direc t an d indirec t installatio ncosts , sit e preparation , an dbuilding s cost s compris e th e batter y 1imit s estimate . B y definition , thi s i s th e tota l estimat e ".. . fo r a specifi c jo bwithou t regardt o require dsupportin g facilitie s whic har e assume dt o alread y exist..."( 2 ) a t th e plant . Thi s woul dmainl y

appl y t o contro l system s installe dinexistin g plants , thoug h i t coul dals o appl y t o thos e system s installe dinnew plant s whe nno specia l facilitie s fo r supportin g th e contro l system woul db e required .

### Figur e 2- 1 Element s o f Tota l Capita l Investmen t

o Primar y

Contro l Devic e o Auxiliar y

Equipmen t (includin gductwork ) o Instrumentation 3 

### o Sale s Taxes 3 

### o Freight 3 

### o Foundation s an

dSupport s o Handlin gan

dErectio n o Electrica l 6 Pipin g o Insulatio n o Paintin g Purchase d Equipmen t Cos t

o Engineerin g o Constructio nan

dFiel d Expense s o Contracto r Fee s o Start-u p o Performanc e Tes t o Contingencie s 

### Direc t -Installatio n Cost 0 

### Sit e Preparat1on c 

### » d 

### Bu1ldings d



### Indirec t Installatio n Cost 0 

### Land e 

### Workin gCap1tal e 

### Tota l Nondepreciabl e Investmen t Tota l Direc t Cos t

Tota l Indirec t Cos t "Battery

Limits " Cos t

0ff-S1t e fadlites e Tota l Depreciabl e Investmen t Tota l

Capita l Investmen t r o i c n



### a b c d Thes e cost s ar e factore dfro m th e su m o f th e contro l devic e an dauxiliar y

equipmen t costs . Thes e cost s ar e factore dfro m th e purchase dequipmen t cost . Usuall y require donl y

a t "gras s roots " installations . Unlik e th e othe r direc t an dindirec t costs , cost s fo r thes e items ar e not ^ factore dfrom th e purchase dequipmen t cost . Rather , they

ar e size dan

dcoste dseparately . Normall y no t require dwit hadd-o ncontro l systems . 

### S \ fD I-I 3 Kfl r r O Kfl

• o T J r> iP. 8
2- 6 Where required , thes e supportin g facilitie s woul d encompas s unit s t o produc e steam , electricity , an d treate d water ; laborator ybuildings , railroa d spurs , roads , an d th e like
. I ti s unusual , however , fo ra contro l syste m t o hav e on e o fthes e unit s (e.g. , a powe rplant ) dedicate d t o it
. Th e syste m need s ar e rarel ytha t great . However , i tma yb e necessary—especiall y i n th e cas e o fcontro l system s installe d i n ne wo r"gras s roots " plants- - fo rextr a capacit yt o b e buil t int o th e sit e generatin g plan tt o servic e th e system . ( Aventur i scrubber , whic h ofte n require s larg e amount s o f electricity , i s a goo d exampl e o fthis. ) I ti s customar yfo rth e utilit ycost s t o b e charge d t o th e projec t a s operatin g cost s a ta rat e whic h cover s bot h th e investmen t an d operatin g cost s fo rth e utility
. A s Figur e 2- 1 shows , ther e ar e tw o othe rcost s whic h ma yb e include d i n th e tota l capita l investmen t fo ra contro l system . Thes e ar e "workin g capital" , an d "land"
. Th e firs t o fthese , workin g capital , i s a fun d se t asid e t o cove rth e initia l cost s o ffuel , chemicals , an d othe rmaterials , as wel l a s labo ran d maintenance
. I t usuall ydoe s no tappl yt o contro l systems , fo rth e quantitie s o futilities , materials , labor , etc. , the y requir e ar e usuall ysmall
. (A n exceptio n migh tb e a n oil-fire d therma l incinerator , wher e a smal l suppl y(e.g. , 30-day ) o fdistillat e fue l woul d hav e t o b e availabl e durin g it s initia l perio d o foperation. ) Lan d ma yals o b e required
. But , sinc e mos tadd-o n contro l system s tak e u p ver ylittl e spac e ( a quarter-acr e o rless ) thi s cos twoul d b e relativel ysmall
. (Certai n contro l systems , suc h as thos e use d fo rflu e gas desulfurization , requir e large rquantitie s o flan d fo rth e proces s equipment , chemical s storage , an d wast e disposal. )



# 7P. 9
2- 7 Not e als o i n Figur e 2- 1 tha t th e workin g capita l an d lan d ar e "nondepreciable" , expenses . I n othe rwords , thes e cost s ar e "recovered " whe n th e contro l syste m reache s th e en d o fit s usefu l lif e (generall yi n 1 0 t o 2 0 years)
. Conversely , th e othe rcapita l cost s ar e "depreciable" , i n tha t the ycanno t b e recovere d an d ar e include d i n th e calculatio n o fth e incom e ta xcredi tan d depreciatio n allowance , wheneve rsuc h taxe s ar e considere d i n a cos t analysis
. (I n th e Manua l methodology , however , incom e taxe s ar e no tconsidered
. Se e Sectio n 2.3. ) Notic e tha twhe n 100 % o fth e syste m cost s ar e depreciated , ji o salvag e valu e i s take n fo rth e syste m equipmen ta tth e conclusio n o fit s usefu l life
. Thi s i s a reasonabl e assumptio n fo radd-o n contro l systems , a s mos t o fth e equipment , whic h i s designe d fo ra specifi csource , canno t b e use d elsewher e withou t modifications
. Eve n i fi t wer e reusable , th e cos t o fdisassemblin g th e syste m int o it s component s coul d b e a s hig h (o rhigher ) tha n th e salvag e value
. 2.2. 2 Element s o fTota l Annua l Cos t Th e Tota l Annua l Cos t (TAC ) fo rcontro l system s i s comprise d o fthre e elements : "direct " costs , (DC ) "indirect " costs , (IC ) an d "recover ycredits " (RC) , whic h ar e relate d b yth e followin g equation : TA C = D C + I C - R

C (2-1 ) Clearly , th e basi s o fthes e cost s i s on e year , as thi s perio d allow s fo r seasona l variation s i n productio n (an d emission s generation ) an d i s directl y usabl e i n profitabilit yanalyses
. (Se e Sectio n 2.3. ) D i rec t cost s ar e thos e whic h ten d t o b e proportiona l o rpartiall y proportiona l t o th e quantit yo fexhaus t ga s processe d byth e contro l syste m pe runi t time
. Thes e includ e cost s fo rrawmaterials , utilitie s (steam , e i n v m a d i i



## ?P.1 0

2- 8 electricity , proces s an dcoolin g water , etc.) , wast e treatmen t an ddisposal , maintenanc e materials , replacemen t parts , an doperating , supervisory , an d maintenanc e labor . O f thes e direc t costs , cost s fo r ra w materials , utilities , an dwast e treatmen t an ddisposa l ar e variable , i ntha t the y tendt o b e a direc t functio no f th e exhaus t flowrate . Tha t is , whe nth e flowrat e i s a t it s maximu

m rate , thes e cost s ar e highest . Conversely, , whe nth e flowrat e i s zero , s o ar e th e costs . Sem i variabl e direc t cost s ar e onl y partl y dependen t upo nth e exhaus t flowrate . Thes e includ e al l kind s o f labor , maintenanc e materials , an d replacemen t parts . Althoug hthes e cost s ar e a functio no f th e ga s flowrate , the y ar e no t 1inea r functions . Eve nwhil e th e contro l system i s no t operating , some o f th e semi variabl e cost s continu e t o b e incurred . Indirect , o r "fixed" , annua l cost s ar e thos e whos e value s ar e totall y independen t o f th e exhaus t flowrat e and , infact , woul db e incurre deve ni f th e contro l system

wer e shu t down . The y includ e suc hcategorie s a s overhead , propert y

taxes , insurance , an dcapita l recovery . Finally , th e direc t an dindirec t annua l cost s ar e offse t b y recover y credits , take nfo r material s o r energ y recovere db

y th e contro l system , whic hma y

be sold , recycle dt o th e process , o r reuse delsewher e at th e site . Thes e credits , inturn , mus t be offse t b y th e cost s necessar y fo r thei r purification , storage , transportation , an dany othe r cost s require d t o mak e them

reusabl e o r resalable . Grea t car e an djudgemen t mus t b e exercise di nassignin g value s t o recover y credit s sinc e material s recovere d ma y b e o f smal l quantit y o r o f doubtfu l purity , resultin g inthei r havin g les s valu e tha nvirgi nmaterial .


# ?\P.1 1

2- 9 Th e variou s annua l cost s an dthei r interrelationship s ar e displaye din Figur e 2-2 . A

mor e thoroug hdescriptio no f thes e cost s an dhow the y ma y b e estimate di s give ni nSectio n2.4 . 2. 3 Engineerin g Econom y Concept s A s mentione dpreviously , th e estimatin g methodolog y presente di n Sectio n2. 4 rest s upo nth e notio no f th e "factored " o r study estimate . However , ther e ar e othe r concept s centra l t o th e cos t analyse s whic hmus t b e understood . Thes e ar e (1 ) th e tim e valu e o f money , (2 ) cas hflow , an d.

o R (3 ) annualization . 0 u 2.3. 1 Tim e Valu e o f Mone y Th e "time valu e o f money " i s base do nth e truis m

tha t "... a dolla r no w i s wort hmor e tha nth e prospec t o f a dollar.. . a t some late r date."(3 ) o L A measur e o f thi s valu e i s th e interes t rat e whic h"...ma y b e though t o f a s th e retur nobtainabl e b y th e productiv e investmen t o f capital . "(3 ) o M 2.3. 2 Cas hFlow

o R Durin g th e lifetime o f a project , variou s kind s o f cas hexpenditure s ar e mad e an

dvariou s income s ar e received . Th e amount s an dtimin g o f thes e expenditure s an

dincome s constitut e th e cas hflow s fo r th e project . In contro l system

costin g i t i s norma l t o conside r expenditure s (negativ e cas h flows ) an

dunusua l t o conside r income (positiv e cas hflows) , excep t fo r produc t o r energ y

recovery

income . By

th e simplifyin g conventio nrecommende d by Grant , Ireson , an

dLeavenworth(4) , eac hannua l expenditur e (o r payment ) i s considere dt o be incurre da t th e en do f th e year , eve nthoug hth e paymen t wil l probabl y

b e mad e sometime durin g th e yea r inquestion . (Th e erro r introduce db

y thi s assumptio ni s minimal , however. ) Figur e 2-3 , whic h show s thre e hypothetica l cas hflow "diagrams" , illustrate s thes e end-of yea r payments . Inthes e diagrams , "P " represent s th e capita l investment ,
/ ^2-1 0 Figur e 2- 2 Element s o f Tota l Annua l Cos t

o Raw material s o Utilitie s

- Electricit y Steam

- Wate r

- Other s Variabl e

o o Labo r

- Operatin g



### - Supervisor y

- Maintenanc e Maintenanc e material s Replacemen t part s •Sem i variabl e Di rec t

Annua l Cost s

o Overhea d o Propert y

Taxe s o Insuranc e o Capita l Recover y
Material s Energ y Indirec t -Annua l Cost s

Recover y Credit s Tota l Annua l Cos t

/{

### Figur e 2- 3 Hypothetica l Cas hFlow Diagram s



## c p

^ 

### ) 1 

## Al >

' 

## 2

A 2 

## | Al l Value s

3 4

• Ar e Constan t Yea r (Real ) Dollar s

5 6 7 A3 I A4 A 5 A 6 A 7 Y., w

1 v 

## £ I 9 

## A e A 9 

## 1 

# I 1 0 Al O <



### 0 1 II . P 

## 2 2 4 5 t 1 8 9 1 0

A A

A , A A , A A

A

' A

w 

### A

f ro v 1

. 7 1 0 Yea r 

### II I A l A l A l A l A l

^ r o l- » r r< r r t o < o > O-

~ > a. r r a. x.

### 2-1 2

w n 1l e th e A' s denot e th e end-of-yea rannua l payments . Not e tha t i n al l diagrams , th e cas h flow s ar e i n "constant " ("real" ) dollars , meanin g tha t the yd o no t reflec t th e effect s o finflation
. Als o not e tha ti n th e to p diagra m (I) , th e annua l payment s ar e differen t fo reac h year . (Thes e represen t th e contro l syste m annua l cost s (exclusiv e o fcapita l recovery ) describe d i n Sectio n 2.2. ) I n reality , thes e payment s woul d b e different , as labo ran d maintenanc e requirements , labo ran d utilit ycosts , etc. , woul d var yfro m yea rt o year . Agenerall yupwar d tren d i n annua l cost s woul d b e seen , however
. I n diagra m II , thes e fluctuatin g annua l payment s hav e bee n converte d t o equa l payments . Thi s ca n b e don e bycalculatin g th e su m o fth e presen t value s o feac h o fth e annua l payment s show n i n diagra m I an d annualizin g th e tota l ne t presen t valu e t o equivalen t equa l annua l payment s vi a a capita l recover yfactor
. (Se e discussio n i n th e followin g paragraph s an d i n Sectio n 2.3.3. ) Alternatively , i t i s adequat e t o choos e a valu e o fAequa l t o th e su m o fth e direc t an d indirec t annua l cost s estimate d fo rth e firs t year . Thi s assumptio n i s i n keepin g wit h th e overal l accurac yo fstud yestimate s an d allow s fo reasie rcalculations
. Finally , notic e diagra m III
. Here , th e annua l cost s (Al ) ar e agai n equal , whil e th e capita l investmen t (P ) i s missing
. Pu t simply , P ha s bee n incorporate d int o A l SO tha t A l reflect s no tonl yth e variou s annua l cost s bu t th e investmen t as-well
. Thi s wa s don e byintroducin g anothe rterm , th e capita l recover yfacto r(CRF) , define d a s follows : "whe n multiplie d bya presen t deb t o rinvestmen t , [th e CRF] give s th e unifor m end-of-yea rpaymen t necessar yt o repa yth e deb t o rinvestmen ti n n year s wit h interes t rat e i."(5 ) Th e produc t o fth e CR F an d th e investmen t(P ) i s th e capita l recover ycos t (CRC) CR C = CR F xP (2-2 )

L3

### 2-1 3 P.1 5

where : CR F = i( l + i) n 

### ( 1 

### + D 11 

### . ! (2.-3 ) Therefore , A* i s th e su m o fAan d th e CRC , or : A 1 = A+ CR

F " xP (2-4 ) I n thi s context , "n " i s th e contro l syste m economi clife , which , a s state d above , typicall yvarie s fro m 1 0 t o 2 0 years . Th e interes t rat e ("i" ) use d i n thi s Manua l i s a rea l rat e o f10 % (annual)
. Thi s valu e i s use d i n mos to fth e OAQP S cos tanalyse s an d i s i n keepin g wit h curren t EA B guideline s 

### (6 ) an d th e Offic e o fManagemen tan d Budge trecommendatio n fo rus e i n regulator yanalyses.( 7 ) I t ma yb e helpfu l t o illustrat e th e differenc e betwee n "real " an d "nominal " interes t rates . Th e mathematica l relationshi p betwee n them i s straightforward : (*>

) 

### ( 1 + 1 n 

### ) = ( 1 + i)( l + ' r ) (2-5 ) where : i n i - th e annua l nomina l an d rea l interes trates , respectivel y r= th e annua l inflatio n rat e Clearly , th e "real " rat e doe s no t conside rinflatio n an d i s i n keepin g wit h th e expressio n o fannua l cost s i n constan t(i.e. , real ) dollars
. EA B guideline s als o recommen d th e exclusio n o fincom e ta xconsideration s fro m cos t analyses.v» ) No t onl ydoe s thi s simplif yth e analysis , bu t i t als o allow s fo rth e calculatio n o fth e "economic " cost s o fai rpollutio n control--!.e. , th e tru e cos tt o society
. Incom e taxe s generall yrepresen t transfe rpayment s fro m on e segmen t o fsociet yt o anothe ran d a s suc h ar e no t properl ypar t o fth e economi ccosts . 2 ,
y « m e u ;
d t ct e < U ! u
h m w c 

### y t



# /¥

### 2-1 4 P.1 6

2.3. 3 Annualizatio n Method s Th e abov e metho d o f"smoothin g out " th e investmen tint o equa l end-of yea rpayments , i s terme d th e "equivalen t unifor m annua l cas h flow " (EUAC) method. WI n additio n t o it s inheren t simplicity , thi s metho d i s very usefu l whe n comparin g th e cost s o ftw o o rmor e alternativ e contro l system s (i.e.,'thos e whic h ar e designe d t o contro l th e sam e sourc e t o a n equivalen t degree)
. I n fact , th e EUAC's--o rsimpl yth e tota l annua l costs--o ftw o competin g system s ma yb e compare d eve n i fbot h th e system s hav e differen t economi clives , sa y1 0 an d 2 0 years . W e recommen d tha t th e EUA C metho d b e used fo rcontro l cos t wor k unles s particula rcircumstance s preclud e it s use . Comparison s o fsystem s wit h differin g economi clive s canno t b e made , however , usin g th e othe rtw o annualizatio n (i.e. , profitabilit yanalysis ) methods--"presen t worth " an d "interna l rat e o freturn"
. Th e "presen t worth " (o r"discounte d cas h flow" ) metho d involve s th e "discounting " o fal l cas h flow s occurin g afte ryea r"0 " (i.e. , th e syste m startu p date ) bac k t o yea r"0"
. Thes e cas h flow s ar e discounte d b ymultiplyin g eac h bya "discoun t factor" , 1 , wher e "m " i s th e numbe ro fyear s fro m yea r0 t o th e yea r

( 1 + i)" 1 i n whic h th e cas h flo wi s incurred
. Th e su m o fthes e discounte d cas h flow s i s the n adde d t o th e capita l investmen t t o yiel d th e "presen tworth " o fth e project
. Th e alternativ e havin g th e highes t presen twort h woul d b e selecte d (i n contro l syste m costin g thi s i s usuall ya negativ e number)
. Bu t whe n comparin g th e presen t worth s o falternativ e systems , th e syste m lifetime s mus t b e equa l fo rth e compariso n t o b e valid
. (9 )



# yP J 7

li

!,-:; ! 

### 2-1 5

Th e thir d annualizatio n method , "interna l rat e o freturn " (IRR) , i s simila rt o th e presen t wort h method , i n tha ti tinvolve s th e discountin g o f a serie s o funequa l cas h flows
. However , wher e wit h th e P Wmetho d th e interes t rate , "i" , i s se t beforehand , i n th e IR R metho d th e interes t rat e 0 i s solve d fo r(usuall yvi a trial-and-error ) afte rarbitraril ysettin g th e P Wt o zero . When comparin g alternativ e systems , th e on e wit h th e highes t IR R i s selected.(10 ) Bu t again , th e alternativ e system s compare d mus t hav e equa l economi clives
. o 2. 4 Estimatin g Procedur e Th e estimatin g procedur e use d i n th e Manua l consist s o ffiv e steps : (1 ) obtainin g th e "facilit yparameters " an d "regulator yoptions " fo ra give n facility ; (2 ) "roughin g out " th e contro l syste m design ; (3 ) sizin g th e contro l syste m components ; (4 ) estimatin g th e cost s o fthes e individua l components ; an d (5 ) estimatin g th e cost s (capita l an d annualized ) o fth e ent i r e system . o 2.4. 1 Facilit yParameter s an d Regulator yOption s o Obtainin g th e facilit yparameter s an d regulator yoption s involve s no t onl yassemblin g th e parameter s o fth e ai rpollutio n sourc e (i.e. , th e quantity , temperature , an d compositio n o fth e emissio n stream(s)) , o bu t als o compilin g dat a fo rth e facility' s operation
. (Tabl e 2- 1 list s example s o fthese. ) Not e tha ttw o kind s o ffacilit yparameter s ar e identi fie d - - "intensive " an d "extensive"
. Th e forme rar e simpl ythos e variable s ° whos e value s ar e independen t o fquantit yo rdimension s - - i.e. , th e "extent " o fth e system . Conversely , "extensive " parameter s encompas s al l size-dependen t variables , suc h as th e ga s volumetri cflowrate
.



## /bp j j


### 2-1 6 Tabl e 2- 1 Facilit yParameters an d Regulator yOption s (H )

FACILIT YPARAMETER

S
o Intensiv e

- Facilit ystatu s (ne wo rexisting , location )

- Ga s characteristic s {temperature , pressure , moistur e content )

- Pollutan t concentration(s ) and/o rparticl e siz e distributio n o Extensiv e

- Facilit ycapacit y



## - Facilit ylif e

- Ga s flo wrat e

- Pollutan t emissio n rate(s ) REGULATOR YOPTION S

o N o contro l o "Add-on " device s

- Emissio n 1 imit s

- Opacit y o Proces s modification s

- Ra wmateria l change s

- Fue l substitutio n o Other s

- Coa l desulfurizatio n



# / 7

### P.1 9

2-1 7 Lik e th e facilit y

parameters , th e "regulator y options " ar e usuall y specifie db y

others . Thes e option s ar e way s t o achiev e a predetermine d emissio nlimit . The y rang e fro m

"n o control " t o maximu m contro l technicall y achievable . Th e optio nprovide dwil l depend , firstly , o nwhethe r th e t 0 

### t emissio nsourc e i s a stac k(poin t source) , a proces s lea k("proces s fugitives " s0U 

### r source ) o r a nunenclose d(o r partl y closed ) area , suc ha s a storag e pil e C 

### on t ("are a fugitives " source) . Stack s ar e normall y controlle db y

"add-on " devices . A s discusse dabove , thi s Manua l wil l dea l primaril y wit hthes e add-o ndevices . (However , som e o f thes e device s ca nb e use dt o contro l proces s fugitive s i ncertai ncases , suc ha s a fabri c filte r use di nconjunctio n wit ha buildin gevacuatio nsystem. ) Add-on s ar e normall y use dt o mee t a specifie demissio nlevel , althoug hi nth e cas e o f particulat e emissions , the y ma y als o b e require dt o mee t a nopacit y level . 2. 4 2.4. 2 Contro l Syste m Oesig n Ste p2 - - roughin gou t th e contro l syste m desig n- - firs t involve s Si z decidin gwha t kind s o f system s wil l b e price d( a decisio ntha t wil l depen dth i o nth e pollutant s t o b e controlled , ga s strea m conditions , andothe r factors) , Be f andwha t auxiliar y

equipmen t wil l b e needed . Whe nspecifyin gth e auxiliar y th

e equipment , severa l question s nee dt o b e answered : ce t o Wha t typ e o f hoo d(i f any ) wil l b e neede dt o captur e th e emission s th f a t th e source ? in : o Wil l a.fa nb e neede dt o conve y th e exhaus t throug hth e system ? o f o I s a cyclon e or.anothe r pre-cleane r neede dt o conditio nth e exhaus t o f befor e i t enter s th e contro l device ? th o Wil l th e capture dpollutant s b e dispose do f o r recycled ? Ho w wil l ( T thi s b e done ?

/ /

### £.2 0

2-1 8

o Ca nth e on-sit e utilit y capacit y

(e.g. , electricity ) accomodat e th e adde drequirement s o f th e contro l system ? Th e kind s o f auxiliar y equipmen t selecte dwil l depen donth e answer s t o thes e an

dothe r site-specifi c questions . However * regardles s o f th e sourc e bein gcontrolled , eac hsystem wil l likel y

contain , alon gwit hth e contro l devic e itself , th e followin gauxiliaries : o Hood , o r othe r mean s fo r capturin gth e exhaust ; o Ductwork , t o conve y th e exhaust , from

th e source , to , through , an d fro m th e contro l system ; o Fa nsystem

(fan , motor , starter , inlet/outle t dampers , etc.) , t o mov e th e exhaus t throughth e system ; o Stack , fo r dispersin gth e cleane dga s int o th e atmosphere . 2.4. 3 Sizin gth e Contro l System Onc e th e system

component s have bee nselected , the y mus t be sized . Sizingi s probabl y

th e mos t critica l step , becaus e th e assumption s mad e i n thi s ste pwil l mor e heavil y influenc e th e capita l investmen t tha nan y other . Befor e discussin gho

w t o siz e equipment , w e needt o defin e th e term . Fo r th e purpose s o f thi s Manual , "sizing " i s th e calculatio n(o r estimation ) o f certai n"critical " desig nparameter s fo r a contro l devic e agains t whic h th e purchase dcos t o f tha t devic e i s mos t accuratel y correlated . Fo r instance , th e purchase dcos t o f a nelectrostati c precipitato r (ESP ) i s mos t oftencorrelate dwit hit s collectin garea . This , inturn , i s a functio n o f the exhaus t volumetri c flowrate , th e overal l collectio nefficienc y an d the empirically-determine ddrif t velocity , th e ES P "critical " parameter . (Tabl e 2- 2 list s example s o f thes e parameters. )



# /?P.2 1
2-1 9 Tabl e 2- 2 Example s o fTypica l Contro l Devic e Parameters(H ) GENERA Lspe < Materia l o fconstruction : e.g. , carbo n stee l Insulated ? Ye s Economi c1ife : 2 0 yr Redundancy 3 : non e Not ( ki w ran i pol ; lif '

. DEVICE-SPECIFI C re q no t

- Air-to-clot h rati o ("critica l parameter") : 7. 5 t o 1 Kse v

- Pressur e drop : 6. 0 i n w.g . (inche s wate rgauge ) 1

- Construction : suctio n (vs
. pressurized )

- Duty : continuou s (vs
. intermittent ) „ .

- Othe rfeatures : dilutio n ai rpor t (fo rexhaus ttemperatur e regulation ) sy s COI T

aRefer s t o whethe rther e ar e an yextr a equipmen t item s installe d (e.g. , fans ) t o functio n i n cas e th e basi cite m become s inoperative , s o a s t o avoi d shuttin g dow n th e entir e system . o f 

### re . by fa t w r e s s a



## *2D

### P.2 2

2-2 0 Als o liste di nTabl e 2- 2 ar e "general " parameter s whic hmus t als o b e specifie dbefor e th e purchase dcos t o f th e system equipmen t canbe estimated . Not e that , unlik e th e contro l devic e parameters , thes e ma y appl y t o an y kin do f contro l system . Thes e includ e material s o f constructio n(whic hma y range fro

m carbo nstee l t o variou s stainles s steel s t o fiberglass-reinforce d polyester) , presenc e o r absenc e o f insulation , an dth e economi c o r "useful " lif e o f th e system . A s indicate di nSectio n2.3.2 , thi s las t paramete r i s requiredfo r estimatin gth e annua l capita l recover y costs . Th e lifetim e no t onl y varie s accordin gt o th e typ e o f th e contro l system , bu t wit hth e severit y o f th e environmen t inwhic hi t i s installed . (Representativ e value s fo r thi s an

dth e othe r contro l devic e parameter s wil l be presente d inthos e Section s o f th e Manua l coverin gthem. ) 2.4. 4 Estimatin gTota l Capita l Investmen t Th e fourt hste pi s estimatin gth e tota l purchase dcos t o f th e contro l syste m equipment . Thes e cost s ar e availabl e fro m thi s Manua l fo r th e mos t commonl y usedadd-o ncontro l device s an dauxiliar y

equipment . Eac htyp e o f equipmen t i s covere dina separat e section . (Se e Tabl e o f Contents. ) Mos t o f thes e costs , i nturn , hav e bee nbase dondata obtaine dfro m contro l equipmen t vendors . Ther e ar e ove r on e hundre do f thes e firms , many o f whom fabricat e an

derec t a variet y

o f contro l systems . (12 ) The yhav e readil yavailable , curren t pric e list s o fthei requipment , usuall yindexe d bymode l designation
. I fth e item s fo rwhic h cost s ar e requeste d ar e fabricated , "off-the-shelf " equipment , the n th e vendo rca n provid e a writte n quotatio n listin g thei rcosts , mode l designations , dat e o fquotation , estimate d shipmen t date , an d othe rinformation
. (Se e Figur e 2- 4 fo ra sampl e quotation. ) Moreover , th e quot e i s usuall y"F.O.B. " ("free-on-board" )
3*/ i

### P.2 3



# v l : •2-2 1 Figur e 2- 4 Typica l Vendo r Quotatio n 

## QUOTAT |

xes s Equipmen

t Plan t 

# r MAI L DRO P # 1 2 U.S . EPA RESEARC HTRIANGL E PARK DURHAM , N C 2771 1 ATTN : MR . BIL L VATAVU K 

## " 1

L J ha,y< e bee n deleted. )

• QUOTATIO N NO . OAT E REFERENC E 85S2338 2

9-23-8 5 VERBA L - BUDGE

T 

### tf H e 0 1 

### t\ d c e > Than k yo u fo ryou rinquiry . W e ar e please d t o submi t ou rquotatio n as follows : OUANTtT Y DESCRIPTIO N PRIC E



### ITE M # 1 PREHEATE R MODE L 191-1 9 SIZ E # 9 IMPERVIT E SHEL L & TUB E HEA T EXCHANGE RWIT H : 

### 55. 8 SQ . FT . O F HEA T TRANSFERAREA ANDCOD E STAMPE D ITE M # 2 CONDENSE R MODE L 191-1 9 SIZ E #1 2 IMPERVIT E SHEL L 4 TUB E HEA T EXCHANGE RWIT H 74. 5 SQ . FT . O F HEAT TRANSFERAREA ANDCOD E STAMPE D APPROVA L DWG' S 2- 3 WEEK S AFTE RRECEIP T O F ORDER . THI S QUOTATION

I S I N CONFIRMATION

O F OURPHON E CONVERSATION O F 9/18/85 . ! $ 7,147. 1
7,430. 1 1 !

Sl i t 

### d

ESTIMATE D SHIPMEN T6 t Q 8 WEEK S AFTE R 

# • RECEIP TO F OROE R RECEIP TO F ORAWIN G APPROVA L Price s are F.O.B
. > . Net 3 0 Days
. •• Unles s otherwis e state d thes e price s are subject t o acceptanc e withi n 30 days fro m date
. 

### By . 3.2- AN TPURCHASE OROE

B RESULTIN G FRO M THI S QUOTATION WI U B E SUBJEC

TT O TH E CONTRAC

TTERM S ANO CQNOfTIONS PRINTS ) ON TH E REVERSE SIO E OF THIS 1P.2 4 

## W''.. T| | 2-2 2 th e vendor , meanin g tha t n o taxes , freight , o rothe rcharge s ar e included
. However , i fth e item s ar e no t off-the-shelf , the ymus t b e custo m fabricate d or , i n th e cas e o fver ylarg e systems , constructe d on-site
. I n suc h cases , th e vendo rca n stil l giv e quotations—bu twil l likel ytak e much longe rt o d o s o an d ma

yeve n charg e fo rthi s service , t o recou p th e labo ran d overhea d expense s o fhi s estimatin g department
.

- As discusse d i n Sectio n 2. 2 i n thi s Manual , th e tota l capita l investmen t I s "factored " fro m th e "purchase d equipmen t cost" , whic h i n turn , i s th e

• 0 sum o fth e bas e equipmen t cos t (contro l devic e plu s auxiliaries) , freight , instrumentation , an d sale s tax . Th e value s o fthes e installatio n factor s depen d o n th e typ e o fth e contro l syste m installe d an d are , therefore , liste d i n th e individua l Manua l section s dedicate d t o them
. Th e cost s o ffreight , instrumentation , an d sale s ta xar e calculate d differentl yfro m th e direc t an d indirec t installatio n costs . Thes e item s ar e "factored " also , bu t fro m th e bas e equipmen t cos t(F.O.B
. th e vendor(s))
. Bu t unlik e th e installatio n factors , thes e factor s ar e essentiall yequa l fo ral l contro l systems . Value s fo rthes e ar e a s follows :

Cos t Rang e Typica l Freigh t 0.0 1 - 0.1 0 0.0 5 Sale s ta x0 - 0.0 8 0.0 3 Instrumentatio n 0.0 5 - 0.3 0 0.1 0 Th e rang e i n freigh tcost s reflect s th e distanc e betwee n th e vendo ran d th e site
. Th e lowe ren d i s typica l o fmajo rU.S
. metropolita n areas , whil e th e latte rwoul d reflec t freigh tcharge s t o remot e location s suc h a s Alask a an d Hawaii.(H ) Th e sale s ta xfactor s simpl yreflec t th e rang e o floca l an d stat e ta xrate s currentl yi n effec t i n th e U.S.(13 )



## A/3P.2 5



# I IN ' l i 2-2 3

Th e rang e o finstrumentatio n factor s i s als o quit e large
. Fo rsystem s requirin g onl ysimpl e continuou s o rmanua l control , th e lowe rfacto rwoul d apply
. However , i fth e contro l is
. intermitten t and/o rrequire s safet ybacku p instrumentation , th e highe ren d o fth e rang e woul d b e applicable/* 1 ) Finally , som e "package " contro l system s (e.g. , incinerator s covere d i n Sectio n 3 ) hav e built-i n controls , whos e cos t i s include d i n th e bas e equipmen tcost . I n thos e cases , th e facto rt o us e would , o fcourse , b e zero . 2.4. 5 Retrofi t Cos t Consideration s Th e installatio n factor s liste d elsewher e i n th e Manua l appl yprimaril y t o system s installe d i n ne wfacilities
. Thes e factor s mus tb e adjuste d wheneve ra contro l syste m i s size d for , an d installe d i n (i.e , "retrofitted" ) a n existin g facility
. However , becaus e th e siz e an d numbe ro fauxiliarie s ar e usuall yth e same i n a retrofi tsituation , th e tota l purchase d cos t o f th e contro l syste m woul d probabl ymrt b e differen t fro m th e ne wplan t purchase d cost . A

n exceptio n i s th e ductwor k cost , fo ri n manyretrofi t situation s exceptionall ylon g duc t run s ar e require d t o ti e th e contro l syste m int o th e existin g process . Eac h retrofi t installatio n i s unique ; therefore , n o genera l factor s ca n be developed
. Nonetheless , some genera l informatio n ca n b e give n concernin g th e kind s o fsyste m modification s on e migh t expec ti n a retrofit : 1
. Auxi l iaries
. Again , th e mos t importan t componen t t o conside ri s th e ductwor k

cost . I n addition , t o requirin g very lon g duc t runs , som e retrofit s requir e extr a tees , elbows , dampers , an d othe r fittings
. 2
. Handlin g an d Erection
. Becaus e o fa "tigh tfit" , specia l car e ma y nee d t o b e take n whe n unloading , transporting , an d placin g th e


## <J3

### P.2 6

2-2 4 equipment . Thi s cos t coul dincreas e significantl y i f specia l mean s (i.e. , helicopters ) ar e neede dt o ge t th e equipmen t o nroof s U 

### P o r t o othe r inaccessibl e places .

3 . Piping , Insulation , andPainting . Lik e ductwork , larg e amount s o f pipin gma y

b e neede dt o ti e i nth e contro l devic e t o source s o f proces s an

dcoolin gwater , steam , etc . O f course , th e mor e pipin g } 

### * andductwor krequired , th e mor e insulatio nan dpaintin gwil l b e needed .
' 4 . Sit e Preparation . Unlik e th e othe r categories , thi s cos t ma y

actuall y decrease , fo r mos t o f thi s wor kwoul dhav e bee ndon e whe n ) th e origina l facilit y wa s built . 5 

### * Facilities . Conceivably , retrofi t cost s fo r thi s categor y coul d b e th e largest . Fo r example , i f th e contro l syste m require s larg e amount s o f electricit y (e.g. , a ventur i scrubber) , th e facility' s powe r plan t ma y

no t b e abl e t o servic e it . Insuc hcases , th e facilit y woul dhav e t o purchas e th e additiona l powe r from a publi c utility , expandit s powe r plant , o r buil danothe r one . I nany case , th e cos t o f electricit y supplie dt o that contro l syste m woul dlikel y

b e highe r tha ni f th e syste m wer e installe di n a new facilit y

wher e adequat e provisio nfo r it s electrica l need s woul dhav e bee nmade . 6 " Engineering . Designin ga contro l syste m t o fi t int o anexistin g plan t normall y

require s extr a engineering , especiall y whe nth e syste m i s exceptionall y

large , heavy , o r utility-consumptive . Fo r th e same reasons , extr a supervisio nma y b e neede dwhe nth e installatio nwor ki s bein gdone .



## <2S

### P.2 7
2-2 5 7 . Los t Production
. Thi s cos t i s incurre d wheneve ra retrofi tcontro l 2.4 . syste m canno t b e tie dint o th e proces s durin gnormall y schedule d maintenanc e periods . Then , par t o r al l o f th e proces s ma y hav e t o ou 

### j b e temporaril y

shu t down . Th e revenu e los t durin gthi s shutdownt 0 n 

### perio di s a bonafid e retrofi t expense . ma v 

### 8 . Contingency . Du e t o th e uncertai nnatur e o f retrofi t estimates , -be*f c th e contingenc y

(i.e. , uncertainty ) facto r inth e estimat e shoul dw 

### ^ e r 

### b e increased . svs 1 

### From th e abov e points , i t i s apparen t tha t som e o r mos t o f thes e instal - sec 

### t Iatio ncost s woul dincreas e ina retrofi t situation . However , ther e ma y b e othe r case s wher e th e retrofitte dinstallatio ncos t woul db e les s tha nth e w 

### it l cos t o f installin gth e system ina new

plant . Thi s coul doccu r whe non e ar e 

### contro l device , say

anESP , i s bein greplace dby a mor e efficien t unit-- a 2. 4 baghouse , fo r example . Th e ductwork , stack , andothe r auxiliarie s fo r th e ES P ma y b e adequat e fo r th e new system , a s perhap s woul dth e suppor t le y facilitie s (powe r plant , etc.) . lab 2.4. 6 Estimatin gAnnua l Cost s da t Determinin gth e tota l annua l cos t i s th e las t ste pinth e estimatin gar e procedure . A s mentione di nSectio n2. 2 th e TA C i s comprise do f thre e component s - - direc t an dindirec t annua l cost s an drecover y

credits . Unlik e th e installatio ncosts , whic har e "factored " from th e purchase dequipmen t cost , annua l cos t item s ar e usuall y compute dfrom

know ndat a onth e system siz e an

doperatin gmode , a s wel l a s from th e facilit y

an dcontro l devic e parameters . Followin gi s a mor e detaile ddiscussio no f th e item s comprisin gth e tota l annua l cost . (Values/factor s fo r thes e cost s ar e als o give ninth e section s fo r th e individua l devices. ) i n ap ]


## 3£>P.2 8 =*->: #
2-2 6 

### 2.4.6. 1 Ra

w Materia l s Ra wmaterial s ar e generall yno t require d wit h contro l systems . Exception s woul d b e chemical s use d i n absorber s o rventur i scrubber s a s absorbent s o r t o neutraliz e acidi cexhaus t gase s (e.g. , hydrochlori cacid)
. Chemical s ma yals o b e require d t o trea t wastewate rdischarge d b yscrubber s o rabsorber s •befor e releasin g i t t o surfac e waters . But , thes e cost s ar e onl yconsidere d whe n a wastewate rtreatmen t syste m i s exclusivel ydedicate d t o th e contro l system . I n mos t cases , a pro-rat a wast e treatmen tcharg e i s applied
. (Se e sectio n 2.4.6,5. ) Quantitie s o fchemical s require d ar e calculate d vi a materia l balancies , wit h a n extr a 1 0 t o 20% adde d fo rmiscellaneou s losses
. Cost s fo rchemical s ar e availabl e fro m th e Chemica l Marketin g Reporte ran d simila rpublications
. 2.4.6. 2 Operatin g Labo r Th e amoun t o flabo rrequire d fo ra syste m depend s o n it s size , complexity , leve l o fautomation , an d operatin g mod e (i.e. , batc h o rcontinuous)
. Th e labo ri s usuall yfigure d o n a n hours-per-shif t basis
. A s a rule , though , dat a showin g explici tcorrelation s betwee n th e labo rrequiremen t an d capacit y ar e har d t o obtain
. Atypica l correlatio n i s logarithmic : 

# h-(^y 

## (2

# - 6 ) L 

### i v 

### i where : Li » L g = labo rrequirement s fo rsystem s 1 an d 2

v l » v 2 = capacitie s o fsystem s 1 an d 2 (a s measure d byth e

ga s flo wrate , fo rinstance ) y= 0. 2 t o 0.2 5 (typica l ly)< 1 4 ) Th e exponen t i n equatio n (2-6 ) ca n var yconsiderably , however
. Conversely , i n man ycases , th e amoun t o foperato rlabo rrequire d fo ra syste m wil l b e approximatel yth e sam e regardles s o fit s size
. 

## j>7P.2 9
2-2 7 Acertai n amoun t mus t b e adde d t o operatin g labo rt o cove rsupervisor yinc i requirements
. Fiftee n pe rcen t o fth e operatin g labo rrequiremen t i s an d representative
. (15 ) pui s T o obtai n th e annua l labo rcost , multipl yth e operatin g an d supervisor y labo rrequirement s b yth e respectiv e wag e rate s (i n $/hr ) an d th e syste m ar e operatin g facto r(numbe ro fhour s pe ryea rth e syste m i s i n operation)
. sys i Th e wag e rate s als o var ywidely , dependin g upo n th e sourc e category , gent geographica l location , etc . Thes e dat a ar e tabulate d an d periodicall yhe r i update d b yth e U.S
. Departmen to fLabor , Burea u o fLabo rStatistics , i n it s Monthl yLabo rRevie wan d i n othe rpublications
. Finally , not e tha tthes e whe ar e bas e labo rrates , whic h d o no t includ e payrol l an d plan t overhead
. (Se e overhea d discussio n below. ) 2.4.6. 3 Maintenanc e Maintenanc e labo ri s calculate d i n th e sam e waya s operatin g labo r an d i s influence d b yth e sam e variables
. Th e maintenanc e labo rrate , however , i s normall yhighe rtha n th e operatin g labo rrate , mainl ybecaus e mor e skille d personne l ar e required
. A10 % wag e rat e premiu m i s typical.(15 ) Further , ther e ar e expense s fo rmaintenanc e material s - - oil , othe r lubricants , duc t tape , etc. , an d a hos to fsmal l tools
. Cost s fo rthes e item s ca n b e figure d individually , bu tsinc e the yar e normall ys o small , ft E the yar e typicall yfactore d fro m th e maintenanc e labor
. Referenc e 1 5 re c suggest s a facto ro f100 % o fth e maintenanc e labor
. 2.4.6. 4 Utilitie s Thi s cos t categor ycover s man ydifferen t items , rangin g fro m electricit y t o compresse d air
. Ofthese , onl yelectricit yi s commo n t o al l contro l devices , wher e fue l oi l an d natura l ga s ar e generall yuse d onl yb y wi th
.



### ar 

# £$P.3 0
2-2 8 incinerators ; wate ran d wate rtreatment , b yventur i scrubbers , quenchers , an d spra ychambers ; steam , b ycarbo n adsorbers ; an d compresse d air , b y pulse-je t fabri cfilters
. Technique s an d factor s fo restimatin g utilit ycost s fo rspecifi cdevice s ar e presente d i n thei rrespectiv e sections
. However , becaus e nearl yevery syste m require s a fa n t o conve yth e exhaus tgase s t o an d throug h it , a genera l expressio n fo rcomputin g th e fa n electricit ycos t(C e ) i s give n here:' 1 1 ) C e = 0.74 6 Q A

P s & P P 635 6 T I (2-7 ) where : Q = ga s flowrat e (actua l ft^/min ) A P = pressur e dro p throug h syste m (inche s o fwater , gauge ) (Value s fo rA

P ar e give n i n th e section s coverin g th e equipmen t 

### items. ) s = specifi cgravit yo fga s relativ e t o ai r(1.000 , fo ral l practica l purposes ) 9 = operatin g facto r(hr/yr ) n = combine d fa n an d moto refficienc y(usuall y0.6 0 t o 0.70 ) P e = electricit ycos t ($/kwhr)
. Asimila rexpressio n ca n be develope d fo rcalculatin g pum p moto relectricit y requ i rements . 2.4.6. 5 Wate rTreatmen t an d Disposa l Thoug h ofte n overlooked , ther e ca n b e a significan t cos tassociate d wit h treatin g and/o rdisposin g o fwast e materia l capture d b ya contro l syste m tha t neithe rca n b e sol d no rrecycle d t o th e process . Liqui d wast e streams , suc h a s th e effluen t fro m a ventur i scrubber , ar e usuall yprocesse d befor e bein g release d t o surfac e waters . Th e typ e



## * ?

### 2-2 9 P.3 1

an d exten t o fthi s processin g will , o fcourse , depen d o n th e characteristic s o fth e effluent
. Fo rexample , th e wast e ca n firs t b e sen tt o on e (o rmore ) clarifiers , fo rcoagulatio n an d remova l o fsuspende d solids
. Th e precipitat e fro m th e clarifie ri s the n conveye d t o a rotar yfilter , wher e mos t o fth e liqui d i s removed
. Th e resultin g filte rcak e i s the n dispose d of , vi a lan d filling , fo rexample
. Th e annua l cos t o fthi s treatmen ti s relativel yhigh—$1.0 0 t o $2.00/thousan d gallon s treate d o rmore.(15 ) Th e soli d wast e disposa l cost s (vi a lan d filling , fo rexample ) typicall ywoul d ad d anothe r$2 0 t o $30/to n dispose d of.(l^ ) This , however , woul d no tinclud e transportatio n t o th e disposa l site
. More informatio n o n thes e technologie s an d thei rcost s i s foun d i n Reference s (16 ) an d (17)
. 2.4.6. 6 Replacemen t Part s Thi s cos t i s compute d separatel yfro m maintenance , becaus e i ti s a larg e expenditure , incurre d on e o rmor e time s durin g th e usefu l lif e o fa contro l system . Thi s categor yinclude s suc h item s a s carbo n (fo rcarbo n adsorbers) , bag s (fo rfabri cfilters ) an d catalys t(fo rcatalyti c incinerators) , alon g wit h th e labo rfo rthei rinstallation
. Th e annua l cos to fth e replacemen tmaterial s i s a functio n o fth e initia l part s cost , th e part s replacemen tlabo rcost,'th e lif e o fth e parts , an d th e interes t rate , a s follows : CRC p = (C p + C pl )CRF p (2-8 ) where : CRC

p = capita l recover ycos t o freplacemen tpart s ($/yr ) C p = initia l cos t o freplacemen t parts , includin g taxe s an d freigh t ($ ) C p i = cos to fpart s replacemen t labo r($ ) CRFp = capita l recover yfacto r(define d i n Sectio n 2.3)
. any mus t 

### (ty t o ft


### mat ' fac 2. 4
Mu c wa y ma y
Pa y sup Se c 

### ot t pa i ov t la t

ne * 

### i n



# 3 ^P.3 2 r «$F 2-3 0 I n th e Manua l methodology , replacemen t part s ar e treate d th e sam e a s an yothe rinvestment , i n tha t the yar e als o considere d a n expenditur e tha t mus t b e amortize d ove ra certai n period
. Also , th e usefu l lif e o fth e part s (typicall y2 t o 5 years ) i s generall yles s tha n th e usefu l lif e o fth e res t o fth e contro l system . Replacemen t par t labo rwil l vary , dependin g upo n th e amoun to fth e material , it s workability , accessibilit yo fth e contro l device , an d othe r factors
. 2.4.6. 7 Overhea d Thi s cos t i s eas yt o calculate , bu t ofte n difficul tt o comprehend
. Muc h o fth e confusio n surroundin g overhea d i s du e t o th e manydifferen t way s i t i s compute d an d t o th e severa l cost s i t includes , some o fwhic h ma yappea rt o b e duplicative
. Ther e are , generally , tw o categorie s o foverhead , payro l 1 an d p l ant . Payrol l overhea d include s expense s directl yassociate d wit h operating , supervisory , an d maintenanc e labor , suc h as : workmen' s compensation , Socia l Securit yan d pensio n fun d contributions , vacations , grou p insurance , an d othe rfring e benefits
. Som e o fthes e ar e fixe d cost s (i.e. , the ymus t b e pai d regardles s o fho wmanyhour s pe ryea ra n employe e works)
. Payrol l overhea d i s traditionall ycompute d as a percentag e o fth e tota l annua l labo rcos t (operating , supervisory , an d maintenance)
. Conversely , plan t (o r"factory" ) overhea d accoun tfo rexpense s no t necessaril ytie d t o th e operatio n an d maintenanc e o fth e contro l system , including : plan t protection , contro l laboratories , employe e amenities , plan t lighting , parkin g areas , an d landscaping
. Som e estimator s comput e



# 31

### P.3 3 *> « 

### 2-3 1 plan t overhea db

y takin ga percentag e o f all . labo r plu s maintenanc e materials(IB ! - whil e other s facto r i t fro m th e tota l labo r cost s alone . (19 ) Fo r "study " estimates , i t i s sufficientl y accurat e t o combin e payrol l w an dplan t overhea dint o a singl e indirec t cost . Thi s i s don e i nthi s Manual . Also , overhea dwil l b e factore dfro m th e su m o f al l labo r (operating , supervisory , an

dmaintenance ) plu s maintenanc e materials , th e approac h recommende dinreferenc e 18 . Th e factor s recommende dtherei nrang e fro m 5 0 t o 70 % (1 Q 

### ) A

naverag e valu e o f 60 % i s use di nthi s Manual . 2.4.6. 8 Propert y

Taxes , Insurance , an dAdministrativ e Charge s Thes e thre e indirec t operatin gcost s ar e factore dfrom th e system

tota l capita l investment , an dtypicall y

compris e 1,1 , an

d2 % o f it , respectively . Taxe s an dinsuranc e ar e self-explanatory . "Administrativ e charges " cover s sales , researc han

ddevelopment , accounting , and * othe r home offic e expenses . (I t shoul dno t be confuse dwit hplan t overhead , however. ) Fo r simplicity , th e thre e item s ar e usuall y combine dint o a single , 4 % factor . Thi s value , incidentally , i s standar di nal l OAQP S cos t analyses . 2.4.6. 9 Capita l Recover y A s discusse dinSectio n2.3 , th e annualizatio nmetho duse dinth e Manua l is . th e equivalen t uniform annualize dcos t method . Recal l tha t th e cornerston e o f thi s metho di s th e capita l recover y facto r which , whe nmultiplie db y th e tota l capita l investment , yield s th e capita l recover y cost . (Se e equatio n2-2. ) However , wheneve r ther e ar e part s inth e contro l system tha t mus t be replace dbefor e th e en do f it s usefu l life , equatio n2- 2 mus t be adjusted , t o avoi ddouble-counting .



## jn-

### P.3 4

'••§ & • 

### 2-3 2 Tha t is : CRC S 

### = CRF

S 

### [TC I - (C p 

### + C p l 

### ) ] (2-9 ) where : CRC S 

### = capita l recover ycos t fo rcontro l syste m (%/yr) TC I = tota l capita l investmen t fo rent i r e syste m ($)
. CRF S 

### - capita l recover yfacto rfo rcontro l syste m The ter m (C p 

### +C p 

### i ) account s fo rth e cos t o fthos e part s tha t woul d be replace d durin g th e usefu l lif e o fth e contro l syste m an d th e labo rfo r replacin g them
. Clearly , CRF S 

### an d CRF

p 

### wil l no t be equa l unles s th e contro l syste m and replacemen t par t live s ar e equal
.



# 33P.3 5
2-3 3 Reference s fo rSectio n 2 : 1
. Perry , Rober t H. , an d Chilton , Ceci l H. , Perry' s Chemica l Engineer' s Handboo k

(Fift h Edition)
. Ne wYork : McGraw-Hill , 1973 , pp . 25-1 2 t o 25-16
. 2
. Humphries , K
. K
. an d Katell , S. , Basi cCos t Engineering , Ne wYork : Marce l Dekker , 1981 , pp . 17-33
. 3
. Grant , E.L. , Ireson , W.G. , Leavenworth , R.S. , Principle s o fEngineerin g Economy , Sixt h Edition
. Ne wYork : Joh n Wile y& Sons , 1976 , p.25
. 4
. Ibid. , p . 35
. 

### 5 . Ibid. , p . 36 . 6
. EA B Guidelin e Memo : "Interes tRate s fo rRegulator yImpac t Analyse s (RIA)" , Ma

y27 , 1982
. 7 . "Interi m Regulator yImpac tAnalysi s Guidance, " Offic e o fManagemen t an d Budget , Jun e 5 , 1981
. 8
. Grant , e t al.. , Op
. Cit. , p . 67
. 9
. Ibid. , p . 91
. 

### 10 . Ibid. , pp . 107-131 . 1 1
. Vatavuk , W
. M
. an d Neveril , R
. B. , "Estimatin g Cost s o fAir-Pollutio n Contro l Systems—Par tI : Parameter s fo rSizin g Systems, " Chem i ca l Engineering , Octobe r6 * 1980 , pp . 165-168
. 12
. Pollutio n Equipmen t News , Pittsburgh : Rimbac h Publishing , 1982 , pp . 71-72
. 13
. Interna l Revenu e Service , For m 1040 , 1985
. 14
. Peters , M
. S
. an d Timmerhaus , K
. D. , Plan t Desig n an d Economic s fo rChemica l Engineer s (Thir d Edition] - ; NewYork : McGraw-Hill , 1980 , p . 195
. 15
. Vatavuk , W
. M
. an d Neveril , R
. B. , "Estimatin g Cost s o fAir-Pollutio n Contro l Systems—Par t II : Factor s fo rEstimatin g Capita l an d Operatin g Costs, " Chemica l Engineering , Novembe r3 , 1980 , pp . 157-162
. 16
. Ibid. , "Par tXVII : Particl e Emission s Control, " Chemica l Engineering , Apri l 2 , 1984 , pp . 97-99
. 17
. Th e RCR

ARisk-Cos t Analysi s Mode l : U.S
. Environmenta l Protectio n Agency , Offic e o fSoli d Waste , Januar y13 , 1984
. 18
. Peter s an d Timmerhaus , Op
. Cit. , p . 203
. 19
. Humphrie s an d Katell , Op
. Cit. , pp . 64-68
. 

# 3i