Document KG59pdnXpNZk89pDkwwnKOzar

CELANESE CHEMICAL COMPANY TECHNICAL CENTER Corpus Christ!, Texas May 1, 1980 TMK-436-80 Ceianese Construction Cost Index - 1980_________ Bay City C.E. Jackson M. Lantau D.H. Miller C.V. McSwain C. R. Pennington P.R. Raps tine W.F. Soward E. L. Tejml M. Valenta Bishop J. W. Beasley G. Cade J.F. Harper C.W. Harrison P.E. Hime D.G. Pausky J.C. Susil Bishop Plastics F.V. Beckman R. G. B randt C. J. Doedyns D. C. Hartman W.R. Timman CCCTC C.J. Brugger J.D. Chase A.G. Custer G.J. Fisher E. Hackman L. W. Hartman W.E. Heinz W. C. Hopkins T. M. Knox R.W. Rasmussen J. M. Robertson A. Spencer W. T. McNair P.J. Volpe Central Files Daw-McKee- Lakeland B.W. Ellis C.D. Yates New York J. W. Fella J.D. Underwood Clear Lake W. W. Hampton R.A. Farrow J.J. Fritsch D.R. Lehman J. L. McCavit L. C. Rosa J. L. Ward Pampa A.S. Baker J.J. Forstchen G.J. Hayman E.C. Juenger C. E. Loeffler G. C. Seaman C.E. Steel B. C. Stephens Charlotte R.S. Sahlie C.K. Powers - FII New Jersey Plastics T. Welch Summit P. A. Penley S. I. Goldberg Edmonton J. Kuziak M. Yashchshn Greer C, Carter Newark Terminal W. D. Coble Celco - Narrows W. L. Shealy Costa Mesa, CA D. Watkins Dallas R. J. Anderson H.B. Bartley A. L. Baxley J.A. Bousquet J. T. Cockburn R. D. Damron D. L. Daehnert D.O. Dawson P.E. Duduit D. L. Edwards O.H. Kirchmeier R. E. Larsen K. H. Marple W.L. Pieper B. L. Pritchard K.B. Rollins R, C. Seawright T.R. Shandley J. A. Stewart S. H. Warren E. N. Wheeler H. C. Wilson Mexico C.A. Bruce Araoldo Cepeda Roberto Celaya L.J. Kilgore I. J. Miller J. P. Mireur N.G. Schack W.A. Seime Hector M. Ortiz Celaya Antonio Avila G. Jose Louis Cardenas P. G. Ibarra I. Jauregui C. F. Braun - Alhambra L. L. Henderson A.G. Pullan Louisville A. Coppola . M. Gordon 007190 R. Schmidt R.E. Trampe CELANESE CHEMICAL COMPANY, INC. TECHNICAL CENTER Corpus Christi, Texas May 1, 1980 To Mr. A. G. Custer - CCCTC From T. M. Knox TMK-436-80 Celanese Construction Cost Index - 1980 The 1979 Celanese Construction Cost Index has been updated according to escalation recorded from 1/79 to 1/80 and projected escalation to mid 1983. (Figure 1). COST DATA Prices of equipment and commodities were obtained from pur chase orders, quotes, and discounted price lists and used to form the basis for the indicated changes in measured escalation of monitored items. The attached graphs, Figures 1-17, show the index (7/75 = Base 100) for real costs (Celanese) from 7/75 to 1/80 and projected costs to 7/8 3. Projected escalations shown on each graph were derived through personal consultations with representatives of manufacturers, vendors, engineering firms, and contractors including: 4 - Company Presidents 4 - Vice Presidents 4 - General Managers 1 - Manager - Capital Cost Estimating 3 - Managers - Cost Engineering 1 - Manager - Purchasing 5 - Managers - Regional Sales 6 - Sales Representatives Several people were contacted this year for the first time due to personnel changes plus two new contacts but, for the most part, the contacts are the same ones consulted in previous years. Consultations this year were made by Mr. Shandley, Mr. Ellis, Mr. Seawright, and Mr. Daehnert in Central Purchasing, and-those that I made plus one new contact, an engineering firm. As before, when a range in projected escalation was given, e.g., 10-12%/year, the lower number or a weighted average was usually considered, dependent on past experience. Generally, 007191 TMK-436-80 -2- May 1, 1980 the projected escalation for the next three years.are higher numbers than those given last year (TMK-426-79). COST INDEX FOR RFAs Escalation as applied to RFAs, whether for preparation, check estimate, or definitive estimate should be based on the latest Celanese Construction Cost Index (Figure 1). This graph shows the cost index for a total plant battery limits only. When using this index to calculate escalation for a project the escalation expenditure rate is about 70% of the escalation (Figure 1) and should be applied at start of engineering (spending money) to startup of the project. COST INDEX FOR CAPITAL PLANNING For preparation of hydrocarbon, R&D, and capital budget planning, the adjusted MSI shown below should be used. Actual escalation, as seen from results of accumulated data used in the preparation of Figure 1 from 7/75 to 1/80, was applied to the previous adjusted MSI beginning with 7/75. From 1/80 to 7/83 the MSI is adjusted in accordance with the projected escalation shown on Figure 1. Mr. J. W. Fella, Corporate Planning, concurs with these projections. Escalation from mid 1983 to mid 1990 is projected by Mr. Fella as shown in the middle column below with the corresponding adjustment of the MSI accordingly: Mid Year % Escalation Adjusted MSI 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 - 2. 1 2.45 8. 4 10. 5 11. 55 10. 7 10. 1 9. 5 8. 7 8. 4 8.2 8. 0 7. 7 7. 7 7. 5 630 643 659 714 789 881 975 1073 1175 1277 1385 1498 1618 1743 1877 2018 Actual Projected 007192 TMK-436-80 -3- May 1, 1980 EQUIPMENT AND COMMODITIES Insulation prices monitored for this index are based on a weighted percent of average price base of Fiberglas (30%) Foamglas (50%), and calcium silicate (20%) pipe insulation in required thickness according to the latest Celanese insulation standards. Two vendors were contacted for prices and their best guess projections for escalation. One projected a weighted average of 13. 5% and the other 5.9% for 1980 (8% was used for the index Figure 3). Piping escalation is based on a weighted average for carbon steel (40%) and stainless steel (60%) in Figure 4. Total piping for each material. Figures 6 and 8, is composed of 40% pipe, 40% valves, and 20% fittings (1975 Base). The overall piping index for 1979 was up 21% and the projected escalation was 15%. Stainless steel (316) piping was up 29% and carbon steel piping was up 9%. The large increase in stainless piping was due primarily to the significant increase in the cost of molybdenum. It is interesting to note that total piping costs for 1/80 (Figure 4 - based on monitored prices) is only 3% more than in mid 1975. Instrumentation escalation is based on pricing of transmitters, recorders, controllers (pnuematic and electronic) and control valves (carbon steel and stainless steel). The instrumentation index for 1/79 to 1/80 was up 12% versus the projected escalation of 6. 5% (Figure 9). Electronic transmitters, pneumatic recorders and 316 SS control valve prices increased 16% to 35%. This was the primary accounting for the higher escalation. Electrical equipment escalation is based on prices of a motor starter, two wire sizes, and conduit. Pricing on a 1500 KVA trans former is monitored also to detect trends but not used in determining escalation rates. The electrical index for 1/79 to 1/80 was up 10% versus the projected escalation of 9% (Figure 10). Two vendors were contacted for escalation projections in 1980; one projected 10% and the other 18%. On a weighted basis of previous projections, 12% was used for the index. Structural steel escalation is based on a weighted average (1975 Base) using heavy, medium and light weight categories as a percent of total steel cost (less reformer steel) on Bishop MS II project (Figure 11). Another interesting point to note (on Figure 11) is the index for structural steel at 1/80 is the same as at 7/75. Concrete pricing is based on using 140 pounds of rebar per cubic yard of concrete. Escalation is based on annual contracts for concrete and reinforcing steel negotiated by S&D (Figure 12). Total civil escalation is based on 60% structural steel and 40% concrete (Figure 13). 007193 TMK-436-80 -4- May 1, 1980 Direct labor escalation to 1/80 is based on a 7/75 calculated average rate for construction labor on Celanese projects in the Houston area. Figure 15 is a graphic illustration of the escalation of labor rate only. Total dollars for direct labor cost at 1/80 includes escalation plus 20% added in 1978 due to labor efficiency. The projected escalation rates shown in this report are weighted averages of projections made by the many people contributing their knowledge and "gut feel. " Peaks and lows are inevitable and no attempt has been made to project when these might occur. I appreciate the help of Mr. Shandley, Mr. Seawright, Mr. Ellis, and Mr. Daehnert in obtaining information and price data. TMK:jl T. M. KNOX 007194 1 i i T~i--|--------1 : i . |-- 1I 1 1. . ! ' --------- !----------i i i 1--I---------------: r~ 7 .7 --------- ! 1 1 : 1 1 :--: 1 1 ; 1 ;* 1:i ! ----- Actual ----------- Projected r1 , . 1 -------------------- . :1 9.5^ / i . t , ----------1 : ! i i i ' : ; i! . ,___ ___ :;1;1______ 1_ : l i J* 10. 7%__t ___ _________ ___ ___ ! >. . i1 1ii i < 1 11, 7L L.` \ .. 1 --------- 1---- --1 ;----- 1------ 1---------- 1 ; " 9,1% 1 1 '--1--------- !---------- 1----------1-------------------- 1 ______ ___ ______ ___ ______ ___ :___l 1 ___ :---- ------- '_______,;______ _,, .1 1 1 11 e- i It'1: J_____________ L. 'Ii|. | '111______ ___ ,______ ___ 1,' .. i ; ]_ 4. Wo J____ ^_____ 1_______ ___ ,___ ___ ____ ______ ___ ! L 2. 1 % 0% T- ! | --i 1:i ii!i: ' , it - . - j i . : ! 1 ; ' ' ' 1! ;'1 .!1j 1! i1' ! i?i ..._______ i 1 ^ r~ i"i___ !1 ;> J /wn -y- /J - &CS 1 imi rrri r-i ; 1 r i 1.1 1_J i 7 1 1.1 L- 7/75 1/75 7/75 1/77 7/77 1/71 7/75 1/79 7/79 1/90 7/T 1/91 7/51 1/91 7/91 1/53 7/93 Yew TOTAL PLANT (BATTERY LIMITS) Figure i | i 7/75 1/75 7/75 1/77 7/77 1/79 7/75 1/79 7/79 1/50 7/90 1/81 7/81 1/83 7/82 1/83 1/83 Year MAJOR EQUIPMENT Escalation - Based on Projections from 7 Manufacturers Three projected Escalation on Fabricated Equipment at 12-20o,e/ Yr. Two projected Escalation on Rotating Equipment at 7-10%/Yr and Two projected 12-15?#/Yr. Figure 2 007195 Actual Projectea 5 :5< --- - 2% JJT. 9J -- - 3% j-- 1 --* >% -I------- U 10% JXJZSL _ Q' ins l/ie i/ti i/rr 1/77 1/11 i/ 1/19 t/h i/m Yar ~f*r^ 'Y+tiT'fo- vw 1/11 i/n l/n 7/ i/m i/m INSULATIO N Two Vendor* Contacted - Escalation Projected at 9-15%/Yr. Figure 3 TOTA L PIPING Ratio: 40% Carbon Steel and 60% Stainleaa Steel Three Vendor! Projected Escalation at 10-13%/Yr. Figure 4 Pipe V alves F ittmgi Yt*r CARBON STEEL PIPE, '/ALVES i, FITTINGS Figure 7 007196 _ -- A ecu* l ...... Projected TOTAL PIPING - CARBON STEEL - 40% Pipe. 40f Valve*. 2OS Fitting* Figure 6 STAINLESS STEEL PIPE. VALVES. It FITTINGS Figure 7 7/75 1/76 7/79 l/'7 `V77 1/78 7/78 1/7$ 7/79 1/80 7/80 1'31 7/81 1,52 7-82 1/83 ",33 Ytu TOTAL STAINLESS STEEL PIPING - 40-r, pipe. 40*, Valves. 20* Fittinea Figure S 007197 Actual Projectea Yes INSTRUMENTATION Two Vendor* Contacted: One projected Escalation at 3-9%/Yr. : the other 10%/Yr. figure 9 -- :ao , i i . IMJ i |i|^ '11 i1 1i' ! i i ii| ! 1 1.! :!___________ J________________ 11% , *'r.HI--.-..-.-.-.-.-.-..-.-.-.-..--.-.-.-..-.-.-.-.-.-.-..-..1 ....... i in J on n i nn 90 70 1/78 `. .1 i r- ; . i i: 1 l 10% ! I --* . * v . i 1 --^~r----------- :------------ 1| '`i' ' j ' -a% - . >*'. i j_ &% j____^____________ i!________________ ii<_______ ____ :________ ____L_J____i:i M1' 1 ' ii 1 j 1 1' :___________i- L_ 1 1 1 1 . i 1: 11 :i 11 --1 '1 : i' : ' ----------- --------------\ \ \ i \ 1 1 . > I/1 7/71 1/77 7/77 1/78 7/71 1/71 i ;i1 i! .... 1- ' !. 1 ; .1 1 i < . 1 1 .1 --:--;--:--;--1--!--1------------ :--I 1 ; ' -- t ` 1 T" '----1 1 1___ _ , |i . .i I i i-. i i i 7/71 1/10 7/80 l/8t 7/11 1/88 7/88 1/81 7/13 ^ Ye* E LECTRICAL Two Vendor* Contacted: One projected escalation at 10%/Yr.; the other 12-14%/Yr. Figure 10 7'7J 1/76 7/7 1/77 7/77 1/78 1/71 1/79 7/79 1/90 1/80 1/81 */Sl 1/82 7/98 1/83 VM Yes STRUCTURAL STEEL Escalation to 1/80 was derived from a weignted average of actual prices of the following catagones: Heaw - 41 I/Ft. and over - olack 1 fc'U of Total Medium - 22 - 40# Tt. - black Licr.i -3-21 */Ft, - Black nn of Total :1" of Total The oercent of total average ws aerived by takins each aoove claaj u a cercent ifcuec .r. Oudarj zi Total Structural Steel dess Reiormer Steeli on 3 is nop MS - LI 007198 Actual Projected Baaed on SfcO Contract* (For Houaton Area) and Projection* per S4D Figure 12 Y TOTAL CIVIL (60% Structural Steel, 40% Concrete and Rebar) Figure 13 BUILDING (MASONRY TYPE1 One A rcmtect-Contractor Projected l 3 -1 r iaure 14 Yr. 007199 Actual Projected Projections by Company Estimator* Percent* Shown for Actual Eicalatton are Based on Increase of Average Labor Rate Figure IS Ym ENGINEERING Baaed on Projection* by Four Engineering Companies Figure 16 CONSTRUCTION OVERHEAD .CELANESE PLUS CONTRACT', rif,.-? 007200