241

(1916)1

i?ngineeringand PImess Economics 1

24 - 243
0 ElsevierScientificPublishingCompany,Amsterdam-

Printedin The

Netherlands

BOOK REVIEWS
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The Principles and Techniques of Engineering

Estimating; by Granvilfe Calder, published by
Pergatnon Press 1976, 167 pages, price & 5.00.
Books in this field relating to U.K. conditions and practice are few and far between,
the majority of those on this subject in the
english language being orientated almost
exclusively to U.S. conditions. So this book is
indeed welcome, even although, in view of its
size, the treatment is never in depth.
The book attempts to cover and follow
through ail forms of engineering estimating
within a v3ry small compass. It deals with four
main areas: machine shop estimating, including
mass production techniques: capital cost
estimating: research and development estimating:
and finally technological forecasting. It also
deals briefly with investment appraisal. All the
emphasis is on machine shop estimating, the
treatment of capital cost estimating being at
best superficial.

Process Plant Estimating fvatwtion and

Control; by Kenneth M. Guthrie, published by
the Craftsman Book Co. (U.S.A ), 1974, price
$25.
At first glance this book seems to fulfill all
its author promises by way of comprehensive
theoretical and numerical cost data. It is full
of charts and diagrams which should satisfy
the costing requirements of a large majority
of chemical engineers. However, when attempting to use the book for an actual costing
exercise it quickly becomes clear that It has inconsistencies of terminology and confusing
presentation that make it difficult to use with

--__The role of the estimating function within

the management structure is demonstrated
and its importance and influence is outlined.
The need for management to understand both
the value and the limitations of the estimating
functioil is continually stressed. As we are in.,
deed warned by its title, the book covers principles and techniques, and does not provide
any detailed costs, or costing data, except to a
minor extent for illustrative purposes. It is m
no sense, therefore, a textbook, but can well
serve as a useful introduction to a subject with
which many more, particularly in the management field, should be familiar than is the case
at present. The easy, friendly style of writing
should encourage the uninitiated to delve deepel
than perhaps they normally would in a subject
which is very much the preserve of the specialist
E.A. Stallworthy

any confidence. The author does not quote

any sourzes of his information, theoretical or
practical, so it has to be assessed as a ver.1
personal book, the result, no doubt, of many
years of experience.
The book has 600 A4 sized pages divided
into eleven sections each attempting to examine
a specific area of costing or evaluation theory
osr practice.
A. The economic environment. This section discusses evaluation of capital projects by the
standard techniques of payback time, NPV,
DCF and so on. The author includes an unconventional year -1 before the capita1 investment year 0 in his cash flow diagrams with-

242
out explaming its significance. There also
stems to be some confusion between design
production capacity in relation to capital cost
and operating capacity in relation to Operating
cost in the discussion of breakeven level.
There follow some 80 pages of graphs and
tables showing total capital investment in
terms of plant capacity for a range of 60 processes. The costs tk roughout the book are
normalised to mid 1970 average U.S. values.
The plants included are mostly petrochemical
and aknost entirely liquid or liquid/gas handlmg
and no indication is given as to the source of
the information.
Th; terms used are not defined and there
is some confusion about what each means, for
instance, it is not clear whether process units
are the same as purchasec equipment or
whether total capital investment has the
same meaning throughout the book and is the
same as, for example total module cost. All
the terms need to be defined and consistent in
such a text and a numerical example of how to
use the cost data would be a very valuable
addition.
Graphs of operating costs for the 60 processes
are next included but are quoted in dollars per
unit and the unit is not defined. There is
also a brief discussion of plant overheads expenses including depreciation. Taxation is hardly mentioned.
8. Chemical process modules. This includes an
explanation of much of the data presented in
section A under modules! It provides data
for assembling plant item costs from the item
type, material of construction, and direct
labour factor to produce a module cost. Data
for various types of h*at exchangers, process
vessels, pumps, and several other types of
process unit, and details for most of the
ancillaries are included, such as painting, insulation, control panels and electrical installatlon.
C. Buildings and structures. These civil engineering costs are presented in the standard
way by type, floor area or structure volume

and include separate cosis for building services

such as lighting, heating, etc.
D. Offsite facilities. These include steam and
power generation, cooling, refrigeration and
siorage costs which are presented in a similar
way to Sections A and B with similar difficulties.
E. Site development. These are, again, standard
civil engineering type costs presented in straightforward tabular form.
F. Project indirect costs. These include construction overheads, engineering costs and
contingencies and are applied to all the types
of process modules referred to in Section B.
G. Pipe estimating handbook. This is a very
valuable section of the book and includes data
on capacity, weight and flow for standard
American pipes and flanges from 1 inch to
30 inches diameter. There are viscosity and
density charts for liquids and gases and from
these are derived pressL*rcloss diagrams. The
chapter ends with unit costs for pipework and
pipe fittings including valves insulation,
painting, tracing, etc.
Sections H, J, and K are more theoretical
sections of the book providing an introduction
to various control techniques for projects.
H. Project control techniques. This section has a
brief discussion of cost control in which forecast performance is compared with actual
performance to produce a new plan. There is
also a mention of a modular control technique which seems to be a way of breaking
down a large and long capital programme
into manageable units.
J. Computer cost management. This has a brief
description of how a computer might be used
for some of the processing involved in H.
K. Uncertainty and risk. This section mentions
standard statistical methods for probability
assessment.
L. General design data. This appendix contains
comprehensive conversion tables - American
and metric -and graphs for vessel volumes,
weights, areas and pumping powers. Escalation
indexes for 1963 - 1973 are presented for

plants and their components, and the effect

of world location on costs for North and South
America, Europe and Australia. This section,
and the book, ends with suggested layouts for
various types of costing forms.
Nearly half the book is taken up with
Sections A and B which are potentially a valuable
addition to the published data on process plant
costs. With the suggested definition of terms,

editing to maintain consistency and provision

of examples this would be a most useful source
of cost data for students and practising cngineers. The second half presenting standard non
process costs and briefly describing costing
theory is not so original. but is better prcscntcd
and easily used.
J.K. Maund