Understanding cost growth and performance shortfalls in pioneer process plants

Abstract

Misestimation of the capital costs and performance of innovative energy process plants and other chemical process facilities creates fundamental problems for government and industry in planning the development and commercialization of such plants. What factors are responsible for inaccurate cost estimates for process plants. How well do pioneer plants perform and what factors are responsible for poor plant performance. What are the implications of the answers to the above questions for planning by the process industries and DOE. Thirty-four firms in the process industries provided data. Detailed proprietary information on 44 process plants sustained the analysis. Most of the variation found in cost-estimation error can be explained by the extent to which the plant's technology departs from that of prior plants, the degree of definition of the project's site and related characteristics, and the complexity of the plant. Most of the variation in plant performance is explained by the measures of new technology and whether or not a plant processes solid materials. The routinely high performance assumed for pioneer process plants is unrealistic. Over 50% of the plants in the sample failed to achieve their production goals in the second six months after startup.

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