Factored estimate

In process industries, the cost of the major equipment is knowable early — vendors will quote a compressor or a column from a datasheet long before the plant is designed. Factored estimating exploits the observed regularity that everything around the equipment (piping, steel, instruments, electrical, civil, installation labour, engineering) bears a fairly stable ratio to the equipment cost for a given type of plant. Multiply the equipment total by an overall factor — the classic Lang factors run roughly from three for solids-handling plants to nearly five for fluid-processing plants — or apply component factors per discipline for a finer result, and a total installed cost appears from remarkably little definition.

It is the workhorse of order-of-magnitude and study estimates, and it fails in predictable ways: factors calibrated on greenfield plants applied to revamps inside a live facility, unusual metallurgy that distorts the equipment-to-bulks ratio, or site conditions the reference data set never contained. A factored estimate is an analogy, and it is only as good as the resemblance.