When calculating the investment amount for a chemical plant, the coefficient method called Lang factor is very important.
This is a way of thinking that I would like to acquire as one of the skills of a mechanical and electrical engineer.
If you properly understand this concept and put it into practice, small-scale in-house estimation work can be done extremely quickly.
The concept itself is simple, but collecting data is difficult and requires steady effort and building a cooperative system with people around you.
Definition of Lang factor
One way to calculate the capital investment amount for a factory is to use a coefficient called the Lang coefficient.
It may also be called the coefficient method.
Defining the Lang factor is extremely easy.
Lang coefficient = total investment amount / equipment amount
Chemical plants use this Lang coefficient to calculate various capital investment amounts.
Advantages of using the Lang coefficient
We will introduce the benefits that can be obtained by using Lang coefficients in chemical plants.
Instant estimate available
Using Lang coefficients, you can instantly estimate the amount of capital investment.
Mechanical engineers can get a sense of the amount of capital investment.
Even if you are a little worried, just ask the equipment manufacturer and they will figure it out in an instant.
Recently, there have been an increasing number of cases where equipment manufacturers are too busy to respond.
Your company should have data on past equipment purchases, so you can use that.
It is possible to estimate the approximate investment amount simply by multiplying this equipment amount by the Lang coefficient.
We can give you an estimate in less than a day.
Accuracy verification of detailed quotations is possible
By using the Lang coefficient, it is possible to verify the accuracy of accurate estimates.
In a chemical plant, the investment amount is not determined only by a rough estimate.
We will make a detailed estimate for the purpose of improving accuracy.
We will use data such as P&ID, layout, and manufacturing flow to improve accuracy even a little.
For example, the following method.
- List the required pipe diameter and material from P&ID
- Calculate the length of each pipe based on the layout
- Add the necessary incidental equipment while watching the process flow
With this kind of feeling, it is a precise estimate to raise the accuracy a little.
This is sometimes called cumulative.
Accumulation will take some time. People still go there.
That’s why mistakes can happen.
To double check for that mistake, we use the Lang factor.
If the Lang coefficient obtained by dividing the accumulated investment amount by the equipment amount is extremely small (large), the accumulation is strange!
It can be determined that
Increased sensitivity to capital investment
Using Lang’s coefficient increases sensitivity to capital expenditures.
Mechatronics engineers often make accurate estimates for integration.
Just submit the results to the company as they are.
As a company, you cannot make investment decisions.
A detailed estimate is just a detailed estimate.
The company’s management estimates the approximate amount using Lang’s coefficient, and makes investment decisions based on the fact that the final estimate does not deviate.
It is the same relationship that mechanical and electrical engineers interview equipment manufacturers when making a detailed estimate.
Before asking equipment manufacturers, mechanical and electrical engineers who have a certain level of sensitivity will interview equipment manufacturers to improve accuracy.
Lang factor is an empirical value
This Lang coefficient is very useful, but there is a caveat.
The point is that it depends on the environment of the company and the factory.
It is said to be about 3 to 5 in chemical plants.
- Factory construction/expansion/renovation
- batch/continuous
- Plant only/with ancillary equipment
By adding various conditions, the Lang coefficient naturally changes.
In order to use the Lang coefficient well, it is necessary to accumulate past achievements.
The Lang coefficient is empirical knowledge.
Some companies have abandoned the accumulation of data,
In the long run, there are many drawbacks.
Example of batch chemical plant construction
At least 4 billion yen is required to build a batch chemical plant in Japan .
Let’s think about this using the Lang coefficient.
Look at it as a Lang coefficient exercise.
Equipment amount
The first step in estimating by the coefficient method is to derive the equipment price.
Once the size of the plant is determined, it is determined almost automatically.
For example, consider a four-story plant with a width of 15 m and a length of 40 m.
For batch plants, it is relatively easy to derive a rough estimate of equipment costs.
Consider one block as a four-story building with a width of 7.5m x 5m.
The equipment cost per block is approximately 45,000,000 yen.
| stirring tank | 20,000,000 |
| Heat exchanger | 10,000,000 |
| tank | 10,000,000 |
| pump | 5,000,000 |
To apply this to a width of 15m x length of 40m, simply multiply by 16.
0.45×16=720 million yen
rung coefficient
The second step is the derivation of Lang coefficients.
This value varies depending on the industry.
For continuous plants, the coefficient is slightly lower, around 4, and for batch plants, it is higher, around 5 .
The coefficients are lower for continuous plants as follows.
- More equipment in the same site area
- A lot of special equipment is expensive
- The number of connecting piping for equipment is small.
- Few piping made of high-quality materials
Batch plants perform switching production, so there is a lot of expensive piping such as glass lining, and the cost of piping work for one facility is high, so the coefficient is high.
In this regard, it is actually better to refer to the performance data of each company.
In fact, costs continue to rise.
Investment amount
Once you have determined the equipment cost and rung factor, the rest is easy. Multiplication only.
Equipment cost 720 million × Lang coefficient 5 = 3.6 billion yen
If you include some margin, it’s 4 billion yen .
Example of new product introduction in batch chemical plant
Let’s consider the case of introducing a new product into an existing plant, similar to the construction of a new plant.
Equipment amount
In general, the cost of equipment when introducing a new product will be significantly reduced.
This is because it is common to reuse existing equipment .
In this case, let’s count the number of existing equipment required to introduce the new product.
Most of the equipment from the existing plant will likely be reused.
In the above example where the capital investment for the plant is 720 million yen , about 80% would be diverted.
7.2×0.8=570 million yen
Lang factor
What should be the rung coefficient when introducing a new product?
This varies considerably depending on the factory.
In my workplace, around 3 is common.
This is because the following costs are cut compared to the time of plant construction.
Lang factor elements that are cut when introducing a new product
- Civil engineering construction costs
- Some piping work costs
- high voltage electrical panel
- emergency generator
Major items in plant construction can be omitted when introducing new products.
If this is 2 out of 5 Lang coefficients, the calculation is 5-2=3.
1.5 or 2.5 depends on the factory, so it is important to accumulate data.
Let’s go with 3 here .
Investment amount
Multiplying the equipment amount using the Lang factor yields the following value.
5.7×3=1.71 billion yen
It doesn’t end here.
You must subtract the equipment amount .
The equipment amount used to calculate the investment amount was only used to derive the Lang coefficient.
It would be strange to include this in the investment amount when the equipment is actually being reused.
No matter how much equipment is reused, about 20% of the 720 million pieces of equipment will be replaced.
7.2×0.2=140 million yen
This value will be the actual equipment amount.
That is, the difference between the equipment cost of 570 million yen used for the Lang coefficient and the actual equipment cost of 140 million yen.
5.7-1.4=430 million yen must be subtracted from the investment amount.
17.1-4.3=1.28 billion yen
This value is fairly standard for capital expenditures for new product introductions.
reference
To estimate the investment level, you need to have a complete picture of your chemical plant.
The following books are recommended to learn the overall philosophy of plants.
Related information
Related information
lastly
I introduced Lang coefficients used in chemical plants.
Instant estimates are possible. It is possible to double check the detailed quotation. You can study investment decisions.
Gather past performance statistics and use them to make timely investment decisions.
This is where the skills of mechanical and electrical engineers, whose actual results are easily available, are put to the test.
Please feel free to post any concerns, questions, or concerns you may have regarding the design, maintenance, and operation of chemical plants in the comments section. (The comment section is at the bottom of this article.)
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