Accurate detailed capital cost estimates are critical for the successful implementation of major commercial investments.
An accurate estimate of a capital expenditure (CAPEX) is foundational to timely and profitable implementation of a new or proven technology. In industries ranging from renewable energy production and petroleum refining to semiconductor and consumer product manufacturing, detailed cost estimating methodologies can be used to quantify the cost of design and construction operations, as well as the overall investment.
This article is Part II of a two-part series on capital cost estimation. Part I (April 2021, pp. 42–47) defines the five phases of capital cost estimates, but focuses on early-stage cost estimating methods (1). Part II addresses detailed capital cost estimation, which aims to maintain value identified in early-stage estimates and then optimize the deployment of financial resources to achieve maximum return on invested capital (ROIC).
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