Understanding Cost Growth and Performance Shortfalls in Pioneer Process Plants

by Edward W. Merrow, Kenneth Phillips, Christopher W. Myers


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Misestimation of the capital costs and performance of innovative energy and chemical process plants creates fundamental problems in planning the development and commercialization of advanced technologies — including synthetic fuels. This report presents an empirical analysis of the following questions: What factors are responsible for inaccurate cost estimates found to be typical of pioneer process plants? How well do pioneer plants perform and what factors are responsible for poor performance? What are the implications of the answers to these questions for energy planning by industry and the government? Detailed proprietary information on 44 process plants built by 34 oil, chemical, and mineral companies sustain the quantitative analysis. The report draws implications for planning and estimating innovative projects, for comparing advanced technologies in different stages of development, and for commercializing new technologies in pioneer plants. Also mentioned are some promising avenues for research and development.

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