Question

Which cost estimation method uses historical data from similar plants?

• A. Detailed itemized estimation
• B. Factored estimation
• C. Lang factor method
• D. Turnkey costing

Hint:

Factored estimation is fast and efficient for early-stage projects — ideal when only major equipment data is known and historical references are available.

Answer 1

The Correct Option is B

Factored estimation is a type of preliminary cost estimation technique that relies on historical data from similar plants or projects. It estimates the total cost by applying multiplication factors to the known costs of key items or units (like equipment) based on experience from past projects.
This method is especially useful in the early stages of design when detailed information is unavailable. It provides a quick yet reasonably accurate cost prediction using established ratios and scaling laws.
Let's examine the other options:
- Detailed itemized estimation requires a complete breakdown of all costs and is used much later in the project when full design data is available.
- Lang factor method also uses historical data but is more specific to multiplying equipment costs with standard Lang factors — it's a subset of factored estimation.
- Turnkey costing refers to a lump-sum cost for delivering a fully operational plant — it does not describe the method of estimating based on prior data.
Hence, the best match for an estimation approach using historical data from similar plants is Factored estimation.