VMGSim Economics

By Chris Arthur, VMG Calgary

VMGSim 9.5 includes the option to estimate unit operation focused capital cost and operating expenditure resulting from energy consumption. A pro forma income statement can be generated for an entire simulation taking into account capital contingency, revenue streams, and direct and indirect expenses. The income statement can be customised and used as the basis to refine, reject or optimise a simulation case.


VMGSim economics summary form with collection of unit operation capital cost estimates and energy rates.

Capital Expenditure Estimation

VMGSim presents the capital cost on an on-site installed basis. The installed cost is inclusive of transport, installation and instrumentation and is several times greater than the purchase price.

VMGSim offers two methods to estimate the capital cost of individual units:

 1. Ulrich Method

Unit operations, where appropriate correlations are available, will generate a capital cost based on process conditions. An algorithm based on the correlations published by Ulrich and Vasudevani generates the cost of the unit. Pressure, duty and process flow rates are examples of variables available in solved VMGSim unit operations that are correlated to an equipment cost.  Volume, dimension, area, material and equipment type are examples of additional variables that are configured or calculated within the VMGSim economics environment where required.  Factors are generated to attain an estimated installed cost of the specified unit operation at current rates. The Ulrich capital cost method is limited to appropriate process conditions and unit sizes and VMGSim will not extrapolate beyond these ranges.


Compressor economics tab with calculated energy rate and cost estimate generated using the Ulrich correlation.

2. User Defined

All unit operations in VMGSim have the option to estimate a user defined installed cost. This option is appropriate when a cost is known or estimated. An installed cost for the unit can be entered directly or scaled. If a known cost is an installed cost, an installed cost for a similar unit of a different size, a free-on-board cost or a free-on-board cost of a different size the installed cost can be estimated within the economics environment.

Operating Expenditure Estimation

VMGSim calculates the duty associated with process units depending on their operating condition. In the economics environment this duty will form the basis to calculate the direct operating cost based on power consumption. To calculate an operating cost from a duty it is necessary to attribute a cost to an energy source.  This is done globally in the Economics Summary form. Energy source consumption then takes into account specified efficiencies and downtime. In the unit operations the duty can be associated with an energy source to calculate a cost. 

Project Level

Unit level expenses for a project are collated in a dedicated economics summary form where project level factors such as energy sources, feedstocks, consumables and revenue streams are also configured.

Income Statement

The economic summary data can be collated in a generalised income statement. Assumptions are highlighted and are customisable. The data is presented in a process calculator format and can be amended with alternative formulae, categories or entries. The cells containing numerical data are ordinary VMGSim variables with paths that can be linked to other variables or used in a Case Study. The general Income statement estimates a rate of return for the simulation project.

Foreign Currency

VMGSim economic calculations take place in $US.  A suite of alternative currencies can be seen with the tooltip or selected as the currency to be displayed for the project. The exchange rates can be updated via the Economics Summary form and the VMG server will contain rates that are updated every 4 hours when connected to the internet.

Please contact your local VMG office for more information.

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