WSP10809

• File Number: 8273.500
• Description: Colorado River Basin Salinity Control - Federal Agency Reports - EPA
• Basin: Colorado Mainstem
• Water Division: 5
• Date: 4/1/1978
• Title: Integrating Desalination and Agricultural Salinity Control Alternatives
• Water Supply Pro - Doc Type: Report/Study

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Capital Costs

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Construction costs, capital costs, or investment costs
include all expenses associated with building the appropriate
facilities and can be subdivided into the following eight
categories:

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(1) Construction costs, including designs and specifi-
cations, labor, and materials;
(2) Steam generation equipment if utilized in the desalt-
ing process;
(3) Site development expenses for offices, shops,
laboratories, storage rooms, etc., and for the
improvement of the surrounding landscape such as
parking, grading, and fencing;
(4) Interest during construction on funds borrowed to
finance construction;
(5) Start-up costs necessary to test the plant operation,
train operating personnel, and establish operating
criteria;
(6) Owner's general expenses for indirect costs like
· project investigation, land acquisition, contract
negotiation and administration, and other miscel-
laneous overhead costs;
(7) Land costs for the site and conveyance facilities;
and
(8) Working capital to cover daily expenses involved in
plant operation.

The capital costs delineated above are based on estimating
functions current during mid-1971 and therefore must be updated
to prevai+ing price levels. The costs for construction, steam
supply, and general site development can be estimated in the
present time frame by employing the Engineering News Record
Construction Cost Index, ENR (Engineering News Record is
published monthly by McGraw-Hill, Inc.). In July of 1971 the
ENR index.was 952, whereas in January 1976 it had risen to
l354. Consequently, a early 1976 cost estimate would be l354/
952 or 1.42 times the 1971 functional estimate. Other capital
costs for interest during construction, owners' general
expense, $tart-up, and working capital are functions of con-
struction, steam, and site development costs and are therefore
updated automatically. Land costs may be estimated on a current
basis by utilizing existing land prices.

Estimates of capital costs for feedwater and brine facili-
ties requ~re several other inflational factors. For example,
conveyance pipeline costs are modified by the Bureau of Reclama-
tion Concrete Pipeline Cost Index, CPI (1.17 for July 1971 and
2.13 in J~nuary 1976), and the USBR Canal and Earthwork Cost
Index, EI (1.27 in July 1971 and 1.92 in January 1976).

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