Startup cost allowance in fixed-capital planning As a rule of thumb in chemical plant estimating, the maximum production start-up cost to bring a new plant on-stream is approximately what percent of the fixed capital cost?

Introduction / Context:
Bringing a new process unit into operation requires pre-commissioning, operator training, initial off-spec production, extra utilities, and consumables. Estimators often include a provisional allowance for “production start-up cost” as a fraction of fixed capital when detailed data are unavailable.

Given Data / Assumptions:

• Fixed capital cost is already established.
• Typical commodity chemical plant under normal complexity.
• Seeking a common rule-of-thumb maximum allowance figure.

Concept / Approach:
Textbook heuristics commonly cite a start-up allowance in the range of about 3–5% of fixed capital cost for conventional plants, occasionally higher for complex facilities. Using the conservative “maximum of typical” values, 5% is widely used in screening estimates.

Step-by-Step Solution:

Verification / Alternative check:
Comparisons with historical project closeouts show start-up costs clustering in low single-digit percentages of fixed capital for typical chemical units.

Why Other Options Are Wrong:

• 1%: Often too low, risks under-provisioning for training/commissioning.
• 10% or 30%: Excessive for ordinary plants; such high allowances imply unusual complexity or major schedule/capability risks.

Common Pitfalls:
Confusing start-up cost with working capital; ignoring that specialty or first-of-a-kind plants may require larger allowances than standard heuristics.

Final Answer:
5