Supplement to Systems and Specifications,

SSPC Painting Manual Volume 2, Eighth Edition

SSPC-TU 9
Estimating Costs in Protective Coatings Projects

@SSPC
the society for protective coatings

SSPC Publication No. 01-02

ISBN: 1-889060-55-0

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 DISCLAIMER

This Technology Update has been developed in accordance with voluntary

consensus procedures by SSPC Technical Committees and is believed to represent
good current practices. All SSPC specifications, guides and recommendations are
monitored and revised as practices improve, and suggestions for revision are
welcome. Other methods, materials and specifications may be equally effective or
superior. SSPC is not responsible for the application, interpretation or administration
of its specifications, guides and recommendations; and no person is authorized to
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issue to an interpretation of an SSPC specification, guide or recommendation on

behalf of SSPC. SSPC specifically disclaims responsibility of the use or misuse of
its specifications, guides, and recommendations. The supplying of details about
patented formulations, treatments or processes is not to be regarded as conveying
any right or permitting the user of this technology update to use or sell any patented
invention. When it is known that the subject matter of the text is covered by patent,
such patents are reflected in the text.

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SSPC: The Society for Protective Coatings

TECHNOLOGY UPDATE No. 9
Estimating Costs for Protective Coatings Projects

1. Scope 3. Types of Costs

This technology update provides information on 3.1 INITIAL VS LIFETIME COSTS: When discussing
approaches and models for estimating the initial and lifetime costs, it is useful to distinguish between the initial costs for
cost of protective coatings projects. a coating project and the costs incurred in protecting that
structure over its lifetime. The initial cost is the most visible
2. Description cost, since it is the money spent in the short term at the
commencement of the period; the financial impact is both
2.1 IMPORTANCE AND USE: Cost is a major factor in immediate and quantifiable. Lifetime costs include the initial
determining if protective coatings or another corrosion con- cost and all other potential costs involved in the upkeep and
trol alternative should be used for corrosion control. If maintenance of the coated structure. In the long term,
protective coatings are used, cost is amajor consideration lifetime cost has the greater impact on the financial viability
in selecting the coating system to be used. of the company or its project. Short-term budget consider-
The cost of coating systems can be interpreted in ations, however, are often influential in making choices of
several manners. Of major interest is the cost of the applied coating types, working method, contract style, and other
or installed coating system (often called turnkey costs). alternatives, often ensuring that managers focus on the
Owners must also be concerned with operational and main- initial costs. This section and Section 4 will discuss initial
tenance costs that occur over the life of the structure. The costs. Lifetime costs will be covered in Section 5.
installation and maintenance costs are often collectively
described under the designation life-cycle cost (or long term 3.2 INDIRECT VERSUS DIRECT COSTS: Initial costs
cost). Additional cost factors include costs for inspection can be classified as direct costs or indirect costs. Direct
and indirect costs, such as loss of product, downtime, and costs are those which are readily attributed to the coating
inconvenience to the community. activity, for example, the cost of a coating contract or an
The cost of an applied coating system is often an engineering service. Direct costs are relatively easy to
insignificant portion of the overall cost of a facility or struc- measure. Indirect costs are those which arise because of
ture, but is an important consideration before selection. the need for coating work, but are not readily identifiable or
Coating cost can range from less than 1%to as high as 10% measurable. Examples are given in Table 1.
of the overall cost of the project. Indirect costs are often unpredictable, and are therefore
Acquiring accurate and reliable cost data is a major extremely difficult to estimate and often not considered
challenge for the protective coating industry. This technol- explicitly in cost analysis.
ogy update will review some of the major concepts, consid- Overthe lifetime of a structure (e.g., 40 years), there are
erations, and approaches to this critical subject. likely to be many costs associated with corrosion protection,
including both direct and indirect costs.
2.2 OUTLINE OF CONTENTS: The technology update
includes the following sections: 4. Methods for Estimating Initial Costs

4.1 UNIT COSTS: The most common and straightfor-

Section ward means of estimating costs is by using unit costs. The
Types of costs 3 work is broken into measurable units, e.g., an area of
Methods for estimating initial cost 4 surface to be prepared and coated. In some cases, the
Methods for estimating lifetime cost 5 estimate is based on the number of hours of labor required.
Models and data sources 6 Depending on the complexity of the job, various additional
cost items will be added to the base cost. These include

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1
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Table 1

Direct Versus Indirect Costs

Direct Costs Indirect Costs

Cost of coating material Down time for maintenance or repair work

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Initial application cost Loss of product from leaks or vessel contamination
Repair of damaged coatings Environmental or worker health damage from deficient
Replacement of corroded parts corrosion protection or hazardous products
Complete or partial repainting for maintenance Administrative and overhead costs of engineering staff
(of exterior coatings or internal linings)

costs for special equipment and costs for subcontracted Weather

items, several of which were described in the previous Additional modifications may be made for hazardous paint
section. removal or other special considerations.
In this section, we will describe two approaches to the 4.3 LABOR AND MATERIALS METHOD: This ap-
unit cost method, proach is based on deriving estimates for the following
Cost per unit area components:
Labor and materials Surface area to be painted
Number of worker hours required to perform each
4.2 ACTIVITIES BREAKDOWN (COST PER UNIT stage of the work
AREA): One of the simplest approaches is to estimate the Labor costs, including benefits
cost per unit surface area (cost per square meter [$/mz] or Material costs
cost per square foot [$/ft2]).These estimates may be based Equipment costs
I
on historical records of similar projects or may be obtained Overhead costs
by breaking the unit costs into specific sub-elements (see These components are described below. Appendix 1
below). It is assumed that the amount of labor and material provides a sample calculation in US units and Appendix 1M
is roughly proportional to the amount of surface to be is the metric version.
coated. This assumption is certainly valid for coating mate-
rials and thinners. For labor, the cost per square meter may 4.3.1 Surface Area To Be Painted: The surface area of
vary, but the method allows one to modify labor rates based each item to be painted (e.g., tank bottom, walls, piping) is
on different conditions. measured or estimated, and the cost of painting per unit
The costs of a coating system can be broken into the area (e.g., a square meter) is then applied to achieve the
following components: surface preparation; application of total painting cost. Books and tables are available to assist
coating; coating materials; number of coats required; and estimators in making unit area (square meter) calculations
required curing conditions. Numerous analyses have been (Ref 2).
done to show which proportion of the total cost is attributed
to each of these items. 4.3.2 Estimate of Required Worker Hours: After the
These data are general. As each job is unique, it is surface area (square meters) has been calculated, the time
important to be aware of the assumptions made in deriving required for surface preparation and/or paint application
these numbers. Modifications are often made based on the must also be calculated for each item of work. The total area
following factors: of each item (Area) divided by the number of square meters
Height ofsurfaces to be coated that can be completed per worker hour (Production Rate)
Condition of the structure (e.g., pitted and rusting yields the total worker hours required to complete the work.
Production rates and worker hour estimates can also be
obtained from estimating guides. Most painting contractors
and experienced estimators, however, know from past ex-
previously painted) perience the average production rate to be used for a given
Type and shape of structure (e.g., for accessibility) work item. The estimator must decide on the number and
Location (e.g., shop or field) size of crews to be mobilized.
Geographic location

2
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4.3.3 Labor Costs: Wage rates for union blasters and number of factors. The cost of purchasing materials or
painters can be obtained from the local office of the union services is not constant over time. The numbers tend to
having jurisdiction in the project area. Prevailing wage rates increase because of inflation. Even more significant is the
are also available from trade publications and government cost of tying up money that could otherwise be invested and
sources. Estimating guides can be useful references as generate interest. Also, tax treatments differ for capital
well. costs (incurred as part of the construction and initiai coating)
The wage rate should include all labor payments, in- compared to maintenance costs.
cluding the hourly wage, fringe benefits, and insurance. This The total costs of future maintenance or repair can be
is often referred to as the “charge-out rate.” estimated, but with difficulty, because they are highly vari-
able. This can be attributed to the subjective definitions of

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4.3.4 Material Costs: The number of liters (gallons) of “lifetime,” the unpredictability of coating system perfor-
paint, thinner, cleanup solvents, etc. must be estimated mance, the lack of standard methods for assessing lifetime,
based on the areas being coated and the dry film thickness and variables associated with protection and maintenance
DFT in micrometers (or mils) of coating to be applied. philosophy, time value of money, and others.
Loss factors must also be estimated. Material loss It is important to recognize that the data on a coating’s
factors, such as overspray, range generally from 10 to 50 lifetime will always be uncertain to some degree. Even with
percent of the total paint purchased, depending on weather the most thorough testing, there are variables affecting the
conditions, job location, and the type of surface to be lifetime that cannot be controlled or precisely defined. For
coated. The practical spreading rates are normally more example, the definition of coating failure may vary from one
useful than the theoretical spreading rate figures quoted in situation to another. There is also variability in the substrate,
the coating manufacturer’s product data sheets. the particular coating material, and the exposure environ-
The estimate should also include the cost of consum- ment. It is sometimes useful to define a range forthe lifetime
able supplies. Abrasives, cleaning rags, respirators and of a coating system. For example, for alkyds on bridges in
respirator cartridges, overalls and other protective clothing, moderate exposure environments, the lifetime is often esti-
masking tape, and small tools such as scrapers and wire mated at 7 to 12 years before five percent of the surface is
brushes are all considered consumable items that are ex- degraded by rusting.
pended during the course of work.
5.1.1 Limitations of Data on Lifetime: As discussed in
4.3.5 Equipment Costs: The cost of the equipment Section 4, methods are generally available to estimate the
used on a job must also be estimated; such costs might initial cost of a coating system. Maintenance costs can also
include charges for the use of compressors, dust collectors, be estimated in a similar manner. Depending on the circum-
vacuum or recycling equipment, containment, spray guns, stances, it is normally necessary to assess the condition of
airless or conventional spray pots or guns, and air and paint the coating and the accessibility of the structure, as well as
hoses. Fuel costs for diesel compressors and electrical the presence of lead and other hazardous components of
generators should also be estimated. Most painting contrac- the paint.
tors have standard costs for these items, and charge clients For life-cycle costing, however, the most difficult factor
on either a daily, weekly, or monthly basis. to determine is the lifetime of the coating, the time until a full
repaint, partial repaint, or touch-up is required. Industry has
4.3.6 Overhead Costs: Indirect costs of overhead, developed numerous laboratory and field procedures for
insurance, licenses, taxes, etc., must be added to the direct predicting lifetimes. In addition, data have been compiled on
cost to arrive at a total cost. performances of coatings on structures in service. A thor-
ough discussion of these modelsand methods is beyond the
scope of this technology update. Examples of some models
5. Methods for Estimating Lifetime Cost are provided in Section 6.
Two life-cycle methods will be discussed in this section:
5.1 LIFE CYCLE COST CONCEPT: Life cycle costs are cost per unit area per year, and present value method.
those costs incurred protecting steel from corrosion overthe
life of the structure. This includes the initial cost of applying 5.2 COST PER UNIT AREA PER YEAR: Lifetime costs
the protective coating system, the various inspections and of coating systems and other corrosion control options can
touch-ups, and maintenance painting activities. It is impor- be calculated using methods of varying levels of sophistica-
tant to recognize that, in many instances, a strategy that tion. The simplest approach is to compare alternatives on
may result in a lower initial cost may cost more in the long run the basis of cost per unit area per year ($/m2/yr) over the
because of higher maintenance or even replacement costs. lifetime being considered. This normally entails determining
Applying life cycle cost in practice is complicated by a

3
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initial application costs, estimating the service life of the Because of the time value of money, it is frequently advan-
coating system, and calculating the subsequent repainting tageous to minimize the initial investment and defer the cost
or regular maintenance costs. to later years.
In the following examples, two painting systems are 5.3.2 Using Time Value of Money Approach: The
compared for an industrial exposure environment.’ The method of analysis is based on the “time value of money” or
data needed for each system are initial cost, maintenance the “cost of money.” Initial application costs are computed,
costs, and the lifetime until maintenance. and subsequent yearly maintenance costs are estimated
and discounted over the effective protective life of the
System A: Two-coat alkyd applied over commercial blast coating. As will be shown, the principle of this method is to
cleaned steel (SSPC-SP 6/NACE No. 3) determine or estimate the various expenditures that will
Initial painting: $6.24/m2; 7-year lifetime occur over the lifetime of the structure or whatever time
Maintenance painting: $5.27/m2; 4-year lifetime period is used for calculation. The present value (the value
in today’s money) of each cash expense is calculated, then
System B:Three-coat inorganic zinc-rich over near-white totaled to arrive at a present value for each corrosion control
blast cleaned steel (SSPC-SP 1O/NACE No. 2) option. In this way, cash flows are discounted to their
Initial painting: $12.38 /m2; 15-year lifetime present value, so the method is often referred to as “dis-
Maintenance painting: $1 1.63 /m2: 9-year lifetime counted cash flow.”The most accurate and detailed present
value analyses often include adjustments for taxes and
First, looking at a 15-year time period: depreciation.
Alkyd: Methods based on discounted cash flow yield more
$6.24 for years 1-7, realistic comparisons because they recognize that money
$5.27 for years 8-1 1, paid out today is worth more than money paid out at a
$5.27 for years 12-1 5, subsequent date.
Total of $16.78 /m2 for 15 years of protection, or A complete discussion of discounted cash flow analysis
$1.12 /m2 per year techniques is beyond the scope of this technology update.
It must be noted, however, that the results of any type of
Inorganic zinc-rich system: economic analysis are only as good as the input information.
$12.38 for 15 years of protection, or Furthermore, most analytical techniques use only “dollar“
$0.83/m2 per year. costs and do not consider intangible costs such as those
related to risks due to environmental or safety hazards/
The alkyd had a lower initial cost ($6.24/m2vs $12.381 compliance, improved or changed technologies. Some as-
m2). However, the inorganic zinc had a lower cost per m2per sign probabilities or factors to various intangible costs or
year when averaged over 15 years. risks and attempt to include these in their analysis.
The example is also extended to show costs for a 50-
year period (Ref 1). The result of this further analysis shows 5.3.3 Present and Future Value and Compounding:
that total cost was $64.15/m2 for the alkyd ($1.283/m2/yr.) Present value is a means of assessing the economic merit
system, and $58.88/m2for the zinc system ($1 .178/m2/yr.). of various investment alternatives. The basis of the determi-
nation is the evaluation of all costs and revenues of an
5.3 PRESENT VALUE METHOD AND COATING LIFE- investment alternative at “today’s’’ value-the present value.
TIME COST Using the present value, we can determine the present-day
cost of future activity (e.g., maintenance painting).
5.3.1 Time Value of Money - Discounted Flow Another important concept is that of future value. This
Method: The cost per unit area per year procedure neglects is what the maintenance painting will cost at some future
an important factor in determining the economics of corro- date, e.g., two years from now. The important terms are:
sion protection systems - the tirne value of money. Money PV = present value
can earn interest. Because of that, $1.00 today is more FV = future value
valuable than $1 .O0a year from now. At a rate of return of i = annual rate of return
1O percent, $1 .O0will be worth $1.1 O in one year. Similarly, (interest rate expressed as a decimal)
$0.91 today will be worth $1.O0in one year, and $0.83 today n = numberof years
will be worth $1 .O0 in two years. Calculations for inflation
can easily be added. The quantities $0.91 and $0.83 are The basic equation is:
known as the net present value of $1.00 in one and two
years, respectively. For example, if a structure were to be FV = PV (1+i)” (11
painted two years from now at a cost of $100,000, it would
be necessary to bank only $83,000 of today’s money. At 15 percent interest per year (or “rate of return”),
4
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$1.O0invested today will be worth $1.1 5 in one year (i=O.15). 6. Models and Data Sources
Two years from now, that same dollar will be worth $1.32.
6.1 SOURCES OF APPLICATIONIINSTALLATION
FVI = $1.00 x (1+0.15)1 = $1.15 COST DATA: Over the last several years, various govern-
FV2 = $1.00 x (1+0.15)2 = $1.32 ment and private groups have developed models to esti-
Tables have been developed that provide the discount mate and analyze the cost for protective coatings projects.
factors for various i and n values. Also available are com- This section summarizes the major features of several of
puter programs that contain the discount factors and per- these efforts. Several of these models are derived from
form the calculations, saving time for the analyst. common practices and data sources.
One can also determine the amount of money to be set
aside today (present value) for a future expense. One uses 6.1.1 Data from Applicatorsand Suppliers (Brevoort-
future value (equation 2) which is derived from equation 1. Roebuck): The compilation of data on costs for varying
coating activities was prepared by A. Roebuck and G.
PV = FV (2) Brevoort in the early 1 9 7 0 ’ ~Their
. ~ sources were field and
(1 +i)“ shop applicators in different regions of the US. The data
were presented as cost per unit area. The activities covered

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If you needed a dollar a year from now, at 15 percent in this database included:
interest you would have to invest $0.87. Letting FV = $1, surface preparation (e.g., types of methods and de-
i=O.15, and n=l, in equation (2) yields grees of blast cleaning)
application (e.g., from different methods of airless spray-
= 0.87 ing and for different types of coatings)
(1+0.15)’ coating materials (for different generic types and thick-
nesses)
If you needed a dollar in two years, you would only have modification factors: adjustments were made for work
to invest $0.76: done in hard to access areas (e.g., high structures), for
different configurations (e.g., different pipe sizes), and
FV = $1, i = 0.15, and n = 2 others.
These data have not been reconfirmed on a consistent
=0.76 basis, but many have used the original numbers by adjusting
(1+0.15)’ them for i n f l a t i ~ n ) . ~

To demonstrate the impact of interest rates on these 6.1.2 PDCA Estimating Guide: This text provides
calculations, the following exercise calculates the amount of guidelines on measuring surfaces to be painted and in
money that should be set aside today to pay for an expected estimating production rates in square feet per hour for
$100,000 project 10 years from now. Assume an interest various industrial protective coatings activities. Rates are
rate of 15 percent (i = 0.15). The $100,000 represents a given for application of one, two or three coats to pipe, duct
“future value.” work, light, medium and heavy structural steel, hangers,
fasteners, exterior shells and roofs of tanks and spheres,
Using Equation 2, we compute present value: and machinery and equipment. Production rates are also
given for surface preparation for four degrees of abrasive
blast cleaning, hand scraping and wire brushing, power tool
cleaning, pressure washing, steam cleaning, and water
blasting. Charts are provided for determining surface areas
for cylindrical tanks and standard structural steel shapes.
At 15 percent interest, it is necessary to invest $24,700
today (present value) to have $100,000 in 10 years. 6.2 SOURCES OF COATING LIFETIME DATA

At an interest rate of 5 percent (0.05): 6.2.1 RoebucklBrevoort:The authors have developed

tables of estimated lifetimes of various coating systems and
different exposure environments. The coating systems in-
clude generic material for primer, intermediate, and topcoat,
system dry film thickness, and degree of surface prepara-
At 5 percent interest, it is necessary to invest $61,400 tion. The exposures include chemicals, acids and bases,
today to have $100,000 in 10 years. This illustrates how immersions, and several atmospheric exposures. For each
sensitive this method is to the interest rate selected.
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combination of systems and exposure the authors defined Exposure environment (from list of chemical and
two lifetimes. The “ideaVoptimum life” is defined as a time atmospheric exposures
until the first maintenance painting/touch up should occur, Geographical locations (within the US)
(i.e., 3 to 5 percent breakdown of the topcoats occur and Method of application (spray, brush, roll)
before active rusting begins). The “practical” lifetime is the Maintenance strategy (ideaVoptimum or prac-
time until approximately 10 percent of the surface requires tical)
surface preparation. The “P” lifetimes are typically about 50 c) Output: Cost per unit area per year.
percent longer than the “I” lifetime. The latest version of the d) Extent of Database:
tables include 1O0 coating system^.^.^ Over 1O 0 coating systems based on combina-
tions of surface preparation, coating materials
6.2.2 SSPC PACE Project Data: These are derived and film thickness.
from the long-term SSPC study entitled “Performance of 12 exposure locations
Alternate Coatings in the Environment” (PACE).6 In this 2 maintenance schedules (ideal and practical)
study,more than 200 coating systems were applied to test e) Availability: The tables and model calculations
panels and exposed at three standard exterior exposure are available from SSPC and NACE.3,4
sites. The large number of replicates of systems tested f) Comments: This model computed installed and
allowed for very sophisticated statistical analysis of the lifetime costs using data described in the above
coating performance. In this study, different criteria are data sets. The costs are computed as cost per
identified for failure including rusting (e.g., to rust grades 9, unit area (e.g., dollars per square foot) for initial
8 or 7),and scribe undercutting (e.g., 3.2 mm [1/8 inch] or costs and for various maintenance costs as-
6.4 mm [1/4 inch]). For each coating system the data are sumed over the structures’ lifetime. The lifetime
presented as the number of months until 20% failure has cycle cost is computed by adding up the cost for
occurred (based on the failure criteria identified above). The each activity and dividing by the length of the
data are available in reports or in electronic format from lifetime. Lifetime costs are given in cost per unit
SSPC. The test series included the following: area per year (e.g., dollars per square meter per
Alternate inhibitive pigments (Branch A) year).
Alternative blast cleaning abrasives and degrees
of cleaning (Branch B) 7.3 BREVOORT COMPUTER COST MODEL (SPEC
Waterborne coatings (Branch C) MATE): This is an enhancement of the basic Brevoorü
Vinyl alternate pigment and vehicles (Branch D) Roebuck model. Additional features include the following:
Alternate blast and non-blast cleaning methods Specific adjustments for individual structures (e.g.,
(Branch E) bridges or water towers)
New experimental coatings (Branch F) Consideration of the cost of money (i.e., including
Waterborne epoxies (Branch G) inflation, interest rate and tax factors)
Bridge site evaluation (Branch H) Computation of alternative scenarios for different coat-
ing systems and service environment
i . Examples of Cost Models
7.4 NSRP/SSPC ABRASIVE BLASTING COST
7.1 FORMAT FOR COST DATA SYSTEMS: Several MODEL:4The format for the NSRP/SSPC abrasive blasting
published and commercial cost models for protective coat- model is given below.
ing systems have been developed. These can be described a) Objective: Evaluate cost and productivity of various
using the following format: abrasive blasting media for ship surfaces.
a) objective of model b) User Input: Type of substrate (i.e., coated or un-
b) user input coated, surface area, degree of cleanliness required, pres-
c) output ence of hazardous metal in coating, operation parametersof
d) extent of data shipyard [optional]).
e) availability c) Output: Production rate for blast cleaning (area per
i) comments unit time [e.g., square feet per hour]), abrasive consumption
rates, [volume of abrasive per unit time or per unit area,
7.2 BREVOORTIROEBUCWSSPCINACE:These cost [e.g., pounds per area per hour or pounds per square foot],
models follow the following format. cost per square foot and overall project costs).
a) Objective: Estimate initial and lifetime cost for d) Extent of Data: Data have been compiled on con-
coating systems sumption and production rates and abrasive costs for ap-
b) User Input proximately ten to twelve commercially available abrasives.
Coating systems (from tabulated list)
6
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e) Availability: Hard and electronic copy of reports responsibility nor incur any obligation resulting from the use
available from NSRP and SSPC. The software is not avail- of any materials, coatings, or methods specified herein, or
able commercially. of the technology update itself.

8.Referenced Documents 1O. References

8.1 SSPC STANDARDS AND JOINT STANDARDS: 1. Appleman, B. R. “Economics of Corrosion Protection by
Coatings.” Journal of Protective Coatings and Linings
SP 6/NACE No. 3 Commercial Blast Cleaning 2, 3 (1985): p. 26- 33.

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SP 10INACE No. 2 Near-White Blast Cleaning 2. Brevoort, G.H., Oechsle, S.J., Sline M. R.,and Feinberg,
R.B.“Comparative Painting Costs”, Good Painting
8.2 INTERNATIONAL ORGANIZATION FOR STAN- Practice, Steel Structures Painting Manual, Vol. 1,
DARDIZATION (EO) STANDARDS: 3rd Edition. Pittsburgh: SSPC, 1993.
3. “Corrosion and Coating Costs of Highway Structural
8501-1 Preparation of steel substrates before ap- Steel.” Federal Highway Administration Report No.
plication of paints and related products - FHWA-RD-79-121, March 1980.
Visual assessment of surface cleanliness 4. NSRP 0511, “Users Guide to Selection of Blasting Abra-
- Part I: Rust grades and preparation sives” (March 1998). Available as .pdf for download-
grades of uncoated steel substrates and ing from http://horsey.umtri.umich.edu/library.
of steel substrates after overall removal of 5. PDCA Estimating Guide, latest edition. Fairfax, Virginia:
previous coatings - SA 2.5. Painting and Decorating Contractors of America
6. “Performance of Alternate Coatings in the Environment”
9. Disclaimer (PACE), Vol. III, Executive Summary, SSPC Report
89-12. Pittsburgh, PA: SSPC, 1989.
This technology update is for information purposes 7. SSPC Tutorial W-8, “Assessing Cost and Cost-Effective-
only. It is neither a standard nor a recommended practice. ness of Protective Coatings”, presented at PCE ‘98,
While every precaution is taken to ensure that all informa- the Hague, The Netherlands, April 1-3, 1998.
tion furnished in SSPC technology updates is as accurate, 8. SSPC Tutorial T-52, “Basic Construction Cost Estimat-
complete, and useful as possible, SSPC cannot assume ing for Owners and Contractors,” presented at SSPC
98, November 14-19, 1998.

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Appendix 1 - Example of Labor and Material Methods for Estimating Initial Cost (US Units
Version)

The following nine-step process is suitable for estimating initial costs for applying a coating to a structure.

Data furnished:
Structure: exterior of ground storage tank
Dimension: 33 ft diameter, 20 ft high
Surface prep.: SSPC SP-lO/NACE 2 (Sa 2.5)
Surface profile: 1-3 mils
Abrasive: coal slag
o Coating system
* primer: epoxy 6 mil DFT
* topcoat: polyurethane 4 mil DFT
Coating material data
* Epoxy: 60% solids, loss factor 20%, cost $24/gal
Polyurethane: 80% solids, loss factor 25%, cost $32/gal
o Abrasive data
* consumption rate: IO Ib/ft2,cost $45 ton
Labor data
wage rate per hour: $45 (including fringes)
* blast cleaning rate: 160 ft2/h
* coating application rate: 650 ft2/h
o Equipment data
* blasting equipment: $30/h
* application equipment: $10/h

Nine Step Process for Estimating Initial Cost

Step 1: Compute surface areas:

--``,,,,````,```,,```,,`,,`,`,,-`-`,,`,,`,`,,`---
Tank: height x diameter x SC
33 ft x 20 ft x 3.14 = 2070 ft2

Step 2: Compute Labor for Surface Preparation

Tanks
2070 ftz + 160 ft2/ h = 12.9 h (round to 13)
13 h x $45/h = $585
Note: In some jobs, an additional labor cost may be included for mobilization (e.g. set up of equipment/ rigging of
tank).

Step 3: Compute Labor for Painting

Epoxy on tank
2070 ft2 + (650 ft2/h) = 3.18 h (round to 4)
4 h x $45/h = $180
Urethane on tank
2070 ft2 + (650 ftYh) = 3.18 h (round to 4)
4 h x $45/h = $180

Step 4: Compute Material Cost for Surface Preparation

Abrasive for tank
2070 ft2 x 10 lb/ft2= 20,700 Ib = 10.4 ton
10.4 x $45/ton = $468

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March 1, 2001

Step 5: Compute Cost of Coating Material

In general, the spreading rate is computed from Equation A,

Epoxy on tank

To find the cost of the epoxy primer, the spreading rate must first be computed. The spreading rate of primer to give 6
mil DFT is 137 ft2/gal,computed as follows. One gallon covers 1604 ft2 at a thickness of 1 mil. Thus, theoretical coverage
is 1604 mil x ft2/gal. Since the primer is only 60% solids, multiply by 0.60. To account for the effect of filling the profile
with primer, add 1 mil to the target DFT.

1604.-. millft2 x 0.60

Spreading Rate for epoxy primer (ft2/gal) = gal = 137 ftz/gal
6 mil + 1 mil

The coverage computation is then:

2070 ft2 + (137 ft2/gal) = 15.1 gal

Because of the 20% loss factor, only 80% of the paint falls on the structure. The total volume of paint needed is therefore:

15.1 gal -i 0.80 = 18.9 gal (round to 19 gal)

Thus, the cost for the epoxy is:

19 gal x $24/gal= $456

Polyurethane o n tank

Compute the spreading rate of the polyurethane topcoat: 80% solids, 4 mils DFT, no adjustment for filling profile; using
equation A above,

1 604- mil/ f t2 x 0.80

spreading rate of polyurethane topcoat = gal = 321 ft2/gal
4 mil

The theoretical volume of paint required is then

2070 ft2 + 321 ft2/gal = 6.45 gal

Correcting as above for a 25% loss factor, the total volume of paint needed is

6.45 gal i0.75 = 8.6 gal (round to 9 gal)

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The cost for the polyurethane is then

9 gal x $32/gal= $288

Step 6: Compute Equipment Cost for Surface Preparation

Tank
13 hours blasting x $30/h = $390

Step 7: Compute Equipment Cost for Coating Application

Tank:
4 hours application x $10/h = $40

Step 8: Total Direct Cost

Total Cost (bid cost)

Direct costs
labor: $895
* materials: $1,460
equipment: $390
Overhead: 20%
Profit: 15%

The total direct cost is computed by adding up the costs for labor, materials, and equipment as shown in Table A l - 1
below.

Step 9: Estimate Overhead and Profit

The above costs do not account for overhead items such as liability insurance, training, maintenance of trailers, weather
losses and equipment break down. This can add 20% or more to the cost of the job. In addition, the contractor would
like to make a profit, which is set at 15% for this example. In Table A l - 1 below, thirty five percent is added to the direct
cost to yield a bid price of $3,492 (which could be rounded up to $3,500) for the tank.

Table Al-1. Estimated Labor and Material Cost -- Tank

--``,,,,````,```,,```,,`,,`,`,,-`-`,,`,,`,`,,`---
Cost Element
labor surface preparation $585
labor application/primer $180
labor application/topcoat $180

Labor Total $945

materials surface preparation (abrasive) $468
materials primer $456
materials topcoat $288

Materials Total $1,212

equipment surface preparation $390
equipment application $40

Equipment Total $430

$2,587
Total Direct
$905
profit/overhead@ 35% of $2,587

Total Bid Price $3,492

10

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Appendix 1M - Example of Labor and Material Methods for Estimating Initial Cost (Metric
Ver cion)

The following nine-step process is suitable for estimating initial costs for applying a coating to a structure.

Data furnished:
Structure: exterior of ground storage tank,
Dimension: 10 m diameter, 6 m high
Surface prep.: SSPC SP-lO/NACE 2 (Sa 2.5)
Surface profile: 25 to 75 micrometers
Abrasive: coal slag
Coating system
'primer: epoxy 150 micrometers DFT
*topcoat: polyurethane 1O0 micrometers DFT
Coating material data
*Epoxy: 60% solids, spreading rate 6 mYliter, loss factor 20%, cost $6/liter
*Polyurethane: 80% solids, spreading rate 8 m2/liter, loss factor 25%, cost $8/liter
Abrasive data
'consumption rate: 49 kg/m2, cost $50/Mg
Labor data
*wage rate per hour: $45 (including fringes)
*blast cleaning rate: 15 m2/h
*coating application rate: 60 mYh
Equipment data
*blasting equipment: $30/h
*application equipment: $1 O/h

Nine Step Process for Estimating Initial Cost

Step 1: Compute surface areas:

o Tank: height diameter x
1O m 6 m 3.14 = 188 m2

Step 2: Compute Labor for Surface Preparation

o Tanks
188 m2*I 5 mY h = 12.5 h (round to 13)
13 hrs $45/h = $585

Note: In some jobs, an additional labor cost may be included for mobilization (e.g. set up of equipment/ rigging of
tank).

Step 3: Compute Labor for Painting

o Epoxy on tank
188 m2 i(60 m2/h)= 3.13 h (round to 4)
4 hrs. $45/h = $180
o Urethane on tank
188 m2 i(60 m2/h)= 3.13 h (round to 4)
4 hrs. $45/h = $180

Step 4: Compute Material Cost for Surface Preparation

o Abrasive for tank
188 m2 (49 kg/m2)= 9,212 kg = 9.2 Mg
9.2 Mg $50/Mg = $460

11
--``,,,,````,```,,```,,`,,`,`,,-`-`,,`,,`,`,,`---

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Step 5: Compute Cost of Coating Material

Epoxy on tank

First, the spreading rate must be computed. The spreading rate of primer to give 150 pm DFT is 3.4 m2/L,computed
as follows. One liter covers 1000 m2at a thickness of 1 pm. Thus, theoretical coverage is 1000 pm x m2/L. Since the
primer is only 60% solids, multiply by 0.60. To account for the effect of filling the profile with primer, add 25 pm to the
target DFT.

1000 pmxm2
Spreading Rate for epoxy primer (rr?/L) = L = 3.4 m2/L
150 pm + 25 pm
The coverage computation is then
188 m2+. (3.4 m2/L)= 55.3 L

Because of the 20% loss factor, only 80% of the paint falls on the structure. The total volume of paint needed is
therefore

55.3 L + 0.80 = 69.1 L (round to 70 L)

Thus, the cost for the epoxy primer is 70 liters x $6/liter = $420

Polyurethane on tank

--``,,,,````,```,,```,,`,,`,`,,-`-`,,`,,`,`,,`---
Compute the spreading rate of the polyurethane topcoat: 80% solids, 1O0 p m DFT, no adjustment for filling profile; using
equation A above,

low prn rn2 x 0.80

spreading rate of polyurethane topcoat = = 8.0 m2/L
100 pm

The theoretical volume of paint required is then

188 m2c (8 mYL)= 23.5 L

Correcting as above for a 25% loss factor, the total volume of paint needed is
23.5 L + 0.75 = 31.3 L (round to 35)

The cost for the Polyurethane is then

35 liters x $8/liter = $280

Step 6: Compute Equipment Cost for Surface Preparation

Tank
13 hours blasting x $30/h = $390

12
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Step 7: Compute Equipment Cost for Coating Application

Tank:
4 hours application x $10/h = $40

Step 8: Total Direct Cost

Total Cost (bid cost)

Direct costs

--``,,,,````,```,,```,,`,,`,`,,-`-`,,`,,`,`,,`---
labor: $895
materials: $1,460
* equipment: $390
Overhead: 20%
Profit: 15%

The total direct cost is computed by adding up the costs for labor, materials and equipment as shown in Table A l -1M
below.

Step 9: Estimate Overhead and Profit

The above costs do not account for overhead items such as liability insurance, training, maintenance of trailers, weather
losses and equipment break down. This can add 20% or more to the cost of the job. In addition, the contractor would
like to make a profit, which is set at 15% for this example. In Table A l -1M below, thirty five percent is added to the direct
cost to yield a bid price of $3,422 (which could be rounded up to $3,500) for the tank.

Table Al-1M. Estimated Labor and Material Costs -- Tank

Cost Element
labor surface preparation $585
labor application/primer $180
labor application/topcoat $180
Labor Total $945

materials
materials surface preparation (abrasive) $468
materials primer $456
topcoat $288
Materials Total $1,212
equipment surface preparation $390
equipment application $40

Equipment Total $430

Total Direct $2,587
profit/overheadQ 35% of $2,587 $905
Total Bid Price $3,492

13

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-
Appendix 2 Example Using Present Value The total of the costs for the carbon steel tank are $59,000
(see Table A2-1) compared to $50,000 for the FRP tank.
Cost Analysis
However, this analysis did not take into account the time
A2.1 Present Value of a Series of Payments value of money.

It is sometimes necessary to determine the present A2.2 Analysis Using Time Value of Money
value of a series of payments made over the life of an
investment at a given interest rate. The cash flows over the life of the tank using the
A company can purchase a fiber-reinforced plastic time value of money can be computed. The first three costs
(FRP) corrosion-resistant tank installed for $50,000. Alter- in Table A2-1 occur at year O, so the present values of these
natively, it can purchase a carbon steel tank of the same costs are unchanged at $20,000, $15,000, and $5,000,
capacity for $20,000, but will have to line the interior and respectively. However, the fourth item, the cost of mainte-
paint the exterior. Tank lining costs are estimated to be nance, occurs in year 1O, so money can be put aside today
$15,000 initially, with relining repairs every 15 years esti- to pay for the future cost of $3,000. Today’s dollar is worth
mated at $5,000. $0.564 in 10 years, so $3,000 x 0.564, or $1,692, can be set
Exterior painting costs are estimated at $5,000 aside today to pay for that future cost. Similarly, present
initially, with maintenance required every 1O yearsat $3,000. values for other future maintenance costs can be computed,
The service life of either tank is required to be 40 years, and as shown in Table A2-1. The total of the present value costs
the company in the past has made a 15 percent return on for the steel tank initial and maintenance costs is $43,270;
invested capital. Which tank should be purchased? so this option is more economical than the FRP tank.
In order to compare these two options, one needs
to look at the cost outlays (cash flows) and when they occur.

Table A2-1. Net Present Value of Carbon Steel Tank*

VALUE OF $1 PRESENT VALUE (PV)

-
YEAR EXPENDITURE FUTURE VALUE (FV) COST (for i = O. 1O)

O Steel Tank $20,000 $1.o0 $20,000

O Interior Lining $15,000 $1.o0 $15,000
O Exterior Coating $5,000 $1 .o0 $5,000
1O Maintenance Painting $3,000 $0.39 $1,160
15 Lining Repair $5,000 $0.24 $1,200
20 Maintenance Painting $3,000 $0.15 $450
30 Maintenance Painting/ 8,000 $0.06 $460
Lining Repair
TOTAL COST $59,000 $43,270
(UNDISCOUNTED) (DISCOUNTED)

Extracted from Unit 5 of “Economic Considerations When Selecting Coatings”, from SSPC Course C-2, Specifying and
Managing Protective Coatings Projects.

PVof$l = 1
(1 +i)”

where
i = annual percentage rate in decimal form
n = number of years
PV = cost x (PV of $1)

14
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 Supplement to Systems and Specifications,
SSPC Painting Manual Volume 2, Eighth Edition

SSPC-TU 8
--``,,,,````,```,,```,,`,,`,`,,-`-`,,`,,`,`,,`---

The Use of Isocyanate-Containing Paints

as Industrial Maintenance Coatings

@SSPC

SSPC Publication No. 01-01

ISBN: 1-889060-54-2

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 DISCLAIMER

This Technology Update has been developed in accordance with voluntary

consensus procedures by SSPC Technical Committees and is believed to repre-
sent good current practices All SSPC specifications, guides and recommendations
are monitored and revised as practices improve, and suggestions for revision are
welcome. Other methods, materiais and specifications may be equally effective or
superior. SSPC is not responsible for the application, interpretation or administra-
tion of its specifications, guides and recommendations; and no person is autho-
rized to issue to an interpretation of an SSPC specification, guide or recornmenda-
tion on behalf of SSPC. SSPC specifically disclaims responsibility of the use or
misuse of its specifications, guides, and recommendations. The supplying of
details about patented formulations, treatments or processes is not to be regarded
as conveying any right or permitting the user of this technology update to use or sell
any patented invention. When it is known that the subject matter of the text is
covered by patent, such patents are reflected in the text.

Copyright 2001 by

SSPC: The Society for Protective Coatings

40 24th Street, 6th Floor
Pittsburgh, PA 15222

All rights reserved

This document or any part thereof may not be reproduced in any form
without the written permission of the publisher.
--``,,,,````,```,,```,,`,,`,`,,-`-`,,`,,`,`,,`---

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