A method of determining the construction cost of a petroleum refinery or a process unit. It is used to compare operating costs over time and involves normalizing cost during that time span and includes changes in productivity costs such as labour and utilities, etc. The purchase cost at any particular time is based on the original cost at some earlier specified time multiplied by a ratio of cost indices for the present to the earlier time of interest. Established in 1926, the original index was given a value of 100 in (p. 252) 1946. The Nelson–Farrar cost index is published in the first issue of each month of Oil and Gas Journal, and not considered to be suitable for refineries and process units that are older than five years.

http://www.ogj.com/articles/print/vol-110/issue-9/processing/nelson-farrar-cost-indexes.html Official website of Oil and Gas Journal containing the Nelson–Farrar index.