One of the biggest challenges in solving optimization engineering problems is rooted in the nonlinearities and nonconvexities, which arise from bilinear terms corresponding to component material balances and/or concave functions used to estimate capital cost of equipments. The procedure proposed uses an MILP lower bound constructed using partitioning of certain variables, similar to the one used by other approaches. The core of the method is to bound contract a set of variables that are not necessarily the ones being partitioned. The procedure for bound contraction consists of a novel interval elimination procedure that has several variants. Once bound contraction is exhausted the method increases the number of intervals or resorts to a branch and bound strategy where bound contraction takes place at each node. The procedure is illustrated with examples of water management and pooling problems. (C) 2011 American Institute of Chemical Engineers AIChE J, 58: 23202335, 2012