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Introduction To Engineering Economy: Week 1

Engineering economy is a method for analyzing the economic aspects of engineering and technical decisions. It helps engineers systematically evaluate the costs and benefits of projects to analyze alternative uses of resources. Engineering economy is important because engineers must incorporate economic analysis into their design decisions and often must select from multiple alternatives. An engineering economy study defines alternatives, estimates their costs and cash flows, performs an analysis using engineering economy tools, selects the best alternative, and implements and monitors it.

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139 views16 pages

Introduction To Engineering Economy: Week 1

Engineering economy is a method for analyzing the economic aspects of engineering and technical decisions. It helps engineers systematically evaluate the costs and benefits of projects to analyze alternative uses of resources. Engineering economy is important because engineers must incorporate economic analysis into their design decisions and often must select from multiple alternatives. An engineering economy study defines alternatives, estimates their costs and cash flows, performs an analysis using engineering economy tools, selects the best alternative, and implements and monitors it.

Uploaded by

satryoyu811
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Introduction to Engineering Economy

Week 1

Engineering Economy

Engineering economy is a method about economic aspect / finance aspect from technical decision/ engineering decision. A.M Wellington 1887 Engineering Economy is about making decisions It is based on the systematic evaluation of the costs and benefits of proposed technical projects The principles and methodology of engineering economy are utilized to analyze alternative uses of financial resources, particularly in relation to the physical assets and the operation of an organization.

Why Engineering Economy is Important to Engineers (and other professionals)


Engineers design and create Designing involves economic decisions Engineers must be able to incorporate economic analysis into their creative efforts Often engineers must select and execute from multiple alternatives A proper economic analysis for selection and execution is a fundamental aspect of engineering

Why Engineering Economy is Important to Engineers (and other professionals)

Engineering economy is involved with the formulation, estimation, and evaluation of economic outcomes when alternatives to accomplished a defined purpose are available. Always concerned with the selection and possible execution of alternatives given the economic parameters associated with the project. Engineering Economy is a set of tools that aid in decision making but will not make the decision for you. People make decisions! Engineering economy is based mainly on estimates of future events must deal with the future and risk and uncertainty.

Performing An Engineering Economy Study

Engineering Economy Studies:

Define Alternatives

Do-nothing alternative maintain the status quo Define feasible alternatives that can solve the problem

Define/estimate the current and future cash flows Perform the analysis

Apply the tools and methods of engineering economy

Selection of the best alternative Implement and monitor

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