chapter_1_introduction to eng economy

Copyright ©2012 by Pearson Education, Inc.Upper Saddle River, New Jersey 07458

All rights reserved.

Engineering Economy, Fifteenth EditionBy William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling

Engineering EconomyEngineering Economy

Sullivian W.G, Wicks E.M and Koelling C.P (2012)

Mohamad Sirin, R (2007)

Blank, L.T, A.Tarquin (2012)




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Chapter 1Chapter 1

Introduction to Engineering Economy




Engineering economy…

involves the systematic evaluation of the economic merits of proposed solutions to engineering problems.




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Why Engineering Economy is Important to Engineers

Engineers design and create …design & build…what type of design involved?

Designing involves economic decisions…size min or max? A=125m2, provide 4Y20 (Area 130m2 not 4Y25 (Area = 135m2

Engineers must be able to incorporate economic analysis into their creative efforts …Project A, but 20 company submit tender for this project..




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Why Engineering Economy is Important to Engineers

Often engineers must select and implement from multiple alternatives..apa akan terjadi apabila 1 pile patah semasa kerja piling dilakukan?

Understanding and applying time value of money, economic equivalence, and cost estimation are vital for engineers

A proper economic analysis for selection and execution is a fundamental task of engineering.. 1 of company submit 3 tender, which are 3BQ...which one the best price??




Engineering economic analysis can play a role in many types of

situations.• Choosing the best design for a high-efficiency gas furnace.

• Selecting the most suitable robot for a welding operation on an automotive assembly line.

• Making a recommendation about whether jet airplanes for an overnight delivery service should be purchased or leased.

• Determining the optimal staffing plan for a computer help desk.

• Determing labour …pekerja asing or tempatan• Progress Report..Interim payment, S-Curve• Bidding (BQ)…the best price to select contractor• Hire purchase..machineries




SEVEN (7) fundamental principles of engineering economy.

• Develop the alternativescarefully define the problem, then the choice (decision) is among alternatives. The alternatives need to be identified and then defined for subsequent analysis.

• Focus on the differencesonly the differences in expected future outcomes among the alternatives are relevant to their comparison and should be considered in the decision.




Cont…SEVEN (7) fundamental principles of engineering economy.

• Use a consistent viewpointthe prospective outcomes of the alternatives, economic and other, should be consistently developed from a defined viewpoint (perspective)

• Use a common unit of measureusing a common unit of measurement to enumerate as many of the prospective outcomes as possible will simplify the analysis of the alternatives.





• Consider all relevant criteriaselection of a preferred alternative (decision making) requires the use of a criterion (or several criteria). The decision process should consider both the outcomes enumerated in the monetary unit and those expressed in some other unit of measurement or made explicit in a descriptive manner.

• Make uncertainty explicitrisk and uncertainty are inherent in estimating the future outcomes of the alternatives and should be recognized in their analysis and comparison.





• Revisit your decisionsimproved decision making results from an adaptive process; to the extent practicable, the initial projected outcomes of the selected alternative should be subsequently compared with actual results achieved.




No Principle of eng. economy

Example issue

1 Develop the alternativescarefully define the problem, then the choice (decision) is among alternatives

SMART Tunnel

Problem1.Sinkholes 2. Crack

Propose all decision alternative1.Service & Repair for maintenances purpose only, (xperlu redesign)2.Redesign, sampling & lab testing for others action approval from authorities3.New improvement technologist action





Example issue

2 Focus on the differencesonly the differences in expected future outcomes among the alternatives are relevant to their comparison and should be considered in the decision.

Choose expected decision alternative (2) & (3)2. Redesign, sampling & lab testing for others action approval

from authorities

3. New improvement technologist

3 Use a consistent viewpointthe prospective outcomes of the alternatives, economic and other, should be consistently developed from a defined viewpoint (perspective)

2. Redesign, sampling & lab testing for others action approval from authorities

a. melibatkan masa untuk merekabentuk & menyiapkn laporan serta mendapatkan kelulusan oleh pihak berkuasa tempatan. b. melibatkan kos dan pekerja mahir bagi membuat penyelenggaraan

3. New improvement technologist a. menggunakan TB Machine jenis Variable Density bukan jenis Earth Pressure Balance for different soil condition. b. menggunakan pekerja mahir yang dilatih khas c. menggunakan bahan yang mempunyai kekuatan tinggi




No Principle of eng. economy Example issue

4 Use a common unit of measureusing a common unit of measurement to enumerate as many of the prospective outcomes as possible will simplify the analysis of the alternatives.

2. Redesign, sampling & lab testing • R/Bentuk semula & kelulusan ambil masa yang lama• Kos yang tinggi• pekerja mahir yang terlatih

3. New technologist to prevent Crack – Steel fibreConstructive:Constructive: •Less material cost •Labor reduction •Less human error

Structural: Structural: •Smaller crack width openings •Higher durability •Higher impact and abrasion resistance •Higher fatigue strength •Improved fire resistance properties

5 Consider all relevant criteriaselection of a preferred alternative (decision making) requires the use of a criterion (or several criteria). The decision process should consider both the outcomes enumerated in the monetary unit and those expressed in some other unit of measurement or made explicit in a descriptive manner.

Review again all criteria





Example issue

6 Make uncertainty explicitrisk and uncertainty are inherent in estimating the future outcomes of the alternatives and should be recognized in their analysis and comparison.

Advantages•Minimized cracking and spalling •Less repair and maintenance needed •Better aesthetical appearance of the tunnel •No limitations for M&E to drill •Higher durability

Disadvantages

•The use of SFRC as tunnel lining is uncommon •Unlike conventional rebar design, SFRC mix design is more complex. •No precedence of mix design to follow •Limited guidelines on the sampling and testing of SFRC samples •Engage experienced consultants to facilitate:

7 Revisit your decisionsimproved decision making results from an adaptive process; to the extent practicable, the initial projected outcomes of the selected alternative should be subsequently compared with actual results achieved.

Choose the best decision ..no (3)




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Engineering Economy• Engineering Economy involves

– Formulating .. A=P x L x t – Estimating, ..slab– Evaluating …how many mixer lorry want to order???expected economic outcomes of alternativesdesigned to accomplish a defined purpose

• Easy-to-use math techniques simplify the evaluation, ex : Teorem Pithagoras

• Estimates of economic outcomes can be deterministic or stochastic in nature.ex : Progress Curve (S-curve)




Electronic spreadsheets are a powerful addition to the

analysis arsenal.

• Most engineering economy problems can be formulated and solved using a spreadsheet.

• Large problems can be quickly solved.• Proper formulation allows key parameters to be

changed.• Graphical output is easily generated.• Give example of spreadsheets that engineer use in

design for civil engineering???




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General Steps for Decision Making Processes

1. Understand the problem ..define objectives .. Ex : broken pile

2. Collect relevant information…why that happen (condong semasa setting piling work)

3. Define the set of feasible alternatives..discuss any solution (korek semula? biarkan tanpa cukup bil pile ikut size asal?redesign footing?)

4. Identify the criteria for decision making..list outi.korek semulaii. ikut saiz asal tanpa cukup bil pileiii. redesign footing




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Cont..General Steps for Decision Making Processes

5. Evaluate the alternatives and apply sensitivity analysis..

i.korek semula…akan mengganggu struktur tnhii. ikut saiz asal tanpa cukup bil pile…x boleh tanggung load structure..iii. redesign footing…boleh tanggung load structure

6. Select the “best” alternative…..choose (iii) redesign 7. Implement the alternative and monitor results....action

(submit drawing for aprovals)




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Cont..General Steps for Decision Making Processes

No Decision Making Processes

Example issue

1 Understand the problem (define objectives )

broken pile

2 Decision Making Processes condong semasa setting piling work

3 Define the set of feasible alternatives..discuss any solution

Senaraikan semua kebarangkalian solution..korek semula? biarkan tanpa cukup bil pile ikut size asal? redesign footing etc.

4 Identify the criteria for decision making..list out

i.korek semulaii. ikut saiz asal tanpa cukup bil pileiii. redesign footing

5 Evaluate the alternatives and apply sensitivity analysis..

i.korek semula…akan mengganggu struktur tnhii. ikut saiz asal tanpa cukup bil pile…tidakboleh tanggung load structure..iii. redesign footing…boleh tanggung loadstructure

6 Select the “best” alternative.. choose

(iii) redesign

7 Implement the alternative and monitor results.. action

submit drawing for approvals




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Steps in an Engineering Economy Study




Take Home Quiz 1

1.Find one (1) problem economic issues related on building/construction/environment/ structure/materials/road & drainage/ others activities.

2. Solve the problem follows the i. Principle of eng economy ii. Decision making process.

chapter_1_introduction to eng economy

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