Faculty of Engineering

Department of Civil Engineering

Sub: Engineering managements
and economic

L2:ENGINEERING
ECONOMY

Lecturer : Abdulqadir bayz hammad amin

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• The utilization of scientific and
engineering knowledge for our benefit is
achieved through the design of things we
use, such as furnaces for vaporizing trash
and structures for supporting magnetic
railway. However, these achievements do
not occur without a price, monetary or
otherwise.
• Do its benefits exceed its cost?

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What is engineering
• “Engineering is defined by the
ABET (Accreditation for
Engineering and Technology) as
the profession in which the
knowledge gained in physics,
chemistry, life science, and
mathematics is applied to make
products in large scale that
increase the prosperity of
man.”( Sharma, 2015:1 )
• Thus, engineers use knowledge
to find new ways of doing
things economically. http://www.uswaterservices.com/our-services/engineering-services

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Southeastern city- 310
Energy Conservation
Traffic intersection
The annual savings of
$396,000 per year from
the light conversion more
than paid for the $150,000
cost of installing the LED
light
Green Engineering in Acton- The USA
(decision making process)
Incandescent light to light-
Sustainability manager to
emitting diode (LED)
the city
Lights.
The resultant of bill has
changed $440,000 Watts reduction from 150
annually to $44,000 watts to 15 watts
annually
Engineering economy involves the systematic evaluation of
the economic merits of the proposed solutions to
engineering problems. To be economically acceptable (i.e.,
affordable), solution to engineering problems must
demonstrate a positive balance of long-term benefits over
long-term costs, and they must also
• Promote the well-being and survival of an organization,
• Embody creative and innovative technology and ideas
• Permit identification and scrutiny of their estimated
outcomes, and
• Translate profitability to the “bottom line” through a valid
and acceptable measure of merit.
Economy
➢Economy consists of the sum total of
all income from goods produced and
services offered in a state or nation.
➢It deals with the interactions between
people and wealth
➢The size of the United States’
economy can be measured using
parameters such as GDP (Gross
Domestic Product) GNP( Gross
National Product).

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The sizes of the
economies of
20 nations that
meet regularly
as G20.

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 • Engineering economy is the
study of the feasibility and
evaluation of the cost of
possible solutions to
engineering problems.
• When the benefits outweigh
costs, the alternative
becomes an acceptable one.

Engineering economy
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 1. Develop the Alternatives
2. Focus on difference
The principles 3. Use a consistent viewpoint
4. Use a common unit measure
of Engineering 5. Consider all relevant criteria
economy 6. Make risk and uncertainty explicit
7. Revisit your decision
1- Develop the
alternatives

• Carefully define the problem. Then the

choice (decision) is among alternatives. The
alternatives need to be identified and then
defined for subsequent analysis.
• Developing and defining the alternatives for
detailed evaluation is important because of
resulting impact on the quality of the
decision
• One alternative that may be feasible in a
decision situation is making no change to the
current operation or set of conditions.

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2 Focus on the
differences

• Only the differences in expected future

outcomes among the alternatives are
relevant to their comparison and should be
considered in future decision.
• Obviously, only the differences in the future
outcomes of the alternatives are important.
• Outcomes that are common to all
alternatives can be disregarded in the
comparison and decision.

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Engineering
economy AND
DESIGN PROCESS
An engineering economy
study is accomplished using
a structured procedure and
mathematical modeling
techniques. The economic
results are then used In a
decision that normally
includes other engineering
knowledge and inputs.

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TABLE 1-1 The general relationship between the engineering economic analysis procedure and the
engineering design process

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 Spread sheets are a useful tools for solving
engineering economy problems. Most
engineering economy problems are amenable to
spreadsheet solution for the following reason .
Using 1– They consist of structured, repetitive ,
Spreadsheets calculations that can be expressed as formulas
that rely on a few functional relationships.
in engineering 2- The parameters of the problem are subject to
change.
economic 3- the result and underlying calculation must be
analysis documented.
4-Graphic output is often required, as well as
control over the format of the graphs.
Spread
sheet

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