Session 7 & 8 Economics of Eng. Design I

TMC 4312: Mechanical Engineering Design I
Lecturer :James N. Mutie

Email :jndunda@tum.ac.ke, jamesmutie1@gmail.com
LECTURE SESSIONS
Session Seven: Design Factors, Cost Evaluation & Project presentation.
Design factors. Safety & Reliability. Overall Cost Evaluation. Project presentation &
bill of materials.
Session Eight: Economical factors in engineering design.
7.1 & 8.1 Session Objectives
By the end of this session, you should be able to
 Understand the different criteria & considerations/limitations that affect
the nature & approach of design.
 Understand and explain how to determine the cost of an engineered
product.
 Prepare technical documentations for engineering design projects, create
and conduct audio-visual or project presentations.
 Understand and explain how economical factors affect products of
engineering design.
7.2 Design Factors
Sometimes the strength required of an element in a system is an important factor in
the determination of the geometry and the dimensions of the element. In such a
situation we say that strength is an important design consideration. When we use
the expression design consideration, we are referring to some characteristic that
influences the design of the element or, perhaps, the entire system. Usually quite a
number of such characteristics must be considered and prioritized in a given design
situation. Many of the important ones are as follows (not necessarily in order of
importance):
 Functionality  Cost
 Strength/Stress  Friction
 Distortion/Deflection/stiffness  Weight
 Wear  Life
 Corrosion  Noise
 Safety  Styling
 Reliability  Shape
 Manufacturability  Size
 Utility  Control
TUM is ISO 9001:2015 Certified

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 Thermal Properties  Liability

 Surface  Remanufacturing/resource
 Lubrication recovery
 Marketability
 Maintenance
 Volume
Some of these characteristics have to do directly with the dimensions, the material,
the processing, and the joining of the elements of the system. Several characteristics
may be interrelated, which affects the configuration of the total system.
7.3 Safety & Product liability
The strict liability concept of product liability generally prevails in the United States.
This concept states that the manufacturer of an article is liable for any damage or
harm that results because of a defect. And it doesn’t matter whether the
manufacturer knew about the defect, or even could have known about it. For
example, suppose an article was manufactured, say, 10 years ago. And suppose at
that time the article could not have been considered defective on the basis of all
technological knowledge then available.
Ten years later, according to the concept of strict liability, the manufacturer is still
liable. Thus, under this concept, the plaintiff needs only to prove that the article was
defective and that the defect caused some damage or harm. Negligence of the
manufacturer need not be proved.
The best approaches to the prevention of product liability are good engineering in
analysis and design, quality control, and comprehensive testing procedures.
Advertising managers often make glowing promises in the warranties and sales
literature for a product. These statements should be reviewed carefully by the
engineering staff to eliminate excessive promises and to insert adequate warnings
and instructions for use.
There are three aspects to design for safety:
1. Make the product safe, that is, design all hazards out of the product.
2. If it is not possible to make the product inherently safe, then design in protective
devices like guards, automatic cutoff switches, and pressure-relief valves, to mitigate
the hazard.
3. If step 2 cannot remove all hazards, then warn the user of the product with
appropriate warnings like labels, flashing lights, and loud sounds.
A fail-safe design seeks to ensure that a failure will either not affect the product
or change it to a state in which no injury or damage will occur. There are three
variants of fail-safe designs.

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 Fail-passive design. When a failure occurs, the system is reduced to its lowest-
energy state, and the product will not operate until corrective action is taken.
A circuit breaker is an example of a fail-passive device.
 Fail-active design. When failure occurs, the system remains energized and in
a safe operating mode. A redundant system kept on standby is an example.
 Fail-operational design. The design is such that the device continues to
provide its critical function even though a part has failed. A valve that is
designed so that it will remain in the open position if it fails is an example.
Guidelines for Design for Safety

1. Recognize and identify the actual or potential hazards, and then design the
product so they will not affect its functioning.
2. Thoroughly test prototypes of the product to reveal any hazards overlooked
in the initial design.
3. Design the product so it is easier to use safely than unsafely.
4. If field experience turns up a safety problem, determine the root cause and
redesign to eliminate the hazard.
5. Realize that humans will do foolish things, and allow for it in your design.
More product safety problems arise from improper product use than from
product defects. A user-friendly product is usually a safe product.
6. There is a close correspondence between good ergonomic design and a safe
design. For example:
● Arrange the controls so that the operator does not have to move to
manipulate them.
● Make sure that f ngers cannot be pinched by levers or other features.
● Avoid sharp edges and corners.
● Point-of-operation guards should not interfere with the operator’s
movement.
● Products that require heavy or prolonged use should be designed to avoid
cumulative trauma disorders like carpal tunnel syndrome. This means
avoiding awkward positions of the hand, wrist, and arm and avoiding
repetitive motions and vibration.
7. Minimize the use of flammable materials, including packaging materials.
8. Paint and other surface finishing materials should be chosen to comply with
EPA and OSHA regulations for toxicity to the user and for safety when they
are burned, recycled, or discarded.
9. Think about the need for repair, service, or maintenance. Provide adequate
access without pinch or puncture hazards to the repairer.
10. Electrical products should be properly grounded to prevent shock. Provide
electrical interlocks so that high-voltage circuits will not be energized unless a
guard is in the proper position.

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7.4 Reliability
In these days of greatly increasing numbers of liability lawsuits and the need to
conform to regulations issued by governmental agencies such as EPA and OSHA, it
is very important for the designer and the manufacturer to know the reliability of
their product. The reliability method of design is one in which we obtain the
distribution of stresses and the distribution of strengths and then relate these two in
order to achieve an acceptable success rate.
The statistical measure of the probability that a mechanical element will not fail in
use is called the reliability of that element. The reliability R can be expressed by a
number having the range 0 ≤ R ≤ 1. A reliability of R = 0.90 means that there is a 90
percent chance that the part will perform its proper function without failure. The
failure of 6 parts out of every 1000 manufactured might be considered an acceptable
failure rate for a certain class of products. This represents a reliability of
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R  1  0.994
1000
In the reliability method of design, the designer’s task is to make a judicious selection of
materials, processes, and geometry (size) so as to achieve a specific reliability
goal. Thus, if the objective reliability is to be 99.4 percent, as above, what
combination of materials, processing, and dimensions is needed to meet this goal?
Analyses that lead to an assessment of reliability address uncertainties, or their
estimates, in parameters that describe the situation. Stochastic variables such as
stress, strength, load, or size are described in terms of their means, standard
deviations, and distributions. If bearing balls are produced by a manufacturing
process in which a diameter distribution is created, we can say upon choosing a ball
that there is uncertainty as to size. If we wish to consider weight or moment of
inertia in rolling, this size uncertainty can be considered to be propagated to our
knowledge of weight or inertia. There are ways of estimating the statistical
parameters describing weight and inertia from those describing size and density.
These methods are variously called propagation of error, propagation of uncertainty, or
propagation of dispersion. These methods are integral parts of analysis or synthesis
tasks when probability of failure is involved.
It is important to note that good statistical data and estimates are essential to
perform an acceptable reliability analysis. This requires a good deal of testing and
validation of the data. In many cases, this is not practical and a deterministic
approach to the design must be undertaken.

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Forms of the failure curve: (a) three-stage (bath tub) curve typical of electronic
equipment; (b) failure curve more typical of mechanical equipment.
(Further in-depth reading in Reliability Engineering)
7.4.1 Causes of Unreliability

The malfunctions that an engineering system can experience can be classified into
five general categories.
1. Design mistakes: Among the common design errors are failure to include all
important operating factors, incomplete information on loads and environmental
conditions, erroneous calculations, and poor selection of materials.
2. Manufacturing defects: Although the design may be free from error, defects
introduced at some stage in manufacturing may degrade it. Some common examples
are (1) poor surface finish or sharp edges (burrs) that lead to fatigue cracks and
(2) decarburization or quench cracks in heat-treated steel. Elimination of defects
in manufacturing is a key responsibility of the manufacturing engineering staff,
but a strong relationship with the R&D function may be required to achieve it.
Manufacturing errors produced by the production work force are due to such factors
as lack of proper instructions or specifications, insufficient supervision, poor
working environment, unrealistic production quota, inadequate training, and poor
motivation.
3. Maintenance: Most engineering systems are designed on the assumption they will
receive adequate maintenance at specified periods. When maintenance is neglected
or is improperly performed, service life will suffer. Since many consumer products
do not receive proper maintenance by their owners, a good design strategy is to
design products that do not require maintenance.
4. Exceeding design limits: If the operator exceeds the limits of temperature, speed,
or another variable for which it was designed, the equipment is likely to fail.
5. Environmental factors: Subjecting equipment to environmental conditions for
which it was not designed, such as rain, high humidity, and ice, usually greatly
shortens its service life.

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7.4.2 Minimizing Failure

A variety of methods are used in engineering design practice to improve reliability.
We generally aim at a probability of failure of Pf< 10-6 for structural applications
and 10-4 <Pf <10 -3 for unstressed applications.
1. Margin of Safety
The variability in the strength properties of materials and in loading conditions
(stress) leads to a situation in which the overlapping statistical distributions can
result in failures. The variability in strength of materials has a major impact on the
probability of failure, so failure can be reduced with no change in the mean value if
the variability of the strength can be reduced.
2. Derating
The analogy to using a factor of safety in structural design is derating electrical,
electronic, and mechanical equipment. The reliability of such equipment is increased
if the maximum operating conditions (power, temperature, etc.) are derated below
their nameplate values. As the load factor of equipment is reduced, so is the failure
rate. Conversely, when equipment is operated in excess of rated conditions, failure
will ensue rapidly.
3. Redundancy
One of the most effective ways to increase reliability is with redundancy. In parallel
redundant designs the same system functions are performed at the same time by
two or more components even though the combined outputs are not required. The
existence of parallel paths may result in load sharing so that each component is
derated and has its life increased by a longer-than-normal time.
Another method of increasing redundancy is to have inoperative or idling standby
units that cut in and take over when an operating unit fails. The standby unit wears
out much more slowly than the operating unit does. Therefore, the operating
strategy often is to alternate units between full-load and standby service. The
standby unit must be provided with sensors to detect the failure and switching gear
to place it in service. The sensor and/or switching units frequently are the weak link
in a standby redundant system.
4. Durability
The material selection and design details should be performed with the objective
of producing a system that is resistant to degradation from such factors as corrosion,
erosion, foreign object damage, fatigue, and wear. This usually requires the decision
to spend more money on high-performance materials so as to increase service life
and reduce maintenance costs. Life cycle costing is the technique used to justify this
type of decision.
5.Damage Tolerance
Crack detection and propagation have taken on great importance since the
development of the fracture mechanics approach to design A damage-tolerant
material or structure is one in which a crack, when it occurs, will be detected soon
enough after its occurrence so that the probability of encountering loads in excess of

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the residual strength is very remote. Figure below illustrates some of the concepts of
damage tolerance. The initial population of very small flaws inherent in the material
is shown at the far left. These are small cracks, inclusions, porosity, surface pits, and
scratches. If they are less than a1, they will not grow appreciably in service.
Additional defects will be introduced by manufacturing processes. Those larger than
a2 will be detected by inspection and eliminated as scrapped parts. However, some
cracks will be present in the components put into service, and they will grow to a
size a3 that can be detected by the nondestructive evaluation (NDE) techniques that
can be used in service. The allowable design stresses must be so selected that the
number of flaws of size a3 or greater will be small. Moreover, the material should be
damage-tolerant so that propagation to the critical crack size acr is slow. In
conventional fracture mechanics analysis, the critical crack size is set at the largest
crack size that might be undetected by the NDE technique used in service. The value
of fracture toughness of the material is taken as the minimum reasonable value. This
is a safe but overly conservative approach. These worst-case assumptions can be
relaxed and the analysis based on more realistic conditions by using probabilistic
fracture mechanics (PFM).
6. Ease of Inspection
The importance of detecting cracks should be apparent from the figure below.
Ideally it should be possible to employ visual methods of crack detection, but special
design features may have to be provided in order to do so. In critically stressed
structures, special features to permit reliable NDE by ultrasonics or eddy current
techniques may be required. If the structure is not capable of ready inspection, then
the stress level must be lowered until the initial crack cannot grow to a critical size
during the life of the structure. For that situation the inspection costs will be low but
the structure will carry a weight penalty because of the low stress level.

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Distribution of defects in engineering components
7.Simplicity
Simplification of components and assemblies reduces the chance for error and
increases the reliability. The components that can be adjusted by operation or
maintenance personnel should be restricted to the absolute minimum. The simpler
the equipment needed to meet the performance requirements the better the design.
8.Specificity
The greater the degree of specificity, the greater the inherent reliability of design.
Whenever possible, be specific with regard to material characteristics, sources
of supply, tolerances and characteristics of the manufacturing process, tests required
for qualification of materials and components, and procedures for installation,
maintenance, and use. Specifying standard items increases reliability. It usually
means that the materials and components have a history of use so that their
reliability is known. Also, replacement items will be readily available. When it is
necessary to use a component with a high failure rate, the design should especially
provide for the easy replacement of that component.
7.5 COST EVALUATION: Costing and Business Aspects.

Decisions made in the design process commit 70 to 80 % of the cost of a product. It is
in the conceptual and embodiment design stages that a majority of the costs are
locked into the product. Cost estimates are used in the following ways:
 To provide and establish the S.P(selling price) of a product or a quotation for a
good service.
 To determine the most economical method, process or material for
manufacturing aproduct
 To become a basis for a cost reduction program
 To determine standards of production performance that may be used to
control costs
 To provide input concerning the profitability of a new product.
7.6 CATEGORIES OF COSTS
Costs can be divided into 2 broad categories
1. Product costs/ variable cost- costs that vary with each unit of product made e.g.
material cost and labor cost.
2. Period cost/fixed costs- costs that occur over a period of time regardless of the
amountof prod that Is made or sold e.g. Insurance on factory equipment, expenses or
selling the product.
They can also be categorized into direct costs and indirect costs.
Direct costs- costs directly associated with a particular unit of product that is
manufactured.In most cases it is also a variable cost.

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Indirect costs- Costs that can't be identified with any particular product e.g. rent or
factorybuilding, cost of utilities.
FIXED COSTS
These includes:
1. Indirect plant costs plus[G &A]i.e. General and Administrative cost are also part.
a) Investment costs: Depreciation or capital investment, Interest on capital
investment andinventory, property taxes, Insurance.
b) Overhead costs (burden): Technical services (engineering), product design and
development, non technical services (office personnel, security) General supplies,
rental of equipment.
2. Management and administrative expenses: share of costs of corporate executive
staff, legal staff, market staff share of corporate research & development staff
3. Selling expenses: Sales force, delivery and warehouse costs, technical services.
VARIABLE COSTS.
These includes:
Cost of materials, direct labor (including Fringe benefits), direct production
supervision,maintenance, power and utilities, quality control staff, royalty payments,
packaging andstorage costs, scrap losses and spoilage.
Elements of cost that establish the selling price
Break-even Point
The break-even point is the roles or production volumes at which sales and costs be
operatingbeyond BEP results in profits operating below BEP - losses.
If P be unit of sales price, v be the variable cost and f be the fixed costs.

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Q is the number of production units or the sales volume of products sold. The gross
profit Zis given by
Z  PQ  (Qv  f ) @ BEP Q  QBEP & Z  0
f
QBEP ( P  v)  f  QBEP 
( P  v)
Example: A new product has the following cost structure over one month of
operation. Determine
i. the break-even point.
ii. What the Sales price would be needed for the product to break even at 1000
units.
Given
Labour cost Ksh 250/unit ,
Material cost Ksh 600/unit
G & A expenses Ksh 120,000,
Depreciation on equipment Ksh 500,000 ,
Factory expenses Ksh 90,000,
Sales & distribution overhead Ksh 100,000
Profit Ksh 170/unit.
Solution
Total variable (Ksh) v=250+600=850/unit
Break –even curve showing relation between fixed & variable cost & profit before
taxes.

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Total fixed cost, f  120, 000  500, 000  80, 000  100, 000  800, 000
Sales price (Ksh) P  850  170  1020
f 800, 000
QBEP ( P  v)  f  QBEP    4706 units
( P  v) (1020  850)
Sales price would be needed for the product to break even at 1000 units.
(QBEP v  f ) (1000  850  800, 000) 1, 650,000
 PQBEP  (QBEP v  f )  P     Ksh1, 650
QBEP 1000 1000
7.7 METHODS OF DEVELOPING COST ESTIMATES

Costing in Conceptual Design
Costing methods are required that allow for direct comparison between different
types ofdesigns that would perform the same functions. An accuracy of 20% is the
goal.
Relative cost are often used for comparing the costs of different design configuration
standard components and materials. The base cost is usually the cost of the lowest
cost ormost commonly used item.. The advantages of relative cost scales is that they
change lesswith time than do absolute costs. Methods used are;
Analogy
The future costs of a project or design are based. On part costs of a similar project or
design with due allowance for cost escalation and technical differences.
Parametric and Factor Methods
Here techniques such as regression analysis are used to establish relations between
costsand key parameters of the systeme.eg weight, speed, power. This be approach
is most helpful in problem definition of conceptual design.
E.g. the cost of developing a turbofan aircraft engine might be given by:
C  0.13937 x10.7435 x20.0775
Where C is in millions, x1- maximum engine thrust in products and x2 is the number
ofengines produced by the company.
Factor methods are related to parametric studies in that they use empirical
relationships basedon cost data to find useful predictive relationship..
A factor method for determining the unit manufacturing cost of a part.
= + ( × × × )
Cu= Manufacture to make one unit.V= Volume of the part
Cmv= Material cost per unit volume
Ps= basic cost for process an ideal shape by a particular process.
Cmp= Cost factor that relates to malleability of material in particular.
Cc= relative cost associated with shape complexity
Cs= is a relative cost associated with achieving minimum section thickness

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Cft= is the cost of achieving a specified surface finish or tolerance.

Functional costing- a method of determining cost in early design where once the
functions to be performed and determine, the minimum cost of the design has been
fixed linking functions to cost gives a direct way of designing to costs. It is also the
basic idea behind value analysis. A number of software programs that incorporate
quick design calculations cost models of processes and cost catalogs are available
some are:
SEER DFM by Galorath uses advance parametric modeling to estimate
manufacturing costsearly in design process. It deals with machining, casting,
forging, molding, powder metals heat treatment, coating, fabrication of sheet metal
composite materials etc.
DFM concurrent Costing by Boothroyd Dewhurst: The software requires minimum
part detail to provide relative costs for process selection.
Feature- Based Cost Analytics by Akoya Inc: uses predictive cost data models based
on data mining thousands of parts with known manufacturing costs. The parametric
equations include financial information, purchasing information, and part attributes
such as part weight and volume, type of material, heat treating, and required
geometric tolerances.
Costimator by MTI systems: provides detailed cost estimates for parts made by
machining.
7.8 Detailed Methods Costing

Detailed design is completed and the final detailed drawings of the part and
assemblies have been prepared, it is possible to prepare a cost evaluation of 5%
accuracy. The cost evaluation requires detailed analysis of every operation to
produce the part and a good estimate of the time required to complete the operation.
Similar method is also used in building and civil engineering.
At the outset of developing the cost estimate, the following information should be
available:
 Total quantity of product to be produced
 Schedule for production
 Detailed drawings and/or CAD file
 Bill of materials (BOM)
Detailed methods costing analysis is usually prepared by a process planner or a
cost engineer. Such a person must be very familiar with the machines, tooling, and
processes used in the factory. The steps to determine cost to manufacture a part are:
1. Determine the material costs . Since the cost of material makes up 50 to 60 percent
of the cost of many products, this is a good place to start.
mCM
MtC 
1  f 
Where –cost of material, m- weight of the material

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f- fraction of material that ends up as scraps
2. Prepare the operations route sheet. The route sheet is a sequenced list of all operations
required to produce the part. An operation is a step in the process sequence, defined
as all the work done on a machine or workstation.
3. Determine the time required to carry out each operation . Whenever a new part is first
made on a machine, there must be a setup period during which old tooling is taken
out and new tooling is installed and adjusted. Depending on the process, this can be
a period of minutes or several days, but two hours is a more typical setup time. Each
process has a cycle time, which consists of loading the workpiece into the machine,
carrying out the operation, and unloading the workpiece. The process cycle is
repeated many times until the number of parts required for the batch size has been
made. Often there is a downtime for shift change or for maintenance on the machine
or tooling.
4. Convert time to cost. The times for each element in each operation are added to find
the total time to complete each operation of the process. Then the time is multiplied
by the fully loaded wage rate (Ksh/hr) to give the cost of labor. A typical product
will require parts made by different processes, and some parts purchased rather than
made in-house. Typically, different labor rates and overhead rates prevail in
different cost centers of the factory.
7.9 Bill of Materials

The bill of materials (BOM) or the parts list is a list of each individual component
in the product. As Fig below shows, it lists the part description, quantity needed for
a complete assembly, part number, the source of the part, and purchase order
number if outsourced to a supplier. This version of the bill of materials also lists the
name of the engineer responsible for the detail design of each part, and the name of
the project engineer who is responsible for tracking the parts through manufacture
and assembly.
The bill of materials has many uses. It is essential for determining the cost of the
product. A bill of materials will be started early in the embodiment design phase,
when the product architecture has been established, as a way of checking whether
the product costs are in line with that called for in the PDS. The bill of materials will
be finalized in the detail design phase and will be used in the detailed cost analysis.
The bill of materials is vital for tracking the parts during manufacture and assembly.
It is an important archival document for the design that needs to be preserved and
be available for retrieval.

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An example of bill of Materials
7.10 Written Documents & Presentation.

Novice design engineers often are surprised at how much time is spent in writing
tasks connected with a design project. Design is a complicated process with many
stakeholders. There are many groups who provide input to the design process and
many groups who participate in decision-making during the process. Often a current
decision can only be made after reviewing work done earlier in the design process.
Members of a design team on a complicated project may need to refresh their
memories on work done at a prior stage in the process just to move into new stages.
The importance of creating an accessible and correct collection of information on all
aspects of the design process cannot be over emphasized.
The critical need for precise and formal documentation drives all design engineers to
become effective at writing technical documents. Written documents create a
lasting record of the author’s work. Rightly or wrongly the quality of the
documentation gives a lasting impression of the quality of the work and of the skill
of the writer.
Design engineers prepare both informal and formal documents as part of their
daily routines. Informal documentation includes e-mail messages; and brief
memoranda, and daily entries in a design journal. Formal written documentation
usually takes the form of letters, formal technical reports (e.g. progress reports,
laboratory reports, process descriptions), technical papers, and proposals.
Oral Presentation
Impressions and reputations (favorable or unfavorable) are made most quickly by
audience reaction to an oral presentation. There are a number of situations in which

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you will be called upon to give a talk. Oral communication has several special
characteristics: quick feedback by questions and dialogue; impact of personal
enthusiasm; impact of visual aids; and the important influence of tone, emphasis,
and gesture. A skilled speaker in close contact with an audience can communicate
far more effectively than the cold, distant, easily evaded written word. On the other
hand, the organization and logic of presentation must be of a higher order for oral
than for written communication.
The listener to an oral communication has no opportunity to reread a page to clarify
a point. Many opportunities for “noise” exist in oral communication. The
preparation & delivery of the speaker, the environment of the meeting room, and the
quality of the visual aids all contribute to the efficiency of the oral communication
process.
Formal technical reports
A formal technical report usually is written at the end of a project. Generally, it is a
complete, stand-alone document aimed at persons having widely diverse
backgrounds. Therefore, much more detail is required than for the memorandum
report.The outline of a typical professional report 5 might be:
 Cover letter (letter of transmittal): The cover letter is provided so that

persons who might receive the report without prior notification will have
some introduction to it.
 Title page: The title page includes names, affiliations, and addresses of the
authors.
 Executive summary (containing conclusions): The summary is generally less
than a page in length and contains three paragraphs. The first briefly
describes the objective of the study and the problems studied. Paragraph two
describes your solution to the problem. The last paragraph addresses its
importance to the business in terms of cost savings, improved quality, or new
business opportunities.
 Table of contents, including list of figures and tables.
 Introduction: The introduction contains the pertinent technical facts that
might be unknown to the reader but will be used in the report.
 Technical issue sections (analysis or experimental procedures, pertinent
results, discussion of results):
i) The experimental procedure section is usually included to indicate how the
data were obtained and to describe any nonstandard methods or techniques
that were employed.
ii) The results section describes the results of the study and includes relevant
data analysis. Any experimental error allowances are included here.
iii) The discussion section presents data analysis analyzing the data to make a

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specific point, develop the data into some more meaningful form, or relate the
data to theory described in the introduction.
 Conclusions: The conclusion section states in as concise a form as possible the
conclusions that can be drawn from the study. In general, this section is the
culmination of the work and the report.
 References: References support statements in the report and lead the reader to
more in-depth information about a topic.
 Appendixes: Appendixes are used for mathematical developments, sample
calculations, etc., that are not directly associated with the subject of the report
and that, if placed in the main body of the report, would seriously impede the
logical flow of thought. Final equations developed in the appendixes are then
placed in the body of the report with reference to the appendix in which they
were developed.
Common Challenges in Technical Writing

The following suggestions are presented as a guide to writing and an aid in avoiding
some of the most common mistakes. You also should avail yourself of one of the
popular guides to English grammar and style.
1. Tense
The choice of the tense of verbs is often confusing. The following simple rules are
usually employed by experienced writers:
Past tense: Use to describe work completed or in general to past events. “Hardness
readings were taken on all specimens.”
Present tense: Use in reference to items and ideas in the report itself. “It is clear
from the data in Figure 4 that the motor speed is not easily controlled” or “The
group recommends that the experiment be repeated” (present opinion).
Future tense: Use in making prediction from the data that will be applicable in
the future. “The market data given in Table II indicate that the sales for the new
product line will continue to increase in the next ten years.”
2. References
References are usually placed at the end of the written text. Those to the technical
literature (described as readily available on subscription and included in most
library collections) are made by author and journal reference (often with the title of
article omitted) as shown by the following example. There is no single universally
accepted format for references. Each publishing organization has a preferred style
for referencing material.

16
 Technical Journal Article: C.O. Smith, Transactions of the ASME, Journal of

Mechanical Design, 1980, vol. 102, pp. 787–792.
 Book: Thomas T. Woodson: “Introduction to Engineering design,” pp. 321–
346. McGraw-Hill, New York, 1966.
 A private communication: J.J. Doe, XYZ Company, Altoona, PA, unpublished
research, 2004
 Internal reports J.J. Doe, Report No. 642, XYZ Company, Altoona, PA,
February
2001
8.2 ECONOMIC CONSIDERATIONS IN ENGINEERING DESIGN

Introduction
In an engineering project, costs and revenues will occur at various points of time in
the future. The methodology for handling this class of problems is known as
engineering economy or engineering economic analysis. Familiarity with the
concepts and approach of engineering economy generally is considered to be part of
the standard engineering toolkit. Indeed, an examination on the fundamentals of
engineering economy is required for professional engineering registration in all
disciplines in all states.
The chief concept in engineering economy is that money has a time value. Paying
out $1.00 today is more costly than paying out $1.00 a year from now. A dollar
invested today is worth a dollar plus interest a year from now. Engineering economy
recognizes the fact that the use of money is a valuable asset. Money can be rented in
the same way one can rent an apartment, but the charge for using it is called interest
rather than rent. This time value of money makes it more profitable to push expenses
into the future and bring revenues into the present as much as possible.
Before proceeding into the mathematics of engineering economy, it is important
to understand where engineering economy sits with regard to related disciplines like
economics and accounting. Economics generally deals with broader and more global
issues than engineering economy, such as the forces that control the money supply
and trade between nations. Engineering economy uses the interest rate established
by the economic forces to solve more specific and detailed problems. However, it
usually is a problem concerning alternative costs in the future. The accountant is
more concerned with determining exactly, and often in great detail, what costs have
been incurred in the past. One might say that the economist is an oracle, the
engineering economist is a fortune teller, and the accountant is a historian.
Some of the critical economic considerations that an engineer has to versed in are:,
i) The mathematics of time value for money:
 Simple interest
 Compound interest
 Cash flow diagrams and cash flow analysis methods

17
 Present worth analysis, annual cost analysis and capitalized cost analysis
ii) Depreciation of assets and depreciation methods
 Straight-line depreciation,
 Declining-Balance Depreciation
 Sum of digits years digits depreciation
 Modified accelerated cost recovery system
iii) Taxes:
Taxes are an important factor to be considered in engineering economic decisions.
The chief types of taxes that are imposed on a business firm are:
 Property taxes: Based on the value of the property owned by the corporation
(land, buildings, equipment, inventory). These taxes do not vary with profits
and usually are not too large.
 Sales taxes: Imposed on sales of products. Sales taxes usually are paid by the
retail purchaser, so they generally are not relevant to engineering economy
studies of a business.
 Excise taxes: Imposed on the manufacture of certain products like gasoline,
tobacco, and alcohol. Also usually passed on to the consumer.
 Income taxes: Imposed on corporate profits or personal income. Gains resulting
from the sale of capital property also are subject to income tax.
iv) Profitability of Investments:
One of the principal uses for engineering economy is to determine the profitability of
proposed projects or investments. The decision to invest in a project generally is
based on three different sets of criteria.
 Profitability: It is an analysis that estimates how rewarding in monetary terms
an investment will be.
 Financial analysis: How to obtain the necessary funds and what it will cost.
Funds for investment come from three broad sources: (1) retained earnings of
the corporation, (2) long-term commercial borrowing from banks, insurance
companies, and pension funds, and (3) the equity market through the sale of
stock.
 Analysis of intangibles: Legal, political, or social consideration or issues of a
corporate image often outweigh financial considerations in deciding on which
project to pursue. For example, a corporation may decide to invest in the
modernization of an old plant because of its responsibility to continue
employment for its employees when investment in a new plant 1000 miles
away would be economically more attractive.
However, in our free-enterprise system a major goal of a business firm is to
maximize profit. It does so by committing its funds to ventures that appear to be
profitable. If investors do not receive a sufficiently attractive profit, they will find
other uses for their money, and the growth—even the survival—of the firm will be
threatened.

18
Four methods of evaluating profitability are commonly used. Accounting rate of

return and payback period are simple techniques that are readily understood, but they
do not take time value of money into consideration. Net present value and discounted
cash flow are the most common profitability measures in which time value of money
is considered.
A typical cycle of a plant investment

v) Inflation:
Inflation exists when prices of goods and services are increasing so that a given
amount of money buys less and less as time goes by. Interest rates and inflation are
directly related. The basic interest rate is about 2 to 3 percent higher than the
inflation rate. Thus, in a period of high inflation, not only does the dollar or Kenyan
shilling whichever the currency, purchase less each month but the cost of borrowing

19
money also rises. Price changes may or may not be considered in an economic
analysis.
Because the purchasing power of money decreases with time, all published cost data
are out of date. To compensate for this, cost indexes are used to convert past costs to
current costs. The cost at time 2 is the cost at time 1 multiplied by the ratio of the cost
indexes.
 index @ time 2 
C2  C1  
 index @ time1 
The most readily available cost indexes are:
Consumer Price Index (CPI)—gives the price of consumer goods and services
Producer Price Index (PPI)—measures the entire market output of U.S. producers
of goods. The Finished Goods Price Index of the PPI is roughly split between durable
goods (not in the CPI) and consumer goods. No services are measured by the PPI.
Both the CPI and PPI are available at www.bls.gov.
The Engineering News Record provides indexes on general construction costs.
The Marshall and Swift Index, found on the last page of Chemical Engineering
magazine, provides an index of industrial equipment costs. The same magazine
publishes the Chemical Engineering Plant Equipment Index, which covers
equipment such as heat exchangers, pumps, compressors, piping, and valves.
Many trade associations and consulting groups also maintain specialized cost
indexes.
Example: An oilfield diesel engine cost $5500 when it was purchased in 1982.
What did it cost to replace the diesel engine in 1997?
I   1156.8 
C1997  C1982  1997   $5500     $7095
 I1982   121.8 
vi) Sensitivity and break even analysis
A sensitivity analysis determines the influence of each factor on the final result, and
therefore it determines which factors are most critical in the economic decision. Since
there is a considerable degree of uncertainty in predicting future events like sales
volume, salvage value, and rate of inflation, it is important to see how much the
economic analysis depends on the magnitude of the estimates. One factor is varied
over a reasonable range and the others are held at their mean (expected) value. The
amount of computation involved in a sensitivity analysis of an engineering economy
problem can be considerable, but the use of computers has made sensitivity analysis
a much more practical endeavor.
A break-even analysis often is used when there is particular uncertainty about
one of the factors in an economic study. The break-even point is the value for the
factor at which the project is just marginally justified.

20
vii) Uncertainty of economic analysis

Since none of us has a completely clear crystal ball, such estimates are likely to
contain considerable uncertainty. In all of the examples presented so far in this
chapter we have used a single value that was the implied best estimate of the future.
Now that we are willing to recognize that estimates of the future may not be very
precise, there are some ways by which we can guard against the imprecision. The
simplest procedure is to supplement your estimated most likely value with an
optimistic value and a pessimistic value.
Optimistic value  4( most likely value)  pessimistic value
Mean value=
6
The mean value determined from the equation is used in the economic analysis.
8.2 Summary of engineering economics
Engineering economy is the methodology that promotes rational decision making

about the allocation of amounts of money at various points in time and in various
manners—for example, as a uniform series over time or a single payment in the
future. As such, engineering economy accounts for the time value of money.
The basic relationship is the compound interest formula that relates the future
sum F to the present sum P over n years at an interest rate i.
F  P (1  i ) n
If P is solved for in this equation, we are discounting the future sum F back to the
present time. If the money occurs as equal end-of-the-period amounts A , then
(1  i ) n  1
FA
i
If this equation is solved for A, it gives the annual payment to provide a sinking
fund to replace worn-out equipment. More important is the annual payment to
return the initial capital investment plus paying interest on the principal P tied up in
the investment, where CRF is the capital recovery factor.
i (1  i ) n
A P  P(CRF )
(1  i ) n  1
Engineering economy allows rational decisions to be made about alternative
courses of action involving money. To do this, each alternative must be placed on an
equivalent basis. There are four common ways of doing this.
Present-worth analysis: All costs or receipts are discounted to the present time to
calculate the net present worth. This method works best when the alternatives have
a common time period.
Annual cost analysis: The cash flow over time is converted to an equivalent annual
cost or benefit. This method works well when the alternatives have different time
periods.
Capitalized cost analysis: This is a special case of present worth analysis for a project

21
that exists in perpetuity (n  )

Benefit-cost ratio: This method analyzes the costs and benefits of a project on one
of the above three bases, and then decides to fund the project if the ratio of benefits
to costs is greater than 1.0.
Realistic economic analysis requires consideration of taxes, chiefly federal income
tax. Accurate determination of the taxable income requires allowance for depreciation,
the reduction in value of owned assets due to wear and tear or obsolescence.
Realistic economic analysis also requires allowance for inflation, the decrease in the
value of currency over time.
An important use of engineering economy is in determining the profitability of
proposed projects or investments. This usually starts with estimating the cash flow
to be generated by the project.
Cash flow=net annual cash income +depreciation
Two common methods of estimating profitability are rate of return on the investment
(ROI) and payback period.
average annual net profit
R.O.I . 
capital investment  working capital
Payback period is the period of time for the cumulative cash flow to fully recover
the initial total capital investment. Both of these methods suffer from not considering
the time value of money. A better method to measure profitability is net present
worth.
Net Present Worth=Present worth of benefits  present worth of costs
With this method the expected cash flows (both +ve and -ve ) through the life of
the project are discounted to time zero at an interest rate representing the minimum
acceptable return on capital. The internal rate of return (IRR) is the interest rate for
which the net present worth equals zero.
Net Present Worth=PW (benefits )  PW (costs)  0
Since there is considerable uncertainty in estimating future income streams and
costs, engineering economic studies often estimate a range of values and utilize a
mean value. Another approach is to place probabilities on the values and use an
expected value in the analysis.
8.3 Further reading/references

Core Textbooks
i. George E. Dieter, Linda C. Schmidt Engineering Design (2012) 5th Edition
Mc-Graw Hill ISBN-13:978-0073398143
ii. Richard Budynas, Keith Nisbett (2014) Shigley’s Mechanical Engineering

22
Design, 10th Ed., McGraw-Hill. ISBN-13: 978-0073398204

iii. Edward B. Magrab, Satyandra K. Gupta & Others (2010) Integrated Product
and Process Design and Development, 2nd edition Taylor & Francis Group
iv. Jack A. Collins, Henry R. Busby, George H. Staab (2009) Mechanical
Design of Machine Elements and Machines: A Failure Prevention
Perspective, 2nd Edition. ISBN-13: 978-0470413036
v. Michael F. Ashby (2017) Materials Selection in Mechanical Design, 5th
Edition. ISBN-13: 978-0081005996
Core Journals
i. Journal of Mechanical Design. ISSN: 1528-9001
ii. Journal of Mechanical Design and Vibration. ISSN Online: 2376-9572
iii. International Journal of Mechanical Engineering And Information
Technology. ISSN Online: 2348-196x
Recommended Textbooks
i. Robert L. Mott, Dieter G., (2003) Machine Elements in Mechanical Design,
Pearson; 4th Edition. ISBN-13: 978-0130618856
ii. Richard S. Figliola, Donald E. Beasley, (2014) Theory and Design for
Mechanical Measurements, Wiley; 6th Edition. ISBN-13: 978-1118881279

23

Session 7 &amp; 8 Economics of Eng. Design I

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TMC 4312: Mechanical Engineering Design I

Lecturer :James N. Mutie

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 Thermal Properties  Liability

7.3 Safety & Product liability

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Guidelines for Design for Safety

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7.4.1 Causes of Unreliability

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7.4.2 Minimizing Failure

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Distribution of defects in engineering components

7.5 COST EVALUATION: Costing and Business Aspects.

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Elements of cost that establish the selling price

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7.7 METHODS OF DEVELOPING COST ESTIMATES

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Cft= is the cost of achieving a specified surface finish or tolerance.

7.8 Detailed Methods Costing

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f- fraction of material that ends up as scraps

7.9 Bill of Materials

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An example of bill of Materials

7.10 Written Documents & Presentation.

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 Cover letter (letter of transmittal): The cover letter is provided so that

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Common Challenges in Technical Writing

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 Technical Journal Article: C.O. Smith, Transactions of the ASME, Journal of

8.2 ECONOMIC CONSIDERATIONS IN ENGINEERING DESIGN

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Four methods of evaluating profitability are commonly used. Accounting rate of

A typical cycle of a plant investment

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vii) Uncertainty of economic analysis

8.2 Summary of engineering economics

Engineering economy is the methodology that promotes rational decision making

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that exists in perpetuity (n  )

8.3 Further reading/references

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Design, 10th Ed., McGraw-Hill. ISBN-13: 978-0073398204

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Session 7 & 8 Economics of Eng. Design I

Session 7 & 8 Economics of Eng. Design I