1.Microeconomics: Microeconomic studies individuals and business. 1.1 Factors of production:Land (refers to any kind of natural resource.

) Labour (the physical and mental

efforts of people.) Capital (buildings,plant, equipment etc that is used to make the goods and services.) Entrepreneurship (the human resource that organizes the other three
factors,)
1.2 Supply, Demand and Price (1)Supply curve Marginal cost 边际成本：是指每新增生产一单位的产品带来的总成本的增量。 (2)Demand curve Marginal utility：是指其
他投入固定不变时，连续地增加某一种投入，所新增的产出或收益反而会逐渐减少。 1.3 Elasticity:Elasticity=Changes in quantity %/changes in price % Consumption is
more elastic in the long term. Durable good is more elastic in the short term. (After a price rise they may put off replacing them,but needto eventually). Supply tends to be more
elastic in the long term (in the short term it is difficult to increase supply by hiringmore workers etc.) 1.4 Substitutes and Complements;Substitutes are pairs of goods and services
where an increase in the price of one good or service results in anincrease in demand for another.; Complements are items where a decrease in the price of one leads to an
increase in the demand of the other. 1.5 Giffen goods and Veblen goods: A Giffen good is one where demand increases when prices increase due to the income effect.(oneof
theinferior goods) Eg Irish potato famine. A Veblen good is similar,but the cause is status seeking. 1.6 Economies of Scale and Diseconomies of Scale: Reasons that reduce costs
for big firms are called economies of scale. Division of labour and using large pieces of plant are a major contributor to economies of scale. 1.7 Monopoly :SMarket power is the
ability to increase the produce price without losing all of its customers.A natural monopoly occurs when increasing the economies of scales and large fixed cost. Cause of
monopoly : patents and copyrights/barriers to entry/network effect/branding 1.8 Price discrimination 第一种：Same product with different price to different customers. 第
二种：Different quality levels to different customers with different price.en 的客户创建不同质量级别的产品，并让客户选择哪一个。Price differentiators: Timing of delivery,
Reliability ,Pleasantness, Capacity, Convenience, Geography, Channel, Quantity, Add-ons. Other price manipulations:Reference and decoy price,Discount to the cheapest part,
Discounts give price reference, Do not have many choices, Individual price per IP address. Running a large firm requires more layers of management and so forth, these may
lead to diseconomies ofscale. Macroeconomics studies the performance of the national and global economies.
2.Macroeconomics 2.1 Output and GDP (1)Output :Output is the amount of economic goods that an economy produces. Output is measured by GDP. The higher output→more
goods and services for people to enjoy. The higher output→requires more labour→lower unemployment; GDP does not count goods and services that are produced in the home
that consumes them. GDP does not count raw materials and fuel,since they are not considered as final product ; (2)GDP: This is the total value of all the final goods produced
for sale in an economy; Economists break output up in terms of who consumes it（将 GDP 按消费人群分类）：Y=C+G+I+X-M; Y is output; C is consumption by consumers; L is
investment by businesses; X is export to other countries; M is import from other countries; G is consumption by government (aka government spending) ;(3)Economic growth:
Economic growth is cause by five factors: Growth or improvement in the labour force Improvements in efficiency Improvements in technology Growth or improvement in the
capital stock
2.2 The Business Cycle :Expansions（扩展）：Periods when growth is high arereferred to as expansions; Downturns（低迷）：Periods of low growth are referred to as
downturns.;Recessions（衰退）：Periods of negative growth are referred to as recessions.; When economy is expanding →Businesses will be producing at full output→need
new factories and capitalgoods→makes the economy expand even faster (eg.the construction industry); When economy slow growth→the businesses are producing
less→reduces the output of the economypeople lose jobs and have less income→making the economy shrink（收缩）further.
2.3 Fiscal Policy :Fiscal policy is the use of government spending and taxation to influence the economy.; Surplus: government collects taxes > it spends; Deficit:spendsit
collected(taxes) Automatic Stabilizers: Tax revenue as a percentage of GDP increases during expansions and decreases during recessions.（经济上升，税占比大） Personal
income tax rates are usually progressive. Thus, increases in household income leads to highertax rates and vice versa.（收入高，交的税高） Corporate tax is based on profit
not revenue and profits fluctuate more than revenue. Certain government expenditures as a percentage of GDP increase during recessions and decrease duringexpansions.（政
府支出） Increases in natural resources(eg mineral discoveries)
2.4 Monetary Policy :Monetary policy（货币政策）is the control of the money supply to influence the economy. 执行单位：Monetary policy is exercised by the reserve bank.
（储备银行）;An increase in the money supply →increases aggregate demand → increases both output and the general level of prices→ increasing output reduces
unemployment→Increases in prices is inflation
2.5 Lags : Inside lag is the time that it takes government to recognize a shock to the economy and to respond to it.（认识到响应）
Outside lag is the time between this response and its effect on the economy.（响应到影响） For fiscal policy: 内部延迟长，因为 the government needs to debate the changes；
外部延迟短，因为 the tax rates or spending are changed the money held by the citizens changes quickly. For monetary policy: 内部延迟短，因为 the central bank can decide
and act quickly； 外部延迟长，因为 the change in interest rates slowly affects more and more inyestment decisions.
Week1 Economic Evaluation 1．Nominal interest rate 和 reaI interest rate. Nominal interest rate(iN) - the interest rates available in the market for investment or loan. Real
interest rate (iR) - the interest rate after the effect of inflation has been taken into account.［考虑到 inflation］iR=(1+1)-1
2．Actual dollars 和 constant dollars Constant dollars - are dollars that have the same purchasing power at a defined point of time. ［特定时间点的现金-2008 年的 dollar］
Actual (or current) dollars - represent the current dollar values at any time during the analysis.［考虑 inflation］ f 为定值时：Constant ddollars = Actial dollars f 为变量：
Constant dodollars = Actual dolarsxCP(start)
3．不同的大小 discount rate 要选择什么项目，怎么做？ Discount rate 高，选择 projects with short-term benefit／选择 projects with more of cost being delay／decrease
the number of viable projects Discount rate 低，选择 projects with long-term benefit／选择 projects with high initial capital outlay／increase the number of viable projects
4．选择 Discount rate 需要考虑的因素 Inflation rate. inflation rate>interest rate,we are losing money. Time value of money. ---People want money as soon as possible Risk. -
-- Higher risk projects use higher discount rates; Potential return from alternative uses of the money
4．五种项目可行性分析方法。（1）Net Present Value 净现值法 Difference between discounted benefits (B) and costs (C) associated with a project. NPV=B-C 项目选择：
NPV 为正值的项目可采纳，优先选择 NPV 大的项目。（2）Annual Equivalent Amount 等年值法 In this method,the NPV is discounted to give an annual payment over the
life of the project.项目选择：优先选择 AEA 大的项目。（3）Benefit-Cost Ratio（Profitability Index-PI）盈利能力指数 Benefit-Cost Ratio = Discounted Vale of fet Benefts
/capital cost 项目选择：在项目 Benefit-的情况下，选择 B-B-Cost RatioRatio 大的项目。（4） Internal Rate of Return 内部收益率法 The internal rate of return for an
investment is the rate of return (interest rate) that makes the present 等于收益现值）。IRR 表示了一个项目能够承受通货膨胀的能力。+3 项目选择：IRR≥基准收益率，
该项目可行。IRR 数值越大越好。（5）Payback Period 回收期法 Determine the number of years required to recover the initial outlay of an investment.回收最初投资支出
所需要的年数。a.Conventional payback -payback period is obtained by counting the number of years it takes forcumulative cash flows to equal initial investment. b.Discounted
payback - cash flows are discounted using the required rate of return before they arecumulated to reach the initial investment.项目选择：回收期小于预定时间，且回收期更
小的项目
5.Choosing a Discount Rate for the Private Sector (1)the cost of obtaining investment capital, which depends on; (2) the opportunity cost of capital ; (3) the return sought by the
company; (4)the risk of the investment as perceived by the company
6.Choosing a Discount Rate for Public Sector Projects; (1) zero discount rate when projects are funded from tax receipts or considration needs to be given tothe long term future.;
(2)a discount rate that reflects society's time preference rate.;(3)the cost of borrowed capital to the government.;(4) the opportunity cost of investments forgone by the private
sector as a result of paying taxes.;(5) the opportunity cost of public sector investments forgone due to budget constraints.
Week2 Evaluation Issues 2．当一个公司破产了之后哪一类投资人风险最大？ 风险最高：Ordinary shareholders 风险最低：Secured creditors; 3.Triple Bottom Line Economic、
Ecological/Environmental、Social; 4.Shadow price What price would you be willing to pay to reduce a constraint.
Week3 Cost Estimation 1.Direct cost/Indirect cost/Overheads/Profit/Contingency: Direct cost: These are costs directl attributable to individual activities.They include
labour,materials,plant.The can usually be calculated by looking at the work that needs to be done. Indirect cost:These are costs that need to be paid whether work happens or
not. Some of these costswill be one-off costs,such as site mobilisation. Overheads: If a business relies on projects for its income then these projects will need to contributeto
the overhead costs of running the company.Overheads are usually calculated as a percentage of theproject cost. Profit: Businesses need to make a profit to keep operating. This
is usually calculated as a percentageof the project cost for estimating purposes. Contingency: This is an allowance for errors in the estimate.For a client contingency is an amount
of money that is allocated to the project in case there are scopechanges, etc that will raise the cost of the project. As such it will be an amount above and beyond thecontract
price.For a contractor contingency is a protection of the profit. If the project costs more than expected thenthe profit would be diminished if there was no contingency (or if the
contingency is used up)
2．合同类型 lump sum contract 总额收费合同：the total cost is fixed.所有风险由 contractor 承担 unit rates（aka schedule of rates）单价合同；client 和 contractor 共
同承担风险。 cost reimbursable（也叫 cost plus）费用可报销合同：the client pays all of the contracts bill accordingto the receipts，所有风险由 client 承担。
3.Provisional item/Prime Cost item/Unbalanced Bids: Provisional item: A provisional item is one where the quantity is unknown at tender time,and thecontractor is expected to
supply a unit rate.
Week4& Week5 Decision Making & Real Option Prime Cost Item:A prime cost item is an item where the cost is not predictable at tender time. It ispaid as a cost reimbursable
item.
Unbalanced Bids: Sometimes contractors will put unit rates that are different to what they expect thereal unit rates to be into a tender. This may be because they expect different
conditions to the client,or in order to increase the cashflow at the start of the project to help with financing the job.
1.Types of Decision Models
One-off decisions that are made once and are not likelyto be repeated (many in Civil Egineering) Many-off decisions that are repeated many times(many in Production
Engineering); Single Stage only one decision needs be made e.g. choosing heads or tails Multi-Stage a sequence of decisions need to be made,typical in design situations Certainty
in Decision Making you know what will happen no matter what the outcome of your decision; Uncertainty in Decision Making possble outcomes are known but there is no
information on likelihood of occurrence; Risk in Decision Making possible outcomes are known and an estimate of the 2 probability of each outcome occurring can be made
Competitive Decision Making where the decision outcome is affected by the actions of an (Gaming Approaches) opponent
2.Call option & Put option: Call option: an option to buy [underlying asset value-strike price] ;Put option: an option to sell [strike price-underlying asset value]
3. European option and American option: A European option is one where the option can only be exercised at the end of the option's life,notbefore and not after; An American
option is one where the option can be exercised at any time during its.life.An American option is worth more than a European option that has all of the other parameters the
samebecause it is possible that it is worth exercising the option at some stagebefore the option expires,butnot on the expiration date itself
Week7 Accounting Types of option: Option to defer/Option to abandon/Option to expand/Option to contract. 5.Value an Option: Options are “in the money" if it is worth
exercising them now.可以行权的情况，对于 call option 是 future market value＞strike price 对于 put option 是 future market value＜strike price; Options are "out of the
money" if it is not worth exercising them now. 不值得行权，对于 call option，当 future market value 小于 strike price 时，以市场价购入更省钱。 对于 put option，当
future market value 大于 strike price 时，以市场价出售更赚钱。 Options are "near the money” if the value of the underlying asset is close to the strike price. near the money
意味着，underlying asst 的 future market price 约等于 strike price; If the value of the underlying asset is a long way from the strike price, then the option is "deep in
themoney”or“deep out of the money”.如果 future market price 与 strike price 的差值较大，可以说 deep in/out of the money。2.Allowance for doubtful account: This is a
contra asset account. It begins with a reasonable estimate of the proportion of AccountsReceivable that will not be collected (based on historical experience). When accounts
are actuallywritten off then the Allowance for Doubtful Account is adjusted with the Accounts Receivable account,and so the profit is not affected. 3．Common stock 和
Preferred stock: Common stock：普通股股东具有公司决策参与权。有权从公司利润分配中得到股息。普通股的股息是不固定的，由公司赢利状况及其分配政策决定。
Preferred stock：优先股股东权利范围小于普通股股东，不参与公司分红，但是其股息率事先固定，且定期支付，并可以先于普通股股东领取股息。4．Cash Accounting
和 Accrual Accounting
Cash accounting only recognizes transactions where the business receives or pays cash. The drawbackis that the cash payment may be at a significantly different time to the
main part of the transaction.Accrual accounting measures firm performance regardless of when the cash payment occurs.At thetime of purchase there is an increase in both
the current assets and accounts payable. The actualpayment is represented by a transfer from cash to accounts payable. 7.Depreciation:公司倾向使用 Diminishing Value
Method，不倾向 Sinking Fund Method （in regard of taxiation）
Week10 Value Engineering 1.Error of sub-optimization (1)Sub-optimisation is where the performance of subsystems is optimised at the expense of theperformance of the total
system. (2) A facility is designed based on minimum construction cost,when the major cost for the life ofthe facility is the ongoing operation and maintenance cost. (3)Value
engineering may pick up is where the owner has set requirements on the design that donot really provide value for cost. 2. Value Engineering proceeds through five phases:
Information-provide a data base, select areas for detailed study; Speculative-generate alternatives to meet requirements; Analytical-evaluate and generate alternatives;
Proposal-present best alternative to decision makers; Final report-define and quantify results. 3.Level of Abstraction: Asking the questions how or why enables the level of
abstraction in the function definition to bechanged.Asking why gives a more abstract function. On the other hand if the function is too abstract then we can get a less abstract
function by asking how? 4.Verb-noun Approach:To facilitate the functional analysis the function is described by two words only: a verb and a noun.Eg. valid function of a ceiling
farfan=Move Ai. The two-word description has several advantages: 3.Facilitates distinction between primary and secondary functions. 4. Aids in disassociation between the
function and previous solutions. 1.Forces conciseness.2.Avoids combining different functions.