Chapter 1 Introduction To Eng Economy PDF

Engineering Economy
Sullivian
W.G, Wicks
E.M and
Koelling
C.P (2012)
Mohamad
Sirin, R
(2007)
Blank, L.T, A.Tarquin (2012)
Engineering Economy, Fifteenth Edition
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
Copyright 2012 by Pearson Education, Inc.

Upper Saddle River, New Jersey 07458
All rights reserved.
Chapter 1
Introduction to
Engineering Economy
1-2

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


Why Engineering Economy is Important

to Engineers
Engineers design and create .. what type of project
involved? example : traditional method / design & build
Designing involves economic decisions. example : size
minimum or maximum?
ex: A=125m2, provide 4Y20 (Area = 130m2 )
or 4Y25 (Area = 150m2)
Engineers must be able to incorporate economic analysis
into their creative efforts example : Project A, but 10
company submit tender for this project, the selection of
reasonable price should be choose by authorities.
1-4

Why Engineering Economy is Important

to Engineers
Often engineers must select and implement from multiple
alternatives.. example: what will happen when one pile is
broken during piling work?
Understanding and applying time value of money, economic
equivalence, and cost estimation are vital for
engineers..example : 1 small project (rough estimate for
quoatation)
A proper economic analysis for selection and execution is a
fundamental task of engineering..
example : 1 big project (which are 10 contractor submit 10
tender, which contractor will get the job?)
1-5

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 local or foreign workers
Progress Report..Interim payment, S-Curve
Bidding (BQ)the best price to select contractor
Hire purchase..machineries (crane / excavator / compactor
etc)

SEVEN (7) fundamental principles of

engineering economy.
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.
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 the decision.


ContSEVEN (7) fundamental principles

of engineering economy.
3. Use a consistent viewpoint
the prospective outcomes of the alternatives, economic and
other, should be consistently developed from a defined
viewpoint (perspective)
4. Use a common unit of measure

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



5. Consider all relevant criteria
selection 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.
6. Make uncertainty explicit

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



7. Revisit your decisions
improved 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
1
Principle of eng.
economy
Example issue
Develop the alternatives

carefully define the problem, then
the choice (decision) is among
alternatives
SMART Tunnel
Problem
1. Sinkholes
2. Crack
Propose all decision alternative

1. Service & Repair for maintenances purpose only, (no need to
redesign)
2. Redesign, sampling & lab testing for others action approval from
authorities
3. New improvement technologist action


No
2
Principle of eng.
economy
Example issue
Focus on the differences

only 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
Use a consistent viewpoint

the 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. take time to design and prepare report and must submit &
approve by the local authorities.
b. increasing costs and skilled workers during maintenance
works.
3. New improvement technologist
a. Propose using the new TB Machine for type Variable Density
and not for Earth Pressure Balance for different soil.
condition.
b. using specially trained skilled workers
c. Using materials that have strength height
3. New improvement technologist


No
4
Principle of eng. economy
Example issue
Use a common unit of measure

using 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

a. take time to design and prepare report and must submit &
approve by the local authorities.
b. increasing costs and skilled workers during maintenance
works.
3. New technologist to prevent Crack Steel fibre
Constructive:
Less material cost
Labor reduction
Less human error
Structural:
Smaller crack width openings
Higher durability
Higher impact and abrasion resistance
Higher fatigue strength
Improved fire resistance properties
Consider all relevant criteria

selection 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

No
6
Principle of eng.
economy
Example issue
Make uncertainty explicit

risk 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:
Revisit your decisions

improved 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)


Engineering Economy
1. Engineering Economy involves
Formulating .. V = P x L x t
Estimating, ..volume of ground beam
Evaluating how many mixer lorry want to order???
expected economic outcomes of alternatives designed to
accomplish a defined purpose.
Example Figure 1: Calculate total volume of concrete for
groundbeam
1-15

Figure 1 : Beams Construction
prepare a formwork
install reinforcement bar
Concreting
work

Copyright
16 2012 by Pearson Education, Inc.
2. Easy-to-use math techniques

simplify the evaluation, example :
Teorem Pithagoras.
Figure 2 : Setting out for

boundary of
building using Teorem
Pithagorass method
3. Estimates of economic
outcomes can be deterministic
or stochastic in nature.
example : Progress Curve (Scurve)

Concreting
work
Copyright
17 2012 by Pearson Education, Inc.
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???


General Steps for Decision Making

Processes
1.
2.
3.
4.
Understand the problem ..define objectives .. Ex : broken pile

Collect relevant informationwhy that happen (alignment
failure during of setting piling work)
Define the set of feasible alternatives..discuss any solution
(reexcavate? Maintain the size without adequate of number
pile?redesign footing?)
Identify the criteria for decision making..list out
i. re excavate
ii. follow the original size without adequate number of pile
iii. redesign footing
1-19

Cont..General Steps for Decision

Making Processes
5.
6.
7.
Evaluate the alternatives and apply sensitivity analysis..

i. re excavate ..disturb the structure of soil..
ii. follow the original size without adequate number of pile..
cannot carry load of structure..
iii. redesign footingcan carry load of structure
Select the best alternative..choose (iii) redesign
Implement the alternative and monitor results....action (submit
drawing for aprovals)
1-20

Cont..General Steps for Decision

Making Processes
No
Decision Making
Processes
Example issue
Understand the problem ..define

objectives
broken pile
Decision Making Processes why

that happen?
Alignment failure during of setting piling work
Define the set of feasible

alternatives..discuss any solution
List all probability solution.. re excavate ?maintain the

size without adequate of number pile? redesign footing
etc.
Identify the criteria for decision

making..list out
i.
ii.
iii.
re excavate
maintain the size without adequate of number
pile
redesign footing
Evaluate the alternatives and apply

sensitivity analysis..
i. re excavate ..disturb the structure of soil..

ii. follow the original size without adequate number of
pile..cannot carry load of structure..
iii. redesign footingcan carry load of structure
Select the best alternative..

choose
(iii) redesign
1-21
By William
G.
Sullivan,
Elin
M.
Wicks,
and
C.
Patrick
Koelling
Implement the alternative and
submit
drawing for

approvals
Steps in an Engineering Economy

Study
1-22

Take Home Quiz 1

1. Identify one (1) problem related on
building/construction/environment/
structure/materials/road & drainage or
others activities related to civil
engineering based on video in class.
2. Solve the problem follows the
i. Principle of eng economy, and
ii. Decision making process.



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Engineering Economy

Copyright 2012 by Pearson Education, Inc.

Copyright 2012 by Pearson Education, Inc.

Engineering Economy, Fifteenth Edition

Copyright 2012 by Pearson Education, Inc.

Why Engineering Economy is Important

Copyright 2012 by Pearson Education, Inc.

Why Engineering Economy is Important

Copyright 2012 by Pearson Education, Inc.

Engineering economic analysis can play

Copyright 2012 by Pearson Education, Inc.

SEVEN (7) fundamental principles of

2. Focus on the differences

Engineering Economy, Fifteenth Edition

Copyright 2012 by Pearson Education, Inc.

ContSEVEN (7) fundamental principles

4. Use a common unit of measure

Engineering Economy, Fifteenth Edition

Copyright 2012 by Pearson Education, Inc.

ContSEVEN (7) fundamental principles

6. Make uncertainty explicit

Engineering Economy, Fifteenth Edition

Copyright 2012 by Pearson Education, Inc.

ContSEVEN (7) fundamental principles

Engineering Economy, Fifteenth Edition

Copyright 2012 by Pearson Education, Inc.

Develop the alternatives

Propose all decision alternative

Engineering Economy, Fifteenth Edition

Copyright 2012 by Pearson Education, Inc.

Focus on the differences

Choose expected decision alternative (2) & (3)

Use a consistent viewpoint

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

3. New improvement technologist

Engineering Economy, Fifteenth Edition

Copyright 2012 by Pearson Education, Inc.

Principle of eng. economy

Use a common unit of measure

2. Redesign, sampling & lab testing

Consider all relevant criteria

Engineering Economy, Fifteenth Edition

Review again all criteria

Copyright 2012 by Pearson Education, Inc.

Make uncertainty explicit

Revisit your decisions

Choose the best decision ..no (3)

Engineering Economy, Fifteenth Edition

Copyright 2012 by Pearson Education, Inc.

Copyright 2012 by Pearson Education, Inc.

Figure 1 : Beams Construction

install reinforcement bar

Engineering Economy, Fifteenth Edition

2. Easy-to-use math techniques

Figure 2 : Setting out for

Engineering Economy, Fifteenth Edition

Electronic spreadsheets are a powerful

Engineering Economy, Fifteenth Edition

Copyright 2012 by Pearson Education, Inc.

General Steps for Decision Making

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

Copyright 2012 by Pearson Education, Inc.

Cont..General Steps for Decision