Chapter 1 - Introduction To Eng Economy

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

All rights reserved.
Engineering Economy, Fifteenth Edition
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
Engineering Economy
Sullivian
W.G, Wicks
E.M and
Koelling
C.P (2012)
Mohamad
Sirin, R
(2007)
Blank, L.T, A.Tarquin (2012)
1-2
Chapter 1

Introduction to
Engineering Economy
Engineering economy
involves the systematic evaluation
of the economic merits of proposed
solutions to engineering
problems.
1-4
Why Engineering Economy is Important
to Engineers
Engineers design and create design & buildwhat type of
design involved?

Designing involves economic decisionssize 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..

1-5
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 alternatives
carefully 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 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.
Use a consistent viewpoint
the prospective outcomes of the alternatives, economic and
other, should be consistently developed from a defined
viewpoint (perspective)

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.
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.

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.
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 Principle of eng.
economy
Example issue
1 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, (xperlu redesign)
2. Redesign, sampling & lab testing for others action approval from
authorities
3. New improvement technologist action

economy
Example issue
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.
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 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. 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 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
R/Bentuk semula & kelulusan ambil masa yang lama
Kos yang tinggi
pekerja mahir yang terlatih

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

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.

Review again all criteria

economy
Example issue
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.
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 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)

1-15
Engineering Economy
Engineering Economy involves
Formulating .. v=P x L x t
Estimating, ..slab
Evaluating how many mixer lorry want to order???
expected economic outcomes of alternatives
designed 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???
1-17
General Steps for Decision Making
Processes
1. Understand the problem ..define objectives .. Ex : broken pile
2. Collect relevant informationwhy 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 out
i.korek semula
ii. ikut saiz asal tanpa cukup bil pile
iii. redesign footing

1-18
Cont..General Steps for Decision
Making Processes
5. Evaluate the alternatives and apply sensitivity analysis..
i.korek semulaakan mengganggu struktur tnh
ii. ikut saiz asal tanpa cukup bil pilex boleh tanggung load
structure..
iii. redesign footingboleh tanggung load structure
6. Select the best alternative..choose (iii) redesign
7. Implement the alternative and monitor results....action (submit
drawing for aprovals)

1-19
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 semula
ii. ikut saiz asal tanpa cukup bil pile
iii. redesign footing
5 Evaluate the alternatives and apply
sensitivity analysis..

i.korek semulaakan mengganggu struktur tnh
ii. ikut saiz asal tanpa cukup bil piletidak
boleh tanggung load structure..
iii. redesign footingboleh tanggung load
structure
6 Select the best alternative..
choose
(iii) redesign
7 Implement the alternative and
monitor results.. action
submit drawing for approvals
1-20
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.

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Copyright 2012 by Pearson Education, Inc.

Upper Saddle River, New Jersey 07458

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