Chapter - 1 - Introduction To Eng Economy

WELCOME TO ENGINEERING ECONOMY CLASS
IM PN NORHAFIZAH SALLEH
EDMODO CODE : rj2j6j
Copyright 2012 by Pearson Education, Inc.

Engineering Economy, Fifteenth Edition
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
Engineering Economy
Sullivian
W.G, Wicks
E.M and
Koelling
C.P (2012)
Mohamad
Sirin, R
(2007)
Blank, L.T, A.Tarquin (2012)

Chapter 1
Introduction to
Engineering Economy
Engineering Economy, Fifteenth Edition 1-3 Copyright 2012 by Pearson Education, Inc.
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.
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?)
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
(advantages & disadvantages) 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 Principle of eng. Example issue
economy
1 Develop the alternatives SMART Tunnel
carefully define the problem, then
the choice (decision) is among
alternatives
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

economy
2 Focus on the differences Choose expected decision alternative (2) & (3)
2. Redesign, sampling & lab testing for others action approval from
only the differences in expected authorities
future outcomes among the
alternatives are relevant to their 3. New improvement technologist
comparison and should be
considered in the decision.
3 Use a consistent viewpoint 2. Redesign, sampling & lab testing for others action approval
from authorities
the prospective outcomes of the a. take time to design and prepare report and must submit &
alternatives, economic and other, approve by the local authorities.
should be consistently developed b. increasing costs and skilled workers during maintenance
from a defined viewpoint works.
3. New improvement technologist
(perspective) 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

No Principle of eng. economy Example issue
4 Use a common unit of measure 2. Redesign, sampling & lab testing

a. take time to design and prepare report and must submit &
using a common unit of measurement to approve by the local authorities.
enumerate as many of the prospective b. increasing costs and skilled workers during maintenance
outcomes as possible will simplify the analysis works.
of the alternatives.
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 Review again all criteria
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.

economy
6 Make uncertainty explicit Advantages
Minimized cracking and spalling
risk and uncertainty are inherent
Less repair and maintenance needed
in estimating the future outcomes Better aesthetical appearance of the tunnel
of the alternatives and should be No limitations for M&E to drill
recognized in their analysis and Higher durability
comparison.
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 Choose the best decision ..no (3)

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.

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
Figure 1 : Beams Construction
prepare a formwork install reinforcement bar
Concreting
work
Copyright
17 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. Concreting
example : Progress Curve (S- work
curve)
Copyright
18 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. Understand the problem ..define objectives .. Ex : broken pile
2. Collect relevant informationwhy that happen (alignment
failure during of setting piling work)
3. Define the set of feasible alternatives..discuss any solution
(reexcavate? Maintain the size without adequate of number
pile?redesign footing?)
4. Identify the criteria for decision making..list out
i. re excavate
ii. follow the original size without adequate number of pile
iii. redesign footing
Cont..General Steps for Decision
Making Processes
5. 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
6. Select the best alternative..choose (iii) redesign
7. Implement the alternative and monitor results....action (submit
drawing for aprovals)
Cont..General Steps for Decision
Making Processes
No Decision Making Example issue
Processes
1 Understand the problem ..define broken pile
objectives
2 Decision Making Processes why Alignment failure during of setting piling work
that happen?
3 Define the set of feasible List all probability solution.. re excavate ?maintain the
alternatives..discuss any solution size without adequate of number pile? redesign footing
etc.
4 Identify the criteria for decision i. re excavate
making..list out ii. maintain the size without adequate of number
pile
iii. redesign footing
5 Evaluate the alternatives and apply i. re excavate ..disturb the structure of soil..
sensitivity analysis.. ii. follow the original size without adequate number of
pile..cannot carry load of structure..
iii. redesign footingcan carry load of structure
6 Select the best alternative.. (iii) redesign

choose 1-22 Copyright 2012 by Pearson Education, Inc.
7 By William G. Sullivan, Elin M. Wicks,
Implement the alternative and and C. Patrick Koellingsubmit drawing for approvals All rights reserved.
Steps in an Engineering Economy
Study
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.


Chapter - 1 - Introduction To Eng Economy

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Chapter - 1 - Introduction To Eng Economy

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WELCOME TO ENGINEERING ECONOMY CLASS

EDMODO CODE : rj2j6j

Copyright 2012 by Pearson Education, Inc.

Blank, L.T, A.Tarquin (2012)

involves the systematic evaluation

Copyright 2012 by Pearson Education, Inc.

Engineers design and create .. what type of project

Often engineers must select and implement from multiple

2. Focus on the differences

Copyright 2012 by Pearson Education, Inc.

3. Use a consistent viewpoint

4. Use a common unit of measure

Copyright 2012 by Pearson Education, Inc.

6. Make uncertainty explicit

Copyright 2012 by Pearson Education, Inc.

Copyright 2012 by Pearson Education, Inc.

Propose all decision alternative

Copyright 2012 by Pearson Education, Inc.

Copyright 2012 by Pearson Education, Inc.

4 Use a common unit of measure 2. Redesign, sampling & lab testing

5 Consider all relevant criteria

Copyright 2012 by Pearson Education, Inc.

The use of SFRC as tunnel lining is uncommon

7 Revisit your decisions Choose the best decision ..no (3)

Copyright 2012 by Pearson Education, Inc.

expected economic outcomes of alternatives designed to

Example Figure 1: Calculate total volume of concrete for

prepare a formwork install reinforcement bar

Figure 2 : Setting out for

Copyright 2012 by Pearson Education, Inc.

6 Select the best alternative.. (iii) redesign

2. Solve the problem follows the

Copyright 2012 by Pearson Education, Inc.

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