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Engineering Economy

Sullivian
W.G, Wicks
E.M and
Koelling
C.P (2012)

Mohamad
Sirin, R
(2007)

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


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.
Chapter 1

Introduction to
Engineering Economy

Engineering Economy, Fifteenth Edition 1-2 Copyright 2012 by Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
Engineering economy

involves the systematic evaluation


of the economic merits of proposed
solutions to engineering
problems.

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.
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..

Engineering Economy, Fifteenth Edition 1-4 Copyright 2012 by Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
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 Economy, Fifteenth Edition 1-5 Copyright 2012 by Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
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

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.
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.

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.
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.

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.
ContSEVEN (7) fundamental principles
of engineering economy.
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.

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.
ContSEVEN (7) fundamental principles
of engineering economy.
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.

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.
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, (xperlu redesign)
2. Redesign, sampling & lab testing for others action approval from
authorities
3. New improvement technologist action

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.
No Principle of eng. Example issue
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. melibatkan masa untuk merekabentuk & menyiapkn
alternatives, economic and other, laporan serta mendapatkan kelulusan oleh pihak
should be consistently developed berkuasa tempatan.
from a defined viewpoint b. melibatkan kos dan pekerja mahir bagi membuat
penyelenggaraan
(perspective)
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

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.
No Principle of eng. economy Example issue

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


R/Bentuk semula & kelulusan ambil masa yang lama
using a common unit of measurement to Kos yang tinggi
enumerate as many of the prospective pekerja mahir yang terlatih
outcomes as possible will simplify the analysis
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.

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.
No Principle of eng. Example issue
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.

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
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)

Engineering Economy, Fifteenth Edition 1-15 Copyright 2012 by Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
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???

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.
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

Engineering Economy, Fifteenth Edition 1-17 Copyright 2012 by Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
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)

Engineering Economy, Fifteenth Edition 1-18 Copyright 2012 by Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
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 condong semasa setting piling work
3 Define the set of feasible Senaraikan semua kebarangkalian solution..korek
alternatives..discuss any solution semula? biarkan tanpa cukup bil pile ikut size asal?
redesign footing etc.
4 Identify the criteria for decision i.korek semula
making..list out ii. ikut saiz asal tanpa cukup bil pile
iii. redesign footing
5 Evaluate the alternatives and apply i.korek semulaakan mengganggu struktur tnh
sensitivity analysis.. ii. ikut saiz asal tanpa cukup bil piletidak
boleh tanggung load structure..
iii. redesign footingboleh tanggung load
structure
6 Select the best alternative.. (iii) redesign
choose
7 Implement the alternative and submit drawing for approvals
monitor results.. action
Engineering Economy, Fifteenth Edition 1-19 Copyright 2012 by Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
Steps in an Engineering Economy
Study

Engineering Economy, Fifteenth Edition 1-20 Copyright 2012 by Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
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.

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.