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Unit 3.1-3
Engineering Costs and Cost Estimating
Dr. J. Michael Bennett, P. Eng., PMP,
UOIT,
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Change Record
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3-2
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Course Outline
1.
2.
3.
4.
5.
6.
7.
8.
9.
1-3
Engineering Economics
General Economics
1.
Microeconomics
2.
Macroeconomics
3.
Money and the Bank of
Canada
Engineering Estimation
Interest and Equivalence
Present Worth Analysis
Annual Cash Flow
Rate of Return Analysis
Picking the Best Choice
Other Choosing Techniques
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3-4
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Questions to be resolved
For the most part, Engineering economy
3-6
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Engineering Costs
Costs are analyzed to evaluate alternatives
Fixed Costs:
Variable Costs:
Marginal Costs:
Average Costs:
3-7
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Total Costs
3-8
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3-9
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3-11
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Non-recurring Costs
Incremental Costs
3-12
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3-13
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AOC E cont.
Familiar projects:
Home construction;
Buildings standard designs;
Petrochemical and energy production.
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Design-to-Cost Approach
3-15
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Accuracy of Estimates
No estimate is intended to be exact
But must be reasonable and accurate
enough to provide a robust economic
analysis
In preliminary design phase:
3-16
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Rough Estimates
Budget Estimates
Detailed Estimates
3-18
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Estimation Difficulties
One-of-a-Kind Estimates
Estimator Experience
3-19
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Estimation Difficulties
One-of-a-Kind Estimates
Estimator Experience
3-20
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