ENGINEERING ECONOMICS

LECTURE - 03

ASST PROF. ENGR

ALI SALMAN
alisalman@ ceme.nust.edu.pk
DEPARTMENT OF ENGINEERING MANAGEMENT COLLEGE OF E & ME, NUST
ALI SALMAN 1

The Engineering Process

1. Determination of Objectives
To find out what people need and want that can be supplied by engineering? The things that people want may be the result of logical considerations, but more often they are the result of emotional drives.

2. Identification of Strategic Factors

The factors that stand in the way of attaining objectives are known as limiting factors. Once the limiting factors have been identified, they are examined to locate strategic factors those factors that can be altered to remove limitations restricting the success of an undertaking.

3. Determination of Means
Strategic factors may be altered in many different ways. Each possibility must be evaluated to determine which will be most successful in terms of overall economy. Engineers are well equipped by training and experience to determine means for altering the physical environment. If the means devised to overcome strategic factors come within the field of engineering, they may be termed engineering proposals.
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4. Evaluation of Engineering Proposals

It is usually possible to accomplish a desired result by several means, each of which is feasible from the technical aspects of engineering application. The most desirable of several proposals is the one that can be performed at the least cost. The evaluation of engineering proposals in terms of comparative cost is an important feature of engineering process. Engineering alternatives are most often evaluated to determine which is most desirable economically.
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5. Assistance in Decision Making

An important feature of the engineering process is

to improve the certainty of decision with respect to the want-satisfying objective of engineering application. Correct decisions can offset many operating handicaps. To make a decision is to select a course of action from among several. A correct decision is the selection of that course of action that will result in an outcome more desirable than any other selection. The logical determination and evaluation of alternatives in tangible terms has long been recognized as integral to the engineering process. 6

Engineering for Economic Competitiveness

Competitiveness is a comparative

concept of the ability and performance

of a firm, sub-sector or country to sell

and supply goods and / or services in a given market.

 In these times of intensifying economic competition, producers are striving for a sustainable competitive advantage in the market place. Engineering must have an emphasis on economic competitiveness and this can be enhanced through a life cycle approach to engineering.

The Product Life Cycle

Identification of need Conceptual / preliminary design Detail design / development Production and / or construction Product use / support / Phase-out / disposal Acquisition Phase Utilization Phase
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The Product Life Cycle

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 Generally, engineers have focused mainly on the acquisition phase of the product life cycle and have been involved in early design and analysis activities alone.

Product performance has been a main objective. Experience in recent years indicates that a properly functioning product, which is competitive in the market place, can not be achieved through efforts applied largely after the product comes into being.
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 Accordingly it is essential that engineers be sensitive to operational outcomes during the early stages of product development, and that assume the responsibility for life cycle engineering, which has been largely neglected in the past. Emerging technologies are revealing opportunities for bringing new and improved products and systems into being that will be more cost effective.
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 These technologies are acting to expand physically realizable design options and to enhance capabilities for developing more competitive consumer and producer goods.
The ultimate value of products that result from engineering is measured in economic terms.

However, the economic aspects of design are often not examined until detail design is almost complete. By then it is too late. Many beneficial design decisions can be made during the design phase of life cycle that will minimize the cost of operating and maintaining the product during use. 13

 The objective should be to minimize the sum of all cost incurred over the life cycle.
An engineering design should not only transform a need into a definitive product configuration for customer use, but should ensure the designs compatibility with related to physical and functional requirements. Engineering Design should take into account life cycle outcomes as measured by performance, reliability, maintainability, quality, cost etc

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 Many firms have chosen to design with the life cycle in mind. For example,
1. Design for energy efficiency is now quite common in appliances such as water heater and air conditioner. Fuel efficiency is a required design characteristic of automobiles.

2.

These developments are commendable, but they do not go for enough. When the producer is not the consumer, it is less likely that potential operational problems will be addressed during development. Undesirable outcomes too often end up with the user of the product instead of with the producer.
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 All other factors remaining equal, people will meet

their needs by procuring goods and services that offer the highest value / cost ratio.

This ratio can be increased by giving more attention

to the resource constrained world within which

engineering is practiced to ensure economic competitiveness with regards to the end item, engineering must become more closely associated with economics and economic feasibility.
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Discussion