EC03_ak

7/29/2019 EC03_ak

1/15

1

Engineering Economics

By

Atif Khan

Lecture 3

7/29/2019 EC03_ak

2/15

2

The Engineering Process

1. Determination of Objectives

To find out what people need and want that canbe supplied by engineering?

The things that people want may be the resultof logical considerations, but more often theyare the result of emotional drives.

7/29/2019 EC03_ak

3/15

3

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.

7/29/2019 EC03_ak

4/15

4

3. Determination of Means

Strategic factors may be altered in many different ways.Each possibility must be evaluated to determine which willbe most successful in terms of overall economy.

Engineers are well equipped by training and experience todetermine means for altering the physical environment.

If the means devised to overcome strategic factors comewithin the field of engineering, they may be termed

engineering proposals.

7/29/2019 EC03_ak

5/15

5

4. Evaluation of Engineering Proposals

It is usually possible to accomplish a desired result byseveral means, each of which is feasible from the technicalaspects of engineering application. The most desirable ofseveral proposals is the one that can be performed at theleast cost.

The evaluation of engineering proposals in terms ofcomparative cost is an important feature of engineeringprocess. Engineering alternatives are most often evaluatedto determine which is most desirable economically.

7/29/2019 EC03_ak

6/15

6

5. Assistance in Decision Making An important feature of the engineering process is to improve

the certainty of decision with respect to the want-satisfyingobjective of engineering application. Correct decisions canoffset 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 ofaction that will result in an outcome more desirable than anyother selection.

The logical determination and evaluation of alternatives intangible terms has long been recognized as integral to theengineering process.

7/29/2019 EC03_ak

7/15

7

Engineering for Economic Competitiveness

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 economiccompetitiveness and this can be enhanced through a life cycle

approach to engineering.

Competitiveness is a comparative concept of the abilityand performance of a firm, sub-sector or country to sell

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

7/29/2019 EC03_ak

8/15

8

Identification of need

Conceptual / preliminary design Acquisition

Detail design / development Phase

Production and / or construction

Product use / support /

Phase-out / disposalUtilization

Phase

The Product Life Cycle

7/29/2019 EC03_ak

9/15

9


7/29/2019 EC03_ak

10/15

10


Generally, engineers have focused mainly on the acquisition phase of

the product life cycle and have been involved in early design and analysisactivities alone.

Product performance has been a main objective. Experience in recent

years indicates that a properly functioning product, which is competitive inthe market place, can not be achieved through efforts applied largely after

the product comes into being.

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.

7/29/2019 EC03_ak

11/15

11

Designing for the Life Cycle

Emerging technologies are revealing opportunities for bringing new

and improved products and systems into being that will be more costeffective.

These technologies are acting to expand physically realizabledesign options and to enhance capabilities for developing morecompetitive consumer and producer goods.

The ultimate value of products that result from engineering ismeasured 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.

7/29/2019 EC03_ak

12/15

12


Many beneficial design decisions can be made during the design

phase of life cycle that will minimize the cost of operating andmaintaining the product during use.

The objective should be to minimize the sum of all cost incurred overthe life cycle.

An engineering design should not only transform a need into adefinitive product configuration for customer use, but should ensurethe designs compatibility with related to physical and functionalrequirements.

Engineering Design should take into account life cycle outcomes asmeasured by performance, reliability, maintainability, quality, costetc

7/29/2019 EC03_ak

13/15

13


Many firms have chosen to design with the life cycle in mind. For

example,

1. Design for energy efficiency is now quite common in appliancessuch as water heater and air conditioner.

2. Fuel efficiency is a required design characteristic of automobiles.

These developments are commendable, but they do not go forenough. When the producer is not the consumer, it is less likelythat potential operational problems will be addressed duringdevelopment. Undesirable outcomes too often end up with the

user of the product instead of with the producer.

7/29/2019 EC03_ak

14/15

14


All other factors remaining equal, people will meet their needs byprocuring 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.

7/29/2019 EC03_ak

15/15

15

Documents

EC03_ak