Engineering Economic Analysis

Course code MECH6830Units 10Level 6000Faculty of Engineering and Built EnvironmentSchool of Engineering

This course aims at providing the student with advanced concepts of engineering economic analysis and its role in engineering decision making. It is designed to offer the students the tools needed for rigorous presentation of the effect of the time value of money on engineering problem solving and the capacity to act with ethical and efficient professionalism. The tools introduced include present worth analysis, annual cash flow, rate of return, incremental analysis, future worth analysis, and payback period. Additionally, the course also covers topics such as depreciation, after tax analysis, replacement analysis, uncertainty, inflation, deflation, and estimation of future events.
The course adds a compulsory knowledge for any project management professional in engineering fields.

Available in 2014

Callaghan CampusSemester 2
Previously offered in 2013, 2012, 2011, 2010, 2009, 2008, 2007, 2006, 2005, 2004
Objectives" Learn to apply knowledge of mathematics, economics, and engineering principles to solve engineering problems.
" Understand the major capabilities and limitations of cash flow analysis for evaluating proposed capital investments.
" Be able to recognize, formulate, analyze and solve cash flow models in practical situations. Understand the assumptions underlying these models, and the effects on the modeling process when these assumptions do not hold.
" Develop the ability to account for time value of money using engineering economy factors and formulas, as well as the implications and importance of considering taxes, depreciation, and inflation.
" Apply engineering economic techniques on solving engineering problems by using computer tools such as spreadsheets.
" Be able to communicate the results of the modeling process to management and other non-specialist users of engineering analyses in a lucid, informative manner (graphs, tables and/or text).
Content" Introduction to decision making process
" Time value of money, equivalence and compound interest
" Nominal and effective interest
" Present and future worth
" Annual equivalent cash flow
" Internal rate of return and minimum acceptable rate of return (MARR)
" Discrete and continuous compounding
" Incremental rate of return analysis
" Inflation and deflation
" Financing
" Payback period and sensitivity analysis
" Uncertainty and risk analysis
" Retirement and replacement analysis
" Depreciation
" Income taxes
" Break-even analysis
" Cost/benefit analysis
Replacing Course(s)Not applicable
TransitionNot Applicable
Industrial Experience0
Assumed Knowledge" Basic mathematics, such as powers and exponents
" Linear interpolation
" Ability to generate and understand simple graphs,
" Basic Excel manipulation skills
" Students who have completed MECH4830 are not eligible to enroll in MECH6830.
Modes of DeliveryInternal Mode
Teaching MethodsProblem Based Learning
Student Projects
Assessment Items
Quiz - ClassProgressive assessment by way of class quizes.
* Note, any modification to the above assessment arrangement will appear on the course outline normally issued in week 1.
ReportsGroup Project: Presentation and Report
Contact HoursLecture: for 3 hour(s) per Week for Full Term
Timetables2014 Course Timetables for MECH6830