TABLE OF CONTENTS Engineering economy is a study of the time value of money in an engineering environment. Thus the engineer might study from an economic standpoint the investment differences of different types of energy supplies, the relative cost of two different types of heat insulation, or the relative costs of two highway materials.
In any engineering economic study, the following factors will enter: (1) the first cost of each alternative way of accomplishing a given task or reaching an end result, (2) the cost of borrowed money, (3) the time required to recover the investment, (4) operating and maintenance costs, if any, of each alternative, and (5) any other relative costs associated with the project or task being considered.
Since "it always comes down to money," engineering economy is finding much wider application today than ever before. And with the ready availability of computers of all sizes to do the "numbers crunching," almost every small and medium-sized project is subjected to a rigorous economic analysis before final approval to move ahead. For this reason, every engineer must feel comfortable with the fundamentals of engineering economics. And, of course, every major engineering project is given a searching economic study all the more reason why the engineer must know the fundamentals of the subject. They are presented in this section of this handbook.
In somewhat different terms, engineering economics is the search for and recognition of alternatives which are then compared and evaluated in order to come up with the most practical...
