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Engineering Economic Analysis
Engineering economic analysis is a set of methods applied to answer all questions about the viability of your capital investment and whether any efforts related to it are truly worthwhile. It does so by way of application of economics principles to decisions taken at various corporate or project levels, which are or may be relevant the engineering context and environment present during the delivery. Normally the focus of engineering economic analysis is directed onto answering three questions – which project approach is most economically viable bearing in mind the company’s standing, which option provides the best and quickest rate of return, and which project proposal from the entire project pool should be prioritised and delivered. To do so a range of tools and methodologies can be deployed.
So far we have utilised the full power of:
• Systematic economic analysis technique
• Simple and compound interest calculations
• Minimum attractive rate of return
• Present worth and future worth
• Benefit-cost and cost-effectiveness analysis
• Depreciation analysis
• Break-even analysis
• Opportunity cost approach