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Introduction
• Engineering activities are not an end in themselves. They
are a means for satisfying human wants.
alternatives
Engineering Economy 4
Contd..
• Role of a scientist is to add to humankind’s accumulated
body of knowledge and discover universal laws of behavior.
• Role of engineer is to apply this to particular situations to
produce products and services.
• Engineering activities rarely are carried out for the
satisfaction that may be derived from them directly.
Instead, their use is confined to satisfying human wants
Engineering Economy 5
Contd..
• Modern civilization depends to a large degree on
engineering. For e.g. transportation, communication,
national defense and other goods and services used
to facilitate work.
• Science is the foundation upon which engineer builds.
Engineering Economy 6
Time Value of Money
• Time Value of Money explains the change in the amount of
money over time for funds owed by or owned by a corporation
or individual.
Engineering Economy 7
Engineering Economy
• Engineering Economy involves
1. Formulating
2. Estimating, and
Engineering Economy 10
Bi-Environmental Nature of Engineering
• Engineers are confronted with two environments:
• 1) Physical Environment.
• 2) Economic Environment.
Engineering Economy 14
Physical and Economic Efficiency
• There is limited resources and as a result it is
necessary to produce greatest output with
limited input.
• Opportunity cost: Cost of foregone alternative.
• Engineering is concerned with physical efficiency:
i.e. output/input.
• Physical efficiency is always less than 100%
Engineering Economy 15
Contd..
• At second level there is economic efficiency i.e. worth/cost.
Engineering Economy 16
Engineering for Economic Competitiveness
• Producers strive for sustainable competitive advantage in
the market place. (Bajaj Chetak, RX100, Royal Enfield,
Yahoo- Google, Facebook- Orkut)
• Through the life cycle approach to engineering, economic
competitiveness can be enhanced.
• Identification of need, conceptual/preliminary design,
detailed design and development, production/construction,
utilization and finally phase out and disposal.
Engineering Economy 17
Contd..
• Generally, engineers have focused mainly on the
acquisition phase i.e. up to production/construction.
• However, recent experience shows that product
competitiveness cannot be achieved through efforts
applied largely after product comes in to market
place. For e.g. Tata Nano
• As a result, it is essential that engineers need to be
sensitive in the early stages of life cycle.
Engineering Economy 18
Ethics – Different Levels
• Universal morals or ethics – Fundamental beliefs:
stealing, lying, harming or murdering another are wrong.
life of all people in the society and the quality of all sectors of the
Engineering Economy 20
Code of Ethics for Engineers
• Article 1. Social Responsibility to Uphold Ethical Values of the Society
• Public Safety: Shall ensure the safety, health and welfare of the public.
• Compliance with Social Order: Abide by the laws of the land, respect the
local customs, uphold the human rights, safeguard public property;
abjure violence and acts of terrorism.
• Impartiality and Fairness: Treat fairly all persons regardless of such
factors as race, caste, religion, state, gender or national origin.
• Environment Protection & Improvement: shall strive to protect and
maintain clean, healthy and safe environments and comply with the
statutory requirements
Engineering Economy 21
Code of Ethics for Engineers
• Article 2. Responsibility to Maintain High Standards of Professional Quality
• Performance Responsibility: Engineers shall seek work through fair and proper
methods, and shall take full responsibility for the task undertaken by them.
• Proper Verification of Documents and Production Processes: Shall approve only those
designs, which safely and economically meet the requirement of the client and shall
Engineering Economy 22
Code of Ethics for Engineers
• Article 3: Obligation to Maintain High Standard of Personal Behaviour in a
Responsible Manner
• Honesty and Integrity in Professional Dealing.
• Compensation for Services Rendered. Engineers shall not engage in unhealthy
competition.
• Professional Relationship with the Employer
• Information Communication with Employers
• Mutual Obligation & Trust
• Self Promotion: Engineers shall build their reputation based on the merits of services.
• Employers’ Business Secrets: Engineers shall not disclose confidential information of
the employer or client.
• Personal Conflict. Engineers shall disclose real or perceived conflicts of interest to
affected parties.
Engineering Economy 23