engg eco lecture

8/10/2019 Engg Eco Lecture

http://slidepdf.com/reader/full/engg-eco-lecture 1/15

In the name of Allah the Most Gracious the Most Merciful



QUIZ # 2List common characteristics of developing

nations.

List three objectives of economic

development.



MACROECONOMIC POLICIES

Growth policyInvestment PolicyHuman Resource Development

Trade PolicyExchange Rate PolicyFiscal Policy

Taxation PolicyPublic Expenditure Policy

Monetary PolicyEmployment and Poverty Trends & Policy



Three Major Sectors of Economy

Agriculture

Manufacturing

Services



Traditional Measures of Economic

DevelopmentGrowth and Levels of Per Capita Income

Declining share of Agriculture and risingshare of Manufacturing sector

Improvement in Social Indicators such asLiteracy, Schooling, Health Conditions,Services and Provision of Housing

Trickle Down of Growth



History of Engineering Economics Arthur M. Wellington founder of engineering economics,by profession a civil engineer, wrote a book “ the economictheory of location of railways ” in 1887. His area of interest

was role of railways building in USA

J C.L.Fish and O.B.Goldman both evaluated engineeringstructures from the perspective of actuarial mathematics.

Fish formulated an investment model related to the bondmarketGoldman in his book “Financial Engineering” proposed acompound interest procedure for determiningcomparative values over a period of time

Cont’d



History of Engineering Economics

Eugene L.grant in 1930 in his book “ principles ofengineering economics ” discussed the importance of

Judgment factors and short term investment evaluationas well as conventional comparisons of long terminvestments in capital goods based on compound interestcalculations Eugene L.Grant could be called as the father ofengineering economics.

Cont’d



Engineering Economics Engineering economics is the application of economictechniques for the evaluation of design and engineeringalternatives. The role of engineering economics is to:-

assess the appropriateness of a given projectestimate its value

justify it from an engineering point of view

Engineering economy involves technical analysis, withemphasis on the economic aspects and has the objectiveof assisting in decision making

Cont’d



Engineering Economics Engineering economy involves the systematic evaluation ofthe economic merits of proposed solutions to engineeringproblems. To be economically acceptable, solutions toengineering problems must demonstrate a positive balanceof long term benefits over long term cost and they mustalso:

Promote the wellbeing and survival of an organization

Embed use of creative and innovative technology and ideasPermit identification and scrutiny of their estimated outcomes

Translate profitability to the lowest tier through a valid andacceptable measure of merit

Cont’d



Engineering Economics The application of economic principles to engineeringproblems, for example in comparing the comparativecosts of two alternative capital projects or indetermining the optimum engineering course from thecost aspect. It means that we need to know about :-

Optimal cost-effectiveness

Alternative possibilities



Engineering Economics

What we must know?Time value of money

Estimation of cash flows

Quantitative measurements of profitability

Systematic comparison of alternatives



Assignment 2

Find out share of three major sectors of economy

in the overall economics of at least 15 countries

of the world from various websites. It must

include Pakistan, India, Bangladesh, Sri Lanka,

Korea, USA, UK, Malaysia, China, Australia etc..Provide page reference of website as applicable.

Assignment due on 26 Oct, 2010

engg eco lecture

Documents