CIVL 395--ENGINEERING ECONOMICS AND DECISION THEORY
3 Semester Hours—3 Hours Lecture
Instructor:
Dr. William Trott
Office: Pereira 115
Phone: 310 338 7353
email: btrott@lmu.edu
Text
Newnan, Donald G., , T. G. Eschenbach, and Lavelle, J.P., Engineering Economic
Analysis, 9th ed., Engineering Press, Inc., San Jose, California, 2004
Course Description
The study of Economics and the economic evaluation of engineering alternatives.
Topics include: time value of money relationships, nominal and effective interest
rates, present worth method, annual worth method, rate of return and
incremental analysis, depreciation and income taxes, replacement analysis and
benefit/cost analysis.
Prerequisites Co-Requisites and Relationship to Previous and Current
Classes
Co-requisite: Calculus III--This course does not depend specifically on any one
engineering course, but will use your general engineering, broad education, and
calculus background to analyze the economic viability of engineering projects.
Required Course for all Civil Engineering Majors, Understanding Human Behavior
Core
Course Objectives
The objective of this class is to provide the student with an understanding of the
principles, basic concepts, and methodology of the study of Economics and
engineering economic analysis. These principles and techniques can be used in
feasibility studies, decision making during design, and equipment selection and
replacement analysis. At the completion of the course the student should be able
to analyze the economic impacts of alternate solutions to design, construction,
operation and maintenance problems. Students will develop an understanding of
the economics based decisions in the context of societal, environmental,
sustainability, health and cultural considerations.
Relationship of Course to Civil Engineering Student (Learning) Outcomes
-
-
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An ability to apply knowledge of mathematics, science and
engineering (a)
An ability to design a system, component or process to meet
desired needs with realistic constraints such as economic,
environmental, social, health and safety, manufacturing and
sustainability (c)
An ability to identify, formulate and solve engineering problems
(e)
The broad education necessary to understand the impact of
engineering solutions in a global, economic, environmental and
societal context. Students will be able to comprehend the
impact of a project on the environment, cultural resources,
utilities and/or the community (h)
An ability to use the techniques, skills and modern engineering tools
necessary for engineering practice. (k)
Additional Understanding Human Behavior Core Learning Outcome
‐Students will understand the general study of Economics and its
methods in its context as a social science.
Topics Covered
Context of the topic of Economics with respect to the social sciences, humanities
and engineering
Economics and other considerations when making decisions
Microeconomics, demand and supply; cost concepts, profit maximization (4
classes)
Basic Accounting principles, balance sheet, income statements (1 class)
Time value of money, cash flow equivalence, and interest factors; (6 classes)
Present worth analysis; (3 classes)
Annual worth analysis; (2 classes)
Rate of return and incremental analysis; (3 classes)
External rate of return; (2 classes)
Benefit cost ratio method; (2 classes)
Sensitivity and breakeven analysis; (2 classes)
Depreciation methods; (2 classes)
Income tax considerations; (3 classes)
Replacement analysis; (2 classes)
Risk and uncertainty; (2 classes)
Market failures, benefit cost analysis in the public sector (4 classes)
Exams; (3 classes)