Open AccessA REVIEW STUDY OF ECONOMICS ANALYSIS IN ENGINEERING PROJECTS
Author(s) -
Osama Mohammed Elmardi Suleiman,
Nafea Mostafa Muki Nafea
Publication year - 2021
Publication title -
international journal of engineering applied science and technology
Language(s) - English
Resource type - Journals
ISSN - 2455-2143
DOI - 10.33564/ijeast.2021.v06i04.001
Subject(s) - engineering economics , managerial economics , context (archaeology) , management science , economics , economic analysis , process (computing) , competition (biology) , cost engineering , supply and demand , computer science , microeconomics , cost accounting , business economics , management , finance , paleontology , ecology , agricultural economics , biology , operating system
Engineering economics, previously knownas engineering economy, is a subsetof economics concerned with the use and application ofeconomic principles in the analysis of engineeringdecisions. As a discipline, it is focused on the branch ofeconomics known as microeconomics in that it studies thebehavior of individuals and firms in making decisionsregarding the allocation of limited resources. Thus, itfocuses on the decision making process, its context andenvironment. It is pragmatic by nature, integratingeconomic theory with engineering practice. But, it is also asimplified application of microeconomic theory in that itavoids a number of microeconomic concepts such as pricedetermination, competition and demand/supply. As adiscipline though, it is closely related to others suchas statistics, mathematics and cost accounting. It drawsupon the logical framework of economics but adds to thatthe analytical power of mathematics and statistics.Engineers seek solutions to problems, and the economicviability of each potential solution is normally consideredalong with the technical aspects. Fundamentally,engineering economics involves formulating, estimating,and evaluating the economic outcomes when alternativesto accomplish a defined purpose are available.The study includes an introduction to the application ofeconomic techniques to the evaluation of design andengineering alternatives, cash flow concepts, interestfactors, comparison of alternatives, benefit - cost analysis,and conclusions of the study. One of the objectives of theeconomic analysis in engineering projects is the goodmanagement which consists primarily of making wisedecisions; wise decisions in turn involve making a choicebetween alternatives. Engineering considerationsdetermine the possibility of a project being carried out andpoint out the alternative ways in which the project couldbe handled. Economic considerations also largelydetermine a project's desirability and dictate ho