ABSTRACT
The need for an in-depth understanding of economic analysis is twofold. In our flat, global, and complex world, engineers work on multidisciplinary projects that encompass “cradle to grave” dimensions, including finance, design, construction, operation, maintenance, and retirement. To compete in international markets, all industries face and must respond to increased competition in the form of lower-cost operations and competition from non-traditional sources. Economic analysis is important from the traditional perspectives of life cycle costs, analysis of alternatives, business operations, and so on. Economic analysis, in many cases, is as important as technical requirements. Many parameters can influence an economic analysis. In all these cases, an in-depth understanding of the economic factors affecting a project must be understood in order to remain competitive in today's ever-changing markets. This chapter provides the basics of engineering economics, including analysis methods, processes, and techniques. The basics of time value of money calculations, interest rates, and techniques for making economic decisions are all presented.
