ABSTRACT
This chapter of the Handbook is about the application of engineering economic evaluation to decisionmaking. Decision-making is a part of our daily existence and it answers the questions “what investment alternative(s) should be selected, and what is the economic impact of such selection.” People make decisions, but engineering economic analysis techniques help people to make better investment decisions. A variety of problems face decision makers: simple, intermediate, and complex problems. However, the problems most suitable for the application of engineering economic evaluation techniques must satisfy these requirements (Newnan et al., 2004):
1. The problems should be very important to justify the time spent using any of these techniques. 2. They must include some economic factors that can be used for the analysis. 3. They should require careful analysis and evaluation of the various consequences. 4. The problems should add some economic value to the decision makers.
