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Engineering Economy: A Two-Step Approach to Energy and Environmental Strategies

Arup K. Mallik Sanjiv Sarin

419 McNair Hall North Carolina A&T State University Greensboro, NC 27411

Abstract This paper proposes a two-course sequence to introduce the fundamental concepts and applications of engineering economy. The main idea being explored in this paper is to introduce discipline-specific case studies and their analysis using engineering economic methods. The advantage of this approach will be a better appreciation of engineering economy by non-IE majors.

Introduction The traditional objective of the required Engineering Economy course in engineering programs has been to satisfy the requirements of ABET and EIT. The ABET/EAC curriculum guide explicitly requires that the engineering design experience involve economic factors. Additionally, the Fundamentals of Engineering (EIT) examination has a number of questions relating to engineering economy. Therefore, the conventional Engineering Economy course introduces basic concepts of time value of money, and various techniques for cost justification of capital expenditure. Unfortunately, this course is not integrated with the remainder of the curriculum. For instance, after taking this course, an EE or ME major rarely sees the tools employed in a sequel course within his major. This issue has been addressed by a multi-university project funded by the National Science Foundation [1]. Tasks accomplished by this coalition during the period 1991 - 1992 include the following: (i) Integration of economic principles in a Thermosystems Design Analysis course, (ii) Development of a economic design simulator for estimating cost to manufacture for various thermal components, (iii) Development of case studies focusing on economic principles in design, and (iv) Development of course materials for a course entitled Economics of Engineering Design. There is a need to improve the structure of Engineering Economy study in the engineering curriculum such that students appreciate practical applications within their respective disciplines. This idea is explored in this paper using a two-course sequence model for teaching Engineering Economy. The relationship of the Engineering Economy course with the remainder of a major’s program is also investigated in this paper. Suggestions are made to enhance the delivery of the material to involve all the different majors who take this course in a way that encourages them to appreciate the relevance and importance of the concepts and techniques of Engineering Economy. This paper suggests a different approach to teaching Engineering Economy. The approach is centered around a two-course sequence. The first course is similar in nature to the traditional Engineering Economy course. The second course should involve actual case studies drawn from practical experiences and applications from within a particular major.

First Course in Engineering Economy This 2-semester course includes principles of time value of money, interest factors, cash flow equivalence, techniques for comparing alternatives, depreciation methods and income tax considerations. However, detailed derivations of formulas and computer use may be eliminated from the course. Clearly,

1996 ASEE Annual Conference Proceedings

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Mallik, A. K., & Sarin, S. (1996, June), Engineering Economy: A Two Step Approach To Energy And Environmental Strategies Paper presented at 1996 Annual Conference, Washington, District of Columbia. 10.18260/1-2--6023