Engineering Economics

J. K. Yates, PhD, BSCE, is a construction consultant, and former Professor and the Program Coordinator for the Construction Engineering Program in the Department of Civil Engineering at San Jose State University, as well as having been the associate editor of the Project Management Institute's (PMI) Project Management Journal for ten years. Dr. Yates has extensive hands-on experience working globally for companies such as Bechtel, Williams Engineering, CH2M Hill Consulting Engineers, and Morrison- Knudsen. A member of the American Society of Civil Engineers, PMI, and the American Association of Cost Engineers International, Dr. Yates has published over forty-five refereed journal articles on construction engineering, project management, and international engineering and construction. Dr. Yates was awarded the Ron Brown Presidential Award for Industry-Education Partnership, May 2000, and was also awarded by President Clinton for research collaboration with the Hewlett Packard Foundation. Dr. Yates also received the President's Special Recognition Award, December 1996, awarded by the president of San Jose State University. The Associated General Contractors (AGC) selected Dr. Yates as the Outstanding Educator in Construction in America in 1997, and the Engineering News-Record selected Dr. Yates as One of Those Who Made Their Mark in Construction in 1991.

Introduction

Introduction to Engineering Economics

Money as a Means of Commerce

Improving the Economics of Projects

Managing Costs and Profits

Summary

Key Terms

Problems

Time Value of Money

Definition of Interest

Definition of Engineering Economic Terms

Cash Flow Diagrams

Summary

Key Terms

Problems

Present Worth, Future Worth, and Unknown Interest Rates

Definition of Equivalence

Single Payment Compound Amount Factor¾ Future Worth

Present Worth Compound Amount Factor¾ Present Worth

Compounding Periods Different than One Year

Solving for Unknown Interest Rates

Using Factor Tables to Solve for Present and Future Worth

Summary

Key Terms

Problems

Annuities

Uniform Series Compound Amount Factor¾ Future Worth of Annuities

Uniform Series Sinking Fund Factor¾ Annuity of a Future Value

Uniform Series Present Worth Recovery Factor¾ Present Worth of Annuities

Uniform Series Capital Recovery Factor¾ Annuity of a Present Worth

Present Worth of an Infinite Uniform Series¾ Unlimited Payment Series

Using Factor Tables to Solve for Annuities

Summary

Key Terms

Problems

Arithmetic and Geometric Gradients

Definition of Arithmetic Gradients

Future Worth of Arithmetic Gradient Amounts

Present Worth of Arithmetic Gradient Amounts

Noncontinuous Arithmetic Gradient Series

Using Factor Tables to Solve for Gradients

Perpetual Life Gradients¾ Infinite Series

Geometric Gradients

Using Factor Tables to Solve for Gradients

Summary

Key Terms

Problems

Multiple Factors

Combining Factors to Solve for Future or Present Worth of Different Series

Two Sequential Series with Different Interest Rates

Compounding Periods Not Equal to Payment Periods

Summary

Key Terms

Problems

Present Worth Capitalized Cost Analysis¾ Present Worth Method of Comparing Alternatives

Comparing Alternatives on the Basis of Equivalent Present Worth

Capitalized Cost Calculations for Perpetual Life Series

Present Worth of Least Common Multiples of Series

Summary

Key Terms

Problems

Equivalent Uniform Annual Cost Comparison Method

Comparing Alternatives Based on their Equivalent Uniform Annual Cost

Equivalent Uniform Annual Cost of Perpetual Life Alternatives

Using Trade-in Value and Sunk Costs in Calculations

Summary

Key Terms

Problems

Rate or Return Method for Comparing Alternatives

Solving for the Interest Rate where the Present Sum Equals the Future Sum

Solving for the Unknown Interest Rate using Interpolation

Evaluation by Incremental Investment Analysis¾ Incremental Rate of Return

Summary

Key Terms

Problems

Replacement Analysis

Definitions used in Replacement Analysis

Determining when to Replace an Asset

Analyzing Mutually Exclusive Alternatives

Summary

Key Terms

Problems

Breakeven Analysis Comparisons

Fixed Costs and Variable Costs

Locating the Breakeven Point

Summary

Key Terms

Problems

Benefit/Cost Evaluations

Definition of Terms used in Benefit/Cost Evaluations

Benefit/Cost Ratio Analysis

Summary

Key Terms

Problems

Depreciation

Definition of Deprecation

Components Considered when Calculating Depreciation

Methods for Calculating Depreciation

Summary

Key Terms

Problems

Taxes and After Tax Economic Analysis

Corporate Taxes

After Tax Cash Flows

Individual Taxes

Summary

Key Terms

Problems

Appendix I Summary of Equations and Cash Flow Diagrams

Appendix II Factor Tables

Appendix III Using Spreadsheets to Solve Engineering Economic Problems

Index