Engineering economics is a discipline concerned with the systematic evaluation of the

costs and benefits of proposed technical and business projects and ventures.

Furthermore, they are utilized to analyze alternative uses of financial resources,

particularly in relation to the physical assets operation of an organization.

Engineering economics is invaluable in assessing the economic merits of alternative uses

of your personal funds.

In the operation of an organization, engineers and managers use engineering economy

to assist with decision making in situations such as the following:

1. Selecting between alternative designs for a component, machine, structure,

system, product or service during the engineering design process.
2. Estimating and analyzing the economic consequences of automation
improvements in a factory operation.
3. Select among proposed projects within the annual capital budget limit
established in a corporation.
4. Analyzing whether the transportation equipment in the service fleet should be
replaced, and at what rate.
5. Choosing between asset lease and purchase options to support a new product
line within a company.

Engineering economic analysis includes technical

considerations. Mathematical modeling, emphasis on the
economic effects, is the primary analytical technique used to
select between defined feasible alternatives. Thus,
engineering economics involves technical analysis with a
decision-assisting objective.

An engineer who is unprepared to excel at engineering economic analysis is not properly

equipped for his/her total job.

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