Practice Highlight: Engineering Economics
Given the current economic climate and a focus on project impacts, engineers are challenged to go beyond solid, functional design work and enter the realm of economics to prove that a given project will bring real and tangible benefits. Engineering economics is the application of economic methods and models to project evaluation. This evaluation could include:
- Overall worthiness of a project in terms of return-on-investment
- Benefits and costs of design, construction, implementation and operation of the project
- Alternatives analysis for project financing
- Impacts of projects in terms of jobs, income & taxes on a geographical area or governmental unit
- Life cycle cost analysis
Measurements of some costs are relatively easy; e.g. design and construction cost. Establishing the value of driving time saved for a highway widening project or the value of a human life for a safety enhancement project requires more expertise. Implementation costs are usually one-time, while operating costs and benefits are computed on an annual basis and translated to present value. Finally, incorporating uncertainty in project impacts can complicate the project evaluation.
Benefit-cost analyses have been completed by TMG Consulting for Richmond International, Mobile, Houma, and Louis Armstrong New Orleans International airports. TMG Consulting has completed impact studies for numerous private and public clients in locales such as Missouri, Louisiana, Delaware, Massachusetts, and Florida, helping them to reach their development project goals.
Nowadays, many engineering projects require the use of engineering economics in project evaluation, a discipline in which TMG Consulting has long standing experience and expertise.
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