COURSE INFORMATION Course Title: ENGINEERING ECONOMICS

Code	Course Type	Regular Semester	Theory	Practice	Lab	Credits	ECTS
CE 311	C	5	2	2	0	3	5

Academic staff member responsible for the design of the course syllabus (name, surname, academic title/scientific degree, email address and signature)	NA
Main Course Lecturer (name, surname, academic title/scientific degree, email address and signature) and Office Hours:	Dr. Julinda Keçi jkeci@epoka.edu.al , Friday 13:45-16:00
Second Course Lecturer(s) (name, surname, academic title/scientific degree, email address and signature) and Office Hours:	NA
Teaching Assistant(s) and Office Hours:	NA
Language:	English
Compulsory/Elective:	Compulsory
Study program: (the study for which this course is offered)	Bachelor in Civil Engineering (3 years)
Classroom and Meeting Time:	Thursday 9:45-11:30, 12:45-14:30
Code of Ethics:	Code of Ethics of EPOKA University Regulation of EPOKA University "On Student Discipline"
Attendance Requirement:	75%
Course Description:	Interest and money-time relationship. Depreciation, valuation depletion. Basic methods for making economy studies. Selection between alternatives and the replacement problem. Applications related to various constructions project. Profile the construction sector; company and site organization and types of contracts. Construction projects; estimating, tendering, planning and execution. Construction equipment; selection criteria, hourly cost determination and output analysis of excavators.
Course Objectives:	The objective of this course is to provide the necessary information about engineering economy, and basic technics used in economic analysis of decisions related to engineering projects.

BASIC CONCEPTS OF THE COURSE

1	Factors Affecting Money
2	Nominal and Effective Interest Rates
3	Present Worth Analysis
4	Annual Worth Analysis
5	Rate of Return Analysis
6	Independent Projects Analysis
7	Benefit/Cost Analysis

COURSE OUTLINE

Week	Topics
1	General Introduction: The fundamentals of engineering economy are introduced in the first chapters. When you have completed stage 1, you will be able to understand and work problems that account for the time value of money, cash fl ows occurring at different times with different amounts, and equivalence at different interest rates. The techniques you master here form the basis of how an engineer in any discipline can take economic value into account in virtually any project environment. En engineering project or alternative is formulated to makea product, to develop a process, or to provide a service with specifi end results. An engineering economic analysis evaluates cash flow estimates for parameters such as initial cost, annual costs and revenues, nonrecurring costs, and possible salvage value over an estimated useful life of the product; process, or service. The chapters in the second Learning Stage develop and demonstrate the basic tools and techniques to evaluate one or more alternatives using the factors, formulas, and spreadsheet functions learned in Stage 1.
2	Foundations of Engineering Economy: The need for engineering economy is primarily motivated by the work that engineers do in performing analyses, synthesizing, and coming to a conclusion as they work on projects of all sizes. In other words, engineering economy is at the heart of making decisions. These decisions involve the fundamental elements of cash fl ows of money, time, and interest rates. This chapter introduces the basic concepts and terminology necessary for an engineer to combine these three essential elements in organized, mathematically correct ways to solve problems that will lead to better decisions
3	Factors Affecting Money: The cash flow is fundamental to every economic study. Cash flows occur in many confi gurations and amounts—isolated single values, series that are uniform, and series that increase or decrease by constant amounts or constant percentages. This chapter develops derivations for all the commonly used engineering economy factors that take the time value of money into account.
4	Combining Factors: Most estimated cash flow series do not fit exactly the series for which the factors, equations, and spreadsheet functions in Chapter 2 were developed. For a given sequence of cash flows, there are usually several correct ways to determine the equivalent present worth P, future worth F, or annual worth A. This chapter explains how to combine engineering economy factors and spreadsheet functions to address more complex situations involving shifted uniform series, gradient series, and single cash flows.
5	Nominal and Effective Interest Rates: In all engineering economy relations developed thus far, the interest rate has been a constant, annual value. For a substantial percentage of the projects evaluated by professional engineers in practice, the interest rate is compounded more frequently than once a year; frequencies such as semiannually, quarterly, and monthly are common. In fact, weekly, daily, and even continuous compounding may be experienced in some project evaluations. Also, in our own personal lives, many of our fi nancial considerations—loans of all types (home mortgages, credit cards, automobiles, boats), checking and savings accounts, investments, stock option plans, etc.—have interest rates compounded for a time period shorter than 1 year. This requires the introduction of two new terms— nominal and effective interest rates. This chapter explains how to understand and use nominal and effective interest rates in engineering practice and in daily life situations. Equivalence calculations for any compounding frequency in combination with any cash flow frequency are presented.
6	Present Worth Analysis: future amount of money converted to its equivalent value now has a present worth (PW) that is always less than that of the future cash fl ow, because all PF factors have a value less than 1.0 for any interest rate greater than zero. For this reason, present worth values are often referred to as discounted cash fl ows (DCF), and the interest rate is referred to as the discount rate. Besides PW, two other terms frequently used are present value ( PV ) and net present value ( NPV ). Up to this point, present worth computations have been made for one project or alternative. In this chapter, techniques for comparing two or more mutually exclusive alternatives by the present worth method are treated. Two additional applications are covered here—future worth and capitalized cost. Capitalized costs are used for projects with very long expected lives or long planning horizons. To understand how to organize an economic analysis, this chapter begins with a description of independent and mutually exclusive projects as well as revenue and cost alternatives.
7	Annual Worth Analysis: In this chapter, we add to our repertoire of alternative comparison tools. In Chapter 5 we learned the PW method. Here we learn the equivalent annual worth, or AW, method. AW analysis is commonly considered the more desirable of the two methods because the AW value is easy to calculate; the measure of worth—AW in monetary units per year—is understood by most individuals; and its assumptions are essentially identical to those of the PW method. Annual worth is also known by other titles. Some are equivalent annual worth (EAW), equivalent annual cost (EAC), annual equivalent (AE), and equivalent uniform annual cost (EUAC). The alternative selected by the AW method will always be the same as that selected by the PW method, and all other alternative evaluation methods, provided they are performed correctly. An additional application of AW analysis treated here is life-cycle cost (LCC) analysis. This method considers all costs of a product, process, or system from concept to phaseout.
8	Midterm Exam
9	Rate of Return Analysis-single: The most commonly quoted measure of economic worth for a project or alternative is its rate of return (ROR). Whether it is an engineering project with cash fl ow estimates or an investment in a stock or bond, the rate of return is a wellaccepted way of determining if the project or investment is economically acceptable. Compared to the PW or AW value, the ROR is a generically different type of measure of worth, as is discussed in this chapter. Correct procedures to calculate a rate of return using a PW or AW relation are explained here, as are some cautions necessary when the ROR technique is applied to a single project’s cash flows.
10	Rate of Return Analysis-multiple: This chapter presents the methods by which two or more alternatives can be evaluated using a rate of return (ROR) comparison based on the methods of the previous chapter. The ROR evaluation, correctly performed, will result in the same selection as the PW and AW analyses, but the computational procedure is considerably different for ROR evaluations. The ROR analysis evaluates the increments between two alternatives in pairwise comparisons. As the cash fl ow series becomes more complex, spreadsheet functions help speed computations
11	Independent Projects with/without Budget Limitation: n most of the previous economic comparisons, the alternatives have been mutually exclusive; only one could be selected. If the projects are not mutually exclusive, they are categorized as independent of one another. Now we learn techniques to select from several independent projects. It is possible to select any number of projects from none (do nothing) to all viable projects. There is virtually always some upper limit on the amount of capital available for investment in new projects. This limit is considered as each independent project is economically evaluated. The techniques applied are called capital budgeting methods, also referred to as capital rationing. They determine the economically best rationing of initial investment capital among independent projects based upon different measures, such as PW, ROR, and the profitability index.
12	Applications of the Basic Analysis Tool and Spreadsheet Functions
13	Benefit/Cost Analysis: The evaluation methods of previous chapters are usually applied to alternatives in the private sector, that is, for-profi t and not-for-profi t corporations and businesses. This chapter introduces public sector and service sector alternatives and their economic consideration. In the case of public projects, the owners and users (benefi - ciaries) are the citizens and residents of a government unit—city, county, state, province, or nation. Government units provide the mechanisms to raise capital and operating funds. Public-private partnerships have become increasingly common, especially for large infrastructure projects such as major highways, power generation plants, water resource developments, and the like. The benefi t/cost (B/C) ratio introduces objectivity into the economic analysis of public sector evaluation, thus reducing the effects of politics and special interests. The different formats of B/C analysis, and associated disbenefi ts of an alternative, are discussed here. The B/C analysis can use equivalency computations based on PW, AW, or FW values. Performed correctly, the benefi t/cost method will always select the same alternative as PW, AW, and ROR analyses.
14	General Review

Prerequisite(s):	-
Textbook(s):	Basics of Engineering Economy, Leland Blank and Anthony Tarquin, McGraw-Hill
Additional Literature:
Laboratory Work:
Computer Usage:	Ms Excel
Others:	No

COURSE LEARNING OUTCOMES

1	To learn concepts of Engineering Economy
2	To learn the Time Value of Money concept
3	To learn Economic Analysis Techniques
4	To apply Economic Analysis Techniques in Simple Engineering Projects

COURSE CONTRIBUTION TO... PROGRAM COMPETENCIES (Blank : no contribution, 1: least contribution ... 5: highest contribution)

No	Program Competencies	Cont.
Bachelor in Civil Engineering (3 years) Program
1	an ability to apply knowledge of mathematics, science, and engineering	2
2	an ability to design a system, component, or process to meet desired needs	-
3	an ability to function on multidisciplinary teams	-
4	an ability to identify, formulate, and solve engineering problems	4
5	an understanding of professional and ethical responsibility	-
6	an ability to communicate effectively	2
7	the broad education necessary to understand the impact of engineering solutions in a global and societal context	3
8	a recognition of the need for, and an ability to engage in life long learning	-
9	a knowledge of contemporary issues	-
10	an ability to use the techniques, skills, and modern engineering tools necessary for engineering practice	4
11	skills in project management and recognition of international standards and methodologies	3

COURSE EVALUATION METHOD

Method	Quantity	Percentage
Homework	1	10
Midterm Exam(s)	1	30
Quiz	2	10
Final Exam	1	40
	Total Percent:	100%

ECTS (ALLOCATED BASED ON STUDENT WORKLOAD)

Activities	Quantity	Duration(Hours)	Total Workload(Hours)
Course Duration (Including the exam week: 16x Total course hours)	16	4	64
Hours for off-the-classroom study (Pre-study, practice)	14	3	42
Mid-terms	3	3	9
Assignments			0
Final examination	1	10	10
Other			0
Total Work Load:			125
Total Work Load/25(h):			5
ECTS Credit of the Course:			5

CONCLUDING REMARKS BY THE COURSE LECTURER

To be completed at the end of the semester