Specific competences to be developed in this matter:

A. Knowledge of economic aspects to be considered in the evaluation of industrial projects, especially those related to chemical engineering.

B. Learning of methods for evaluating investment alternatives in engineering.

C. Cost-estimation of process equipment in engineering, and replacement analysis.

D. Probabilistic risk analysis and decision-making.



Transversal or generic competences to be developed in the subject and in the Chemical Engineering degree:

CT1. Ethical commitment.

CT2. Learning capacity.

CT3. Teamwork.

CT4. Creative and entrepreneurial skills.

CT5. Communication skills.

CT6. Autonomy and responsibility.

Chapter 1. INTRODUCTION TO ENGINEERING ECONOMY

Economy: Macroeconomics and microeconomics. The principles of Engineering economy. Engineering economy and the design process. Analysis and comparison of alternatives. Examples.

Chapter 2. ELEMENTS FOR THE ENGINEERING ECONOMIC ANALYSIS

Capital costs: investment and working capital. Cost concepts. Depreciation and its consideration as cost. Capital-estimation and cost-estimation techniques. Revenues and benefits. Income taxes.

Chapter 3. THE TIME VALUE OF MONEY

The concept of interest and equivalence. Types of interés; simple, compound, continuous. Cash-flow diagrams. Present and future equivalent values. Uniform series and arithmetic/geometric gradients of cash flow. Perpetuity investments.

Chapter 4. EVALUATING A SINGLE PROJECT

Conventional rate of return. The mínimum attractive rate of return (MARR). The present worth method. The future worth value. The anual woth method. The internal rate of return. The external rate of return. The payback (payout) period method.

Chapter 5. COMPARISON AND SELECTION AMONG ALTERNATIVES

Classification of investment alternatives. Independent alternative analysis. Analysis of mutually exclusive alternatives. The marginal criteria. Considering the lifetime of alternatives. Application of the anual worth method.

Chapter 6. REPLACEMENT ANALYSIS

Reasons for replacement analysis. Determining the economic life of a new asset (challenger). Determining the economic life of a defender. Comparison when useful lifes are different. After-tax replacement.

Chapter 7. FINANCIAL ANALYSIS

Sources of funds: loans and interest. The financial leverage. The leasing. A possible decisión: leasing or purchase?

Chapter 8. SENSITIVITY ANALYSIS.

What will happen if…? Sensitivity of a single project. Sensitivity of alternatives..

Chapter 9. BENEFIT-COST ANALYSIS.

Optimization target set variables. Optimal project capacity. Utilization coefficient: critical and closing productions. Calculation of capacity to be installed in a dynamic market. The dumping concept.

Chapter 10. RISK ANALYSIS AND DECISSION MAKING. Probabilistic concpts. Decision trees. Discounted decission trees: a combination of present worth value, probability and expected value. Sensitivity of decisions. Making decisions under uncertainty. Competitive decisions: game theory.

Theoretical concepts, magister lectures (M). (19 h). Assimilate concepts, take notes, plan the preparation of the topic. Raise doubts and complementary questions.



Practical activities and problems (GA). (11 h). Solve selected problems or proposed work. Presentation of results on blackboard or through written reports.

Seminars (S). (15 h). Raise doubts arising from non face-to-face assignments. Expose their results on the assigned work. Discussion of results.

Personal study. (45,5 h). Individual or group study activities planned by the students themselves, outside of regular classes.

Case-based study and internet questionaires. (22 h). Solve problems or work proposed in each topic or answer questionnaires posed on the Internet. Presentation of results through written reports.

Along the course exerxcises, case-based learning and problems will be proposed and resolved, which evaluation could provide up to 40% of the final mark.

Two specific written exams will be proposed, for each half of the matter. These assesments will complement the remaining 60% of the final mark.

When the minimum requirements have not been met or the global computation of previous sections has not reached a grade of 50%, the student should take the Final Exam with the total content of the course (no release of parts is considered).

1. Resources in Moodle platform
2. Williams G. Sullivan, Elin M. Wicks y James T. Luxhoj, Engineering Economy, 17ª edición, Prentice Hall, Nueva Jersey, 2021.

Basic bibliography

1. Williams G. Sullivan, Elin M. Wicks y James T. Luxhoj, Engineering Economy, 17ª edición, Prentice Hall, Nueva Jersey, 2021.

2. 16 american professors reveal their files, Engineering Economy: Exam Files, Engineering Press, San José, California, 1984.

3. José A. Sepúlveda, Williams E. Souder y Byron S. Gottfried, Engineering Economics, Schaum¿s Outline Series in Engineering, McGraw Hill, Nueva York, 1984.

In-depth bibliography

1. Max Kurtz, Handbook of Engineering Economics: Guide for Engineers, Technicians, Scientists, and Managers, McGraw Hill, Nueva York, 1984.
2. James L. Riggs y Thomas M. West, Engineering Economics, 3ª edición, McGraw Hill, Nueva York, 1986.