About UD Engineering
Engineering Economics
(How to evaluate your engineering projects
from an economic viewpoint)
December 13 and 14 , 2007
University of Delaware
Newark Campus
(1.6 CEUs awarded for full participation)
Course Description
Understanding the economics of an engineering project is critical to its success -- and to success in your career! This course, designed at the request of our Engineering Outreach Industry Advisory Council, is one that you and your project team won't want to miss!
Business decisions are risky! This interactive course will help you truly understand the risks so that you can make decisions based on sound, economic merit. Many of the engineering economic principles covered in the discussion are relevant to any engineering project. This course is particularly important for those in an industrial/manufacturing setting where sales projections are critical. Dividing the course into nine sessions, Bruce Vrana uses lectures, discussion, and numerous class problems to ensure understanding.
Benefits
By the end of this course, YOU will understand necessary economic terminology and how to do the following for your project:
• Define the opportunity and set the goals
• Identify the options
• Define the options
• Estimate the real cash flows and their timing
• Estimate the economic merit
• Determine the non-economic considerations
• Select the best option
Presenter
Bruce M. Vrana holds both the BS and MS in chemical engineering from the University of Pennsylvania and the MBA from the University of Houston . That education has been put to good use, as he serves as a consultant in the Engineering Evaluations group of DuPont Engineering Technology (DuET). His DuPont career began in 1980 and included assignments in research and manufacturing prior to his joining DuET. He has evaluated processes for a variety of businesses, including Advanced Fibers Systems, Specialty Chemicals, Elastomers, Engineering Polymers, Fluoroproducts, Polyester Intermediates, Nylon, and Centra Research & Development. Since 1985, Bruce has taught and administered DuPont's internal Economic Evaluations course. He is a member of the AIChE and a registered professional engineer in Delaware .
Agenda Topics
Wednesday, November 14, 7:30 am - continental breakfast and registration
Wednesday and Thursday, November 14 & 15, 8 am-5 pm - class time
I. Intro. to Economics & Accounting - An overview of economics and accounting uses a class problem to discuss the income statement, balance sheet, and statement of cash flows; provides a working knowledge of accounting documents and understanding of how cash flows into, through, and out of companies.
II. Methods, Principles and Definitions - A discussion of the seven phases of an economic evaluation (see “Benefits”) including information needed for economic calculations, an evaluation flowchart, accounting and economic evaluation metrics such as Net Present Value, Internal Rate of Return, Minimum Acceptable Rate of Return, After-Tax Operating Income, Return on Investment, and more; compares alternatives using economic and non-economic factors. Many class problems are used to ensure understanding.
III. Sales Estimating - Discusses the uncertainty of estimating future sales. Situations where sales estimating would be necessary are discussed, as well as a number of techniques used for estimates. Market Segmentation Analysis, a sales estimating technique, is examined in detail. The Price Opportunity curve is studied and the influence of time on an estimate is covered.
IV. Investment Estimating - An orientation to estimating the cost to build facilities, focusing on a type of estimate called a factored estimate, detailing key information required for a factored estimate. While the purpose of this session is to understand a factored estimate, not necessarily to be able to prepare one, several examples show how changes in facility definition (materials of construction, existing equipment, and site location) impact the facility cost.
V. Cost Estimating - Introduces cost estimating through an illustration to which you can relate: your car! Uses a class problem to examine the concept of depreciation. Some cost estimating starting points discussed include what estimates typically require (i.e. a flowsheet), some bases that need to be known, things to do, principles to follow while doing the estimate, and information sources. Numerous cost estimating variables are defined and discussed, including materials, utilities, operating labor, maintenance labor, materials, and overhead. Working capital is examined with an illustration showing how everything is used together. Several class problems follow.
VI. Cash Flow Analysis - Discusses the four steps to discounted cash flow:
• establishing a planning horizon
• estimating all incremental future cash flows (including inflation and some tax laws)
• aggregating the incremental cash flows for each year
• discounting the future cash flows to today's dollars
Illustrations pull together these concepts and examine Net Present Value, Internal Rate of Return, Discounted Payback Period, Terminal Value calculations, and Working Capital.
VII. Computational Aids - Deals with tools to help get actual numbers for the extensive calculations:
• an Excel spreadsheet for NPV calculations
• a simplified method - "Back of the Envelope" cash flow method (including assumptions made when using the short cut method as well as the method itself)
Several class problems allow you to practice and demonstrate how economic measures are used to make decisions.
VIII. Decision and Risk Analysis - Focuses on Risk Analysis and how decisions can be made in the face of future uncertainties. Decision trees and probability distributions are used to walk through an example while explaining the meaning and some of the major techniques of D&RA.
• Applications of Evaluation - A single problem - performing a complete economic evaluation.
Registration and General Information
PROGRAM FEES include continental breakfast on DAY ONE, all breaks, UD parking, course notes. Lunches are not included, but Newark offers many convenient options.
Three or more registrants from the same company : $595/person; Individual registrants : $695
REGISTRATION DEADLINE : Wednesday, November 28, 2007
REGISTRATION CONFIRMATION : A letter of confirmation will be mailed to your home on or before November 28, along with directions to campus and parking.
CANCELLATIONS and SUBSTITUTIONS : Refunds will be granted if the request is received in writing by November 28. No refunds after November 28, but substitutions are permitted at any time.
ACCOMMODATIONS and TRANSPORTATION : Participants are responsible for making their own housing and transportation arrangements.. Air transportation should be arranged to either Philadelphia or Baltimore airport. By calling early and asking for the University of Delaware Engineering Outreach rates, you can obtain discounts at the following hotels.
Courtyard by Marriott - UD Campus Hotel - 400 Pencader Way, Newark, DE, 1-302-737-0900 ($144+tax/night)
The following are each about one mile from campus:
Embassy Suites - 654 S. College Ave., Newark, DE, 1-302-368-8000 ($169+tax/night)
Sleep Inn - 630 S. College Ave. (Rt.896N), Newark , DE , 1-302-453-1700 ($79+tax/night)
Howard Johnson Inn - 1119 S. College Ave. , Newark , DE , 1-302-368-8521 ($62+tax/night)
