Explain role engineering economics in decision making.

The techniques and models of engineering economy assists people in making decisions. The role of engineers in the decision making is to evaluate the condition , feasibility and appropriateness of an alternatives of  a given project, estimates its value and justify it from an engineering stand point and finally discover the best alternatives for implementation. For this,both the knowledge of civil engineering and engineering economics is necessary, which clearly shows the importance of engineering economics to civil engineer. 

Since decision affect what will be done, the time frame of engineering economy is primarily the future. Therefore, numbers used in an engineering economic analysis are best estimates of what is expected to occur. These estimates often involve the three essential elements: cash flow, time of occurrence and interest rate.  These estimates are about future, and will somewhat different than what actually occurs, primarily because of changing c....

The techniques and models of engineering economy assists people in making decisions. The role of engineers in the decision making is to evaluate the condition , feasibility and appropriateness of an alternatives of  a given project, estimates its value and justify it from an engineering stand point and finally discover the best alternatives for implementation. For this,both the knowledge of civil engineering and engineering economics is necessary, which clearly shows the importance of engineering economics to civil engineer. 

Since decision affect what will be done, the time frame of engineering economy is primarily the future. Therefore, numbers used in an engineering economic analysis are best estimates of what is expected to occur. These estimates often involve the three essential elements: cash flow, time of occurrence and interest rate.  These estimates are about future, and will somewhat different than what actually occurs, primarily because of changing circumstances and unplanned for events. In other words, stochastic nature of estimate will likely make the observed value in the future differ from the estimate made now. Thus, sensitive analysis is to be  performed during the engineering economic study to determine how the decision might change based on varying estimate.

Some of the reasons to have knowledge of engineering economics for engineers in decision making process are: 

• Develop the alternatives
• Use a common unit of measure
• Use a consistent viewpoint
• Consider all relevant criteria
• Make uncertainty criteria
• Revisit the decision

Engineering economics can be used equally to analyze outcomes have met or not met a specified criterion, such as rate of return requirement. The various steps involved in the problem- solving approach i.e, decision making approach are (Roles of engineer in decision making): 

1. Understand the problem and define objectives
2. Collect relevant information
3. Define the feasible alternative solutions and make realistic estimates.
4. Identify the criteria for decision making using one or more attributes.
5. Evaluate each alternative, using sensitive analysis to enhance the evaluation.
6. Select the best alternative.
7. Implement the solution and monitor the results.