LE/ENG 2001: Engineering Projects: Management, Economics and Safety Professor Regina Lee & Hany Hany Farag
Department of Electrical Electrical Engineering Engineering and Computer Computer Science (EECS) (EECS) Office: LSE 1012F1 Tel: (416) 736 2100 ! 33488 E-mail:
[email protected] [email protected]
LE/ENG 2001
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Lecture Timetable Tuesdays & Thursdays; Sec E: 10 – 11:30
CB 121
Sec Z: 8:30 – 10:00
CB 121
Tutorial Sec E: Friday.
9:30 – 10:30
CB 121
Sec Z: Wed and Mond.
9:30 – 10:30
CB 121
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LE/ENG 2001: Outline
This course covers the administration of design projects Project Management Reginal LEE
Engineering Economics Hany Farag
Health and Safety Tomorr Cerriku
Both of these disciplines are at the heart of successful management of the business side of engineering And a large majority of engineering graduates will be involved in management –either of engineering projects or in other fields You may not appreciate this knowledge yet, but it will benefit your career!
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LE/ENG 2001 Textbook -Niall, M. Fraser, Elizabeth. M Jewkes, Irwin Bernhardt, May Tajima,“Engineering Economics, Financial Decision Making For Engineers”, 5th edition, Prentice Hall
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LE/ENG 2001 Textbook Leland Blank, Engineering Economy, 2nd edition, McGraw-Hill
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LE/ENG 2001 Grading Scheme
Midterm Engineering Economic
30 %
Midterm Project management
15%
Design Project
15%
Final Exam
40%
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LE/ENG 2001 What s in the grade ’
Letter
Point
Description
A+
9
Exceptional
A
8
Excellent
B+
7
Very Good
B
6
Good
C+
5
Competent
C
4
Fairly Competent
D+
3
Passing
D
2
Barely Passing
E
1
Marginally Failing
F
0
Failing 7
What is a project?
The professional organisation for project managers is the Project Management Institute (PMI) By their definitions ! A project is a undertaken to achieve a particular and to which project management can be applied, regardless of the project’s size, budget, or timeline –“a project is a complex, non-routine, one-time effort limited by time, budget, resources, and performance specifications designed to meet customers’ needs (Gray & Larson)”
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Comparison of Routine Work with Projects
1 Taking class notes 2 Daily entering sales receipts into the accounting ledger 3 Writing a term paper 4 Setting up a sales kiosk for a professional accounting meeting 5 Responding to a supply-chain request 6 Practicing scales on the piano
8 Attaching tags on a manufactured product 9 Developing a supply-chain information system 10 Designing an iPod that is approximately 2 X 4 inches, interfaces with PC, and stores 10,000 songs 11 Wire-tag projects for General Electric (GE) and Wal-Mart
7 Writing a new piano piece TABLE 1.1 1–9
What is project management?
Project management is the application of knowledge, skills, tools, and techniques to a broad range of activities in order to meet the requirements of a particular project. Project management is comprised of five processes –initiating, planning, executing, controlling, and closing And nine knowledge areas –Project Integration, Project Scope, Project Time, Project Cost, Project Quality, Project Human Resources, Project Communications, Project Risk Management and Project Procurement 10
What is project management?
The phrase “project management” began to emerge in the late 1950s and early 1960s when the size, scope, duration, and resources required for new projects began to deserve more analysis and attention Today, project management is used globally by multi-billiondollar corporations, governments, and smaller organizations alike as a means of meeting their customers’ or constituents’ needs by both standardizing and reducing the basic tasks necessary to complete a project in the most effective and efficient manner 11
Engineering Economics
Engineering economics
Engineering economics is the discipline which deals with the management of the resources used in a project –particularly the financial aspects “Engineering economics is the science which deals with the techniques of quantitative analysis useful for selecting a preferable alternative from several technically viable ones” –from Engineering Economics in Canada The aim is to identify as closely as possible the economic facts associated with each of the choices, thereby facilitating the decision-making process 13
Engineering Economics Outline
Engineering Decision Making (Chapter 1)
Time Value of Money
Comparison Methods Part# I
Comparison Methods Part # 2 (Chapter 5)
(Chapter 4)
(Chapter 2)
Cash Flow Diagram (Chapter 3) Taxes and Inflation (Chapters 8 and 9) 14
Engineering Decision Making
! Although
engineering is still mainly a technical discipline, other skills are
necessary: – project management – making decisions ! Often the purpose of engineering is to formulate one or more technically feasible solutions – how does one then decide between them? ! Frequently, the basis for the choice is an economic one – which option costs less – affects bid value or product price ! Other factors – e.g. environmental, political – may also be important or overriding concerns
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Cell phones
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Smart Phones
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Why Engineering Economy is Important to Engineers Engineers design and create Designing involves economic decisions Engineers must be able to incorporate economic analysis into their designs Engineers must select and execute from multiple alternatives A proper economic analysis for selection & execution is a fundamental aspect of engineering design “
Slides for Engineering Economy, 2nd Canadian edition, Blank, Tarquin, Iverson © 2012 McGraw-Hill Ltd.
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Engineering Economics
The original concept of engineering economics was that stated above – how to choose the cheapest option – however, this needed some mathematical understanding of the situation ! Now, more management decisions are being undertaken by engineers – complex products and markets – finely-tuned optimization of manufacturing – rapid technological development !
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Making Decisions—Decision Pyramid
Decisions may be made on basis of preferences, politics and people
Decisions are made, in the end, on the basis of belief, but “facts” should be the “foundation” of belief These facts should tend to control politics, people, and preferences. 20
Engineering Economics– Definition
The science which deals with the techniques of quantitative analysis useful for selecting a preferable choice from several technically viable ones “
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The evaluation of costs and benefits makes up the bulk of engineering economics.
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Making Decisions
The aim of the engineering economics is to provide facts to inform the decision-making process ! Decisions may be made on basis of preferences, politics and people, but Economic Analysis establishes the facts upon which a decision can be based ! These facts should tend to control politics, people, and preferences. ! Facts accumulated over time create intuition, experience that control our gut feeling about a decision !
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Dealing with Abstractions
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When dealing with the complexities of reality, it is advisable to use a model.
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Modeling Process
" A
model is an simplification of reality that captures information useful and appropriate for a specific purpose. " Models can be used to analyze a situation and make predictions about the real world. " Engineering Economic Models typically represent a project through estimates of its costs and benefits over time
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Example: Buying a car
P[personal constraints
Car Model
1980 Corvette
2007 Toyota Corolla
2007 BMW 5Series
Purchase
$12 000
$7000
$25 000
Operation
$ 400/month
$300/month
$450/month
Resale
$ 13 000
$5000
$23 000
Analysis Uncertainty is ignored
Money is there 25
