A Naval Architect's Introduction to Engineering Economics

Abstract

Lecture notes for intensive course in ship design economics, University of New Orleans, March 1984 (Adapted from lecture notes prepared for the Eighth WEGEMT School, August 29 - September 8, 1983 in Gothenburg)&&In designing a ship or offshore platform, we naval architects are heavily involved in deciding between competing proposals. For each proposal we should predict the cash flow pattern (i.e., how much cash will flow in or out of the firm and when) as a result of adopting that particular proposal. We can then consider how to select between competing alternatives based on those cash flow projections. &&In going through the above, we must recognize complicating factors such as taxes, inflation, borrowed capital, and decision making in the face of an unpredictable future. While these complicating factors are dealt with rather superficially here, attention is called to more thorough treatises. &&Because of the wide diversity in background of my intended audiences no effort is made to present reliable data. My aim, rather, is to help you develop an understanding of the principles involved in the use of engineering economics as an aid in making rational decisions in designing ships, offshore platforms, or other long-term capital investments.