CHAPTER 13

ENGINEERING ECONOMICS IN DESIGN

How much is this going to cost?

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DESIGNS ALMOST always have to meet cost-related or other economic targets. Therefore, it is essential that we understand how to estimate and manage the costs associated with our design work. In this chapter, we introduce two basic concepts of engineering economics in the context of the design process, after which we close with some remarks about the field of engineering economics.

13.1 COST ESTIMATION: HOW MUCH DOES THIS PARTICULAR DESIGN COST?

How do we estimate the costs of a design, both as we make it and then over its planned life? In practice, cost estimation is a complex business that requires skill and experience. However, there are several ways that we can break out the cost structure of a device that we are designing. The simplest, conceptually, is to estimate labor, materials, and overhead costs. This simple statement ignores profits, and it masks the complexity of the full cost-related details of all but the simplest of artifacts. Nevertheless, we will limit our discussion to describing only the principal elements that make up the cost categories listed above, since they allow designers to begin to grasp the economics of a design.

Before turning to particular cost categories, it is useful to remember that “low cost” is very likely to be among the objectives of a designed artifact. Even when ...

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