SHE Level 4
SCQF Credit Points 20.00
ECTS Credit Points 10.00
Module Code MHL124738
Module Leader Martin MacDonald
School School of Computing, Engineering and Built Environment
Subject SCEBE - School Office
  • A (September start)
  • B (January start)

Summary of Content

The aim of the course is to provide comprehensive knowledge of basics of economics and cost analysis related to engineering so as to take economically sound decisions.


Introduction to Economics- Flow in an economy, Law of supply and demand, Concept of Engineering Economics - Engineering efficiency, Economic efficiency, Scope of engineering economics- Element of costs, Marginal cost, Marginal Revenue, Sunk cost, Opportunity cost, Break-even analysis. Make or buy decision, Value engineering - Function, aims, Value engineering procedure. Interest formulae and their applications -Time value of money, Single payment compound amount factor, Single payment present worth factor. Cost and investment appraisal, budgeting, standard costing, payback period, present value, discounted cash flow, rate of return methods, Examples in all the methods. Replacement and Maintenance analysis - Types of maintenance, types of replacement problem, determination of economic life of an asset, Replacement of an asset with a new asset - capital recovery with return and concept of challenger and defender, Simple probabilistic model for items which fail completely. Depreciation- Introduction, Straight line method of depreciation, declining balance method of depreciation. Production planning & control - stock and stock control, reorder point system, material replacement planning, manufacturing resources planning, just in time, capacity requirement planning, scheduling, forecasting demand.

Learning Outcomes

On completion of this module the student should be able to:1. Demonstrate the concept of engineering economics and elements of costs (AM1).2. Apply value engineering concepts and evaluate the economic impacts. (AM1).3. Appraise various investment projects using different methods. (AM1, AM7).4. Analyse replacement and maintenance scenarios for economic life of assets. (AM5).5. Apply various depreciation methods for evaluating assets in industry (AM5).6. Prepare economic production planning for industry for smooth operations (AM1, AM7).

Teaching / Learning Strategy

The main teaching method will be based on lectures. Tutorials will be used to reinforce the module material and to discuss the issues raised by the directed reading.

Indicative Reading

-422 1. Panneer Selvam, R.(2001) Engineering Economics, Prentice Hall of India Ltd, New Delhi. -422 2. Donald G. Newman and Jerome P. Lavelle. (2002) Engineering Economics and analysis, Engineering Press, Texas. -422 3. Grant E.L, Ireson W.G., and Leavenworth R.S.(1976) Principles of Engineering Economy, Ronald Press, New York. Samuel Eilon, (1962) Elements of Production Planning & Control Macmillan, New York.

Transferrable Skills

Lectures, Tutorial Questions, further development of skills problem solving, numerical analysis. Practical application of cost methods and analysis. Tutorials will be used to reinforce the module material discussed during lecture sessions. Tutorials also serve as a platform of technical discussions to clarify any queries that arise from directed studies.

Module Structure

Activity Total Hours
Lectures (FT) 56.00
Independent Learning (FT) 100.00
Seminars (FT) 28.00
Assessment (FT) 16.00

Assessment Methods

Component Duration Weighting Threshold Description
Exam (School) 1.50 20.00 n/a Mid-Term Test - Unseen written examination-1½ Hours
Coursework 1 n/a 30.00 n/a Coursework 1
Exam (Exams Office) 3.00 50.00 45% Final Examination - Unseen written examination-3 Hours