This document summarizes an example of using engineering economics principles to analyze the financial viability of purchasing a hybrid vehicle versus a non-hybrid vehicle. It outlines comparing the Honda Civic Hybrid sedan, which costs more initially but gets better gas mileage, to the gas-only Civic EX sedan to see if the added cost of the hybrid is worthwhile over a 5 year ownership period based on fuel savings.

2. “To define it rudely but not ineptly,
engineering is the art of doing that
with one dollar which any bungler
can do with two after a fashion.”
– Arthur Mellon Wellington, 1887
The Economic Theory of Railway Location

4. Engineering economics is about
making decisions regarding
engineering projects based on
their economic viability.

5. 1. Recognize and define the problem or opportunity
2. Generate a reasonable set of alternative solutions
3. Gather information and generate cash flows
4. Evaluate the alternatives
5. Select and implement the best alternative
6. Analyze and evaluate the results


6. Gas-electric hybrid autos present a dilemma
for car buyers. On the one hand, they are
more fuel-efficient and produce lower
emissions than conventional, gasoline-only
cars. On the other hand, hybrids typically
cost thousands of dollars more than similar
gas-only models.
Let’s say you are considering buying a new Honda Civic and are trying to
choose between the gasoline-only Civic EX Sedan ($21,445 - 25 mpg city)
and the gas-electric Civic Hybrid Sedan ($24,990 - 40 mpg city). I’ve chosen
the Civic because it is affordable and the hybrid version gets much better
gas mileage in the city than the gas-only version. Let’s see if the added cost
of the hybrid is worth it from a financial standpoint.
Assume you’ll own the car for 5 years and put 15,000 miles per year on the
car (the national average). Assume mostly city driving.