This case study analyzes the economic advantages of using diesel versus gasoline powered boat engines for a delivery service company. Key factors considered include fuel consumption and costs, maintenance costs, insurance costs, and resale values. Calculations show the annual cost of the diesel engine option is $27,223.14 compared to $24,585.70 for the gasoline engine option when using a minimum attractive rate of return of 18% over their lifespans of 4 and 3 years respectively. While the gasoline boats travel slightly faster, the diesel option is found to be more economically favorable overall due to lower fuel and maintenance costs. The report recommends the company purchase boats with diesel engines.
Case Study Research paper- report Spring 20201) Total points.docx
1. Case Study Research paper- report Spring 2020
1) Total points 100 and Optional Presentation =10 points must
be 5-6 Power points 4-5 Minutes.
2) So, expectation is to submit a Research Paper (13-14
PAGES) + PowerPoint Presentation on the Research Paper.
2) All Case Study Assignment due: Must post on Black Board;
before the beginning of the class
: Thursday 5/04/2020 No Email attachments the late
work will not be accepted
3) Individual work. All written submissions must be typed in
12-point font and double spaced.
4) The papers should be logically organized, reflect a
theoretical or research foundation where applicable.
5) On Cover Page. a) Title of your Case Study Report and Make
sure that b) Last Name c) First name,
d) Class row number e) Professor Hemati f) Spring 2020
Select a Case Study to cover 3-4 topics We discussed and apply
in your field of your Major-Program of study (MY MAJOR is
ENVIRONMENTAL ENGINEERING); related to Process
developments or Services, of Application and Implementation of
capital equipment’s Selections and Replacements, and/ or
2. Future needs.
Interest and Equivalence Economic; Present Worth and Annual
Cash Flow Analysis
Choosing the Best Alternative; Income Tax; Replacement
Analysis; Inflation and Price Change
Safety and Environmental Needs in the Public or Private Sector.
Application: Case Study:
100 Points
· Proposal of Case Study; Explain the Issues or concerns and
report
10 points
· Apply various Engineering Economy techniques (at least 3-
methods)
20 points
· Apply relevant formulas and Assumption for financial
analysis.
10 points
· Explanation in Detail economy analysis in the Private or
Public sector
20 points
· Apply economic analysis in managerial decision and
recommendations
20 points
· With are alternatives and future risk, factor?
3. 10 points
· Conclusion and Recommendations with alternative options
10 points
Course Objectives
To Offer Framework for cost management in engineering
Projects.
· To offer assistance in managerial decision making
· To introduce fundamentals of Personal, Private and Public-
sector Financing Engineering Project
· Apply Mathematics of finance to engineering and managerial
decision making.
· Introduce the fundamentals of economic analysis used in
engineering decision making.
· To introduce Economic Analysis of Replacement and
Retention Decisions
· To prepare students for PE/FE Examinations
Course Learning Outcomes:
This course is one of many that you will take towards your
degree in Civil, Construction or Environmental Engineering.
Each of our courses are designed as part of your career
development in your respective Engineering profession.
Program Outcomes are intended to provide a broad base of
knowledge to find your career. However, each course in the
curriculum emphasizes particular aspects of that overall body of
knowledge. Although other outcomes may also be addressed,
this course is intended to have a particular emphasis on the
following program outcomes
OUTCOME 4:Apply relevant techniques, skills and modern
engineering tools to solve a simple problem
4. Assessed by: Homework, Midterm and Final Exam
a) Formulate and solve time value of money problems
b) Apply various Engineering Economy techniques to compare
engineering alternatives.
OUTCOME 11:Explain key concepts and problem-solving
processes used in management
Assessed by: Homework
a) Apply results of economic analysis in managerial decision
making
b) Apply relevant formulas for financial analysis
Outcome 13:Explain key concepts and problem-solving
processes used in business, public policy and public
administration
Assessed by: Homework and Quizzes
a) Explain relevance of engineering economy analysis in the
private sector
b) Explain relevance of engineering economy analysis in the
public sector
Writing a Research Paper
Some general guidelines to keep in mind while writing a
research paper.
Finding a Researchable Topic (Choose a TOPIC Related to
ENGINEERING – If Possible environmental Engineering)
· Try to narrow down two or three topics that truly interests you
5. · Talk with your course instructor and classmates about your
topics
· Pose your topics as a question to be answered or a problem to
be solved
Finding, Selecting, and Reading Sources
You will need to look at the following types of sources:
· Look up library books using catalog on Moodle or library page
on the website. Search using the keyword or subject.
· Use LIRN. This database has peer reviewed full text articles,
E-books, newspaper articles etc.
· Open courseware, Magazine and newspaper articles can
provide you with some facts.
· Primary vs. secondary sources
Documenting Information
The following systems will help keep you organized:
· Create an annotated bibliography for all your resources. This
allows you to cite, summarize and evaluate resources.
· Use Bibme, Citefast or Refdot etc. to organize your content
· If you want to use 10 references, plan to research three times
more that would be around 30.
Start your paper from bottom up
· Start by writing references.
· Once you have enough material to start, work on the topic, its
6. significance, etc.
· Use your referenced material to enhance your topic, refute it
or build on it.
· Any time a quote is used from the above-organized material,
provide in text citation.
Writing the Body
· Use outline and prospectus as flexible guides
· Build your essay around points you want to make (i.e., don't
let your sources organize your paper)
· Integrate your sources into your discussion
· Summarize, analyze, explain, and evaluate published work
rather than merely reporting it
Writing Abstract
· After completing your paper, write an abstract summarizing
the paper.
References
· Make sure all the in text citations have references. In APA,
references have to be alphabetized. They have to follow hanging
indentation.
· Generally, balance your references by having some from peer-
reviewed journals, some from books and some from internet
resources.
Revise the Final Draft
· Go through the APA format checklist.
7. · Make sure there is no bias in writing.
· Put the paper through plagiarism detector
· Check capitalizations, indents, levels of headings, in text
citations, tables etc. for correct usage
CON E 330 Spring 2020 College of Engineering Dept, CCEE
●
●
●
●
Question 1:
The proper implementation of a database is essential to the
success of the data
performance functions of an organization. Identify and evaluate
at least three
considerations that one must plan for when designing a
database.
Suggest at least two types of databases that would be useful for
small businesses,
two types for regional level organizations and two types for
international
companies. Include your rationale for each suggestion.
Question 2:
Your software development company has been contracted to
build a tool that
8. will manage user accounts and rights in an Active Directory
environment. One
of your developers tells you that he wants the tool to make use
of direct
manipulation. A second developer argues that a command line
structure would
be a better and more secure approach. Take a stand on this
argument,
providing at least three positives of each approach, and then
make a decision
for this project and support it.
Describe virtual and augmented reality. Suggest a way in which
this
technology could be used in the future; either to improve a
current process /
procedure or create a new process / procedure. Provide an
example of your
suggested use of the technology.
Question 3:
Describe the considerations that you would take into account
when selecting
the menu style for an application and why. Support your
response with
examples.
Imagine you have been asked to help a novice designer
effectively organize
his menu content in an application. Provide the novice designer
with the
advice you feel would be most helpful when organizing content
for menus.
Support your response.
9. Ibrahim Alsaeed #32
CONE-430
Summer2017
Professor Hossein Hemati
Pendry Hotel
General Contractor: Davis ReedOwner: Robert Green Company
Project Cost: $105 millionProject Duration: 27 monthsStart
Date: October 8th 2017Finish Date: March 2019
Building Features
10. Pendry Hotel San Diego will feature:
317 guest rooms, including 36 suites
A rooftop pool
Two uniquely-designed restaurants
A regional micro-brew beer hall
6,200-square-foot state-of-the-art spa/fitness facility
Over 30,000 square feet of meeting space
Subterranean parking in three stories below grade
Site Logistics and Layout
The project is located in the Gaslamp Quarter of downtown San
Diego
The project sits on a 1 ½ acre site, this area also includes the
pedestrian sidewalk which was annexed into the project
The Gaslamp Quarter Association only allows construction to
occur from the hours of 7 am to 5 pm
Location of project outlined in red
11. Site Layout Continued
Site Layout 4/22/18
Site Layout Diagram
Comat pc 300 Excavator Cycle Time Data
Cycle Time:
load bucket6 Seconds
Actual load 6*0.35=2.1 seconds
Swing time load4 Seconds
Actual Swing 4*1.67=6.7 Seconds
Empty bucket3 Seconds
Swing time empty4 Seconds
Actual Swing empty 4*1.67=6.7 Seconds
Theoretical Cycle time18.5 Seconds
Actual Total Cycle Time =18.7 Seconds
Estimated Productivity:
Probably production: 338 bcy/hr
12. Time period of the excavation:
Hours of excavating: 680 hr.
Days for operation: 680 hr./10 hr/day = 68 days
Machine: KomatSu Pc 300lcAngle of Swing: 100 Degrees
Depth of Excavation: 3 ftFIll Factor 100%
Cat 450 E Cycle Time Data
Machines : Two Cat 450 EAngle of Swing: 100 Degrees
Depth of Excavation: 3 ftFIll Factor 100%
Cycle Time:
load bucket5.5 Seconds
Actual load 6*0.35=N/A
Swing time load3 Seconds
Actual Swing 4*1.67=N/A
Empty bucket2 Seconds
Swing time empty3 Seconds
Actual Swing empty 4*1.67=N/A
Theoretical Cycle time15.9 Seconds
Actual Total Cycle Time =N/A
13. Estimated Productivity: Bucket size 1.75 yd^3
Probably production: 440 bcy/hr
Time period of the excavation:
Hours of excavating: 552 hr.
Days for operation: 552 hr./10 hr/day = 55.2 days
Equipment Analysis
Cat 450 E
If two smaller excavators, the Cat 450 E were used then a cost
and time saving could be achieved.
+
Comat pc 300
The single Comat pc 300 offers good excavation production rate
but not as good as two cat 450 E.
VS
14. 55.2 Days vs 68 Days
12.8 Days of Savings
Cost Savings
$107,946 per month x (2.1 / 5 ) = $5,000 saved in General
Conditions Alone
* 2.1 weeks saved
* 5 weeks in a month
15. Summary
Based on the cycle times and my calculations Davis Reed would
be better off using two smaller Cat 450 Es which would result
in an accelerated excavation of the foundation and underground
parking garage. By accelerating the schedule for the excavation
and equipment alike, the cost would be less than the cost for the
operation while taking less time.
ConE 430
Case Study
Brian Hornby
Class ID #40
Prof. Hemati
Fall 2016
Table of Contents
17. between five and fifteen boats to deliver goods. Each boat
travels around 200 nautical miles (kts) per day and are housed
in a fueling/service dock setup at night, they run three 6 hour
shifts a day seven days a week all year long. At this point each
location manager has chosen from local boats to deliver with
and this has created maintenance, fuel and brand issues. The
purpose of this paper is to analyze the cost differences between
diesel and gasoline engines placed in the same boat hull. A final
boat design has been chosen and we now need to choose the fuel
system. All current boats will be phased out and these new
boats will take their place.
50% of the location managers have requested gasoline because
of boat speed, 30% have requested diesel and 20% don’t care.
The Minimal Attractive Rate of Return (MARR) is set at 18%.
Insurance favors diesel and is charging an extra $500 per year
per boat in premiums. The speed value of the faster gasoline
boat is given a monetary value of $50 per day per boat. The rest
of the details can be found in the appendix and will be detailed
in the analysis portion of this paper.
Analysis
In order to calculate the annual costs to determine a
recommendation we will look at all the costs individually. The
Insurance will charge $500 per year less in premiums if we use
diesel, this is because of the explosive nature of gasoline
compared to diesel, diesel is considered safer to work with. This
is not really a selling point because it is such a small amount
when compared to other costs. The diesel boats have an average
speed of 17.4 kts as opposed to the gasoline speed of 21.1 kts.
This is useful for delivery efficiency and is awarded $50 per
day per boat which adds up and is something to consider. The
efficiency of a diesel engine is superior to a gasoline engine and
therefore has a burn rate of 17 gallons per hour (gph) as
opposed to the gasoline engine of 26 gph. This is detailed in the
spreadsheets in the appendix. Both boats have a fuel capacity of
18. 300 gallons so the diesel will need to fill up less often. The
boats will travel on average 200 nautical miles per day and will
need to fill up at the company station. This station charges a fee
of $15 to fuel at night and $55 to fuel during the day. The
gasoline boat will require 468 gallons per day so will be forced
to fill up twice for a total of $70 per day in fees, the diesel will
require 312 gallons per day so will only require one fill up a
day plus an additional Jerry can to fill the last 12 gallons. This
will be implemented to save the $55 fee. The gasoline boat will
shut down for the 6 hours that it is in port at night but the diesel
will idle all the time consuming an extra one gpm for the six
hours in port. It is found that the fuel consumption of the
gasoline engine is 1.5 times that of the diesel which yields a
fuel cost ratio of 1.6 gasoline vs diesel at $3.15/gal and
$2.95/gal respectively. Maintenance is higher with a diesel
engine hovering close to 2.3 times more costly when factoring
in total maintenance. The salvage value of each is set at $48,000
with a life expectancy of four years for the diesel and $38,000
and three years for the gasoline. When calculating the EUAC at
18% MARR for the three and four year life expectancy we find
that the diesel engine has an annual cost of $27223.14 and the
gasoline of $24585.70. This is slightly in favor of the gasoline
engine.
EUAC gasoline
P(A/P, i, n) – S(A/F, i, n) = $76,586(.4599) - $38,000(.2799) =
$24,585.70
EUAC diesel
P(A/P, i, n) – S(A/F, i, n) = $97,995(.3717) - $48,000(.1917) =
$27,223.14
When calculating the present worth of the invested amount for
each boat we found that the difference is not that great with an
interest rate of 18%. This makes the diesel option seem more
attractive if the 18% is attainable.
19. Present Worth of gasoline
P = F(P/F, I, n) = $76,586(.6086) = $46,600
Present Worth of diesel
P = F(P/F, I, n) = $97,995(.5158) = $50,546
Conclusion
After researching all of the data it is recommended that the
diesel boats should be purchased as the costs of the gasoline
boats are consistently 1.5 times that of the diesel from one year
to 200+ years. The spreadsheets clearly show this and a few of
the screenshots have been placed in the appendix.
Acknowledgements
Professor Hemati, San Diego State University
References
Newnan D, 2014, Engineering Economic Analysis, Oxford
University Press, New York
Appendix
3
Tiny House on Wheels vs a Traditional Home
Lorelay Mendoza
Environmental Engineer
Class Id: 55
20. The Situation
SDSU environmental engineering graduate looking for a place
to live.
Ideally, she is looking to move in Santa Cruz County
Homes are expensive, and being a millennial, she has spent a lot
of money on avocado toast throughout her education, leaving
her with perhaps less money to purchase a home
She is exploring an alternative living situation and assessing the
costs associated with it.
Cost of buying a traditional home$ 625,000 home Down
payment: 625,000 * 20% = $ 125,000Home
inspection: $500Mortgage assumptions: 30-year fixedinterest
rate is 3.833 % APR Property taxes are 1.1% per yearHome
insurance: $800 per year
Monthly payment: $2,979
6025 Highway 9, Felton, CA 95018
2 beds 2 baths 1,316 sqft
$625,000
Other Costs for Traditional Home
Furnishing a home:
Estimates
$3,000 first bedroom
21. $2,000 second bedroom
$1,000 per bathroom x 2 = $2,000
$5,000 living room x 1 = $5,000
$2,000 kitchen x 1 = $2,000
House listing claimed refrigerator and laundry appliances are
included
Total cost of furnishing a home: $ 14, 000
* Note: online forums suggest furnishing costs should be 25%
of home’s value or about $10,000 per room. No.
Utilities: Estimate $200 per month for a young couple
Cost of a Tiny House on WheelsAssumptions: $40,000 RV
loan10-year fixed5% APR= 120 monthly payments of $425
Tiny House dwellers have reported off-grid utility bills to be as
low at $15 per month. We will estimate a generous $200Find
Craigslist ad for backyard rent to park your Tiny House.
Estimate $500 monthly Estimate a generous $10,000 in
furnishing costs
A Tiny House on wheels can be built or bought for about
$32,000 for which one can take out an RV loan
Considerations of Tiny House
$40,000 is reasonable if built oneself.
Suppose one spends 6 months of full time building.
22. Opportunity cost of building house instead of working at an
engineer’s pay of $34 an hour
($34/hour)*(40 hours/week)*(4 weeks/month)*(6 months) = $
32, 640
Suppose SDSU alum has a partner who is also an engineer and
also spends 6 months building.
$ 32, 640 * 1.2 = $ 39,168 Please note gender gap in pay.
Total opportunity cost of building Tiny House = $32,640 +
$39,168 = $71, 808
ComparisonAlternativesFixed CostMonthly Operating
CostsUseful life (of loan)Traditional Home$139,
500$317930Tiny House$10,000 + $71,808 opportunity
=$81,808$1,12510
EUAC
Traditional HouseEUAC = $139,500(A/P,7%,30) + ( 12* $
3,179)EUAC= $139,500(.0578) + ($38,148)EUAC= $ 46, 211.1
23. Tiny HouseEUAC= $81,808(A/P,7%,10) + (12* $1,125)EUAC=
$81,808(.1233)+(13,500)EUAC= $23,586.9
Assuming 7% interest rate as book often does
Final Considerations and RecommendationAssumption that Tiny
House welling couple has vehicle powerful enough to tow Tiny
HouseOff-grid living is more more demanding in terms of
mindfulness (composting toilet, water usage, electricity
etc.)Larger house means more cleaning as wellFrom the
perspective of an environmental engineer and a young adult who
wants independence without a crippling amount of debt, my
recommendation is to live in the Tiny House.
Computer Aided Design
Contract Options
Luis Medina
Professor Hemati
Spring 2019
Principles of Engineering Economy
Table of Contents
Proposal / problem: 3
Options:
· AutoCAD vs MicroStation4
Calculation Analysis:5-6
Conclusion:
Recommendation:7
Reflection:8
References:9
Appendix:10
24. Proposal:
San Diego State University’s (SDSU) contract with the
Computer Aided Design (CAD) Application “AutoCAD” is
expiring soon. SDSU is exploring the option of switching CAD
programs and has MicroStation as the front runner. There are
many factors that university has to consider before making the
decision of either renewing their AutoCAD contract or
switching over to MicroStation.
SDSU has to look into all the possible outcomes and effects of
their decision. The reason this is such an important decision is
because of the fact that the Civil Engineering CAD course is a
course that is mandatory for all majors in the department. This
means that every student in the department will either benefit or
suffer from the decision that the university decides to move
forward with. The AutoCAD course being taught is instrumental
in helping students become ready for the next step after college.
Options:
AutoCAD vs MicroStation:
AutoCAD has been the most widely used 2D design application
in world for nearly two decades and is currently the application
used in CAD learning for the SDSU Civil department. AutoCAD
is known for its extensive customization and its endless hotkeys
and shortcuts. MicroStation allows its users to use AutoCAD
files and drawings, but AutoCAD does not allow MicroStation
drawings to be used in their application. AutoCAD can run both
2D and 3D with a separate application for BIM tools while
MicroStation offers very engineering specific capabilities in
their platform all under the same roof. Both programs are very
similar and offer similar experiences but is the deciding factor
between the programs most of the time is the specific need of
the customer. Both programs are overwhelmingly similar, in
terms of them both having the same specifications for their
programs to run, similar prices (within 4% of each other), and a
25. similar acquisition process. It is important to take all these
factors into account in order to realize that the only thing
separating these two programs are the quality of the content and
not any external factors like licensing or hardware
specifications.
When comparing both of these programs there is an assumption
made when purchasing either of these programs, there is no
interest being paid on any loans since the funds will be provided
by the Civil, Construction, and Environmental Engineering
department. This assumption is made because of the fact that
the school is funded by the government. Another assumption
being made in the calculations is that the institution will
purchase a book for every student enrolled in the course, even
though it is not plausible, the assumption is made to cover all
the bases of fees possible in this comparison.
Calculations:
My calculations found that the more economical choice would
be to choose MicroStation over AutoCAD. The main factors that
affected this were the prices of each program and their
accompanying textbooks.
Calculations Continued:
Recommendation:
26. My final recommendation for choosing between CAD programs
is AutoCAD. Even though AutoCAD is the more expensive
choice I concluded that AutoCAD was the more important
program to know since it has been the best-selling CAD
program for nearly 20 years. If the students in the department
all take the AutoCAD class, it’ll make their transition into the
adult work life that little bit easier since the majority of
engineering companies use AutoCAD in comparison to
MicroStation. Another reason AutoCAD seems like the obvious
answer is that the current Professor already works with
AutoCAD, so they wouldn’t have to learn a new program like
they would if the switch to MicroStation is made. The
drawbacks of using AutoCAD is that it is the more expensive
option when compared to MicroStation. The price is easily
justified when you consider the fact that switching to
MicroStation will bring about the risk of the professor not
teaching the new program adequately enough.
There are many factors that were not considered in the final
decision of the two products. First of all, the amount of storage
space that each program uses is not being considered because
all computers on campus have the available storage for each
program so no changes will have to be made. Another factor
that is not being considered is safety, since this is only an
application that is computer-based there is no safety to
consider. Lastly, in deciding which program to use the number
of employees would not change in either decision, so there is no
ethics comparison to be made when deciding between these two
options.
The only risk factor that is present in this decision is
considering future application partnerships. If SDSU switches
from AutoCAD to MicroStation, then it is possible that the
switch will affect any future possibility of SDSU working with
AutoDesk products.
Reflection:
27. This Case Study allowed me to make an informed decision
about whether or not it would be plausible to switch from the
current CAD program taught at SDSU, AutoCAD, to a new
alternative of MicroStation. I think this an important topic to
look at because it was one of the few classes in college where
students know that their future employer will almost always ask
about in interviews. If the class can prepare the students to
enter the workforce as well as give them exposure to important
technical skills, then I think it is very important to make the
choice that will allow the students to have the most success
outside the classroom. AutoCAD has been dominating the Civil
Engineering workforce for nearly 20 years and is often one of
the only programs that kids entering college know about.
Another aspect in this decision that wasn’t mentioned in the
study was the execution of teaching the course. The course is
taught to most first or second year students. The problem with
that is that by the time students are applying for internships and
jobs they have forgotten most of what they have learned. At
first glance, keeping AutoCAD seemed like the obvious choice,
but once all the factors were considered then it became a
decision that took various information to accurately make.
References:
Newnan, D. G., Eschenbach, T. G., Lavelle, J. P., & Lewis, N.
A. (2017). Engineering economic analysis. New York: Oxford
University Press.
Autodesk Sales, Marketing and Annual Revenue Case Study.
(n.d.). Retrieved from https://corporatevisions.com/success-
stories/autodesk/
Design Modeling Software. (n.d.). Retrieved from
https://www.bentley.com/en/products/product-line/modeling-
and-visualization-software/microstation
28. Appendix
Additional calculations:
Overhead for Computer usage:
Price of Materials for AutoCAD textbooks:
Price of Materials for MicroStation textbooks:
Price of Training Professor in MicroStation:
Final Case Study
Melissa Hamendi
Professor Hossein Hemati
CON E 330
December 7th, 2018
The Louisiana Department of Transportation developed
feasibility analysis for upgrading 6 miles of US-167 South
starting at the intersection with US-80 (California Avenue)
.An existing two-lane highway between is to be converted to a
four-lane divided freeway.
average 25,000 vehicles per day over the next 20 years.
Truck volumes represent 6.25% of the total traffic.
Annual maintenance on the existing high- way is $1875 per
lane mile.
The existing accident rate is 5.725 per million vehicle miles
(MVM).
29. Capital improvement investment money can be secured at 6.25%
Summary
Objective of The Project
Choosing the best plan to upgrade the 6 miles segment of US-
167 South to reduce traffic and promote safety.
The following data will be helpful in calculating and weighting
each one of the alternatives:
•Operating cost-autos: 15¢ per mile
•Operating cost-trucks: 22.5¢ per mile
•Time saving-autos: 3.75¢ per vehicle minute
• Time saving-trucks: 18.75¢ per vehicle minute
•Average accident cost: $1500
Alternatives
Analysis
30. Evaluation
Plan 1: Adding Two Adjacent Lanes
Total cost: $562,500(6 mile) = $3,375,000
Annual capital cost: $3,375,000()=$300,248
Operating cost of auto: (6 miles) ($)(365 day) = $329
Operating cost of truck: (6 miles) ($)(365 day) = $493
Annual cost savings in auto: (23,437 vehicles) ($)(2.5 min) (365
day) =$801,985
Annual cost savings in truck: (1563 vehicles) ($)(1.25 min)
(365 day) = $133,710
If Plan 1 is performed, maintenance cost will be $1,560
Annual maintenance cost: ($1,560) (4 lanes) (6 miles) =
$37,440
Annual savings in maintenance cost: ($1,875 - $1,560) (4 lanes)
(6 miles) = $7,560
Annual savings in accident reduction: (5.725 – 3.125) ($1,500)
($)=$213,525
Total annual cost: $300,248+ $329+$493+$37,440 = $338,510
Total annual benefit: $801,985+$133,710+$7,560+$213,525 =
$1,156,780
Benefit to cost ratio : = 3.417
Evaluation
Plan 2: Adding Two Adjacent Lanes and Make Grade
Improvements
Total cost: $812,500(6 mile) = $4,875,000
Annual capital cost: $4,875,000()=$433,691
Operating cost of auto: (6 miles) ($)(365 day) = $329
Operating cost of truck: (6 miles) ($)(365 day) = $493
31. Annual cost savings in auto: (23,437 vehicles) ($)(3.75 min)
(365 day) =$1,203,003
Annual cost savings in truck: (1563 vehicles) ($)(3.75 min)
(365 day) = $401,001
If Plan 2 is performed, maintenance cost will be $1,250
Annual maintenance cost: ($1,250) (4 lanes) (6 miles) =
$30,000
Annual savings in maintenance cost: ($1,875 - $1,250) (4 lanes)
(6 miles) = $15,000
Annual savings in accident reduction: (5.725 – 3.10) ($1,500)
($)=$215,578
Total annual cost: $433,691+ $329+$493+$30,000 = $464,513
Total annual benefit: $1,203,003+$401,001+$15,000+$215,578=
$1,834,582
Benefit to cost ratio : = 3.949
Evaluation
Plan 3: Construct A New Freeway on New Alignment
Total cost: $1,000,000(6.5 mile) = $6,500,000
Annual capital cost: $6,500,000()=$578,255
Operating cost of auto: (6.5 miles) ($)(365 day) = $356
Operating cost of truck: (6.5 miles) ($)(365 day) = $534
Annual cost savings in auto: (23,437 vehicles) ($)(6.25 min)
(365 day) =$2,005,005
Annual cost savings in truck: (1563 vehicles) ($)(5 min) (365
day) = $534,668
If Plan 3 is performed, maintenance cost will be $1,250
Annual maintenance cost: ($1,250) (4 lanes) (6.5 miles) =
$32,500
Annual savings in maintenance cost: ($1,875 - $1,250) (4 lanes)
(6.5 miles) = $16,250
Annual savings in accident reduction: (5.725 – 3.00) ($1,500)
($)=$242,440
32. Total annual cost: $578,255+$356+$534+$32,500= $611,644
Total annual benefit: $2,005,005+$534,668+$16,250+$242,440=
$2,798,363
Benefit to cost ratio : = 4.575
Plan 3 is the best alternative.
Plan 1 Plan 2 Plan3
Cost per mile $562,500 $812,500 $1,000,000
Reduction in auto
travel time
(minutes)
2.5 3.75 6.25
Reduction in truck
travel time
(minutes)
1.2 3.75 5
Reduction in
accident rate (per
MVM)
3.125 3.10 3.00
Annual
maintenance (per
line male)
$1560 $1250 $1250
Additional notes
0.5 miles longer
than others
No salvage value
34. industry becoming more industrialized, projects are becoming
larger and heavy machinery is needed to complete them quickly
and efficiently. Achieving productivity and efficiency is crucial
for running a successful construction product and or business.
During the construction phase, selection of the right equipment
is a key factor in the success of any project. This decision is
usually made by matching equipment available in a fleet with
the tasks at hand. Such analysis accounts for equipment
productivity, equipment capacity, and cost. With such a wide
variety of options for one to attain the equipment needed for a
job one can agree that construction will continue despite the
preliminary bump.
The heavy civil aspect of construction practically relies on
heavy equipment since most of the workload regards very
strenuous labor. Wheel loaders, compactors, cranes, excavators,
and scrapers are usually involved in heavy civil projects, so
choosing the right one for the job can have a big impact on the
profitability of a given job. One must consider the productivity
and economic implications that a piece of equipment brings.
Therefore, it’s important to choose the right equipment for the
job and to choose the right company. Construction is one of the
nation’s largest industry so there are many companies that
compete to make the best machinery and equipment. In
construction there are many ways to complete one job or task
but there is always only one right and most efficient way.
Choosing the machinery is one of the most important parts to
that.
Abstract:
Freeways and arterials in the Mid-Coast Corridor are generally
congested and traffic congestion is projected to increase more
as the region grows. The population along the corridor is
predicted to increase 19 percent by the year 2030, while
employment is predicted to increase 12 percent.
The Mid-Coast Trolley will expand transportation capacity in
the corridor to accommodate existing and future travel demand,
35. particularly for peak-period commute trips. The project will
provide an effective alternative to congested freeways and
roadways for travelers and will result in fewer vehicle miles
being traveled. The University City area has developed as a
major employment and high-density residential area, like
Downtown San Diego. Although University City is considered
San Diego’s second downtown and UCSD is one of the region’s
largest trip generators, neither is directly served by regional
transit. The Mid-Coast Trolley extension will provide efficient
transit connections to University City and UCSD, as well as
frequent and reliable Trolley service throughout the corridor.
Transportation models indicate that the new trolley service will
attract 20,000 new transit riders a day to the system. The Mid-
Coast Trolley extension route begins just north of the Old Town
Transit Center and travels in existing railroad right-of-way and
alongside I-5 to Gilman Drive. It crosses to the west side of I-5
just south of Nobel Drive and continues to serve the heart of the
UC San Diego campus. It then crosses back to the east side of I-
5 near Voigt Drive to serve the UC San Diego east campus and
Scripps Memorial Hospital, transitions into the median of
Genesee Avenue, and continues down Genesee Avenue to the
UTC Transit Center. View Figure 1below.
Figure 1- Map of Project
In the Mid-Coast Corridor, mobility hubs will serve to enhance
access and connections to the Mid-Coast Trolley, making it
easier to use public transit and other travel alternatives.
Mobility hubs offer an array of transportation services,
amenities, and urban design enhancements that connect transit
to where people live, work, and play. Various modes of travel,
including walking, biking, ridesharing, shuttle, bus, and light
rail services come together to create a seamless travel
experience. Supporting technologies such as real-time arrival
information, electric vehicle charging stations, and mobile
applications also improve convenience for users.
About 60 acres of land that is now spanning about 10.6 miles of
36. where the trolley bride will be built will have to be altered
meaning adding or removing dirt then grading. This is essential
so that the trolley bridge will meet the required grade on the
plans/specs. Along the 10.6 miles over 500 boring holes will
have to be drilled for the foundations of the trolley bridge at a
depth of 60ft.
Figure #2- Conceptual Drawing of Midcoastal Transit Extension
Project.
McKinney Drilling is a drilling contractor in San Diego and
plans to bid the job in order to be awarded it. They need to drill
over 100 boring holes over the 10.6 miles each about 50ft deep
and the machine they use must be mobile. McKinney Drilling
can expect to start their portion of work in year, however, they
knows that they do not currently have the equipment or
manpower in order to successfully complete the job in a timely
manner at the same time as they work on other jobs they have
been awarded. As a result, they must decide to either buy new
equipment or lease the equipment required to complete the job.
The equipment most crucial to the drilling foundations is pile
boring equipment. McKinney needs to choose the best option
that results in the most productive, cost effective, and
affordable option. The useful life of a pile boring machine is
around 25,000 hours. McKinney has the following options:
1) Buy a Caterpillar TR220D Pile Driver with a diameter of 6-
10in that had a max depth of 65m for $200,000 on a 48-month,
9% loan
3) Buy a IMF AF240 with a 15 inch max diameter and a max
depth of 50m for $250,000 on a 60-month, 8% loan.
4) Lease the Caterpillar for $10,000/month
5) Lease the IMF AF240 for $12,000/month
The salvage value at the end of the loan will be $25,000 and
$30,000 respectively cost of annual maintenance for the
37. Caterpillar TR220D is $19,000 while the IMF is $12,000. The
savings in labor costs for each will be $60,000 and $50,000.
The evaluation criteria are:
1. What option has a better productivity rate?
2. What option has a higher equivalent annual worth (EUAW)?
Economic Analysis:
The average cycle time is 5 minutes for the Caterpillar to drill
65m and 4.88 minutes for the IMF AF 240. Cycle time means
the time it takes for the machine to complete once cycle of its
work and repeat. The type of surfaces these pile boring
machines will be working on is compacted and maintained
earth, so the drill resistance is about 40 to 70 lb./ton. To
calculate the productivity of the pile boring machines, we
determine how fast each machine can drill to a certain depth
assuming the soil is the same for both drill resistance for this
job site is about 2.75 percent. The swell percent and swell
factor were calculated to be about 20% and 0.83 for this job site
since the material is earth, gravel and some clay. McKinney
Drilling has determined the pile boring machines will work for
50 minutes per hour. The recorded drill speed per 10 ft is close
to 1.4 min which is the maximum drill time for the Caterpillar
therefore, each
drill can carry out 9 cycles of the and the weight of the drill
would be the same as the weight mentioned in the spec of the
scraper. The IMF AF240 has a drill time of 1.2 minutes per 12ft
and a load of 11 cubic yards per drill fill. Please see the two
machines below in figures two and three.
Figure 3-Caterpillar TR220D:
Drill Time: 1.46 min
Haul
Distance
39. TR
Weight
Speed
Time
Acceleration
12 feet
2.75%
0%
2.75%
33651.4
4 mph
0.57 min
Segment 1
50 feet
2.75%
0%
2.75%
33651.4
12 mph
0.27 min
Deceleration
12 feet
2.75%
0%
2.75%
33651.4
4 mph
0.57 min
Turn at Fill: 0.21 min
Cycle Time: .14+.4+.5=10.4 min
Number of Drills per hour: 50 min/10.4= 5 Cycles per hour
Hourly Production: 5 cycles per hour× 9 lcy(loose cubic yards)=
45 lcy/hr taken out and 50 ft drilled in one hour
Daily Production: 50ft × 8hr/day= 400 ft/day
Production in bank cubic yard: 45lcy/day × 0.83 × 1.1= 41
bcy(bank cubic yards)/day taken out.
40. Days to complete work: 30,0000ft/ 400ft= 75days ⇒ About 75
Figure 4- IMF AF240
Drill: 1.2 min
Haul & Return Times for IMF AF24: Same as chart above.
Cycle Time: 9 min
Number of drills/hr: 50 min/9= 5.5Cycles/hr
Hourly Production: 5.5 cycles per hour× 11 lcy= 60.5 ft/hr
Daily Production: 60.5ft/hr × 8hr/day= 484 ft/day
Production in bank cubic yard: 484lcy/day × 0.83 × 1.1=
441.8bcy/day
Days to complete work: 30000ft /484 ft/day= 61 days
Equivalent Uniform Annual Worth:
EUAW of Caterpillar:
EUAW= -350000(A/P, 9%,4)-19,000(P/A,9%,4)+60,000(P/A,
9%, 4)+30,000(P/F,9% 4)
EUAW= (-350000)(0.3087)+41,000(3.240)+30,000(.7084)
EUAW= - 108,045+132,840+21,252= $46,047
EUAW of IMF AF240:
EUAW= -390,000(A/P, 8%,5)-12,000(P/A,8%,5)+50,000(P/A,
9%, 4)+35,000(P/F,9% 4)
EUAW= (-210,000)(0.2505)+38,000(3.993)+35,000(.6806)
EUAW=-97695+151734+23821= $77,860
Alternative Options- Rent from Machine Rentals:
Equivalent Annual Benefit from renting CAT TR220:
-100,000+60,000(P/A,9%,4)-19,000(P/A,9%,4)
=-100,000+41000(3.240)= $32,840
Equivalent Annual Benefit from renting IMF AF240:
-144,000+50,000(P/A,8%,5)-12,000(P/A,8%,5)
41. =-144,000+41000(3.993)= $51,734
Summary of Results:
When it comes to production rate the best option for McKinney
Drilling would be to go with the IMF AF240 since it saves them
about 41 days of work; however, it is a bit more expensive piece
of equipment. The IMF AF240 can drill about 84 more feet per
day which is a significant increase. This increase production
would easily outweigh the extra increase in cost in the long run.
If you have two of these machines running the increased
production in feet is 168, a substantially larger amount. The
opportunity cost of going with the caterpillar option will result
in less profits. Although a preliminary analysis of the present
costs shows that the Komatsu is more expensive, the EUAW
method will account for the time value of money and show how
much this equipment can bring in. Equivalent annual worth
analysis is necessary to determine how much of an impact each
piece of heavy machinery will have on McKinney Drilling
financials.
Conclusion:
Based off economical and production analysis it will be in
McKinney Drilling best interest to pursue the IMF AF 240 for
several reasons. The IMF has a higher drill dirt fill capacity
which means more dirt can be transported and taken out. Also,
the production rate of the IMF AF240 compared to the
Caterpillar is about 12.80% more loads daily. These statistics
add up considering the IMF AF240 would be able to finish the
job earlier than the caterpillar. This drill brings in a staggering
$77,860 yearly which is $26,126 more than the option closest to
it. I would recommend McKinney Drilling to make an
investment in this piece of heavy machinery and to buy it
instead of renting it since it’ll bring a substantial amount of
economical profit to the company each year. In the construction
time is very important and can either make or cost a company a
fortune. Therefore, it’s so important to choose machinery that
has a fast and efficient production rate and cycle time. I also
42. recommend buying this machine as opposed to leasing because
drilling/boring is McKinney’s Drilling primary business. As a
subcontractor this is what they specialize in. Because of this
they will get their full money’s worth from the machine by
using it often enough assuming there are construction jobs
available and the economy is doing well. In addition, the IMF
AF240 would allow McKinney Drilling to finish in the allowed
allotted amount of time.
Works Cited
· Project Overview. (n.d.). Retrieved from
https://www.keepsandiegomoving.com/Mid-coast/midcoast-
intro.aspx
· Specs, Ritchie. “CATERPILLAR TR220D SERIES II MOTOR
Drill.”Caterpillar TR220D+Series+II Motor+Scraper,
www.ritchiespecs.com/specification?type=Construction&catego
43. ry=Motor%2BScraper&make=Caterpillar&model=613C%2BSeri
es%2BII&modelid=94116.
· (n.d.). Retrieved from http://supplydrillingrigs.com/1d-rotary-
drilling-tr220.html
· Drilling rig. (2019, April 13). Retrieved from
https://en.wikipedia.org/wiki/Drilling_rig
· Project Overview. (n.d.). Retrieved from
https://www.keepsandiegomoving.com/Mid-coast/midcoast-
intro.aspx
· PROJECTS :: San Diego's Regional Planning Agency. (n.d.).
Retrieved from
https://www.sandag.org/index.asp?projectid=250&fuseaction=pr
ojects.detail
Construction Engineering 330 Case Study
Ammar Batta #14
Professor Hemati
Spring 2019
44. Table Of Contents
1.
Cover________________________________________________
1
2. Table of Contents
______________________________________2
3.
Background___________________________________________
3-5
4. Analysis/
Calculations__________________________________5/6
5. Risk
Factors___________________________________________8
6. My
Recommendation____________________________________9
7.
Refrences____________________________________________
_10
Background
The Family Movers is a company located in San Diego,
California. Known for their original company of helping people
pack their items and move they have expanded and offer trucks
as a part of their services. They offer different types trucks to
assist customers’ needs and wants. The company has multiple
offices located in southern California; each branch is managed
by a separate manger. Pricing on each truck depends on the
acting manager at each branch. The way the company is set up
makes it that each branch is having a mixture of trucks (diesel
and gasoline powered) in the truck stations. To better utilize
resources, the company has been repositioning trucks to avoid
45. unnecessary purchases and wasting resources. This has been far
from a success, as the receiving locations are not prepared to
maintain the trucks if they differ from those it currently has.
Maintenance and cost seem to cause problems for all company
as well consumer.. Each location tends to only have one type of
engine or fuel type truck. This causes managers to have
problems with the incoming trucks. With all types of different
types of trucks coming in, all branch offices need both diesel
and gasoline stations. Which means they will have to spend
more money on these new facilities. This makes it hard for the
business to have a professional image due to all these different
rates, and mixture of trucks at the wrong stations. The Family
Movers have decided to prioritize the selection of trucks as well
as select a universal type and fuel method. The task of finding
the total amount of trucks has been assigned to a team
consisting of the CEO and three local branch managers. A vote
among all the branch managers shows five out of ten branch
managers like the gasoline option due to its higher speed, while
two out of ten are 50/50 to the choice of power unit. The
company who makes the truck has given us the info of the
truck’s engine and more. They also told us the info that the only
difference is the engine in the two trucks.
Information
Gasoline
Diesel
Purchase Price
$80,000
$100,000
Engine Size
350 horsepower
300 horsepower
Fuel Capacity (gallons)
300
300
46. Fuel Consumption (gallons per hours)
26
17
Average Speed
22.5
18.9
Since trucks are used in the streets for short periods of times,
the higher speed of the gasoline engine is valued at 50$/day.
When not in use the gasoline trucks are turned off while the
diesel units just sit and lose fuel at the rate of 1 gallon per hour.
Looking at maintenance costs the diesel truck requires 9000$ in
annual maintenance, where as gasoline has an annual cost of
$6,000. Diesel also has estimates of 57$ for oil change (every
100 miles), $2.95 per gallon. Oil trucks details are 25$ for oil
change (every 100 miles), and 3.15$ per gallon. We are told that
the fueling facility we fill the trucks at, are owned by another
business unit of parent company. When trucks are done for the
day, we leave them at the parent company facility. Where
maintenance crew cleans and services the trucks. Nightly
refueling stops cost $15 but if refueling is done in the day it
costs $55. Units cover 200 miles during day, operators are
switched every 6 hours. Company will typically work 12 hours
per day, 7 days a week. Diesel units would be kept in service
for 4 years before being sold at 50,000$ each. Gasoline will be
sold after 3 years for $40,000. The MARR in this case is given
at 18%.
Chart above shows that Gas is cheaper so far in our analysis.
Analysis of Data
47. We will first start off our analysis of this data with our present
worth calculation.
P=F(P/F, I ,n)
Diesel= $100,000(.5158) = $51, 580- $9,130= $42,450
Gas= $80,000(.6086) = $48, 688- $6,100= $42,588
Based on this calculation we can see that as of now the present
worth of gasoline is greater by just a bit. This makes the gas
choice a little bit more enticing for our company. We used the
interest rate of 18% which was mentioned earlier in our data. As
of now, gas is our front runner.
In our next calculation we will be using EUAC to see the cost of
the two options.
EUAC= P(A/P,I,n)-S(A/F,I,n)
Disiel= $100,000(.3717)- $50,000(.1917) = $27, 585
Gas= $80,000(.4599)- $40,000(.2799) = $25, 596
We always want to minimize cost and maximize benefits as the
company. So here we see that Gas truck is the better option if
we are looking at it from this view.
My last method of analysis was deprecation. I used 3 different
methods. The methods are straight line, Sum of the Year Digits,
and Double Declining Balance. To me it looks like Diesel fairs
off better, than the gasoline.
Risk
Mathematically we can see that diesel is a better option than the
gasoline on money stand point. But as a company we need to
portray ourselves in a positive light to attract more people to
our clean business. Looking at recent studies newer diesel cars
tend to have lower carbon emissions than a gasoline car. This
48. study was subjected to small sedans so one can’t conclude if
trucks follow same data. We try to pick an alternative that will
benefit money wise as well as how people perceive us. As a
world that is moving forward and trying to leave a little carbon
footprint and we must do our part to help.
Recommendation
After taking all this info in and making charts we have to come
to an option as the person in charge of this case study. At first
one would think a gasoline truck would be better due to
maintenance cost was greater on the diesel. Then we went and
calculated all those different methods and we saw what came
out. The gasoline did have a lower EUAC, but after calculating
the depreciation. I saw the difference of deprecation was bigger
margin than that of EUAC added up with maintenance for the
gasoline car. But after contemplating the choice I believe the
gasoline type is better. Due to the half the managers really
wanting it due to the speed. As a company we must satisfy our
employees so they can do better work which in turn helps us
look better in the eye of the customer. Plus, the public is more
used to filling up with gas stations, if we have diesel cars it
might throw off the regular customer who won’t choose us.
Especially in California due to new laws we should take the
pick that is easier manage over time with ever changing
guidelines. As, stated earlier my recommendation would be to
choose the Gasoline trucks.
49. References
Engineering Economic Analysis 13th edition by Donald G.
Newnan, Ted G. Eschenbach
, Jerome P. Lavelle,
Nieuwenhuis, P., & McNabola, A. (2019, February 02). Fact
Check: Are diesel cars really more polluting than petrol cars?
Retrieved from https://theconversation.com/fact-check-are-
diesel-cars-really-more-polluting-than-petrol-cars-76241
Case Study: Income tax for the company 3DRobotics
Ana Patricia Lopez
CONE430
Spring 2014
Professor Hossein Hemati
Case Study:
The American company “3DRobotics” was created to produce
drones. The firm bought a land for $525,000, had a $900,000
factory building erected and installed $500,000 worth of
machines and packing equipment. The plant was ready starting
April 1, 2012. Gross income for the year was $450,000.
Supplies and expenses excluiding capital expenditures were
$100,000. The plant will use the Modified cost recovery system
(MACRS)
Objective
50. What is the first year depreciation charge?
What is the first year taxable income?
Case continues
The company wants to buy a used car of $3500 to use for
shipping and delivery. It is a 5-useful life vehicle and it is
estimated that the company will save $800 per year. The salvage
value is $750.
What is the before tax rate of return?
What is the rate of return on this capital expenditure?
MACRS depreciation. 3DRobotics is a private property. From
table 11-2, it is a 7-year property class.
Depreciation deduction:
D_t = depreciation deduction in year t
B= cost basis being depreciated
r_t= appropiate MACRS percentage rate
Dt(equipment) = 500,000(14.29%)=$71,450
Depreciation for real property
Since the company is place in service in the month of april, we
look for the value in table 11-4 (p.369) and the depreciation for
real property:
Total 1st year MACRS depreciation: $71,450+16,371 =
$87,8921
51. 1st year taxable income and federal income
Taxable income= gross income-all expenditures except capital
expenditures- depreciation and depletion charges
Taxable income =$450,000+$100,000+$87,821 = $262,179
Federal income
Since the taxable income is within the range of $100,000-
$335,000, from table 12-2 (p.395)
Federal income = $262,179 + 39% ($262,179
100,000)
= $85,499
Before tax rate of return (car case)before tax rate of
returnyearbefore-tax cash flow-
3,500080018002800380048005800+750
Before tax rate of return: IRR_BT= 3500=800(P/A,I,5)
+750(P/F,i,5)
With 18%:
there is a rate of return of = 8.8%
Rate of return on capital expenditure
B-S/N = 3550-750 = $550 per year
After tax rate of return = 10.55%
The calculation follows:
52. abcdyear before-tax rate of return.cash flowstraight line
depreciation(taxable income)34%income taxafter tax cash flow
0-$3,500.00a-btaxable income * -
.34a+d1$800.00$550.00$250.00-
$84.00$716.002$800.00$550.00$250.00-
$84.00$716.003$800.00$550.00$250.00-
$84.00$716.004$800.00$550.00$250.00-
$84.00$716.005$800.00$550.00$250.00-$84.00$716.00
Results and conclusions
3DRobotics is a company that bought land at $525,000,
$900,000 building and $500,000 of material to build drones.
Their MACRS year depreciation is $71,450 according to table
11-2 of the book. This is a private property and %14.29 will be
deducted from the material worth $500,000.
The property’s federal income tax is calculated based on the
gross income and expenditures and depreciation/depletion
charges.
The company’s used car of $3,500 rate of return (before tax) is
8.8% and the rate of return of expenditure is 10.55%.
53. Case Study: Local Water Sources
Wayne Thorn
Class #49
Construction Engineering 330
Professor Hossein Hemati
May 2, 2019
Table of Contents
Introduction…………………………………………………………
……………………….…….2
Proposal
Overview……….……………………………………………………
…………………..3
Engineering Economy Techniques with Assumptions and
Formulas—Proposal 1………………4
Engineering Economy Techniques with Assumptions and
Formulas—Proposal 2...........….........6
Engineering Economic Analysis in Public/Private
Sector………………………………………..7
Risk Factors and Other Considerations
…………………………………………………………..8
Recommendation……………………………………………………
…………………………...10
References……………………………………………………………
…………………………..11
55. rain, even during the rainy season. The result is relatively few
local water sources. Therefore, 85% of San Diego’s water must
be imported. One source is northern California--the California
State Water Project brings water 700 miles from the San
Francisco Bay Area Delta. The most well-known source is the
Colorado River, which supplies water to San Diego, Los
Angeles, and much of the southwestern U.S. There are problems
that arise from reliance on outside water sources, though. First,
a lot of water is lost to evaporation, as it flows slowly in canals
or sits in gargantuan reservoirs such as Lake Mead in hot desert
heat. Also, many municipalities use the water along the way,
returning salty, treated wastewater to the rivers/canals. Hence,
these sources contain water that is adequate for human
consumption, but lacking in quality. Thirdly, it costs a lot of
money to have this infrastructure to bring in water from faraway
sources. Essentially, there are high water bills in consuming
water that comes from a long distance. Finally, there is an
environmental impact to this transportation of water. The
Colorado River is overallocated, due to its many dams, such as
Hoover Dam and Glen Canyon Dam. For instance, when Glen
Canyon Dam was built, the Lake Powell reservoir formed,
which drowned historic Native American lands and biodiversity
in what was a thriving desert ecosystem along the untamed
Colorado River.
As reliance on imported water systems causes many problems,
local water sources must be paramount. In San Diego, there is a
brand new desalination plant in Carlsbad. That option is
plausible, as there is a vast saltwater ocean, the Pacific, whose
water can be desalted. While the technology is expensive, it is
smarter to rely on that than hoping for a good snowmelt in the
Colorado River’s origin at the Rocky Mountains, which also
experience periods of drought. Another local option is recycling
our consumed water. This water is recycled, either for human
consumption or to add to the groundwater supply. Most
interesting, this water is fairly clean, as it has to go through an
intensive cleaning process before reuse. It is also treated again
56. in a mix with the imported water before being sent to people’s
faucets. The future seems promising for more local water
sources, as residents in drought-stricken areas such as San
Diego have become more conscious of limited local water
availability and the lack of reliability of faraway sources. For
example, thirsty lawns have been exchanged for drought
tolerant plants and mulched landscapes, along with rainwater
barrels that can capture storm water.
Proposal Overview:
There are two proposals for increasing local water sources in
the San Diego area. One local option is the Pure Water San
Diego project, which aims to produce one-third of the city’s
water by 2035. In Phase 1, 30 million gallons per day of high
quality, recycled potable drinking water will be available,
through advanced purification technology, in 2023. Phase 1 will
serve the northern part of the city. In Phases 2 and 3, an
additional 53 million gallons per day will be available by 2035
to serve central and southern San Diego. Another local option is
to build a desalination plant that can cover more residents
throughout the county, namely North San Diego County. The
Carlsbad Desalination Plant will be used as model to gauge the
cost-effectiveness of building a desalination plant. To simplify,
I will compare Phase 1 of Pure Water San Diego, proposal 1, to
the desalination plant option, proposal 2.
There will be two judging criteria, fiscal and environmental
impacts, to decide which local water option is better. Both will
produce enough local water, so production will not be
considered. For each proposal, I will calculate the net present
worth (NPW), annual worth (EUAW), net future worth (NFW),
and benefit-cost (B-C) ratio. I will also consider how much each
plan affects the environment.
Engineering Economy Techniques with Assumptions and
Formulas--Proposal 1:
The first proposal, Phase 1 of the Pure Water San Diego project,
will increase local water sources by collecting wastewater and
57. removing its pollutants to make it potable for 1,400,000 city
residents. The Morena Pump Station will send wastewater to a
brand new North City Pure Water facility. This facility will be
located on city land in the La Jolla area next to the North City
Water Reclamation Plant. The filtration facility will use a five
step multi-barrier treatment technology: ozonation, biological
activated carbon, membrane filtration, reverse osmosis, and
UV/advanced oxidation. The cleaned water will go to Miramar
Reservoir to mix with imported and local water sources. Then
the water is treated again at the Miramar Drinking Water
Treatment Plant to become potable in adhering to state and
federal water guidelines.
Figure 1: Purification diagram courtesy of
https://www.sdcwa.org/purified-water.
Assumptions:
From the perspective of the city of San Diego, I will analyze the
proposal finances using a 40 year analysis period, as it will take
customers a long time to pay for the new facility. The city’s
actual period is roughly the same amount of time, as their
analysis for Phase 1 of this proposal runs from 2019 to 2060. I
will use an average monthly water bill rate of $6.49. Even
though the customers will pay more upfront on their water bill
in the early years due to a higher current money value, I will
simplify these amounts with an average monthly water bill add-
on amount of $6.49. I will use a 15% minimum attractive rate of
return as a generic, common interest rate. Maintenance and jobs
analysis will be omitted, since no credible amounts were found.
Thus, any profits may be somewhat elevated. Also, $2 billion in
revenue will be added, as the Point Loma Wastewater Treatment
Plant will not require refurbishment. Furthermore, water is
saved using the purification plant, as the treatment plant would
simply have disposed of the water. In terms of environmental
impacts, the use of raw water sources are lessened in shifting
from purely imports to recycled water.
Formulas:
58. Cost:
EUAC = $1,400,000,000(A/P, 15%, 40) =
$1,400,000,000(0.1506) = $210,840,000
P.W. of Cost = $1,400,000,000
F.W. of Cost = $1,400,000,000(F/P, 15%, 40) =
$1,400,000,000(267.864) = $375,009,600,000
Revenue:
From 2019-2060, average monthly cost: $6.49; per resident;
1,400,000 residents per year
EUAB = + $2,000,000,000(A/P, 15%, 40) = +
$2,000,000,000(0.1506) = + $301200000 = $410,232,000
P.W. of Benefits: =(P/A, 15%, 40) = (6.642) = + $724,190,544
= $2,724,190,544
F.W. of Benefits =(F/P, 15%, 40) + $109,032,000(F/A, 15%, 40)
= (267.864) + $109,032,000(1779.1) = $535728000000 +
$193978831200 = $729,706,831,200
Profit:
EUAW = EUAB – EUAC = $410,232,000 - $210,840,000 =
$199,392,000
Net PW = P.W. of Benefits – P.W. of Costs =$2,724,190,544 -
$1,400,000,000 = $1,324,190,544
Net FW = F.W. of Benefits - F.W. of Costs = $729,706,831,200
- $375,009,600,000 = $354,697,231,200
Benefit-Cost (B-C) Ratio:
1.95
Engineering Economy Techniques with Assumptions and
Formulas--Proposal 2:
The second proposal, a desalination plant similar to the
Carlsbad Desalination Plant, will increase local water sources
by filtering and cleaning salty Pacific Ocean water. High
59. pressure devices separate the salts from the water using tiny
reverse-osmosis membranes. A desalination plant covers
3,300,000 residents in the county. The cost of the desalination
plant is $1,000,000,000, with $50,000,000 yearly in power
costs. There are 400,000 residents whose water needs can be
met with the desalination water alone. The plant will produce 50
million gallons of potable water daily, suitable to the meet the
water needs of 400,000 people or 10% of San Diego County’s
water supply.
Figure 2: Desalination technology photo courtesy of
https://www.kqed.org
Assumptions:
From the perspective of the city of San Diego, I will analyze the
desalination plant over a 40 year period to be able to compare to
the Pure Water project. For simplicity, I will consider that
3,300,000 residents, not the aforementioned 400,000 residents,
will pay the $5 fee on their water bills to finance the project.
The desalination plant is supposed to help the region as a
whole, so it makes more sense to spread the cost out over more
customers. It should be noted that the city only has 1,400,000
residents, so in reality the city residents would be paying more
than $5. A minimum attractive rate of return will be 15% to
compare to the Pure Water project. There will be $50 million in
annual revenue for the region’s economy, stemming from
economic benefits that come from this investment in the San
Diego region. Most notably, there will be 42 full-time
employees. Environmental impacts involve the disposal of the
salts.
Formulas:
Cost:
EUAC = $1,000,000,000(A/P, 15%, 40) + $50,000,000 =
$1,000,000,000(0.1506) + $50,000,000 = $150,600,000 +
$50,000,000 = $200,600,000
P.W. of Cost = $1,000,000,000 + 50,000,000(P/A, 15%, 40) =
60. $1,000,000,000 + 50,000,000(6.642) = $1,332,100,000
F.W. of Cost = $1,000,000,000(F/P, 15%, 40) +
$50,000,000(F/A, 15%, 40) = $1,000,000,000(267.864) +
$50,000,000(1779.1) = $267,864,000,000 + $88,955,000,000 =
$356,819,000,000
Revenue:
From 2019 to 2060, average monthly cost, for simplicity, was
$5 added to customers’ water bills
per customer; 3,300,000 residents /year
EUAB = + $50,000,000 = $248,000,000
P.W. of Benefits: =(P/A, 15%, 40) + $50,000,000(P/A, 15%, 40)
= (6.642) + $50,000,000(6.642) = $1,315,116,000 +
$332,100,000 = $1,647,216,000
F.W. of Benefits =(F/A, 15%, 40) + $50,000,000(F/A, 15%,
40)= (1779.1) + $50,000,000(1779.1) = $352,261,800,000 +
$88,955,000,000= $441,216,800,000
Profit:
EUAW = EUAB – EUAC = $200,600,000 = $47,400,000
Net PW = P.W. of Benefits – P.W. of Costs =$1,647,216,000-
$1,332,100,000 = $315,116,000
Net FW = F.W. of Benefits - F.W. of Costs = $441,216,800,000-
$356,819,000,000 = $84,397,800,000
Benefit-Cost (B-C) Ratio:
1.24
Engineering Economic Analysis in Public/Private Sector:
The viewpoint for the engineering economic analysis is done
from the perspective of the city government of San Diego.
Therefore, each proposal is a public sector project. Note that the
Carlsbad Desalination Plant was funded by private capital, but
61. for this case study it is viewed as if it were financed by San
Diego residents. The city is in a position of trust to determine
the future of water sources that supply the city. Water can be
procured for the betterment of the city residents, so each
proposal actually promotes the general welfare of the city
residents. There is more stability offered, as the city, in either
proposal, places an increasing amount of importance on local
water sources. The Pure Water San Diego option, proposal 1,
offers a simple yet brilliant idea—put $1.4 billion toward a new
plant that can treat and rehabilitate consumed water instead of
spending $2 billion on refurbishing the aging Point Loma
Wastewater Plant that just dumps the treated water in the
Pacific Ocean. Here, the tax dollars are spent wisely.
The second proposal, building a desalination plant, is also done
from the city’s perspective. It can support the water needs of
even more citizens, but it is also more costly. Overall, the city
will see which option has the best financial outlook, namely
which one has a higher profit. However, the city will consider
the long term outlook in terms of having a more robust water
supply that is more sustainable and practical for the city
residents. Essentially, having more local water sources ensures
that the city remains viable in combating the effects of drought.
Risk Factors and Other Considerations:
There are some risk factors and other considerations. For
proposal 1, San Diego residents may object to drinking water
that has been recycled and cleaned for reuse. The term “toilet to
tap” is often used with a negative connotation to attack these
type of wastewater purification projects. However, residents
should be reassured that the wastewater is not only cleaned and
returned to the Miramar Reservoir, but it is also treated again in
a blend with the imported water before reaching people’s
homes. In terms of environmental effects, proposal 1 seems to
have minimal environmental effects. If anything, treated sewage
was going to be placed in the Pacific Ocean from the existing
Point Loma Sewage Treatment plant. Thus, allowing the water
from the treated sewage to go back into the water supply,
62. instead of importing dwindling water supplies, is sensible.
There is less strain on the imported water sources and those
damaged ecosystems.
For proposal 2, a risk factor includes population growth
associated with a brand new local water supply, as the
southwestern U.S. has experienced massive population growth
in the last century due to added water infrastructure. However,
the San Diego Association of Governments, a regional planning
agency, has stated that most of the San Diego county population
increase by 2030 of one million people will be mostly from
births from the existing population. Therefore, there should not
be a massive population increase from non-residents that will
further strain the water supply. Another risk factor is
environmental damage. One recent incident was the discharge of
a chemical into the Pacific Ocean that was used in the
desalination process. The plant was cited for an environment
violation, and is working on isolating and removing the
chemical from the ocean. Here, desalination is an emerging
technology that needs to be refined further. It should be noted
that there is still the problem of salt disposal once salts are
removed. Desalination is promising, but it still needs to improve
as the only large scale west coast plant is the Carlsbad
Desalination Plant.
For both proposals, natural disasters, project financing, and
depreciation need to be evaluated. Earthquakes, can damage
either type of infrastructure. Since each type of earthquake
event is unique, it is virtually impossible to design the water
infrastructure to stand up to any type of earthquake. Droughts
will more adversely affect the proposal 1, as the Pure Water
option will rely on water still being imported from mostly
distant sources. The desalination plant will not be adversely
affected by any drought, as the Pacific Ocean is too large to
evaporate. In terms of financing, there has become a recent
issue of whether it is still financially viable for people to still
live in California, due to constant threats of severe drought,
fire, and earthquakes. There is always a risk that the residents
63. paying the water bills for this water infrastructure may not
necessarily still be living in San Diego in the foreseeable
future. They may opt to live in a more stable region where
climates are harsher, but offer water stability. For depreciation,
there was no information found in either proposal that says how
long this water infrastructure equipment can last. The
equipment will likely need to be replaced or upgraded as it ages
or new technological innovations occur.
Recommendation:
My recommendation to the city is to choose proposal 1, the Pure
Water San Diego project. It has a higher fiscal upside. There is
larger present worth profit margin, $1,324,190,544, than
proposal 2’s $315,116,000. Also, there is a higher benefit-cost
ratio for proposal 1, 1.95, than for a desalination plant, 1.24.
Another issue is financing, as desalination plants prefer private
financing, whereas the wastewater purification plants are more
easily publicly financed. Oversight is more ideal for public
financing. A third issue is environmental-friendliness. Pure
Water San Diego allows for the reuse of water, so San Diego
will require less raw water from distant, environmentally
damaged sources. If the desalination plant was chosen, it would
have helped limit water imports, but there would have been a
cost in terms of salt disposal and any effects on the marine
ecosystem. As the desalination technology advances in
sophistication, though, its effects on the environment may
become less detrimental. At some point, such as in ten years, it
is advisable to keep the Pure Water San Diego project and also
add a more environmentally-conscious desalination plant to
further bolster San Diego’s local water supply. Most ideally, the
desalination plant would bring in raw, mostly pure local water.
Once consumed, this water could then be recycled for potable
reuse through the Pure Water plant. Having a major part of San
Diego’s water sources be 100% local would be paramount for
San Diegans and the environment.
References
64. Barillo, M. (2018, Nov 10). Retrieved from
http://cweawaternews.org/first-phase-of-pure-water-
san-diego-moves-closer-to-construction/
Bravo, C., and Ojeda, A. (2018, Nov 6). Project to Turn
Wastewater into Drinking Water to
Begin Construction in Spring 2019. Retrieved from
https://www.nbcsandiego.com/news/ local/Pure-Water-San-
Diego-Transform-Wastewater-Drinking-Construction-Contracts-
Phase-1-500705201.html
Frequently Asked Questions. (n.d.). Retrieved from
https://www.carlsbaddesal.com/faqs.html
Gorn, D. (2016, Oct 31). Desalination's Future in California Is
Clouded by Cost and
Controversy. Retrieved from
https://www.kqed.org/science/1115545/
desalination-why-tapping-sea-water-has-slowed-to-a-trickle-in-
california
Newnan, D.G., Eschenbach, T.G., & Lavelle, J.P. (2017.)
Engineering Economic Analysis. New
York, NY: Oxford University Press.
Population. (n.d.). Retrieved from
https://www.sandiego.gov/economic-
development/sandiego/population
Project Overview. (n.d.). Retrieved from
http://carlsbaddesal.sdcwa.org/overview/
Pure Water Phase One - Estimated Impact to Typical Single
Family Residential Customer
Monthly Bills. (n.d.). Retrieved from
https://www.voiceofsandiego.org/wp-content/uploads/
2019/03/March-Pure-Water-Customer-Impact.pdf
Pure Water San Diego – FAQ. (n.d.). Retrieved from
https://www.sandiego.gov/sites/default/
files/pure_water_san_diego_faq_-_10-20-16_0.pdf
Pure Water San Diego. (n.d.). Retrieved from
https://www.sandiego.gov/public-
utilities/sustainability/pure-water-sd
65. Purified Water. (n.d.). Retrieved from
https://www.sdcwa.org/purified-water
Reisner, M. (1993). Cadillac Desert: The American West and Its
Disappearing Water. New
York: NY: Viking Penguin, Inc.
Rivard, Ry. (2019, April 1). Here's How Much the Pure Water
Project Could Raise Your Water
Bill. Voice of San Diego. https://www.voiceofsandiego.org/
State Water Project. (n.d). Retrieved from
https://water.ca.gov/Programs/State-Water-Project
12
Case Study: Choosing the best alternative for PEAB
CON E 430 – Spring 2015
Student: Mathias Loedding, Class ID: #12
Professor Hossein Hemati
Background
Peab is one of the largest contractors in Scandinavia. They want
to invest in a pile diver they can use on their projects. Because
66. of Norway's difficult and hard ground, they need one of the best
piles divers on the market. They have good experiences with
“Bauer RG 21 T Universal Piling Rig”. Unfortunately this is
one of the markets most expensive machines, so its important to
make the right decision.
This case study will analyze two different alternatives for this
investment, and will end with a conclusion for what is the best
alternative.
Alternatives
Rent the machine
Buy a new machine
Assumptions
Lifetime: 10 year
Annual interest rate: 6%
Bauer RG 21 T Universal Piling Rig
Alternative 1: Rent the machine
Initial cost, P = $20,000
Annual cost (Maintenance + Annual rent), A = $5,000 +
$32,800 = $37,800
Interest rate, i = 6%
Lifetime, n = 10 yrs.
PW = -P – A (P/A, i, n)
= -$20,000 – ($37,800*7.360) = - $298,208
67. Alternative 2: Buy a new machine
Initial cost, P = $320,000
Annual cost (Maintenance), A = $5,000
Salvage value, S = $90,000
Interest rate, i = 6%
Lifetime, n = 10 yrs.
PW = -P – A (P/A, i, n) + S(P/F, i, n)
= -$320,000 – ($5000*7.360) + ($85,000*.5584) = - $309,336
Conclusion
The price for the two options is nearly the same but the rent
alternative is a little cheaper. When you rent the machine you
also have the benefits of service from the renter, and less risk.
My conclusion is that Peab should rent the pile diver instead of
buying.
References
http://www.kynningsrud.no/forretningsomrader/fundamentering/
http://www.peab.no
Engineering Economic Analysis, Eleventh edition. Newman,
Eschenbach and Lavelle
68. CON E 430
FALL 2016
CASE STUDY
Professor Hossein Hemati
Summer R Mutawe
Class ID # 62
11/30/2016
69. Case Study 23: Washing Away
1 Background
Seaview is a small resort community on the Gulf of Mexico.
Blessed with nice beaches and a good location, Seaview has
grown rapidly over the last decade. Although the community’s
growth has not been explosive, it still exceeded the expected
70. growth of 1% (4% annual growth). The community is protected
by a seawall that was designed to withstand a 50-year storm
with an additional cushion through safety factors. Now and after
20 years, the community was hit by Hurricane Harvey (40 years
storm). Although the seawall withstood the onslaught, the
biggest concern was that the seawall could become vulnerable
the next hurricane season.
This case study goal is to prepare a report of the findings while
putting emphasizes the economic analysis and considering the
political factors that may dominate the economics.
2 Description of Present Situation after Hurricane Harvey
Seaview is a small resort community was hit by Hurricane
Harvey last year. Ramon, Seaview's city engineer, vowed to
analyze the city's vulnerability along the seawall before the next
hurricane season. He gathered the data, and he is now ready to
begin the analysis.
The seawall was designed to withstand a 50-year storm
however; the analysis has shown that Harvey was a 40-year
storm. Although the seawall seems likely to last for another
century or two, the 4% annual growth of the community has
increased the consequences of a large storm in the future (more
to lose if a future storm occurs). As a result, the 50-year
standard has become inadequate in the face of the larger
consequences.
Ramon has identified three types of alternatives for the city.
Alt. 1
Alt. 2
Alt. 3
Restricting development along the seawall (this could include
condemnation of existing buildings and purchase by the city).
Mitigating the financial consequences through insurance (The
city could require that property owners be insured for hurricane
damage).
Increasing the level of protection by strengthening the existing
71. seawall.
3 Proposed
Solution
s
Alternative 1) Restricting development along the seawall (this
could include condemnation of existing buildings and purchase
by the city).
The condemnation alternative is politically and financially
difficult because:
· Most owners would not want to sell their property and
government cannot force them to do so.
· Very expensive (The city cannot afford it) when compared to
tax return. The appraised value of the buildings and lands is
$290 million in property provides only 15% of the property tax
revenue.
Although buying out the residence can be very expensive, the
city has the option of waiting for the wall to fail and then
buying only the land from the residence after the disaster. There
is still two problems attached to this option. They are:
· It is immoral.
· It would still cost the city severely compared to just
72. strengthening the wall or even rebuild a new seawall to protect
the community.
Alternative 2) Mitigating the financial consequences through
insurance (The city could require that property owners be
insured for hurricane damage).
The head of the city's legal department responded positively to
Ramon's query about the city's ability to require "hurricane"
insurance. So Ramon conducted a small survey of building
owners along the beachfront to check their insurance coverage.
After conducting interviews, he discovered that:
· All of the buildings are insured, but not one policy allows for
failure of the seawall. "At least Seaview can't be sued if the
seawall fails."
· Buying insurance to cover the damages for these extreme
floods would cost 50% more than the expected level of
damages.
· Since the option is available and because owner opted from
upgrading to the more extensive coverage, the owners cannot
sue the city if the seawall fails. However, the city could require
the owners to insure their properties and act as a central
coordinator in obtaining coverage.
Alternative 3) Increasing the level of protection by
strengthening the existing seawall.
73. Since the community depends in its protection on the seawall,
the strengthening the seawall was his "natural" first choice
solution to the problem. Ramon plans to use an 8% interest rate
in the evaluation. He is planning on using a long horizon, at
least 100 years (this seawall will have a longer life and even
longer return interval with a higher severity storms).
The seawall's size and cost increase with the severity of the
storm that it is designed to withstand (look at the following
table).
Return Interval
50
100
200
400
800
etc.
Only strengthening
$0
$3.15M
$6.3M
$9.45M
$12.6M
74. etc.
With the rebuild
$4M
$7.15M
$10.3M
$13.45M
$16.6M
etc.
The table below summarizes the translation of return intervals
into probabilities that Ramon plans to use.
Return Interval
50
100
200
400
800
etc.
Inverse Cumulative Probability
.02
.01
.01/2
.01/4
.01/8
75. etc.
Probability
.01
.01/2
.01/4
.01/8
.01/16
etc.
The expected damages depend on the difference between the
storm's severity and the design standard (interval) used.
design standard
Design interval
1 double
2 doubles
3 doubles
4 doubles
Damage% of the structures' value
0
10
30
70
100
(salvage value = cost of cleanup)
76. 4 Cost of Proposal
Since the community depends in its protection on the seawall,
the strengthening the seawall was his "natural" first choice
solution to the problem. Ramos is planning on using a long
horizon, at least 100 years seawall. From the previous
statement, it is understood that either the engineer is looking
into strengthening the current wall to a 100 or more years. First,
take a look back at the calculate of the first cost needed to
strengthen or rebuild the wall:
First Cost calculations:
Return Interval
100
200
400
800
etc.
Only strengthening
$3.15M
$6.3M
$9.45M
$12.6M
etc.
With the rebuild
$7.15M
79. 0.252
2.205
0.00275625
0.25475625
Looking at this, we can see that strengthening the seawall
instead of total rebuild will cost much less. However, what
option is going to be more suited for this case is going to
depend on the probability of the storm and the damage that can
be caused if it happens.
Looking at the calculation, we can see that the cheapest option
is to strengthen for 100 years. On the other hand, the current
seawall could still last for another century or two, if we assume
that the seawall will last for another 20 years before they will
need to replace it, the City and residence will have enough time
to rethink more options.
5 Other Considerations
It is very clear that the community will benefit from the
strengthening of the current seawall for a long time for that
reason it is a sound decision for them to invest in the project.
Since the current paid tax is being used on other projects, the
city should consider a new real-estate and property tax to pay
for the cost of this new, very important project.
80. Since it was considered to strengthen the wall to a 100 year the
cost that the city should consider is the cost of total
replacement of the new wall which is 7.15M$.
A = .0715M$/year
Total property and land worth = 290M$
Annual Interest on properties worth = .25% (in addition to the
current tax)
CONCLUSION
After reviewing the analysis, the calculations clearly show that
strengthening the current seawall is the best option. Although
the city have many options to choose from the recommendation
is to choose a 100 year design for the new project. This new
stronger seawall will not just have a longer life but it will also
have longer return interval with a higher severity future storms
the community might face.
The cost of the new stronger seawall can be paid for by
introducing a new tax on the owners of the properties who will
benefit from the project.
6
81. Protecting the Public
Chelsi Pascua
Case Study Report
CONE 330
Professor Hossein Hemati
Fall 2018
Environmental Engineering
San Diego State University
Proposal
The Greenacres City Council has just been informed that a local
city park may have had a low-grade contaminant within the
latest annual mosquito spraying. Testing of the contaminant
and quantifying the health impact of exposure is required by the
city’s health department.
Even though the department cannot yet quantify the effects,
they have identified a chain of health problems associated with
the contaminant. If the contaminated vegetation is burned, the
contaminant is then released back into the air as a vapor. The
health effects of this vapor is that it can irritate the eyes and
82. can cause acute damage to anyone wearing contact lenses.
Although the contaminant is irritable as a vapor, there is no
problem if it is touched or eaten, thus the main danger of the
contaminant would be campfires, disposal of windblown leaves
(which could mix with the local residential area), or the
possibility of wildfire in the park. The health department also
stated that sunshine reduces the toxicity of the contaminant over
a 2 to 3 year period, and after 4 years, the danger of the
contaminant will be eliminated.
The city council expects that the publicity of the contaminant
will be large and have decided that a benefit/cost analysis must
be done immediately, before the health department supplies any
results. The city manager must have preliminary results within
24 hours.
The city manager expects the council will want to have
definitive conclusions for the two worst-case scenarios:
1.) Scenario 1: Removal of all vegetation and turning the park
into a landfill
a. Step 1: Remove all vegetation and burn it in a specially
controlled environment
i. The city is in an industrial area where hazardous waste
facilities are available, costing approximately $2 million to $5
million.
b. Step 2: Create a substantial cover using the site as a
temporary landfill
83. i. 20 homeowners will have to be bought out, costing $135,400
each.
ii. All other associated costs can be ignored since the city will
be incurring them at another site.
c. Step 3: In 3 years, the cover would be deep enough that the
landfill can be converted back into a park
i. The park currently emphasizes vegetation, jogging paths, and
similar uses, but the plantings and regrowth are likely to be far
to slow after the conversion.
1. Thus, the city engineer recommended the area could instead
be used as a complex of playing fields for softball, baseball,
soccer, and football.
a. The would cut the regrowth time and would only require
$300,000 for construction
ii. The city engineer has suggested a “net benefit” stream of
$125,000 annually for the field complex after maintenance
costs. She also identified a 5% discount rate that the city
council accepted for that study.
2.) Scenario 2: The maximum health cost in the complete
absence of recovery efforts
a. This scenario is far less defined as there is difficulty in
estimating the probability of different kinds of fires and then
estimating how many people could be affected.
i. A wildfire is the least likely, but could affect the 35,000
people who live in proximity to the park
84. 1. A wildfire has a probability of 0.002, but may increase to
0.01 due to publicity and arson.
b. Although, over a 3 year period, someone is almost certain to
build a fire with vegetation containing the contaminant.
i. Over 20% of the park goers are picnickers
1. ¼ of those parkgoers use wood
ii. Leaves from this year in this scenario are less of an issue,
but would still need to be collected and incinerated, costing
about $1 million.
The possible danger is not exactly known, but it appears to be
associated with park usage. There are approximately 250,000
visitor-hours per year and growing about 15,000 hours per year,
which is slightly faster than the city’s population. Clearly, an
exact answer is impossible, but nevertheless, an answer is
required.
Analysis
This analysis will break broken into 2 parts which will examine
the benefit-cost ratio analysis of present worth and annual cost
then each scenario will be compared. Since scenario 2 is not as
defined as scenario 1, the report will also do a probability
analysis of scenario 2.
Scenario 1
Present Worth Analysis (Equivalent Present Consequences),
using the most conservative estimates
85. With present worth analysis, reference Appendix A. As seen on
that spreadsheet, it would take over 100 years for the new field
complex to return a profit, thus, this present worth benefit-cost
ration is < 0.
Annual Cost Analysis
With annual cost analysis, reference Appendix A. As seen on
that spreadsheet, this analysis also shows that it will take over
100 years for the new field complex to have a positive annual
return. This annual cost benefit-cost ratio is < 0.
Scenario 2
Present Worth Analysis (Equivalent Present Consequences),
using the most conservative estimates
With present worth analysis, we see that the city will pay a
onetime fee of $1,000,000 for the incineration of all
contaminated leaves. This present worth benefit-cost ration is <
0 until the city returns enough money for this cost to be
covered, probably allocated from another department.
Annual Cost Analysis
With annual cost analysis, reference Appendix A. As seen on
that spreadsheet, this analysis also shows that it will take over
100 years for the new field complex to have a positive annual
return as in this scenario, the park will not have a positive
86. annual return. This annual cost benefit-cost ratio is < 0.
Probability of Fire
With the probability of contaminated vegetation being burned,
reference Appendix B. In Appendix B, we see that out of all 4
years the contaminant is active, there is a 26% chance that the
contaminated vegetation will be burned at any given time.
Recommendation/Conclusion
With scenario 1, the city will essentially be losing money on the
park alone for over 100 years, if the money isn’t supplied by
another department. Fiscally, this scenario is not ideal, but it
protects the fraction of the public that wear contacts. Scenario
2 will only cost $1 million to the city, but the park will
essentially be “off limits” to people that prefer to wear contacts.
With this scenario, the probability that any contaminated
vegetation could be burned within the four-year period is 26%.
Because the eye damage that can occur, the public must be
notified immediately, of the source of the contaminant and what
the general public can do to protect themselves. One option for
obtaining the money for both scenarios is to investigate the
company that administers the mosquito spray to see what
exactly was at fault.
The risk with scenario 1 is that the money for this project is
possibly not readily available, but it would protect the health of
87. the general public. Risk with scenario 2 is that anyone who
wear contacts and comes into contact with the contaminant
vapor could get acute damage to their eye.
With public water systems, if any acute contaminants are
detected, that water system is required to notify its customers
within a 24 hour period, or even have their water shut off by
their supplier. Any contaminants in the air should be held to
the same standard. My recommendation is that if the money is
readily available, continue with scenario 1. If the money is not,
then close the park, and hold a public forum on what the
citizens who live in proximity to the park think. To me, the
safety of any citizen is priceless and would continue with
scenario 1 as the citizens look to their government for
protection.
References
Donald G. Newnan, Ted G. Eschenbach, Jerome P. Lavelle, and
Mean A. Lewis. Engineering Economic Analysis. Oxford
University Press, New York, 2017.
Appendix A
Appendix B
10
90. 10019.848-55270000.0504-278603-50400
Total visitor-
hours to park
Visitor-
hours of
wood use
Probability
of wildfire
Total Probability
of Vegetation
being burned
Fraction of time
that vegetion being
burned is possible
2500006250025006500026
2650006625026506890026
2800007000028007280026
2950007375029507670026
CON E 430
FALL 2012
91. CASE STUDY
Dr. Hossein Hemati
Jonathan Madrigal
Class ID # 52
12/3/12
Case Study: Economic Analysis of a
Modified Conveyor System at Buick-
Oldsmobile-Cadillac
92. 1 Background
The Buick-Oldsmobile-Cadillac (BOC) plant in Lansing,
Michigan, is involved in the fabrication and assembly of the
Olds Calais, Buick Somerset Regal, and Pontiac Grand Am. A
small part of the total operation is the sheet molding compound
(SMC) area where plastic parts are formed from sheets of
plastic material. Front-end panels (the front part of the car
where the lights are housed) are produced here, and a conveyor
system is used to transport the panels after they are formed.
This case study examines an economic justification analysis for
a proposed modification of the conveyor system that would
decrease the number of workers needed while improving quality
and facilitating material flow.
2 Description of Present SMC Prime and Finish Process
The SMC prime and finish operation starts on the first floor
with stud drivers. Here a machine screws a two-ended bolt into
each front end panel so that it can be attached to the car later.
93. The conveyor then moves the panels upstairs where they are
washed and primed. Next, the conveyor moves the panels
through an oven to heat-treat the prime coating and then returns
them to the first floor. An inspector checks each panel for pits
and defects and marks them for the pit filler, who uses
compound to fill in the defects. The compound must dry before
it is sanded (the next operation), but the current setup does not
allow sufficient room for this to happen every time. After the
panel is sanded down, it travels up to the second floor again,
where it is inspected for any major repairs that must be made. If
repairs are needed, the panel is taken off the conveyor;
otherwise, it moves on to the washer, where any dust and debris
is removed. The conveyor then moves the panel up to the third
floor to the second prime spray booth and back down to the
second floor, where it is processed through an oven.
The panel is inspected again, and the pit fill and sand operations
are performed as necessary. Again, the area currently allocated
to this operation does not always allow the compound enough
time to dry. The conveyor moves the panels to final inspection
and to the packing area. Once the panels are packed, they must
be moved via elevator to the first floor, where the shipping
docks are located. There is only one elevator, and if it
malfunctions, there is no way to transport the parts to the first
floor.
The existing system is producing good quality front-end panels,
94. but the current arrangement requires that the conveyor travel
frequently between three floors and separates two similar
operations, requiring two supervisors. The finished and packed
parts must also be moved from the second floor packing area
down to the first floor with an elevator. In addition, the repair
and maintenance for the conveyor system will require an
estimated $180,000 in the upcoming year alone in order to keep
it in operable condition. Projected maintenance costs for later
years are unavailable but they are estimated to be around
$100,000 per year.
3 The Proposed System
The proposed system would be a modification of the current
prime and finish conveyor system. It would reduce the number
of trips made between floors, use just one supervisor to oversee
similar operations, eliminate the need for the elevator, and
reduce the number of employees needed for the prime and finish
operation. The proposed system under would still be used to
move the panels along a specified route while different
operations are performed on them. The major change is that
almost all of the major operations would be performed on the
second floor. The areas needed for the two pit fill and sanding
operations would be located in the same general area, thus
requiring only one supervisor; the result should be better
