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MIT 1 011 - Project Evaluation Introduction

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MIT Civil Engineering 1.011 -- Project Evaluation Spring Term 2003Carl D. Martland Page 11.011 Project EvaluationIntroductionCourse Requirements & OverviewPrinciples of Engineering EconomyAssignment 1Civil Projects & CivilizationWhat is a Successful Project?Learning ObjectivesMethodology: Apply the basic methods of engineering economics in evaluating major infrastructure projectsDevelop and apply simple models for estimating costs and resources required for major infrastructure projectsExplain and critique the process used to evaluate major infrastructure projectsProcess: Understand the life-cycle of major projectsAppreciate the complexity of major projects and the role for and limits of analysis in clarifying and resolving issuesBasic Concerns(Sullivan et al., Engineering Economy)Basic questions for any project:"Will its benefits exceed its costs?"Is this the best possible project?Focus of "Engineering Economy""Systematic evaluation of the costs and benefits of proposed [or of potential] projects""Analysis of alternative uses of financial resources, particularly in relation to the physical assets and the operations of an organization""Tradeoffs among different types of costs and the performance provided"What is Your Role as an Engineer?Build projectsDesign projectsEvaluate projectsPropose projectsDefine problems- Increasing complexity- Decreasing certainty- More possibilities- Greater need for imagination and leadershipPrinciples(Sullivan et al., pp. 4-7)Develop the alternativesFocus on the differencesUse a consistent viewpointUse a common unit of measureConsider all relevant criteriaMake uncertainty explicitRevisit your decision"Most errors can be traced to some violation or lack of adherence to the basic principles"What is a Successful Project?It is builtEngineering feasibilityFinancial feasibilityThe benefits are indeed greater than the costsThis was an effective way to achieve those benefitsThe project was built in an efficient and effective mannerNo clearly better optionsNo significant externalitiesBuilding this project did not foreclose other, even better projectsMIT Civil Engineering 1.011 -- Project Evaluation Spring Term 2003Carl D. Martland Page 2Elements of Project EvaluationCreate a "story" for the projectEstimate the time, resources, and other costs of building the projectDetermine how the project can be financedSupport a comparison of costs and benefitsFinancialNon-financialProvide a process for dealing with controversiesCivil & Environmental Projects are the Key to Civilization CITYExportsWastesResourcesFoodWaterBuilding materialsEnergyClothingCapital goodsConsumer goodsBenefits of UrbanizationFor people:Diversity of lifestyles, opportunities, peopleFrequency & quality of social eventsEmployment opportunitiesCreation of enough time to enjoy the fruits of civilizationFor the system:More efficient use of resourcesRoads, buildings, water sources, etc.Proximity of complementary activities Efficiency in distribution of goods SafetyDisbenefits of UrbanizationLoss of self-sufficiencyPossibility of extreme povertyDependency upon transport system for resourcesSusceptibility to disease (physical and mental)Congestion Pollution - inability to absorb wastesCEE Capabilities Limit the Growth and Quality of Urban LifeWater supply Amount & qualityDams, aqueducts, treatment systemsFood supplyTransportation & warehousingLand use near cityDensity of livingFloor area ratio (FAR)Floor area per personLocal Transportation - Commuting; freightLimits on time and money for commutingCapacity & performance of local freightLand available fordevelopmentBridges & transport capabilitiesFlood controlQuality of life(& options for moving)Parks & open spacePublic facilitiesAir & water qualityCEE Projects Make Cities Possible and More Livable Housing BuildingsFactories Warehouses Transport Terminals Water Systems Water SupplyForestsAgricultureSewers, water treatmentFlood controlIntercity transportCropsWater

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