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J.H. Berk and Associates

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Engineering Economics

Concerned about capital equipment alternative investment decisions?  Not certain if you need to invest or if the investment makes economic sense?  Need to communicate sensible investment decision criteria to your team?

Engineering Economics is an intense 16-hour program focused on capital investment decision-making and related manufacturing investment issues.   At the conclusion of this program, your staff will understand:

  • Financial management concepts and terminology.

  • Your organization's criteria for investment decisions.

  • The time-value-of-money concept.

  • How to assess alternative investments.

  • How to assess and minimize risk associated with alternative investments.

  • Make vs. buy assessments.

  • How to use Excel for simplifying and accelerating capital investment and make vs. buy assessments.

Materials

  • Engineering Economics, a set of approximately 250 presentation charts, ManufacturingTraining Seminars.

  • Case studies, a collection of real-world capital investment examples and assignments.

  • Excel templates for net present value assessments, learning curve analysis, make vs. buy assessments, and financial calculations (including present value, future value, and payment calculations).

Who Should Attend

Manufacturing managers, manufacturing engineers, industrial engineers, and others with a role in capital investment decision criteria should attend this training program.

Engineering Economics Outline

Introductory Concepts.  The nature of a corporation.  Why businesses exist.

 

Financial Terminology and Accounting ConceptsRevenue, gross profit, net profit, and loss.  Working capital.  Earnings, taxes, interest, depreciation, and amortization.  Costs.  Break even.  Capital expenditure.  Interest and discount rate.  The balance sheet:  Assets, liabilities, expenses, and PPE.  Operating expenses and cash flow.  Balancing technology and cost.

 

Time Value of Money.  Interest.  The concept of compounding interest.  Present value.  Future value.  Net present value.  ExamplesCase studies.

 

Capital Equipment DecisionsInvestment decision considerations and the engineer’s financial role.  The economic analysis process and economic analysis objectives.  Cost elements (including equipment, labor, material, facilities, and other costs).  Cost determination approaches.  Case studies.

 

Investment Decision Approaches.  Why different approaches exist.  Return on investment. Discounted rate of return/minimum rate of return/internal rate of return.  The payback method.  The net present value method.  Advantages and disadvantages of each approach.  Discount/interest rate relevance.  Case studies.  Case study assignment.

 

Defining and Quantifying Cost Elements.  Recurring versus nonrecurring cost.  Capital costs.  Engineering costs.  Maintenance costs. Depreciation.

 

Estimating Costs.  Historical approach, engineered, time study, and blended approaches.  Cost reduction.  Applying learning curve theory.  Advantages and disadvantages of each approach.  Case study.  Cost estimation activity.

 

Depreciation.  The depreciation concept.  Straightline, double declining balance, sum-of-the-rears-digits, and sinking fund depreciation. Estimating useful life.

 

Investment Math and Excel.  Using Excel for future value, present value, payment, and net present value considerations.  Using Excel for interest rate sensitivity testing.  Using Excel for payback evaluations.  Using Excel for sensitivity assessments.  Using Excel for learning curve projections.  Group Activity:  Excel-based financial analysis.

 

Risk Management.  Requirements identification and evaluation.  Predicting future requirementsRisk analysis from financial, design, facilitization, supplier, source selection, maintenance, regulatory, safety, and other perspectives.  The Yes-No risk analysis approach.  Risk management strategies.

 

Other Investment Decision Drivers.  Qualitative and quantitative factors.  Investment necessity-driven decisions.  Competition-driven decisions.  Integrating capital investment and marketing strategy.

 

Course Wrap Up.  Key topic review.Group discussion:  Post-training activities.  Course critique.

 

How You Will Learn

A seasoned consulting manufacturing executive/instructor will present this course in an interactive lecture and workshop format.

Along with the lectures, we use exercises, puzzles, case studies, and interesting group activities to enrich the instruction and emphasize the essential points.

You will receive a printed Participant Handbook that includes all materials presented in class, which will help you remember and retain what you learned and apply it on your job.

You will learn key capital improvement and make versus buy decision making concepts from theoretical, practical, and organizational perspectives.  


We've been all over the world helping manufacturers improve.  Would you like to see a few photos from our travels here and abroad?  Very few are work related; most are just some of the great local sights we get to see!  

 

The above training can be customized to meet your requirements.

Need a guest speaker for an important luncheon or dinner meeting?  Please contact us.

Any questions?  Please call us at 909 204 9984 or contact us via email.

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