Engineering Economic Analysis

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After Completing This Chapter...

The student should be able to:

·Defineincremental analysisand differentiate it from a standard present worth, annual

worth, and internal rate of return analyses.

·Use agraphical incrementaltechniqueto visualize and solve problems involvingmutu-

ally exclusive choices.

· Use the generalized incremental approach with theinternal rate of return methodfor

comparing alternatives.

· lliustrate how thepresent worthof costs versus benefits can be used incrementally.

·Use spreadsheets to solve incremental analysis problems.

QUESTIONSTO CONSIDER ;.

1. In today's more environmentally aware decision-making climate, costly features such
   as the proposed light-rail lanes may have to be included in any proposal for new bridge
   construction just to get the project off the drawing board. How does this affect the
   "threshold" cost of public works projects?


2. Any bridge that is built would have to undergo extensive environmental impact review
   and a public comment period prior to approval. This is likely to result in pressure for
   additional environmentally friendly components to be built into the project, including
   methods for limiting emissions from cars that are waiting to access the bridge. How
   would this affect the ultimate cost of the project?

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