1. Explain the differences between engineering management and project management.

Engineering Management Project Management

Engineering Management is a specialized
form of management that is concerned with
the application of engineering principles to
business practice.
Project management is the practice of
initiating, planning, executing, controlling,
and closing the work of a team to achieve
specific goals and meet specific success
criteria at the specified time.

Engineering management is a career that The primary challenge of project management

brings together the technological problem-
solving savvy of engineering and the
organizational, administrative, and planning
abilities of management in order to oversee
complex enterprises from conception to
completion.
is to achieve all of the project goals within the
given constraints. This information is usually
described in project documentation, created at
the beginning of the development process.

2. An engineering economic decision is very crucial in an investment of manufacturing

sector. Demonstrate five main types of engineering economic decision an engineer need
to consider.

1. Considering the time value of money is central to most engineering economic analyses.

2. Cash flows are discounted using an interest rate, i, except in the most basic economic
studies.

3. The opportunity cost of making one choice over another must also be considered.

4. There are also non-economic factors to be considered, like color, style, public image, etc.;
such factors are termed attributes.

5. The salvage value is often forgotten, but is important, and is either the net cost or revenue
for decommissioning the project.
 3. The fundamental underlying all financial activities are time value of money. State your
understanding of the term “time value of money”. Evaluate why does money have time
value and how do we characterize time value in any engineering projects.

The time value of money (TVM) is the concept that money available at the present time is worth
more than the identical sum in the future due to its potential earning capacity. This core principle
of finance holds that, provided money can earn interest, any amount of money is worth more the
sooner it is received. TVM is also sometimes referred to as present discounted value. The time
value of money draws from the idea that rational investors prefer to receive money today rather
than the same amount of money in the future because of money's potential to grow in value over
a given period of time. For example, money deposited into a savings account earns a certain
interest rate and is therefore said to be compounding in value.

4. Calculate the annual rate of interest needed for $2100.00 to earn $122.50 in 14 months.

(122.50)(12)
𝑟=
(2100)(14)

1470
𝑟=
29400

𝑟 = 0.05 = 5%
 5. Explain cash flow in engineering economics and draw a Cash Flow Diagram of
RM100.00 borrowed from a bank at 8% interest. At the end of the first year he pays half
of the interest and the remaining in the second year.

Cash flow for this problem is:

End of year Cash flow

0 +$1000

1 -$580 (-$500 - $80)

2 -$540 (-$500 - $40)

Cash Flow Diagram