Question

1. Discuss examples of the ethical considerations engineers must think about in public sector projects.

2. Discuss some differences between breakeven and payback analysis. How does this differ from other types of analysis

3. What are some methods for handling indirect cost estimation?

Please answer this engineer related question with detail. Please answer all three questions. Thank You

Answer 1

Answer 1)

The ethical considerations engineers must think about in public sector projects are-

• relationships between engineers and other individuals who are their managers, clients, colleagues and employers
• the role of engineers in industry and other organizations, professional engineering societies, and responsibilities of the profession.
• If engineers' judgment is overruled under circumstances that endanger life or property, they shall notify their employer or client and such other authority as may be appropriate
• Engineers shall approve only those engineering documents that are in conformity with applicable standards.
• Engineers shall not reveal facts, data, or information without the prior consent of the client or employer except as authorized or required by law.
• Engineers shall not permit the use of their name or associate in business ventures with any person or firm that they believe is engaged in fraudulent or dishonest enterprise.
• Engineers shall not aid or abet the unlawful practice of engineering by a person or firm.

Breakeven analysis is performed to determine-

1. the value of a variable or parameter of a project or alternative that makes two element equal.
2. sales volume that has same cost and revenues.
3. Make or buy decisions

In break-even analysis, Break-even point is the volume of sales or services that will result in no net income or net loss on a company's income statement. In other words, the break-even point focuses on the revenues needed to equal exactly all of the expenses on a single income statement prepared under the accrual method of accounting..

Payback analysis determines the required minimum life of an asset, process, or system to recover the initial investment. It is a screening tool to provide supplemental information for PW, AW or other analysis.

Payback period is the number of years needed for a company to receive net cash inflows that aggregate to the amount of an initial cash investment. Hence the payback period focuses on the pertinent cash flows of multiple accounting years instead of the net income of a single accounting period.

A company's payback period is concerned with the number of periods needed to pay back an initial investment with positive net income, while a company's breakeven point is concerned with the specific period in which its revenue will equal total costs and its net income will be zero.

The difference from other types of analysis is given in the following points:-

No-return payback neglects time value of money, so no return is expected for the investment made.No cash flows after the payback period are considered in the analysis. Return may be higher if these cash flows are expected to be positive.

Answer 3)

Some of the methods for handling indirect cost estimation are-

• Each Indirect Cost Account

One method to estimate the indirect costs is to assign a cost to each cost account. This must be based on the size and type of contract and could be a lengthy list. This method requires a great deal of experience and a working knowledge of the construction firm’s experience.

• Percentage

A multiplier from a local data base or from published cost manuals can be developed. Charts can be developed over a set time frame for the average indirect costs of various fixed-price contractors working at a firm. To use the chart, the ratio of direct cost material to labor must be determined. This ratio is plotted at the bottom of the graph. A vertical line is drawn from this point to intersect with the curve. The multiplier is read on the left-hand side of the graph and this multiplier is applied to the direct cost to determine the estimated indirect cost. All field offices and laboratories are encouraged to develop these local charts.

• Government Furnished Equipment

If a project has “government furnished equipment and materials” that the contractor must install, an additional amount of 5 to 10 percent of the value of the GFE must be added to cover the contractor’s risk, insurance, and paperwork.