Engineering Economy 16th Edition

Chapter 10 explains that because of the methods of financing, the absence of tax and profit requirements, and political and social factors, the criteria used in evaluating privately financed projects frequently cannot be applied to public works. The benefit-cost ratio (B-C) has remained a popular method for evaluating the financial performance of public projects. Chapter 11 addresses sensitivity analysis among alternatives to be made or the acceptability of a project to be determined on the variations presented.

Discuss and explain how variability can best be considered in an engineering economic analysis (i.e., you can discuss sensitivity analysis).