Engineering Economy Case Study The big issue for the department of transportation and public development is that they are approving too many projects. Yes, it is not the job for this division of the department to select, which projects to pursue. However, it is within this division authority to rank all the different projects in priority order, and to identify which projects not to recommend for funding. Some of these projects in the Table 48-2 will meet the first-cut criteria, and the prioritization will be the second cut. The current project budge is $20M and 8 man-years. Now besides the priority listing, there must also be a comparison of the probable results using the old and new processes. The old process being a preliminary screening that compares the project's benefits with its costs at the legislative mandated 10% discount rate; the new process being the new rank priority order. Table 48-1 shows the historical trends of project funded by the department of transportation and public development

Table 48-1 Historical DOTPUF Project Summary 2006 2007 2008" 2009 153 128 72 205 150 80 187 148 44 172 135 65 Fiscal Year Number of projects Submitted Accepted Funded Capital cost (* 10) Accepted Funded As built DOTPUF man-years Funded As built 240 130 140 290 140 135 325 185 210 250 140 125 31 37 55 52 72 60 28 34 Table 48-2 Proposed Projects for Northcentral Required Man-Years .8 1.1 30 First Cost Net Annual Life Project ($ x 10) Benefit ($ 10) (years) A 1.2 270 10 B 2.6 415 20 .8 140 20 D 5.2 1075 10 E .5 90 10 F .2 20 G 1.9 250 40 H 4.5 910 10 I 3.9 845 20 J 2.7 600 10 K 1.1 230 10 L .6 90 20 M .4 51 20 N 2.4 660 10 0 3.1 470 40 P .6 125 10 .6 1.5 .4 .1 1.8 1.9 1.2 1.1 1.1 .4 .5 1.0 2.1 .8 BC at 10% 1.38 1.36 1.49 1.27 1.11 1.28 1.29 1.24 1.84 1.37 1.28 1.28 1.09 1.69 1.48 1.28 IRR (%) 18.31 14.98 16.70 15.98 12.41 13.89 13.06 15.39 21.20 17.96 16.28 13.89 11.23 24.40 15.11 16.18 Table 48-1 Historical DOTPUF Project Summary 2006 2007 2008" 2009 153 128 72 205 150 80 187 148 44 172 135 65 Fiscal Year Number of projects Submitted Accepted Funded Capital cost (* 10) Accepted Funded As built DOTPUF man-years Funded As built 240 130 140 290 140 135 325 185 210 250 140 125 31 37 55 52 72 60 28 34 Table 48-2 Proposed Projects for Northcentral Required Man-Years .8 1.1 30 First Cost Net Annual Life Project ($ x 10) Benefit ($ 10) (years) A 1.2 270 10 B 2.6 415 20 .8 140 20 D 5.2 1075 10 E .5 90 10 F .2 20 G 1.9 250 40 H 4.5 910 10 I 3.9 845 20 J 2.7 600 10 K 1.1 230 10 L .6 90 20 M .4 51 20 N 2.4 660 10 0 3.1 470 40 P .6 125 10 .6 1.5 .4 .1 1.8 1.9 1.2 1.1 1.1 .4 .5 1.0 2.1 .8 BC at 10% 1.38 1.36 1.49 1.27 1.11 1.28 1.29 1.24 1.84 1.37 1.28 1.28 1.09 1.69 1.48 1.28 IRR (%) 18.31 14.98 16.70 15.98 12.41 13.89 13.06 15.39 21.20 17.96 16.28 13.89 11.23 24.40 15.11 16.18