lec_03 - MIT OpenCourseWare http:/ocw.mit.edu 1.133 M.Eng....

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MIT OpenCourseWare http://ocw.mit.edu 1.133 M.Eng. Concepts of Engineering Practice Fall 2007 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms .
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Project Evaluation MIT Department of Civil & Environmental Engineering
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Outline • Motivation for Projects – NPV of Cash Flows – Capital Budgets – Cost Effectiveness – Economic vs. Financial Assessment • Broader Social, Economic, and Environmental Issues • Environmental Impact Assessment (Susan Murcott)
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What Is a Project? For the planner (dreamer?): A vision, a dream or a hope A monument A way to solve a problem For the construction company: A specific task to be completed within a specific time A way to make money through construction For the owner: Potential benefits over the life of the project A way to make money through operation A monument For others: Potential improvement in opportunities, environment, etc Potential disruptions and degradation in environment
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Major Project Examples Venice Gates (MOSE) Grand Canyon Skywalk University of Phoenix Stadium Photo courtesy of kenyaoa on flickr. [Link to: http://www.flickr.com/photos/kenya/572992856/]
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How Do We Justify a Project? Is this project worthwhile? Are the benefits greater than the costs? Is this the best way to achieve these benefits? Can similar benefits be achieved more efficiently by some other approach? Is this the best place to allocate resources? Do other projects have greater payoff? Are other types of benefits more important?
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What Does it Take to Implement a Project? Financing Sources of funds sufficient for design and construction Government Approval Land use regulations Environmental regulations Safety regulations Resources People, with various skills Materials Energy Social Acceptance (or manageable opposition)
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What Does it Take to Implement a Project? •F i n a n c i n g • Government Approval • Resources • Social Acceptance or Manageable Opposition IT DOESN’T HAVE TO BE A GOOD PROJECT!!! Image courtesy of davipt on flickr. [Link to http://www.flickr.c om/photos/davipt/1 63219067/]
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What Does it Take to Sustain a Project? Financing Sufficient income to cover expenses User fees, subsidies, contractual payments Government approvals (inspections, licensing, etc) Engineering Sufficient maintenance and renewal to perform at an acceptable level of service Resources People and materials as required for maintenance and operations of infrastructure As required by users of the project Public support (or tolerable opposition and interference)
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Financing Where does the money come from to cover the costs that are incurred? What returns are necessary to attract capital?
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This note was uploaded on 12/04/2011 for the course ESD 1.133 taught by Professor Ericadams during the Fall '07 term at MIT.

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lec_03 - MIT OpenCourseWare http:/ocw.mit.edu 1.133 M.Eng....

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