Engineering Economics

ENGINEERING ECONOMIC ANALYSIS SERVICES

As with any investment of capital, energy projects are typically justified and funded based on their ability to improve an organization's financial performance. Financial performance is based on the ability to increase profits (the bottom-line) either by increasing revenues or reducing costs. Other factors such as sustainability or risk management can also influence approval, but the financials are critical. The method of analyzing a project's financial performance is called engineering economic analysis.

Engineering economic analysis collects all of the cash flows associated with a project, and calculates various performance metrics. Typical cash flows for energy projects include:

Design and Construction Costs (capital)
Grants, Rebates, Incentives, and Tax Credits (outside funding)
Decreased Costs of Operation (O&M)
Salvage Value (asset value at end of term)

Typical performance metrics for energy projects include:

Internal Rate of Return and Modified Internal Rate of Return
Simple Payback and Discounted Average Payback Periods
Net Present Value

Dakessian Consulting utilizes a sophisticated spreadsheet tool that can model your energy project to calculate its financial performance. Modules provide flexibility to analyze multiple scenarios, and to generate a sensitivity analysis. A thorough economic analysis can help your project to obtain funding, and to ensure that the results are verified.

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Dakessian Consulting, LLC

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