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First Things First Thanks for taking time out of your busy day to read my very first blog post on ChEnected. I have a diverse ChE educational background from working as an environmental engineering intern at a nuclear site to studying surface science and semiconductors for my graduate thesis. After school, I worked in a traditional petrochemical plant developing filtration systems and modeling kinetic processes. Then I moved into a series of supervisory and managerial positions before launching a successful start-up company specializing in strategic innovation coaching, consulting, and training. I call innovation and new product development learning a "mini-MBA". So, I hope that sharing this breadth of experience as a chemical engineer will help you increase your effectiveness as you advance your career along either a technical or managerial path. I'm anxious to learn what you face as your biggest challenges, so please post your feedback or questions in the comments section. I'm especially interested in helping technical teams to communicate better with all levels of management. With lots and lots of business topics open for discussion, we'll first focus on Engineering Economics. Later, we can add items of interest, worksheets, tutorials, and whatever else fits your needs. Let's get started on this exciting journey! Part I - Introduction Have you ever noticed that your boss uses a lot of phrases like the following?
- How much will it cost?
- What will our savings be?
- Show me the cost/benefit analysis.
- What is the budget for that project?
Yes, I know that your project has some really awesome technology and that you've got armloads of data sliced, diced, and statistically analyzed to the nth degree. You've sketched PFDs (Process Flow Diagrams) and created both kinetic AND thermodynamic models. But, there he sits across the desk, daring to ask seemingly trivial MONEY questions!
Aha! The silver lining in this cloud is that your boss completely and wholeheartedly endorses your technical abilities. After all, that's why you spent 4 or 5 years in college and that's good news! On the flip side, companies indeed do need to make money to buy supplies, to purchase raw materials, to produce advertising campaigns, to pay taxes, to pay your salary, and to invest in your project. Therefore, money is important. With a chemical engineering education, you will find that economic calculations are simple and intuitive. Let's take a quick look at some of the "numbers" we'll be covering in this blog series.
- Part I - Introduction (here)
- Part II - Time Value of Money
- Part III - Financial Statements
- Part IV - Operating Costs
- Part V - Inventory
- Part VI - Taxes
As an extra bonus, understanding simple financial calculations so you can actually talk to your boss, will also help you understand investing in your personal portfolio allowing you to more fully pursue your dreams of owning a house, putting the kids through college, and a healthy retirement.
Comments
Teresa, Your post is key, proper economic evaluation of ideas is vital to the success of any business. With streamlined staffs and ever decreasing budgets, discerning how to find the "right stuff" to work on is critical, only sound economic evaluation can accomplish this task. The toughest job for me as a “Bo$$” is not being able to fund all the great ideas our engineers present to us, therefore I must make sure the ideas that are funded will provide the stated benefits opposite our corporate goals. We look forward to additional posts. Rich
Looking forward to the next installments. My position deals mostly with the part where we make it happen, it is always good to learn more about the upstream work - other than "make it happen for less money and faster!".
Thanks Rich for your insightful comment.