Unit 1: Introduction and Overview

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UNIT 1
Introduction and Overview
Welcome to Automation and Control Systems Economics, 2nd Edition. The
first unit of this self-study program provides the information needed to
proceed through the course.
Learning Objectives When you have completed this unit, you should:
A. Understand the general organization of this course.
B. Know the course objectives.
C. Know how to proceed through this course.
1-1. Course Coverage
This book covers the economic aspects of process control. It shows how
the tools of economic and financial analysis can be applied to process con-
trol projects. Techniques are presented for making reasonable cost and
benefit estimates and project evaluations.
The focus of this course is directed toward the multiple steps that are
needed to convert a control idea into a realistic project proposal. Benefits
must be identified and estimated, costs must be estimated, and the worth
of the project must be tested to see whether it has a chance for approval.
Where necessary, risks must be factored into the estimates.
This is neither an engineering economy textbook nor a calculation manual.
Some calculation procedures are described, but the overall emphasis is on
reasonability rather than precision.
1-2. Purpose
The purpose of this book is to provide an understanding of the economics
of control. The basic tools of economic analysis are presented, then applied
to realistic process control projects and proposals. From these applications
a student can see how to use the tools and what factors are likely to have
the greatest influence on profitability. A framework is provided for consis-
tent estimation of costs and benefits, including the incorporation of risk
into calculations.
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4 UNIT 1: Introduction and Overview
1-3. Audience and Prerequisites
The book is designed to serve a fairly wide range of engineers and manag-
ers. The primary audience will be those who prepare and review control
project proposals. This probably includes the majority of instrument and
control professionals in the user community. The young control engineer
who is pulling together the information for a proposal should find this text
especially helpful.
Consultants and sales engineers are an additional possible audience. The
book will help them show their clients how their particular services and
equipment can contribute to profitability.
No mathematics beyond algebra is needed, although some exposure to
statistics and probability will be helpful when covering Part 2. No com-
puter skills are required, but part of Unit 6 will be easier to follow if the
student is familiar with spreadsheets.
1-4. Study Material
This textbook is self-contained. It is uniquely and specifically designed for
self-study. No other study materials are specifically required for this
course.
Suggested references for additional reading are provided in Appendix A.
The student who has had no previous exposure to engineering economics
may find it useful to go through the introductory chapters of one of the
standard engineering economics texts listed in Appendix A.
1-5. Organization and Sequence
There are fourteen units. Unit 2 defines the basic concepts discussed in the
units that follow. The remaining units are grouped into three parts. Part 1,
which includes Units 3 through 7, goes through the steps needed to con-
vert a control idea into a realistic proposal. Units 3 and 4 cover benefits.
Costs are discussed in Unit 5 and project evaluation in Unit 6. Finally, a
detailed example that shows the application of each step in the control of a
major industrial process is described in Unit 7.
Part 2, which includes Units 8 through 12, expands the areas covered in
Part 1 to include risk. Units 8 through 10 go back through the topics cov-
ered in Units 4 through 6, showing how to evaluate risk and incorporate
risk factors into calculations. Unit 11 discusses strategies to minimize risk.
A detailed example of the control of an actual process is presented in Unit
12. The example includes significant technological risk.
UNIT 1: Introduction and Overview 5
Readers with dissimilar levels of experience may approach the book dif-
ferently. A thorough knowledge of the material presented in Part 1 is a
necessary condition for understanding Part 2. Those without much pro-
posal experience should go through Part 1 in detail before going on to Part
2. Those who have already been exposed to cost and benefit calculation
can review Part 1 more quickly and then concentrate on the effects of risk
and uncertainty discussed in Part 2.
Part 3, Units 13 and 14, applies the concepts developed in Parts 1 and 2 to
discontinuous processes. These include batch processing and discrete part
manufacturing.
Each unit contains example problems to illustrate specific concepts, and
exercises to test the readers understanding of the material. These exer-
cises are an integral part of the presentation and should be reviewed by
the reader. Appendix B includes solutions to all exercises.
1-6. Course Objectives
When you have completed this entire book, you should:
A. Be able to identify the significant benefits that are likely to result from
a control improvement.
B. Be able to quantify the benefits and present them as a cash flow table.
C. Be able to estimate project costs and present them as a cash flow table.
D. Know how to evaluate a proposed project, using any of several
evaluation procedures.
E. Understand the importance of risk factors and know how to
incorporate them into calculations.
F. Appreciate the strategies used to minimize risk.

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