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PET685_1

Economics and Decision Analysis for Engineers

This is the study programme for 2019/2020. It is subject to change.


This course teaches the skills required for a key component of an Engineer's job - creating value by making decisions that yield optimal returns on the allocation of human and financial resources. Engineers perform technical work to support the business objectives of the organization they work for (corporation, government). It is therefore important that they understand that business because it will influence the judgments they make.
Economic evaluations provide the main source of the organization's information by which investment and operational decisions are made regarding the most effective use of resources. There are many subtleties and assumptions that underlie the apparently straight-forward economic calculations that are often seen. Consequently, a fundamental understanding of the concepts behind economic evaluation and of techniques for performing them within a petroleum context, are essential skills.
The many uncertainties inherent to the offshore business create considerable uncertainty in the value that can be realized from resource-allocation decisions. Consequently, there will be a strong emphasis on evaluating the impacts of uncertainty, managing its resultant risks and planning to exploit its up-side potential.

Learning outcome

The course provides understanding and knowledge of economic and business concepts, time-value of money, discounted cash flow, cash-flows, net present value and other economic decision criteria, the decision-making process, multi-objective decision making, decision-tree analysis, and value-of-information & flexibility. Some of the psychological and judgmental aspects of how people respond to uncertain and complex decision situations will be discussed.

Contents

This course teaches the skills required for a key component of an Engineer's job - creating value by making decisions that yield optimal returns on the allocation of human and financial resources. Engineers perform technical work to support the business objectives of the organization they work for (corporation, government). It is therefore important that they understand that business because it will influence the judgments they make.
Economic evaluations provide the main source of the organization's information by which investment and operational decisions are made regarding the most effective use of resources. There are many subtleties and assumptions that underlie the apparently straight-forward economic calculations that are often seen. Consequently, a fundamental understanding of the concepts behind economic evaluation and of techniques for performing them within a petroleum context, are essential skills.
The many uncertainties inherent to the offshore business create considerable uncertainty in the value that can be realized from resource-allocation decisions. Consequently, there will be a strong emphasis on evaluating the impacts of uncertainty, managing its resultant risks and planning to exploit its up-side potential.

Required prerequisite knowledge

None.

Recommended previous knowledge

Bachelor degree in engineering.

Exam

Weight Duration Marks Aid
Folder evaluation1/1 A - F
Portfolio evaluation:
  • 5 mandatory assessment 35%
  • Mid-semester test 25%
  • Final test 40%

All part of the folder assessment, must be graded E or better to pass the course. If a student fails or want to improve the grade, she/he have to take the whole course again the following year.

Course teacher(s)

Course coordinator
Reidar Brumer Bratvold
Head of Department
Alejandro Escalona Varela

Method of work

Lectures, Interactive discussions, compulsory assignments, self-study or group work. Lecture language is English.

Literature

Bratvold, R.B. and Begg, S.H. 2010. Making Good Decisions. Richardson, Texas, USA: Society of Petroleum Engineers plus selected papers.


This is the study programme for 2019/2020. It is subject to change.

Sist oppdatert: 19.08.2019

History