THE ORIGINS OF ENGINEERING ECONOMIC CALCULATIONS: THE CONTRIBUTION OF W. THOMSON (LORD KELVIN) AND V. G. SHUKHOV TO THE FORMULATION OF THE REDUCED COST CONCEPT
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THE ORIGINS OF ENGINEERING ECONOMIC CALCULATIONS: THE CONTRIBUTION OF W. THOMSON (LORD KELVIN) AND V. G. SHUKHOV TO THE FORMULATION OF THE REDUCED COST CONCEPT
Annotation
PII
S020596060000525-9-1
Publication type
Article
Status
Published
Authors
Stanislav Vasil'ev 
Vladimir Kluchko
Pages
563-572
Abstract
The paper reviews the history of emergence of the reduced cost concept which is very important for economic calculations. The methodology for using this concept has been the methodology predominantly used for feasibility analysis of different technical solutions throughout almost the entire 20th century. The originators of this methodology were two great minds of the 19th and 20th century, W. Thomson (Lord Kelvin) and V. G. Shukhov. They were the first to realize that, while tackling the practical engineering tasks, technical features only may not be sufficient for obtaining the best engineering solution, and to employ additional, economic data for this purpose. The mathematical formulas they used for their calculations are practically identical to the modern reduced cost formula and may be directly used for finding the optimal engineering solutions. Without these calculations, electrical power engineering and oil industry would have hardly developed at such torrid pace.
Keywords
W. Thomson (Lord Kelvin), V. G. Shukhov, reduced cost, cost-effectiveness, optimal solution, electric power transmission, oil pipeline
Date of publication
01.07.2017
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0
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