Fundamentals of Financial Analysis for the Professional Engineer - a PDH Online Course for Engineers, Surveyors and Architects

Fundamentals of Financial Analysis for the Professional Engineer

Course Outline

The course 4 hour course advances the “standard engineering economics”, taught at the college or continuing education level. Participants will learn how to use, and not misuse, financial analytical tools (mathematics of finance) for the decision-making process specifically applied to: project evaluation and project management, costing, contract negotiations, employee evaluation, revenue, profit and cash production, valuation of assets including buying and selling professional engineering practices

The course covers the following major subjects:

Introduction into financial mathematics language
Analytical models: payback, time value of money, NPV, IRR
Use of Excel
Applications and dealing with your “CFO”
Misuses of NPV and IRR
Applying financial math to value all assets

This course includes a multiple-choice quiz at the end, which is designed to enhance the understanding of course materials.

Learning Objective

At the conclusion of the course, the engineering professional should:

be able to speak the math language of the finance industry;
be able to use financial math in business and personal decision making activities;
be able to interact with financial professionals including CFO’s CEO’s, Lenders and Investors;
be better suited for capital budgeting decisions that could affect their departments, divisions or entire organization;
be able to use payback method, Net Present Value and Internal Rate of return for tactical and strategic management;
be able to quantitatively analyze mutually exclusive projects or opportunities;
be able to rank opportunities, which are not mutually exclusive;
be able to use financial modeling to allocate limited budgets to the highest returning assets (Capital allocation);
be able to plan, coordinate and value assets for a more efficient operation;
be positioned to take a larger managerial role for your business, department or division;
be better aware of price versus value and the effects of interest rates to asset valuations (interest rate sensitivities); and
be better prepared in their personal financial planning decisions in wealth creation.

Intended Audience

This basic course provides value for any professional in any situation. The fundamental financial and analytical tools can be applied to lease-buy decisions, acquisitions and divestitures, capital budgeting and other personal/professional situations. On the surface, this may appear to be applicable for only managerial engineers, however, all engineers can benefit. Specifically, when an entire team understands basic time value of money, entire organizations benefit as all players are “pushing” in the same direction.

Benefit for Attendee

Direct benefits for the attendee include adding new financial modeling capabilities. In addition, when professional engineers can begin to interact with both technical ideas while coordinating with non-technical areas, like the finance or budget departments, smoother operations are in order. Indirect benefits are realized when the engineer can use quantitative and financial analysis to support their positions on technical or operating issues.

Course Introduction

Fundamental Financial Analysis is designed to advance the professional engineer within his or her field while introducing or re-introducing languages from other disciplines; namely, finance and accounting arenas. As engineers progress in their career, many become managers and owners requiring the profession to deal with other professions. It is easier for the professional engineer to pick up financial concepts than for a businessperson to understand engineering concepts. This should be an advantage that the professional engineer enjoys in the business arena.

With the advent of the computer, or more specifically the personal computer, budgetary analysis has taken on a greater meaning in that most, if not all, buyers are now requiring a justification of their decisions. This means the quantitative aspects of transactions must support decisions. As more quantitative activities increase, there is a need to understand both the advantages and disadvantages of such “quant” processes. Both buyers and sellers require financial justifications and Fundamental Financial Analysis targets the professional engineer in bringing that discipline closer to the finance and accounting professionals.

Course Content

The course content is contained in the following PDF file:

Fundamentals of Financial Analysis for the Professional Engineer

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Course Summary

The course introduces financial mathematical solutions in valuing assets. The breadth and scope of assets are infinite as these math tools can be applied to office machinery, office expansions, office relocations and selling the office (selling the engineering practice).

The mathematical solution tools included the payback method, net present value (NPV), and the internal rate of return (IRR) calculations to quantify options or opportunities presented. Furthermore, valuation techniques utilizing these tools were also introduced to show the span of these formulas.

The language of financial management is relatively easy to comprehend for the engineer. The professional engineer can better serve himself and his position by understanding financial concepts and financial modeling. The course is math-oriented in which the quantitative analysis introduced here can be utilized by buyers and sellers to justify a purchase. The trend that more and more buyers and sellers use quantitative analysis will continue and this course helps prepare the professional engineer in his business practices.

Quiz

Once you finish studying the above course content, you need to take a quiz to obtain the PDH credits.

DISCLAIMER: The materials contained in the online course are not intended as a representation or warranty on the part of PDH Center or any other person/organization named herein. The materials are for general information only. They are not a substitute for competent professional advice. Application of this information to a specific project should be reviewed by a registered architect and/or professional engineer/surveyor. Anyone making use of the information set forth herein does so at their own risk and assumes any and all resulting liability arising therefrom.