The subject of Engineering Economics and Ship Design has been treated in a general way as the intention is not to include any extensive coverage of formal economics or detailed ship design, but to show how the two are related. The standpoint is that of the practising designer who needs sufficient information to evaluate the technical and economic performance of alternative designs of ships and their equipment. While many of the techniques may be used by shipowning management, it is not the primary purpose of this book to assist decisions about whether to build, when to build, or where to build, but rather what to build.

It is only in the last decade or so that rigorous economic evaluations have been seriously applied to ships. There would appear to be three principal reasons for this change:

(i) The scope for making the wrong decisions in ship design has increased greatly with expansion in ship sizes and types, together with novel concepts. Until recently, the decision depended more on whether to build rather than what to build, as each succeeding ship design was usually a modification of an earlier one. Now, as one design of ocean-going ship can be 100 times larger than another, the scope for poor investment multiplies correspondingly.

(ii) It is axiomatic that a ship design must be the best for the job, but technical criteria such as minimum resistance are not enough. It is widely recognised that the main criterion must be of an economic nature, giving full weight to technical factors in its calculation. The optimal design is that which is most profitable, in the sense described in Part II.

(iii) There has been increasing complexity in the financial conditions surrounding ship procurement. Traditionally, new ships were largely financed out of retained profits, but now cheap loans, accelerated depreciation, subsidies and tax relief all add greatly to the difficulties of estimating ship profitability.

The principles of engineering economy are straightforward, and engineers find no difficulty in making the detailed calculations, al though of course there are computer programs available.