how can i explain engineering economics to the layman

huangyhg

how can i explain engineering economics to the layman?
in the traditional estimating process, "cost plus" is the established norm. cost plus 20% on $1000 is obviously $1200.
i try to explain how using the divisible multiplier .8 ($12500) is the correct way to mark up a project 20% i am met with heated opposition, because they have always known 200 to be 20% of 1000. any suggestions?
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not sure, but if your are increasing it by 20%... you are effectively multiplying it by 1.2 or dividing it by (1/1.2)
dik
i'd be curious to know where "the correct way to mark up a project" came from.  that sounds like "the way we always did it" to me.  if you "mark something up 20%", you add 20% of the original cost to it and $1000 becomes $1200.  if you want "20% of the final price to be mark-up", then you need 1000/(1-.2)= $1250.  but i would never assume the latter method if it was just referred to as a 20% markup.