The Bell Systeiri Technical Journal 



January. 1925 



Engineering Cost Studies' 



By F. L. RHODES 



In rK()i)i( TKiN 



Tm-I ^ulijcct assigiicnl to me in the ".Notes Rc'Kardinj; the Pro- 

 i;r.im of the Conference" is "The Theoretical Principles of 

 Kcononiic Studies and Tlieir Possible Application in I'ndergraduate 

 Courses." With your permission, I shall digress somewhat from a 

 literal consideration of this title. I shall not undertake to deri%e 

 formulae, to set up efjuations and to obtain maxima and minima 

 from them. The mathematics can readily be obtained from available 

 sources. On the other hand, I shall attenipt to outline the field for 

 economic studies in engineerini; work, usini; iilusi rations drawn from 

 telephone engineering practice. 



What is an engineering cost study? When you or I reiich a de- 

 cision to purchase a certain pair of shoes, making a selection from 

 an assortment ranging in price from (say) So to S15, we have per- 

 formed, consciously or unconsciously, some of the reasoning of an 

 engineering cost study. Among the factors influencing our decision 

 will be the probable length of ser\-ice life of different pairs, as well 

 as the ability to extend this by an expenditure, to be made at some 

 future time, for maintenance as represented by new soles and heels, 

 which, perhaps, can be applied economicalK' to a moderately costly 

 pair but not so to the cheapest. 



These two elements, depreciation and current maintenance, are 

 factors entering into engineering cost studies but they are not all 

 of the factors. Whether we have the necessary capital in hand, or 

 are obliged to hire or otherwise raise it, the annual cost of the capital 

 must be taken into consideration, and treatment of the matter of 

 flepreciation is incomplete without consideration of sal\"age value 

 and cost of removal. 



Thus, unless we pursue our inve.stigalion into tletails that arc not 

 ordinarily considered when buying shoes, it is evident that our 



' .Votes of a Talk given at the Bell S\stem Educational Conference, -August, 1924. 



1 



