520 BELL SYSTEM TECHS'ICAL JOURNAL 



plant must, of course, be started early enough so that adequate time 

 is allowed for completion of the construction work before the new 

 facilities are required. The complete interval between starting work 

 on such a project and getting it into service can seldom be less than 

 one year and in the case of building and central office e(|uipnicnts 

 must, of course, be longer. 



Enginkerinc; Cost Studies 



Owing to the complexil\- of the problem of suitable advance plan- 

 ning for the growth in the telephone plant as already discussed, it is 

 evident that in the study of plans for specific projects, selection must 

 gencralh' be made between a choice of arrangements, more than one 

 of which might satisfactorily meet the requirements of the service. 

 It is usually necessar\', therefore, that two or more practical plans or 

 programs for construction must be compared so that the most ad- 

 vantageous plan may be selected. An important factor in the selec- 

 tion of all of these ca-ses is a study of the relative economies of the 

 different plans; that is to say, a comparative cost study and as these 

 studies form such an important part of our engineering work, I be- 

 lieve it will be of interest to de\ote a few moments to a description of 

 the important considerations generally in\oIvcd. 



These engineering cost studies require analysis and consideration 

 of the cost and resulting annual charges for different amounts and 

 types of plant included luider each plan. The annual charges com- 

 prise items of expense incident to ownership of plant and those that 

 are incurred each year after its installation to keep it in operation and 

 in serviceable condition. As a general thing, in these cost compari- 

 sons, another interesting factor is aKso present; namely, most of the 

 plans which are compared call for expenditures to be made at difTerent 

 periods. For example, one plan might call for erecting a new building 

 at a new location immediately; whereas under the other plan being 

 considered, the necessary additional space required could be secured 

 liy adding to an existing building and deferring the complete new 

 project for possibly five or ten years. The relative economy of the 

 plans, therefore, cannot be determined directly by a detailed com- 

 parison of the expenditures involved or resulting annual charges, but 

 it is necessary in order to give a fair comparison to express the relati\e 

 costs of the different plans in terms of present worths, or equivalent 

 annuities which give figures for the total expense in which accurate 

 allowance is made for the variation of expenditures with respect to 

 time. 



