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Saad Haj Bakry, PhD, CEng, FIEE 1 Economic Evaluations Saad Haj Bakry, PhD, CEng, FIEE P RESENTATIONS IN N ETWORK M ANAGEMENT
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Saad Haj Bakry, PhD, CEng, FIEE 2 Objectives / Contents Cost / Expenditures Benefits / Revenues Background in Economics Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 3 Background in Economics Evaluation Methods Change of Value Cost & Benefits Basic Principles Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 4 Basic Principles Symbol FactorCriteria CCost / Expenditures “Cost Reduction” (maintaining requirements / management) BBenefits / Revenues “Maximizing Benefits” (efficient use / charging policy) ECost-Effectiveness: E = B / C ttime Investigation time scale. Break-Even time: E = 1. Optimum Life: Maximum E Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 5 Types of Cost / Benefits IssueTypeExplanation Estimation Problem Tangible Can be quantified directly and assigned a monetary value: e.g. cost of equipment. In- Tangible Difficult to quantify and given monetary value: e.g. staff frustration Operation / Time Recurring Continue to occur through the life of the project: e.g. maintenance cost Non- Recurring Usually occur at the beginning of the project life and do not occur again: e.g. initial investment. Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 6 Change of Value (with Time) FactorExplanation Reference Time / Year t = 0 Reference time (year) for the evaluation of real worth values Proportional Change of Value (positive or negative) Effect of “inflation” Effect of “borrowing” Combined Effects: “discount rate” Change: v(t) Real Worthv(t) = vRV(t) = V(t) / (1+v) t Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 7 Evaluations: Cash Flow Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 8 Evaluations: Investment State Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 9 Evaluations: Efficiency Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 10 Cost / Expenditures Cost Management / Policy Place Network Operation Network Structure Staff Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 11 Network Structure Access / Services Sub network: Access Points Servers Communications Communications Sub network: Switches Channels Installation / Testing Consulting: Planning (Legal, Technical,..) / Design Capacity / BW = Cost Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 12 Place / Staff Training Land Building Offices / Furniture Lighting Air-Conditioning Water Cooling Salaries Other Staff Benefits Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 13 Network Operation Monitoring & Control Preventive Maintenance Help-Desk: Fault Repair Cost of Other Management Functions … Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 14 Cost Management / Policy Contracts / SLAs: Service Level Agreements Distribution of Cost / Criteria Cost Reduction / Resource Sharing Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 15 Service Level Agreements: SLAs Users: Associated with Different Internal Department Internal SLAs Internal IT Department: Computer Services / Intranet External SLAs Resources Suppliers Services Providers Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 16 Cost Distribution: Organization Intranet Centralized Cost is paid by “top management” Top level “overheads” Distributed Cost is distributed among the departments of the organization “Distribution Criteria is needed. Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 17 Cost Distribution: Criteria CriteriaDescription SharesCost is distributed according to specified weights of shares SizeCost is distributed according to size: “employees” / “space”.. ProfitCost is distributed according to “profit” or “loss” UseCost is distributed according to traffic “generation” / “flow” Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 18 Cost Reduction Equipment: Buy / Lease / Rent Operation / Maintenance / Staff: Considering SLAs (Specialized Companies) Sharing Resources Balancing Demands and Resources Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 19 Sharing Resources Examples: Long Distance Channels Management Software Information Services Staff Advantages: Cost Sharing Less Cost per Department Capacity Utilization Cost Effectiveness Problems: Increased Management Complexity / Control & Security / Performance Level Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 20 Benefits / Revenues Management Of Revenues Dimensions of Benefits Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 21 Dimensions of Benefits Time Saving Time Increasing Productivity Geography Saving Movement Saving Space Form: Enhancing Quality / Supporting Management Efficiency / Better Security P ROPER U TILIZATION Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 22 Management of Revenues Tariff Policy Services Competitiveness Busy Period Issues Management Cost v. Revenues Public Services of Non-Urban Areas Future Development: Cost of Expansion / Upgrading / Replacement Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 23 Conclusions Cost / Expenditures Evaluations: Use of Economic Principles Benefits / Revenues Interaction Time / Progress Efficient Management Economic Evaluations
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Saad Haj Bakry, PhD, CEng, FIEE 24 References General Network Planning, ITU-T Telecommunications Management: Operation & Management of Networks, National Computing Centre (NCC) Training, UK. R. Jamal-Aldeen, S.H. Bakry, A. Nouh, “Analysis of the cost-effectiveness of information networks with applications”, International Journal of Network Management, Vol. 100, No. 2, pp.91-101, March / April 2000. Economic Evaluations
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