Saad Haj Bakry, PhD, CEng, FIEE 1 Economic Evaluations Saad Haj Bakry, PhD, CEng, FIEE P RESENTATIONS IN N ETWORK M ANAGEMENT

Saad Haj Bakry, PhD, CEng, FIEE 2 Objectives / Contents Cost / Expenditures Benefits / Revenues Background in Economics Economic Evaluations

Saad Haj Bakry, PhD, CEng, FIEE 3 Background in Economics Evaluation Methods Change of Value Cost & Benefits Basic Principles Economic Evaluations

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

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

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

Saad Haj Bakry, PhD, CEng, FIEE 7 Evaluations: Cash Flow Economic Evaluations

Saad Haj Bakry, PhD, CEng, FIEE 8 Evaluations: Investment State Economic Evaluations

Saad Haj Bakry, PhD, CEng, FIEE 9 Evaluations: Efficiency Economic Evaluations

Saad Haj Bakry, PhD, CEng, FIEE 10 Cost / Expenditures Cost Management / Policy Place Network Operation Network Structure Staff Economic Evaluations

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

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

Saad Haj Bakry, PhD, CEng, FIEE 13 Network Operation Monitoring & Control Preventive Maintenance Help-Desk: Fault Repair Cost of Other Management Functions … Economic Evaluations

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

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

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

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

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

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

Saad Haj Bakry, PhD, CEng, FIEE 20 Benefits / Revenues Management Of Revenues Dimensions of Benefits Economic Evaluations

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

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

Saad Haj Bakry, PhD, CEng, FIEE 23 Conclusions Cost / Expenditures Evaluations: Use of Economic Principles Benefits / Revenues Interaction Time / Progress Efficient Management Economic Evaluations

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 , March / April Economic Evaluations