Measuring Cost
[Note: this is a lengthier version of an article of mine which first appeared in Matthew Devries' legal blog, Best Practices Construction Law back in July]
As an architect and a concerned citizen, I frequently am required to evaluate the cost of a particular technology or artifact, and then voice my opinion or advise a client as to its value. In order to shed some light on some of the implicit difficulties in measuring cost, let’s take the seemingly innocuous case of weighing the merits of maintaining existing overhead power lines as opposed to running them underground (the grammatically unpalatable “undergrounding”). I hope I’ll be indulged if I write about cars, too, along the way.
Cost accounting is typically framed within the context of manufacturing or production. In this model, all contributing costs are determined (by one of several competing methods) only up to the moment a manufactured item (or "artifact" in Wiebe Bijker’s terminology) is produced. Thus contributing expenditures are the sole determinant of value; cost accounting is hence inherently historical. Furthermore, it is inherently consumerist: in its particular analysis of the cost of production it implicitly treats the artifact as relevant only through the production process; afterwards consideration for the artifact is discarded in effect by neglect. At no time are the costs of the consequences of the artifact considered.
Bijker’s perspective is far broader; his overarching concern is political currency. Such a perspective must account for an artifact’s cost — in his case a broad environmental policy — but of equal or greater concern are the ramifications of that artifact. In advocating a political, consensus-based methodology for evaluating expenditures, Bijker supports a democratic process whereby authority rests as much in how the artifact is used as it does in the technical expertise of the artifact’s scholars. His analysis is thus squarely in the phenomenological camp, concerned as it is with human experience as the foundation of value.
In some respects Bijker does not go far enough. For example, in his analysis of power and artifact, he takes a rather limited, above-the-waterline view of the automobile. The car is in fact two technologies: the technology of the artifact itself (the car qua particular machine), and the technology of the “ecosystem of carhood”. By the latter inelegant term I mean its embodied energy (the extraction, processing, and manufacturing of natural resources) and the consequences of its utility (in the form of hydrocarbon consumption, roads and the complex economic infrastructure which support this particular form of mechanized personal transportation). The individual may enter a power relationship with the particular artifact, but is de facto helpless against this “ecosystem of carhood”, as that system controls, or at the very least heavily influences, her regardless of whether she individually owns a car.
Put directly, Bijker is concerned with an artifact’s value; cost accounting is only about, well, cost.
Somewhere between cost accounting and Bijker’s social constructivism is Bradley Johnson’s engineer-like attempt to measure the cost and value of running power lines underground (“Out of Sight, Out of Mind?”, Edison Electric Institute, July 2006). This article points to some of the difficulties associated with calculating true costs (i.e., accounting for an artifact’s embodied energy and consequences). Johnson can fairly confidently make use of SAIDI and SAIFI data to compare overhead and underground electrical distribution system’s relative reliability, but he does not venture so far as to calculate relative lost productivity attributed to outages, nor lost billing opportunities to the utility company, nor emergency repair costs. Granted there are difficulties in differentiating between overhead and underground outages, and attributing losses to each. But when it comes to valuating qualitative factors like aesthetics, Johnson is at sea, in spite of his best efforts. In fact, his conclusions are at best ambiguous, at worst contradictory: he simultaneously cites cases of utility consumers being unwilling to pay modest sums for underground service, then concludes that communities regularly pay on the order of $1M per mile for conversion to such service. If anything can be determined from his conclusion, it’s that collectively consumers seem willing to pay what individually they refuse.
As helpful as it is in constructing an argument for overhead service (or preparing a defense against such an argument), Johnson’s methodology fails to properly account for value. Like cost accounting, it relies on historical production data, rather than a community consensus based on a phenomenological context for artifacts. An analysis of cost treats artifacts as objects (as in, “objectification”), pigeon-holing them as phenomena disassociated from their use, whereas considerations of value postulate that artifacts are meaningful as experiences in their broader social and environmental context. “Cost” is therefore not sustainable because it alienates artifacts from the environment, “value” is sustainable because it contextualizes artifacts as having agency within the larger environment.
As an architect and a concerned citizen, I frequently am required to evaluate the cost of a particular technology or artifact, and then voice my opinion or advise a client as to its value. In order to shed some light on some of the implicit difficulties in measuring cost, let’s take the seemingly innocuous case of weighing the merits of maintaining existing overhead power lines as opposed to running them underground (the grammatically unpalatable “undergrounding”). I hope I’ll be indulged if I write about cars, too, along the way.
Cost accounting is typically framed within the context of manufacturing or production. In this model, all contributing costs are determined (by one of several competing methods) only up to the moment a manufactured item (or "artifact" in Wiebe Bijker’s terminology) is produced. Thus contributing expenditures are the sole determinant of value; cost accounting is hence inherently historical. Furthermore, it is inherently consumerist: in its particular analysis of the cost of production it implicitly treats the artifact as relevant only through the production process; afterwards consideration for the artifact is discarded in effect by neglect. At no time are the costs of the consequences of the artifact considered.
Bijker’s perspective is far broader; his overarching concern is political currency. Such a perspective must account for an artifact’s cost — in his case a broad environmental policy — but of equal or greater concern are the ramifications of that artifact. In advocating a political, consensus-based methodology for evaluating expenditures, Bijker supports a democratic process whereby authority rests as much in how the artifact is used as it does in the technical expertise of the artifact’s scholars. His analysis is thus squarely in the phenomenological camp, concerned as it is with human experience as the foundation of value.
In some respects Bijker does not go far enough. For example, in his analysis of power and artifact, he takes a rather limited, above-the-waterline view of the automobile. The car is in fact two technologies: the technology of the artifact itself (the car qua particular machine), and the technology of the “ecosystem of carhood”. By the latter inelegant term I mean its embodied energy (the extraction, processing, and manufacturing of natural resources) and the consequences of its utility (in the form of hydrocarbon consumption, roads and the complex economic infrastructure which support this particular form of mechanized personal transportation). The individual may enter a power relationship with the particular artifact, but is de facto helpless against this “ecosystem of carhood”, as that system controls, or at the very least heavily influences, her regardless of whether she individually owns a car.
Put directly, Bijker is concerned with an artifact’s value; cost accounting is only about, well, cost.
Somewhere between cost accounting and Bijker’s social constructivism is Bradley Johnson’s engineer-like attempt to measure the cost and value of running power lines underground (“Out of Sight, Out of Mind?”, Edison Electric Institute, July 2006). This article points to some of the difficulties associated with calculating true costs (i.e., accounting for an artifact’s embodied energy and consequences). Johnson can fairly confidently make use of SAIDI and SAIFI data to compare overhead and underground electrical distribution system’s relative reliability, but he does not venture so far as to calculate relative lost productivity attributed to outages, nor lost billing opportunities to the utility company, nor emergency repair costs. Granted there are difficulties in differentiating between overhead and underground outages, and attributing losses to each. But when it comes to valuating qualitative factors like aesthetics, Johnson is at sea, in spite of his best efforts. In fact, his conclusions are at best ambiguous, at worst contradictory: he simultaneously cites cases of utility consumers being unwilling to pay modest sums for underground service, then concludes that communities regularly pay on the order of $1M per mile for conversion to such service. If anything can be determined from his conclusion, it’s that collectively consumers seem willing to pay what individually they refuse.
As helpful as it is in constructing an argument for overhead service (or preparing a defense against such an argument), Johnson’s methodology fails to properly account for value. Like cost accounting, it relies on historical production data, rather than a community consensus based on a phenomenological context for artifacts. An analysis of cost treats artifacts as objects (as in, “objectification”), pigeon-holing them as phenomena disassociated from their use, whereas considerations of value postulate that artifacts are meaningful as experiences in their broader social and environmental context. “Cost” is therefore not sustainable because it alienates artifacts from the environment, “value” is sustainable because it contextualizes artifacts as having agency within the larger environment.
posted by François Lévy at
11:29 AM
0 Comments
