Exercise 27: Understanding the built-in operating cost attributes

Fixed assets and leased facilities

1. If you look at the Costs dialog for the DSLAM chassis resource, you will see that it defines a cost for the ownership and maintenance of the DSLAM as an owned asset, as well as an overhead operations cost.
2. The Line rental resource, in contrast, defines a cost as a leased facility, i.e., money paid to a third-party facility operator.

Costs for leased facilities are defined on a straightforward connection, rental and usage basis. In this exercise we are going to focus on the meaning of the fixed assets and overhead cost attributes.

3. Note the values entered for Maintenance Cost and Operations Costs for the DSLAM chassis.
4. Recalling that just one unit of this resource is installed in Q1 2007, what results would you expect these two inputs to generate?

Operating costs and draw precedents

5. Draw the graph Operating Costs for the DSLAM chassis.
6. Press <F2> to Draw Precedents, which should show the separate Maintenance Cost and Operations Cost results.

Operations Cost, as an activity cost, is one of the specific cost attributes which contributes to the overall Operating Costs result. This is rather an unfortunate collision of terminology and well noted.

Maintenance cost and operations cost

7. Is the Maintenance Cost lower in 2007 compared to 2011? If so, why? (Set Consolidation to Year to make it more straightforward to do the comparison.)
8. You may find it helpful to show the graph as a separate table to check the exact numbers.
9. Can you explain why the Operations Cost is gradually increasing? Reset Consolidation to Quarter to see exactly when it increases. What other result could you use to predict these increases?
10. How does the Cost input in the Editor relate to the quarterly results you can see here?
11. Save the results workspace before you continue to the next exercise.