Link: http://www.etc-architect.com/?p=364
From ETC-Architect
As an architect you are often part of the company internal circus of budgeting with OPEX, CAPEX, ROI, TCO and similar. So this is why we are quickly being influenced by budgeting when we look a the most cost efficient way of an architecture. The problem with taking our lesson from the budgeting process is that that budgeting is used to divided costs into buckets usually based on a political power. Additional budgeting work on nominal costs instead of real costs.
So if we calculate real costs instead of calculating everything with the nominal costs a lot of interesting things are happening in todays world of zero to negative interest and commodity price indexes, as a lot of decisions are taken differently. A good example is the classic TCO of a in house server farm against AWS. Even when you do it nominal with some stipulations such as that the space present is free as it cannot be used for any other thing it is often a close one, but once you cost it in a way that takes the real values over time into account, the case gets much clearer into owning as little commodities that loose rapid on values is a really bad idea.
This example also demonstrates the weakness of the real cost models that accountants use, as the use the interest cleaned 1992 constant dollar that however is only constant in terms for a cross asset basis as it is only adjusted on interest and inflation. An specific asset class 1992 constant dollar on the other hand is something that is easy enough to calculate as all the national statistic offices have already taken care of this. As architects it is important that we know of these cost distinction especially when we do enterprise or business architecture, but even in other areas it does hurt to show a bit of acumen.
