The purpose of this document is to discuss costing methodology and assumptions used in generating the cost of moving UNC's 16 campuses up to an acceptable baseline specification. This information was used to generate the final costing figures for this project.

The costing methodology was developed with assistance from the UNC Network Team, consisting of over a dozen campus network specialists and a group of supporting consultants. This team developed a comprehensive baseline network specification, implemented the data gathering, and established and verified the costing factors of the model. Their continuing support throughout the project ensured a consistent collection of campus network inventory information and, ultimately, the campus cost to move to baseline.

The costing model accommodates the various network designs used throughout the UNC system. The methodology was developed around establishing a baseline of functional infrastructure components required to meet the needs of all campuses. Once these functional components were defined, it was then possible to use them in the model to directly compare and combine different infrastructures and needs. Developing the cost model using these components and cost factors allowed the inventory information from each campus to be compared priced and summed.

To check the validity of the model, actual network installation costs were gathered based on costing information from NC State and UNC-Chapel Hill, who have completed recent network costing studies. The team reviewed the average cost of over 15,000* drops installed on the NC State and UNC-CH campuses. It also reviewed over 40 actual vendor bids from around the state (to bring the total number of drops analyzed to over 20,000). The overall cost rates were reviewed in detail for 15 buildings and 3500 actual drops, as well as several campus design estimates. Additional information was obtained from a variety of national and regional network costing guides and the experience of the Network Study team. These data were all merged and a consensus developed as to the final number to be use for each cost factor in the financial model.

These cost factors were further verified against actual construction costs in the state and were found to compare favorably as long as they are projected as total cost of a campus and/or System project. This model's pricing is most accurate at a campus or System level, due the heavy use of cost averages. Because of the time limits of the study, verification was done to the floor of every building, but not to the room.

* Drops compared were not standard baseline. They consisted of one each Category 5, voice, video and RG58 cables from network closet to room drop.

The following information defines and quantifies the cost factors that drive the expense of a baseline network implementation. These factors are used in the pricing model developed by the Network Study Team. These factors were applied to the needs inventory of each campus to achieve the cost to reach baseline. The ultimate cost estimates represent an average cost for similar network installations across the system. The campus costing information was then summarized into a total number for the system.

Asbestos

$15,000 per affected building

If a building contains asbestos and if the installation of the building network would cause the asbestos to be disturbed, the affected asbestos must be removed and carefully disposed. It is assumed that the network design will try to avoid disturbing asbestos whenever possible. The incremental cost of handling the asbestos problem in any affected building is shown in the above factor. Experiential data from the campuses showed that the asbestos cost ranged from $1,000 to $40,000 per building, with $15,000 being a conservative average. This study did not attempt to identify the asbestos contaminated areas or to come up with a formula for removal costs.

The 'asbestos state' of a campus was developed using information from the UNC "Facilities Inventory and Utilization Study" book. The cost of avoidance was determined using the campus flooring numbers from this book. We assume that all buildings built prior to 1980 contained asbestos. The sq. footage of these buildings was determined and then the numbers of buildings to be added to the backbone were multiplied by the ratio of pre-1980 to post-1980 buildings. Without knowledge of the exact location of asbestos on each campus, this estimate is seen as a good representation of the cost.

Design

$45,000 per project

This factor is added to the overhead as directed under North Carolina Policies and Procedures. Each construction bid is required to have Design and Construction oversight at a fixed rate of 8-10% per contract. An additional cost for project management of 2.5% has been added as well. The cost of design (as mandated by state procedures) needs to be added to the total cost of the project. Physical documentation (as-builts) and either electronic or paper drawings are included in this factor.

MDF - The Main Distribution Frame

$125,000 per MDF

The outside fiber-optic cable on each campus is connected together in an network MDF closet. A campus may have more than one of these, and depending on space availability, any number of buildings may be connected. In order to come up with a baseline number, the assessment team chose a minimum specification of one MDF per 12 buildings. If a campus has more than 12 buildings connecting into any MDF, the number will reflect that percentage, (e.g. 24 buildings connected to one MDF will double the price). This factor includes a UPS system and fiber termination on one side of all fiber strands. The cost of the other side of the fiber is included in the BDF (Building Distribution Frame) factor. Additional money was added to this cost factor to provide for backbone electronics needed to support the network.

MDF-MDF connectivity

$50,000 per 250 feet

In cases where multiple MDFs exist on a single campus, special connections need to be made between these locations. These costs are for the additional conduits and distances needed to make the connection between MDFs. For the purpose of this study, a baseline distance of 250 ft was used. As with the MDF factor above, if a university decides to combine MDFs, it is assumed that the distance between them would increase and in those cases this factor would be multiplied.

OCP - Outside Cable Plant (priced at hundreds of linear feet)

$5,000 per 100 feet

Wherever possible, it was assumed that fiber would be run directly from a building to a MDF. Because of the various distances on the campus, the team decided to use a figure of CLF (hundreds of linear feet) to measure this cost. Therefore, if a conduit run is 250 ft, the cost will be 2.5 times the OCP factor.

BDF - The Building Distribution Frame

$30,000 per building

The BDF is the place where the outside cable plant is terminated and the inside cable plant begins. Each building should have a BDF per the baseline specifications. This factor includes: termination of the outside cable plant; building entrance; coring; waterproofing; fireproofing; equipment racks; and electronic equipment, at 100 MBPS switched, to support the rest of the building.

IDFs - The Individual Distribution Frame

$9,000 per floor

The IDF is the wiring closet nearest to the end user. This allows networking staff to service a user's connection without having to disturb the classroom or office. For the purpose of this study the team has assumed: a wiring closet with no copper cable run greater than 300 ft.; 144 terminations for 48 drops per closet; and one closet per floor. The IDF factor does not include electronics. Termination of fiber risers from the BDF and termination of copper cables pulled in the horizontal-wiring are included.

IDF Electronics

$7,000 per 48 switched Ethernet ports

In order to support the baseline specifications developed by the UNC Network Team only one connection per drop was determined to need initial electronic support. The baseline stated that these ports would be switched 10 base-T (10 MBPS) but did not specify a vendor, which will ultimately be chosen through a bid process. For the purposes of this study, all cost are based on average brand list prices. This approach was chosen because of the diversity of equipment already installed on the various campuses of the university. By selecting the average cost for suitable electronics, the study assumed that any vendor's equipment could be supported by the pricing model. This factor is an average list cost of such a "standard" device.

Horizontal Wiring

$1,200 per drop

Because of the need for asbestos avoidance, the team used a standard length of 200 ft for an average drop. The baseline standard states that three lines will be installed on ladder rack or a conduit/wiremold system. This factor supports those assumptions. The state DOI (Department of Insurance) requires that electrical fire and safety codes be followed. Therefore some demolition of existing wiring, fire stopping of cored holes and other issues must be verified and corrected before a project is completed. Additional money was added for work in the dorms because of the need to do most the work in a short period of time (summer break).

HVAC (Heating Ventilation and Air Conditioning)

$10,000 per building where needed

While some money was allocated to closets for ventilation, no funding was included in the model for the design of air conditioning for a building (or wiring closets). While this is not needed in many buildings, and the ventilation fans will work in most cases, some wiring closets will require additional cooling. The network team added additional funds, where noted, from the campus surveys on a case by case basis. This is usually a problem in older, unair-conditioned buildings.

The following items were not included in the scope of this project. The UNC Network Team recommends that these items be reviewed as part of any detailed network design project.

Campus Infrastructure (other than data) -- It is important to review the other aspects of the campus communications infrastructure at the same time that the data infrastructure is being designed. Whenever a campus plans for the costly installation of data wiring and conduit, any other potential telephony and video needs should be integrated to minimize total overall cost. Each campus designer should inquire about the needs of the voice, video, safety (campus police, alarms, security), and other services to ensure enough conduit is installed for all services.

Disaster Recovery -- While not included directly in this study, this has a major impact on the design of the network, the MDF location and size, the size and function of the outside cable plant and other issues. It is important that this be included in future discussion of networking infrastructure.

Electricity -- Logically for every connection, there would need to be a power outlet within six feet. The costs of this outlet and/or upgrading the campus electrical systems to support personal computers were not included in this study.

Electronics -- The study assumes that the electronics in offices and departments are capable of connecting to an Ethernet backbone. The costing model does not include:

• Upgrades to PC's from terminals
  
• Ethernet cards or cables to connect devices inside of the actual rooms of the buildings being networked.

Grounding -- The study deals with both types of grounding (safety and electrical) differently. The safety ground supporting the data electronics, racks and raceways is included in the pricing model.

All electricity delivered to the network closets is assumed to be grounded at 5 ohms or better. This is needed to run computer equipment. The study assumes that the building power is adequate for the network electronics and is within the National Electric Code (NEC) specifications. These costs are not included in the cost model.

Lightning Protection -- The study did not look at these issues.

Project Change Order Control -- Policies and procedures for best practices in network planning should be followed. In order to avoid additional expenses, it is important to avoid ad hoc changes to wiring contracts.

Operational Costs -- None of the costs involved in the daily operation of a network have been considered. It is vitally important to the viability of the network that these needs be defined and included in future projects/budgets.

OSHA Rules and Regulations -- This study did not include any funds for manholes and confined space permits or equipment. It was determined at the beginning of the project that manholes and fiber splices throughout the campus would be held to an absolute minimum.

Remote Access -- The team did not include any aspect of remote access, modem pooling or other technology to allow commuting students, faculty and staff to access the campus networks.

Remote Sites -- The study did not address small sites that were located more than several blocks away from the main campus.

Refresh Technology -- The UNC system should decide how often electronic equipment should be replaced. This has a direct impact on many operational and maintenance costs. Equipment replacement every 3-5 years, because of age and functionality, is commonly used for electronics.

Space -- The study calls for space to be allocated for the use of MDFs (Main Distribution Frames), BDFs (Building Distribution Frames), and IDFs (Individual Distribution Frames), but does not mention how that is to be accomplished.

Servers -- The study did not look into the cost of any type of servers needed to support the network (e.g. domain name, e-mail, IP addressing, security, registration, etc.)

UNC inter-campus backbone -- No funding was allotted for the impact in this area. Once the vision and the baseline network for the UNC Systems have been set, the inter-campus network requirements need to be addressed. If this baseline funding is approved, the UNC System will add many more users and connections to each of its campuses and the impact on the inter-campus backbone will need to be studied.

Voice -- While voice lines share a common closet with the network lines and the horizontal cable drops include voice grade lines, these were not included in the study. Voice lines were included in both the MDF and BDF rooms only for safety and testing reasons, and dry circuit lines were included in the IDF (Individual Distribution Frames) for testing purposes. Again, it is important to review the cost issues of the entire campus infrastructure.

Video -- Video distribution, remote conferencing, video broadcasting or the infrastructure to provide these services were not included in any part of the study. However, the assessment team did receive a list of video ready rooms at each of the campuses.

The envisioned project to buildout networking on all the campuses in the UNC system to the "Minimum Baseline" is going to be costly. Therefore, the system needs to search for areas with the potential for significant cost savings and areas where good project management and control can be applied in order to prevent cost overruns. The system's size and purchasing power can ensure better than average prices to acquire the products and services needed to move its campuses up to the baseline level of network technology. The System's size also will provide challenges to achieving these efficiencies due to the widely varying demands of the campus communities.

The key to achieving cost savings in the buildout is a good understanding of the basis of the numbers used in the assessment study. The numbers were developed based on historical cost data from a variety of sources, including significant cost analysis by several system campuses. The study numbers represent averages obtained when installing large numbers of networking drops and are shown at list (non-discounted) prices. While every campus and building will have its own sets of challenges and opportunities to achieve savings, it needs to be understood that some of the building and campus cost estimates will be higher than projected and some will be lower. There is no way to tell until each project is designed and discounts by vendors are applied. These planning numbers are averages.

With this in mind, we can describe several areas of potential savings when building out the campus networks to baseline:

• Design Costs: The State allows for an 8-10% design fee on construction projects and this has been included in the cost estimates. By allowing each campus to hire its own design staff, or better yet by centralizing the design function, these services may be acquired for lower rates. This can allow improved costs while guaranteeing the consistency and quality of the work. This concept also applies to design, construction or project management and/or the hiring of consultants.

• Acquisition Costs: With the need to competitive bid much of the products and services for moving each campus to baseline, the natural reaction would be for each campus to separately create bids for materials, electronics, labor, design and project management. This is time consuming, expensive and the consistent quality of the work cannot be assured. A more collaborative approach to bidding can reduce the cost of the bidding process, capture the economies of scale that the UNC system can demand in the marketplace, and ensure consistent, high quality design and installation of the added network infrastructure. Key to achieving these benefits is a bid process that generates a common set of requirements specifications, consolidates common materials needs (where possible), defines true unique requirements for each campus, and ultimately requests vendors to provide a tiered pricing response. This tiering provides different pricing levels depending on the number of campuses who select the vendor's products and/or services. At the end of the process the best pricing has been achieved and each campus can select the vendor and products that best meet their needs.

• Planning the workload: A good designer can do between 10 and 20 buildings or 15 medium size projects a year. As always with good planning capital expenditures can be planned out and the financing can be predicted, allowing for lower debt load or better financing terms and conditions.

• Teamwork: Cross-unit teamwork in many areas is the key to success for universities today and networking is a notable example. It is critically important to leverage the significant human resource represented by the networking expertise in the UNC System. These internal experts need to serve as advisors and consultants to the campuses when and where needed. In addition, System's size provides it with the opportunity to use this team building model to have network designers, capital plant fund mangers (directors), campus building architects and even in some cases, housing and registration staffs come together to make up a team. This type of cross-unit team can save significant money for the campuses by coordinating and jointly planning work. For example, if a dorm needs to be wired, housing can help in the schedule of work. They know when the students will be out of the building and when they need to be back in. They know which major renovations, painting, plumbing etc. are scheduled for the building and if any "summer" or "break" use is planned. By coordinating work, moving "break" users and making sure cleaning and painting work is done once not twice, the entire university can save money, not only the networking staff. The same goes for furniture or other capital expenditures across the campus as well as for long range plans. Some campuses have networked a building not knowing that it was going to be demolished for a new large building in two years. This results in having to discard not only the interior cost, but having to replace the outside cable plant and resize it as well.

• Quantity Discounts: The campuses can work together and potentially with state and private purchasing specialists to help negotiate contracts for the services, materials and supplies needed by the campuses. Opportunities exist to have vendors include value-added services, such as extended warranties and special delivery services. For example, large materials suppliers like Anixter and Graybar have the capability to stock the necessary large quantities of equipment; wiring and other components and provide "just in time" delivery to the installers. They can provide this type of service if they have a contract specifying the "projected usage" for a year or more. They have been known to provide free inside "second story" delivery on a just-in-time mode, saving warehousing, stocking and labor. These types of creative procurement approaches can provide significant savings to the vendors, which translates to excellent prices for our System projects. Additionally, through a collaborative bidding process, UNC campuses can negotiate large statewide contracts with the network electronics vendors through which the campuses can acquire this equipment at very attractive prices.

• Long Term Services Discounts: Project management and installation vendors are often willing to provide lower rates when provided with a guarantee of a long term contract and/or a large set of projects, for example; the installation of 10,000 drops over the course of a year. As the campuses contract with these type of vendors over several projects and months, future savings can be negotiated as the teams become familiar with the campus, contacts and working conditions and their productivity increases.

• Coordinated Network/Facilities Planning: While this may seem like an easy thing to do, local campus politics often interfere with optimizing a campus' financial resources during construction. Most networking costs are included in the F&E (Furniture and equipment) lines on new and major modification architectural plans. A problem frequently occurs when a new building or major remodeling project has overrun its budget, at which time the F&E line in the project usually gets cut and networking along with it. This apparent short term savings to the project is turned into a future cost multiplied by a factor of 10 when the network infrastructure must be re-designed and added later. The likelihood of such expensive actions can be reduced if the campus physical plant staff works with the campus network staff to eliminate these actions. Part of the solution to these problems is to integrate the required network specifications into all building space requirement specifications and to require the sign-off by the campus networking staff before any changes are made in the network plans for any major facilities projects. By establishing a close working relationship between these two groups, future construction projects can be known ahead of time and provisions for ensuring network connectivity for construction and major remodeling project can be made in advance, resulting in reduced overall costs.

• Media Installation Integration: Currently many of the System campuses are simultaneously planning to extend their voice, data and video networks. The electronic integration of these networks is close at hand (or here today, depending on whom you ask) and the integration of the physical installation of these media can result in significant savings. On campuses that are planning (or will need to plan) for major upgrading of their voice and/or video networks, significant savings can be achieved by combining these projects. The labor and conduit for a data project can cover a majority of the expense of upgrading voice and/or video networks by pulling mixed media at the same time.

• Execute the plan: Finally, the best way to save money is to plan strategically, have comprehensive tactical designs done and then STICK TO THEM. Change orders are the most costly of all of networking drops to install, so good advanced planning accompanied by focused execution is the key to cost control on major projects such as will be required in the baseline buildout.

Last Modified 5/21/98