A life-cycle analysis of a multi-media teleconferencing network

Abstract

A large defense contractor has a need to acquire a teleconferencing network to link two factory locations to the customer site where systems operations are performed. The teleconferencing network will be used to conduct productive meetings with key personnel with no time or expenses lost to travel. The network must be on-line 24 hours a day and be able to transmit video, voice, audio, and fax data. The network is designed to send video, audio, and fax data over a satellite link via the use of a video codec. The network is also capable of performing a stand-alone audio conference, using the fiber-optic phone lines. The two factory locations are located in Philadelphia and Los Angeles and the customer site is located outside of Washington, D.C. The objective of the life-cycle analysis is to define system operational requirements, the maintenance concept, and required program planning information so that the system configuration and life-cycle cost can be determined. The life-cycle analysis includes a cost breakdown structure of the subsystem components of the teleconferencing network and a calculation of the total system cost. The total system cost is used in a lease versus buy analysis to determine the most cost effective method of acquisition. The life-cycle analysis shows that the teleconferencing network meets the communication needs of the customer/contractor party and, if implemented, can potentially result in a $500,000 annual savings in T&L expenses. Sensitivity to variations in the reduction in operating expenses estimate and the interest rate are also considered. A figure showing the relationship between the reduction in operating expenses estimate and the interest rate is developed to determine the best method of network acquisition for any given set of parameters.