48 VALUATION, DEPRECIATION AND THE RATE-BASE
and efficiently constructed necessarily involve a larger cost for
engineering, which should be recognized in any valuation when
the works give evidence of such skill and efficiency.
“The cost of engineering for additions and extensions of a
property may be as large, or even a larger percentage of the
total cost than for the original plant, but under a continuous
system of regulation engineering for additions and extensions, if
charged to current expense, should not be included in the valua-
tion.
“It is sometimes suggested that no engineering charge should
be made in the acquisition of real estate, and there may be some
cases where such a view would be substantially correct. It is
frequently the case, however, especially where strips of land
are to be acquired, that the engineering cost is as great as for
other portions of the work.
“The record of the cost of the Wachusett Reservoir, where
the engineers had little to do with the acquisition of land other
than to prepare the plans of the lands and to make appraisals
of the mill property and water-rights, amounted to about 3
per cent of the total cost of the property acquired. The per-
centage would have been considerably larger if nearly all of the
property had not been acquired by purchase and very little by
condemnation proceedings.
“The records of the New York Water-Works show that the
engineering connected with the acquisition of land to the end of
September, 1913, amounted to 1.87 per cent of the total expendi-
tures on land account.”
Am. Soc. C. E. Committee, General Expense. — The same
committee in referring to general expenses says that these
include:
‘ All administrative, legal and other general expenses during
the period of construction. Such expenses include general office
rent, the salaries of the officers of the corporation and of the
secretary, treasurer, legal advisers, clerks and others. Statistics
showing the amount of such expenses in the case of corporations
are not available to the Committee. The statistics of munic-
ipal public service properties throw some light upon the sub-
ject, although generally defective in that the offices are fre-
quently in public buildings where no rent is charged and the
financial and legal duties are performed to a large extent by
those who receive salaries paid out of general funds.