ESSENTIALS OF VALUE 3 
of the amount of general expense, of the cost of management, 
engineering and supervision of the expenditures due to unforeseen 
conditions, of unprofitable expenditures, and of losses by acci- 
dent, that would ordinarily be anticipated in the execution of 
similar work under the same general conditions. The finished 
plant if constructed under better than average conditions is 
entitled to a credit due to this favorable circumstance, and if 
constructed under adverse conditions, may not be entitled to an 
appraisal at full actual cost. 
The determination of the allowance which should be made 
for overhead expense is therefore a matter of considerable im- 
portance as will be seen from the quotations presented here at 
some length, which will give a fair idea, based upon experience, 
of the actual overhead expense connected with many public 
enterprises. 
The Special Committee of the Am. Soc. C. E. on the Valuation 
of Public Utilities is Cited on Overhead. — In reference to en- 
gineering as an overhead expense the Special Committee of the 
American Society of Civil Engineers on the Valuation of Public 
Utilities in the progress report which it submitted in January, 
1014, Says: 
Am. Soc. C. E. Committee, Engineering. — “ Under the head 
Engineering are usually included not only strictly engineering 
expenses, but those of other technical employes and of inspec- 
tors. It is difficult to draw the line between the preliminary 
engineering and that during construction, and it is probably 
best in most cases to include the part of the preliminary 
engineering expenses connected with the preparation of the 
final design of the works with those incurred during their con- 
struction. 
“The percentage of the cost of the work represented by engi- 
neering differs with the character of the works and with the 
amount of care and skill exercised in their design and con- 
struction. On railroads it is commonly estimated that the 
engineering cost will amount to 5 per cent of the physical valu- 
ation of the property, exclusive of overhead charges. Statistics 
of the cost of engineering are available in connection with several 
municipal and other works as follows: 
4% 
9,