ESSENTIALS OF VALUE i 
no insurance, will be nearly that of two buildings. In esti- 
mating the reproduction cost of the building, only one building 
would appear on the inventory, but in estimating its value, 
there should be added to the reproduction cost of the single 
building as otherwise determined, the sum necessary to insure 
its whole value against fire, and this sum should be added whether 
the owner actually paid it to an insurance company for carrying 
the risk or whether he assumed the risk himself. Similarly any 
other property which involves risk during its construction and 
testing should have added a contingent sum representing what 
the cost of insurance would be were there insurance companies 
to insure against such risks. 
“It is seldom that a large public service property is examined 
that there is not a disclosure of some large expenditure for works 
which have been destroyed, reconstructed, or not used because 
of faulty design or construction. In some cases this is dis- 
tinctly the result of negligence, but in a majority of cases such 
expenditures have taken place where the owners were not 
negligent in that they have taken due care in the selection of 
engineers to design and contractors to construct the work. 
They are the result of human fallibility. 
“ Many examples of failures have been furnished by masonry 
dams. A considerable portion of the Quebec bridge failed while 
in process of construction; there was a great slip in the Necaxa 
Dam, one of the highest earth dams ever built, when it was far 
advanced toward completion; the Loetschberg tunnel in Switz- 
erland encountered bad ground, which required the abandoning 
of the tunnel for about a mile and its relocation through another 
portion of the mountain; the change in plan of the new Croton 
Dam of the New York Water-Works involved an additional ex- 
pense of more than $1,000,000 for construction and interest. 
These are only a few instances of many which might be cited. 
Such disastrous occurrences are not contemplated by engineers 
when they make a provision for contingencies in preliminary 
estimates of the cost of works, but it seems proper in the valu- 
ation of an existing property which has been completed and 
successfully tested to recognize that the owner has been re- 
quired to assume the risk of accident and failure and should 
be compensated therefor by at least the amount which insurance 
companies would charge for taking such risks were they doing 
this kind of business. This feature may properly be included 
in the valuation by increasing the amount allowed for con- 
tingencies and risks.” 
8]