When calculating budgets for the life of a project or a technology, depreciation and amortisation policies will impact on the calculations of costs and benefits, particularly in future years.
Depreciation
How depreciation is calculated and taken into account will depend on the locally applicable finance procedures. Where accrual accounting methods are used, depreciation is a significant factor that can heavily influence the bottom line of a project.
Unfortunately, items of technology, particularly computers, depreciate quickly. The rate of change in the computer industry is such that most computer items are obsolete within months of being purchased. Thus in many cases the value of computer equipment can depreciate so quickly that it can be 'written off' as worthless within 2-4 years.
Consequently, depreciation needs to be factored in to the budget strategy in accordance with local regulations or conventions. Replacement costs of obsolete technology will also need to be included.
Amortisation
On the other hand, if the life of a piece of technology can be extended so that it can be used over several electoral events, the cost of that technology can be amortised over that time. This will serve to reduce the longer-term cost of implementing technology.
This approach necessitates a deliberate decision to reuse technology even where it may in industry terms be obsolete. Provided that the technology continues to perform its intended service to an acceptable standard, this is generally sound practice.
In addition to avoiding the cost of upgrading to new technology, reusing existing technology has the advantage of familiarity, and avoids the pitfalls of implementing new, possibly untested, technology.
When deciding whether to reuse technology and amortise it over two or more electoral events, the cost of maintaining and if necessary upgrading or enhancing that technology should be weighed against the cost of replacing it. The most economic course will depend on the particular type to technology being considered and the timeframes involved.
See also Use or Disposal of Obsolete Equipment
