Firm-specific infrastructure


Firm-specific infrastructure

In macro-economics the term infrastructure usually refers to public infrastructure. That is, that which provides or supports state services. There is also firm-specific infrastructure such as factories, private roads, capital equipment, and other infrastructural capital assets under private ownership.

The related term "firm-specific human capital" applies to the development of individual capital, social capital and instructional capital to specifically enable the activities of a particular firm or enterprise.

May be critical

So-called critical infrastructure includes some public and some firm-specific assets, for example, a private electric power utility would include assets such as transmission towers and transformers. For purposes of determining if they are "critical", it is their function, not their ownership, that matters.

Types of infrastructure

Information technology

Special terminology has evolved to deal with infrastructure that is devoted to information and communication. In this area in particular, public infrastructure may rely on a large number of private operators, e.g. Internet service providers, telcos, computer support and boot image service providers. The management of these assets is usually described in terms like:
*total cost of ownership and of operations
*technology lifecycle management
*information technology asset management
*supply chain management
*technology deployment methodology
*service level agreement.

According to Harry Zarek, a Canadian systems integration expert, these and "many other concepts are important to running a modern technology infrastructure." Such assets all would be considered firm-specific infrastructure.

Accounting treatment

Accounting for firm-specific infrastructure investment varies by jurisdiction. The GAAP framework is the most generally applied, though not followed everywhere.

In Canada, one focus of accounting reform efforts is to match Capital Cost Allowance for asset depreciation to either actual, or desirable, asset lifecycle of each type of asset. There are numerous tradeoffs in policy including the dangers of encouraging waste if assets too easily become a "writeoff", or failing to keep up with the technology of a rapidly changing industrial base.

With respect to information technology in particular this is a cogent concern, as toxic e-waste is becoming an increasing problem everywhere computers and cell phones are used.

In Canada the rapid writeoff of new technology has been linked to the goal of sustainability, so that only those assets which aid in energy conservation, materials conservation and waste reduction quality for favourable accounting treatment. "With respect to public infrastructure, this goal is being pursued a different way - via best practice exchange in sustainable municipal infrastructure, and government performance auditing."


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