CONTACTS 
0201 - Morse Diesel, Inc.                 415 399 0905 fax 399 0945
020101 - Mr. Peter Rau; Operations Manager

SUBJECTS
Send product information, requesting give
Budgeting to Fail
Executive Mind Set/Practice
Overhead, Management is Unproductive
Cost/Benefit, Fear, Faith
Competitive Bidding

1008 -    ..
1009 - Summary/Objective
1010 -
101001 - Followed up work at ref SDS 9 line 27, ref SDS 6 line 25
101002 -
101003 - And ref DIP 1 line 30 to Morse Diesel.
101004 -
101005 - Demonstrated SDS and explained my service of Communication Metrics to
101006 - ensure budgeted earnings on projects are realized.  Peter feels Morse
101007 - Diesel cannot afford this support.
101008 -
101009 -    [See follow up at ref SDS 12 line 47.]
101010 -
101011 -
1011 -
1012 -
1013 - Discussion
1014 -
101401 - I demonstrated how SDS is used to capture the record of events to
101402 - protect the interests of a General Contractor.
101403 -
101404 -
101405 -  ..
101406 - Communication Metrics: New Tool to Manage Projects
101407 -
101408 - We reviewed comments from the CDWR project, ref SDS 3 line 63, showing
101409 - Communication Metrics improved earnings on PG&E's contract, per my
101410 - letter to Peter, ref DIP 1 line 28.  He indicated he read the New
101411 - World Order... paper explaining changes in the way work is performed
101412 - that requires SDS to convert information into knowledge, and that a
101413 - new kind of worker is needed who can do Communication Metrics.
101414 -
101415 -
101416 -  ..
101417 - Contracting Requires "Command & Control of the Record"
101418 -
101419 - I mentioned my background as a General Contractor which showed the
101420 - need for better communication tools that integrate time, information,
101421 - people and documents.  I created SDS to do it.  Since it turns out
101422 - that "management" is complex, automated management takes a special
101423 - person to use SDS initially, so I created the management science of
101424 - Communication Metrics to define that new role, similar to an
101425 - accountant, or schedule engineer which most organizations use.
101426 -
101427 -
101428 -  ..
101429 - Risk Management Ensures Estimated Earnings
101430 -
101431 - Peter is a former general contractor.  He had his own firm for 12
101432 - years.  He indicated awareness of the critical role General Conditions
101433 - play in obtaining the benefit of contractual provisions.  I noted a
101434 - recent study in PMJ on Risk Management that shows "problem handling"
101435 - is a major challenge on projects.  Contracting parties on both sides
101436 - typically fail to use the General Conditions of the contract until
101437 - after problems arise when it is too late to handle them effectively.
101438 -
101439 -
101440 -  ..
101441 - "Communications" Are Failing Everywhere
101442 - ---------------------------------------
101443 - The same study reports failed communications is the greatest cause of
101444 - project failures, ref SDS 7 line 113.  Peter said most of the problems
101445 - Morse Diesel encounters do not arise from miscommunications.  He feels
101446 - the design professionals, owners and other stakeholders do not follow
101447 - the contract.
101448 -
101449 - I mentioned Joel Koppleman with Primavera reported in a speech to PMI
101450 - last year, that they have the same kind of problem on their internal
101451 - projects.  His people wouldn't follow understandings on budget and
101452 - schedule; he felt they were not truthful, ref SDS 4 39200.  I
101453 - explained Communication Metrics discovers these problems before
101454 - mistakes occur that cause people to "circle the wagons."  Of course
101455 - competitive bidding inherently entails conflicts from the design
101456 - process over which the GC has no control.  Experience shows, however,
101457 - that, even here, effective Communication Control is the contractor's
101458 - strongest remedy.
101459 -
101460 -
101461 -  ..
101462 - Executive Mind Set
101463 - Budgeting to Fail
101464 - Cost/Benefit Ignorance Hampers Innovation
101465 -
101466 - Peter believes Morse Diesel cannot allocate a budget for another
101467 - manager to do "data entry" of meeting notes, reflecting the initial
101468 - reaction at the Corps of Engineers yesterday, ref SDS 10 8845, and
101469 - concerns about the cost/benefits of investing intellectual capital in
101470 - a real world setting, reported on 920210. ref SDS 1 8400
101471 -
101472 -     [See later view of "managers" as unproductive overhead that
101473 -  ..
101474 -     renders an organization uncompetitive, ref SDS 13 4692.]
101475 -
101476 - Better Management Improves Earnings
101477 -
101478 - I submitted notes of a meeting with CDWR and PG&E that shows how
101479 - Communication Metrics combines cost and schedule control with
101480 - communications, ref SDS 2 line 89.  Most managers simply use their
101481 - head to "integrate" these control methods on the fly using their
101482 - experience and judgement.  But as the work becomes more complex and
101483 - the pace of communication increases from more meetings, calls, email
101484 - and fax, the chance of error escalates.  Automated integration with
101485 - SDS improves the chances that managers will do this integration more
101486 - successfully and consistently.
101487 -
101488 -     [See follow up with Corps of Engineers to specify Communication
101489 -     Metrics to relieve concerns that improving the quality of
101490 -     management harms competitive posture, ref SDS 11 1008.]
101491 -
101492 -
101493 -  ..
101494 - Reduced Price to Evaluate Communication Metrics
101495 -
101496 - Peter seemed to recognize from a cursory examination of the CDWR notes
101497 - that they are not a "data entry" effort, and in fact comprise the
101498 - analysis contracting parties need to be successful.  His concern about
101499 - budget however remains.  I offered to reduce my usual fee from $100
101500 - per hour to $75 per hour for a month or so to enable Morse Diesel to
101501 - test its judgement about the added value of Communication Metrics.
101502 - This might entail attending their monthly meetings with the owner and
101503 - design professional, and meetings with their subcontractors, plus
101504 - internal executive meetings.  Maybe 5 - 10 meetings might be involved
101505 - at 4 - 6 hours each.  This would be about 40 hours, perhaps $3K.
101506 -
101507 -
101508 -  ..
101509 - Follow Up/Investigate
101510 -
101511 - I suggested Peter discuss with the Project Manager and Superintendent
101512 - whether the flow of information on the US Customs project warrants
101513 - this kind of support.  Since I am across the street from the project,
101514 - it seems like an ideal opportunity to determine if a General
101515 - Contractor can increase its earnings by improving communications in
101516 - the manner set out in the papers submitted to Morse Diesel.  That is
101517 - why I created SDS.  If it costs more that it earns, there is no reason
101518 - to use it.  Sometimes we have to experiment to find out if our
101519 - perception of cost/benefit is borne out by actual performance.
101520 -
101521 -
101522 -
101523 -
1016 -