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S U M M A R Y


DIARY: July 7, 1997 06:52 AM Monday; Rod Welch

Articles on risk management, contingency cost, information entropy.

1...Summary/Objective
2...Managing Capital Expenditures Construction Projects
3...Contingency
4..."Good Management" and its cost has a correlation with contingency
5...Uncertainty Analysis for Program Management
6...Entropy Information is "Noise," Makes Management Comedy of Errors
7...Everybody's Talking, Nobody's Listening, It's Too Noisy!
8...Management Implodes Under Rising Entropy Without Intelligence Support
......[Telephone Game is another name for management by guess and
9...An example of complex communications causing "entropy" may be Bill
10...Budgeting Cost of Better Communication


..............
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CONTACTS 

SUBJECTS
Proposal, Contract & Support
Cost/Benefit of Better Communications
Cost Benefit - Increase Usefulness, Reduce
Level of Effort, Calculate Cost Benefit
Overhead Managers are Unproductive
Risk Management, Contingency Analysis, Value at Risk
Conventional Management Practices
Measuring Communication Issues

1310 -
1310 -    ..
1311 - Summary/Objective
1312 -
131201 - Follow up ref SDS 40 0000, ref SDS 39 0000.
131202 -
131203 - This record reviews a series of articles that identify project risk
131204 - factors, primarily related to business risk, as opposed to pure risk
131205 - defined at ref SDS 38 8499.  There is no help on how to quantify
131206 - business risk potential in order to calculate a budget.  The basic
131207 - method is to use order of magnitude percentage factors by polling
131208 - internal "experts."  There is an interesting paper reviewed on
131209 - information entropy that relates cost growth to disorder in business
131210 - information which seems to support use of Communication Metrics to
131211 - provide business intelligence.
131212 -
131213 -
131214 -
131216 -  ..
1313 -
1314 -
1315 - Progress
1316 -
131601 - Managing Capital Expenditures Construction Projects
131602 -
131603 - There is a section beginning on page 47 about calculating contingency
131604 - based the degree of risk for major catagories of a project, ref OF 1
131605 - line 101.
131606 -
131607 - This article suggests using Monte Carlo calculations to identify value
131608 - at risk based on assumptions about escalation in broad cost areas,
131609 - ref OF 1 line 79.  There is no discussion about how to determine
131610 - ranges for probability classifications, except by refernece to
131611 - historical data peculiar to each organization, ref OF 1 line 55.
131612 - There is no listing of historical data provided and so this suggests
131613 - it is to be drawn from organiztional archives.  There is no
131614 - representation of the liklihood that such historical data is actually
131615 - available, nor of its quality. The result is that "historical data"
131616 - typically reflects the hunches of experienced people: hence, guess and
131617 - gossip.
131618 - ..
131619 - There is an assumption of a correlation between level of risk
131620 - and time.  The books shows that as the project progresses toward
131621 - completion, risk goes down, ref OF 1 line 56, again based on
131622 - historical norms.
131624 -  ..
131625 - The historical norms are not cited; and this view seems incorrect on a
131626 - couple of grounds.
131628 -  ..
131629 - Extra cost arises from discovery of defective work that needs to be
131630 - replaced, i.e., "rework.
131632 -  ..
131633 - This can be discovered at any time and lead to extra cost.  An example
131634 - is the waterstop problem on the Sacramento Waste Water Treatment plant
131635 - constructed in 1978 - 1981. Various concrete channels were
131636 - constructed, and were shown as work completed in the schedule. Perhaps
131637 - a year after initial channel walls were completed, it became possible
131638 - to water test the channels.  The channels leaked.  Material costs for
131639 - forms, rebar, waterstop increased to pay for the corrections.  It was
131640 - a disaster.  A cost account that looked like a huge winner, turned out
131641 - at the end of the job to make the project a failure.
131642 - ..
131643 - The method of calculating value at risk should be possible for
131644 - communications, since it relates to the success and therefore the risk
131645 - potential for mistakes of all cost factors.
131647 -  ..
131648 - We need to figure out how to develop the budget for managing a project
131649 - apart from assigning a percentage of total direct cost, but rather as
131650 - a measure of the value at risk, and physical needs of the work.  The
131651 - percentage method reflects historical norms, but we have a new
131652 - environment that is materially different from past history.
131653 - ..
131654 - When individual work components are assessed for risk to
131655 - formulate a contingency budget, this has an accumulating effect of
131656 - producing an overall project cost that exceeds the financial
131657 - parameters of prudent investment.  The solution to this is to
131658 - recognize the potentials for cost savings, which will balance overruns
131659 - in some accounts.  This is what occurs on actual projects.  Some
131660 - things will go better than expected and some things worse.  If we only
131661 - assess the potential losses, the project evaluation is skewed.
131662 -     ..
131663 -     Actually, its seems that the information entropy model,
131664 -     explained below, could support this point.  Does disordered
131665 -     information means that 50% of the time a positive result will
131666 -     occur and 50% of the time a problem will result?
131668 -  ..
131669 - As well the risk potentials represent the role of planning and control
131670 - called "management."
131671 -
131672 -
131674 -  ..
131675 - Contingency
131676 -
131677 - This article appeared originally in earlier PMI publication, the
131678 - Project Management Quarterly in 1978.  I got it from a re-print in the
131679 - publication "A Decade of Project Management" published by PMI in 1981
131680 - that assembles selected writings from PMI's publications during the
131681 - period 1970 to 1971.
131683 -  ..
131684 - This article provides analysis, formulas and graphs of a method to
131685 - calculate and manage contingency reserves for project investments.
131687 -  ..
131688 - Contingency is more "art" than science, ref OF 3 line 13.
131690 -  ..
131691 - Initial contingency amount is based on precedent and past practices,
131692 - ref OF 3 line 20.  The author says people "guess" about contingency
131693 - amounts, ref OF 3 line 217.
131694 -     ..
131695 -     The difficulty with this is the contingency is not
131696 -     predicated on the conditions of the work, but what is required to
131697 -     get budget approval.
131699 -  ..
131700 - The unsupported guesses, based on no list of possible risks, unlike
131701 - the list in the PMBOK, ref SDS 38 line 119, and in the section of the
131702 - book reviewed above, ref OF 1 line 32, is then used to construct an
131703 - elaborate formal calculation a bunch of bell curves that give the
131704 - appearance of being precisely determined.  The author recognizes this
131705 - at ref OF 3 line 349.  He calls them "educated guesses" but does not
131706 - say where the education is provided.
131708 -  ..
131709 - Actually, there are some risk factors listed under the heading classes
131710 - of uncertainty, ref OF 3 line 286.  These are only very general
131711 - explanations that overlook a lot of stuff that is included in the
131712 - PMBOK analysis, ref SDS 38 line 119.
131714 -  ..
131715 -
131716 - "Good Management" and its cost has a correlation with contingency
131717 - reserves, since bad management will generally exceed any budget.
131718 -
131719 -      [See article suggesting creating a management reserve for risks
131720 -      that materialize, ref SDS 41 line 235.]
131722 -  ..
131723 - This article did not turn out to be as helpful as initially it seemed
131724 - that it would based on the title.
131726 -  ..
131727 - It overlooks the randomness of communication failures that cause cost
131728 - variances.  Such variances occur regularly and strike high or low cost
131729 - matters.
131730 -      ..
131731 -      The next article on information entropy seems to recognize
131732 -      this point.
131733 -
131734 -
1318 -

SUBJECTS
Cost/Benefit of Better Communications
Communication Manager Fewer People More
Level of Effort, Calculate Cost Benefit
Overhead Managers are Unproductive
Risk Management, Contingency Analysis, Value at Risk
Noise, Too Noisy Cannot Understand Content,
Entropy Information Management Failure
Measuring Communication Issues
Entropy in Communications/Information
Entropy Degrades Management Information Access Fails on All Large Pr

4812 -
481301 -  ..
481302 - Uncertainty Analysis for Program Management
481303 - Entropy Information is "Noise," Makes Management Comedy of Errors
481304 -
481305 - This article is from the PM Quarterly compendium, ref OF 4 0001, cited
481306 - for the study on contingency analysis, above. ref SDS 0 0510
481308 -  ..
481309 - An "entropic" model is presented to manage costs on major procurement
481310 - for large projects.  The model recognizes that rising entropy degrades
481311 - management over time toward confusion and failure.  Without front-end
481312 - investment to organize the record of daily work, complexity compounds
481313 - disorder into error, conflict, chaos, and calamity.  Information from
481314 - continual meetings, calls, and documents increases confusion leading
481315 - to misunderstanding about the correct order of cause and effect.
481316 - Errors understanding communication eventually overwhelms people and
481317 - systems. ref OF 4 8448
481318 -
481319 -     Aligns with article reviewed on 960908 in PM Network reporting
481320 -     that communication is the key role in management. ref SDS 34 8888
481321 -     On 921127 technology executive reported that small, innocuous
481322 -     mistakes later turn into major problems. ref SDS 12 0674
481324 -      ..
481325 -     NWO cites Aristotle's rule that the least deviation from the truth
481326 -     compounds over time into major problems, ref OF 9 JV3G, and notes
481327 -     rising population and improved technology is a new reality that
481328 -     increases risks of error because constant information overwhelms
481329 -     people, causing management to implode without intelligence support
481330 -     that organizes and aligns the record. ref OF 9 TQ4O
481332 -      ..
481333 -     Earlier on 931130 review of Peter Drucker's book "Management:
481334 -     Tasks, Responsibilities, Practices" says people have given up on
481335 -     improving communication because the task is too complex.
481336 -     ref SDS 15 3851  Since communication is about 90% of a manager's
481337 -     time, reported for example on 960919, ref SDS 33 9834, and earlier
481338 -     on 890809, ref SDS 4 8812, giving up on this area explains why
481339 -     management degrades to entropy, as found by USAFIT, and
481340 -     necessarilyy presents a large opportunity for improving
481341 -     productivity, earnings and stock prices.
481343 -  ..
481344 - The authors explain the critical variables are time and the amount of
481345 - information.  Large, long term projects are most vulnerable.  This
481346 - article focuses on procurement of weapons systems to exemplify the
481347 - problem.  The same problem occurs in construction, ship building,
481348 - technology, services, education, research, government, health care,
481349 - everywhere.
481350 -
481351 -      [On 011003 entropy, more commonly called information overload,
481352 -      paralyzes productivity is a widespread problem caused by email.
481353 -      ref SDS 74 O76L
481355 -       ..
481356 -      [On 011006 report aerospace project encountered these
481357 -      difficulties. ref SDS 75 O99K
481359 -       ..
481360 -      [On 030506 aerospace company losing command and control of
481361 -      project to develop better command and control for future
481362 -      battlefield operations. ref SDS 78 KT5F
481364 -       ..
481365 -      [On 030830 aerospace project repeating mistakes that caused
481366 -      failure on past projects. ref SDS 81 TY9H
481367 -
481370 -
481372 -  ..
481373 - Management entropy explains the "rework" problem cited in a 1993 PM
481374 - Network article that recognizes traditional project management tools
481375 - are inadequate, ref SDS 13 4633.
481377 -  ..
481378 - Rework caused by complexity that overwhelms human span of attention is
481379 - explained in NWO, ref OF 9 6915 and ref OF 9 4077
481380 -
481381 -      [On 970711 began spreadsheet to build a model of information
481382 -      entropy, ref SDS 46 0000.]
481383 -
481384 -      [On 970710 article on Intel management shows "empowerment" leads
481385 -      to information entropy due to lack of management standards, see
481386 -      ref SDS 45 2009.]
481388 -       ..
481389 -      [On 970725 developed concept of using automated integration to
481390 -      transcend the either/or choice of discipline or innovation, so
481391 -      that discipline can bring innovation. ref SDS 47 6804]
481393 -       ..
481394 -      [On 971008 received report that rework causes cost growth due to
481395 -      information entropy, ref SDS 55 1273.]
481397 -       ..
481398 -      [On 980304 Bill DeHart reported example from PG&E project. see
481399 -      ref SDS 57 3392]
481401 -       ..
481402 -      [On 990126 communication snafu. ref SDS 68 3402]
481404 -  ..
481405 - Entropic cost model is described as "uncertainty analysis," and was
481406 - new at the time this paper was prepared oa 1975. ref OF 4 JP6I
481408 -  ..
481409 - This model seems to be applied to the inception phase of a project and
481410 - there is an assumption that the totality of information that affects a
481411 - project outcome is equally divided between "certain" and "uncertain."
481412 - ref OF 4 7488
481413 -
481414 -      The difficulty with this is that all information does not have
481415 -      equal weight.  Second, the role of management is to investigate
481416 -      and develop order to reduce uncertainty.  Third, there are
481417 -      degrees of certainty, rather than simply two classes.  Actions of
481418 -      people in meetings and other communications impact "certainty"
481419 -      throughout the course of events, so that some actions can reduce
481420 -      or restrain entropy, and others cause or accelerate it.
481422 -       ..
481423 -      If there is no feedback loop ("metric") in communications then
481424 -      uncertainty increases, as reported on 940111. ref SDS 16 4400 If
481425 -      there are no links to original sources, as specified by PMBOK,
481426 -      ISO 10006, ref SDS 22 1740, and as used in the Bible, then the
481427 -      impact of uncertainty becomes manifest.
481429 -       ..
481430 -      The idea that a large body of project information used to
481431 -      forecast completion results, is entropic, i.e., unsupported,
481432 -      seems like an opportunity for estimators to perform research for
481433 -      identifying original soruces.
481434 -
481436 -  ..
481437 - Everybody's Talking, Nobody's Listening, It's Too Noisy!
481438 - Management Implodes Under Rising Entropy Without Intelligence Support
481439 -
481440 - The entropic model developed by US Air Force Institute of Technology
481441 - (USAFIT) finds management fails when the rate of information flow in
481442 - meetings, calls and documents overwhelms people with complexity.
481443 - ref SDS 0 0611
481445 -  ..
481446 - Analysis on 890523 shows creating well ordered records organized to
481447 - make sense of complexity is hard work. ref SDS 2 A53H  Bureaucracy
481448 - creates documents that cause information overload.  Complexity,
481449 - confusion, and crisis cause mistakes and conflict. ref SDS 2 5W4O
481450 - Research on 910418 found that subject indexing is difficult, so people
481451 - avoid filing. ref SDS 7 5584  Documents pile up on desks, the floor,
481452 - coffee tables, computers, filing cabinets.  Eventually, people give up
481453 - and just file everything under "miscellaneous."  Complexity in the
481454 - record of daily work makes finding critical details in time to be
481455 - effective rare, like finding a "needle in a haystack."  Remembering
481456 - the gist of the story to rely on assumption is fast and easy in
481457 - continual meetings, calls, and documents, reviewed on 950204,
481458 - ref SDS 19 0550, and citing research on 900303. ref SDS 6 6689  As
481459 - diligence wains, assumption degrades management to bumbling, guess and
481460 - gossip, hunch and hope, see NWO, ref OF 9 FU6J, leading to Drucker's
481461 - observation reviewed on 931130 that new realities of information
481462 - explosion overwhelms people, ref SDS 15 1855, causing management to
481463 - implode without intelligence support that organizes and aligns
481464 - information to discover cause and effect. see again NWO, ref OF 9 TQ4O
481465 -
481466 -      [On 980307 Andy Grove cites new realities that impact management,
481467 -      requires working intelligently to prepare copious notes analysing
481468 -      work that avoids ambiguity of mental maps. ref SDS 59 1209
481470 -       ..
481471 -      [On 980613 tsunami information overload overwhelms span of
481472 -      attention new reality of information revolution caused by faster
481473 -      technology. ref SDS 66 3499
481475 -       ..
481476 -      [On 000307 knowledge management dilemma arises from "hard work"
481477 -      required to maintain order in the record for correctly
481478 -      understanding cause and effect, while reliance on remembering
481479 -      the gist of the story seems fast and easy. ref SDS 72 767G
481481 -       ..
481482 -      [On 010420 Jeff Conklin's article explains organizations have a
481483 -      weak ability to remember the past. ref SDS 73 IE4M
481485 -       ..
481486 -      [On 020504 study shows professional standards for communication
481487 -      practices and requirements on good management specified in FAR,
481488 -      ISO, Health Care, Covey, Drucker, law, contract notice
481489 -      provisions, and 2,000 years of literacy for contemporaneous
481490 -      documentation for alignment and feedback to work intelligently,
481491 -      quickly, and accurately are ignored in government, business,
481492 -      health care, every sector. ref SDS 77 NS6F
481494 -       ..
481495 -      [On 031215 Freeman's Lifestreams PhD thesis describes negative
481496 -      a feedback loop that degrades productivity because people resist
481497 -      proactive management organizing the record to be prepared for
481498 -      finding critical details when needed. ref SDS 82 K37H
481500 -       ..
481501 -      [On 040312 laws of nature yield order, structure, pattern of
481502 -      cause and effect for logical analysis, ref SDS 83 RP6K; locality
481503 -      principle requires adding energy to connect cause and effect that
481504 -      converts information into the power of knowledge, ref SDS 83
481505 -      YH4G; Knowledge Management takes a lot of hard work (i.e.,
481506 -      energy) without tools for intelligence support; however, rising
481507 -      information density drives management toward entropy, i.e.,
481508 -      disorder, bumbling, errors, loss, conflict, chaos, because
481509 -      meetings, calls, and documents, especially email are "killer
481510 -      applications" that kill productivity under the 2nd law of
481511 -      thermodynamics. ref SDS 83 566F
481513 -       ..
481514 -      [On 041012 medical management exasperating because staff fail to
481515 -      invest time for organizing the record, causing mistakes, delay
481516 -      and cost escalation. ref SDS 84 NV49
481518 -       ..
481519 -      [On 050722 Steve resists email written record; giving up on
481520 -      communication; wants verbal briefings; 300 unread email.
481521 -      ref SDS 85 RP54
481523 -       ..
481524 -      [On 051130 article in AIA Architect - during the past quarter
481525 -      century, documentation has grown significantly; projects that
481526 -      required only a few file boxes in the 1980s result in many times
481527 -      that amount today. ref SDS 86 Z16L
481529 -       ..
481530 -      [On 040312 order, structure, pattern comprise logical analysis;
481531 -      locality principle requires energy to connect cause and effect
481532 -      that converts information into the power of knowledge; hard work
481533 -      without tools for intelligence support; information overload
481534 -      drives management toward entropy that makes email a "killer
481535 -      application" that kills productivity, reviewed lectures on 21st
481536 -      century science. ref SDS 83 RP6K
481538 -       ..
481539 -      [On 060221 Jimmy said he gets so many email at the VA that
481540 -      his directory is full, and he does not have time to read the
481541 -      letters nor to delete anything. ref SDS 87 NT6J
481543 -       ..
481544 -      [On 070729 filing everything miscellaneous growing trend to
481545 -      give up on communications; people need support for context
481546 -      management to work intelligently. ref SDS 88 HE6N
481548 -       ..
481549 -      [On 070904 Gary Johnson commends high performance search engine
481550 -      tools; search technology is the current "holy graile" of desktop
481551 -      computing, similar to data mining, and business intelligence in
481552 -      the 90s, ref SDS 89 DU4Y, indexed search showing chronology of
481553 -      cause and effect yields the power of knowledge. ref SDS 89 PF4K
481555 -  ..
481556 - NASA's research of program failure following loss of the Challenger in
481557 - 1986 demonstrates the challenge of complexity big projects face,
481558 - reviewed on 921021. ref SDS 11 4499
481559 -
481560 -      [On 030826 NASA chief Sean O'Keefe said a culture of denial forms
481561 -      when people cannot perform requirements for good management using
481562 -      popular tools and methods approved by the bureaucracy; people
481563 -      ignore requirements as mere suggestions and guidelines, rather
481564 -      than experiment to discover tools and methods for meeting
481565 -      requirements in less time and for less cost, because people are
481566 -      afraid to notify management that requirements are not being met;
481567 -      when procedures for improvement require many to say yes, and only
481568 -      one person can say no, most everybody gives up. ref SDS 80 8K4G
481570 -  ..
481571 - Entropy described in the USAFIT report, ref OF 4 7488, makes
481572 - management a process of continual bumbling, a comedy of errors, where
481573 - managers cannot improve their work because they are too busy
481574 - expediting and handling problems they caused previously.  Henry
481575 - Kissinger cites "Alice in Wonderland" management, reviewed on 940609.
481576 - ref SDS 17 4238
481578 -  ..
481579 - Complexity of daily work, explained on 890523, ref SDS 2 SQ5L, causes
481580 - information systems to fail, per above, ref SDS 0 0611, so people rely
481581 - on personal memory and spontaneous, cursory analysis in conversation
481582 - and email that are inherently error prone because there is not a fast
481583 - and easy way to align daily communication with relevant work history,
481584 - objectives, requirements and commitements.  Small deviations go
481585 - unnoticed, falling outside span of attention.  A ripple effect soon
481586 - compounds meaning drift, reviewed on 960518. ref SDS 27 3734, into
481587 - misunderstanding that is transferred to others by paraphrasing and
481588 - omission of seemingly inconsequential details.  Over time the process
481589 - of compounding small errors cascades into a critical mass of bumbling
481590 - that eventually erupts into conflict, crisis and calamity, noted by
481591 - Aristotle in 400 BC, as explained in NWO.  Only then, do actual events
481592 - force attention on fixing mistakes caused by information overload due
481593 - to the chaos of entropy, as Morris reported on 921127. ref SDS 12 0674
481595 -  ..
481596 - Earlier, on 920128 Wayne Wetzel explained common communication
481597 - scenarios that reveal a powerful management dilemma where people love
481598 - listening, but hate SDS that enables accuracy. ref SDS 10 EZ9M
481599 -
481600 -      [On 011003 entropy, more commonly called information overload,
481601 -      paralyzes productivity is a widespread problem caused by email.
481602 -      ref SDS 74 O76L
481604 -       ..
481605 -      [On 030506 aerospace company losing command and control of
481606 -      project to develop better command and control for future
481607 -      battlefield operations. ref SDS 78 KT5F
481609 -       ..
481610 -      [On 030830 aerospace project repeating mistakes that caused
481611 -      failure on past projects. ref SDS 81 TY9H
481612 -
481614 -  ..
481615 - On 941209 example at PG&E of management difficulty when communication
481616 - fails during meetings because memories conflict. ref SDS 18 PK5M
481617 -
481618 -      [On 990303 research in cognitive science explains the human mind
481619 -      innately recodes information to aid understanding, commonly
481620 -      called paraphrasing.  Information overload, however, accelerates
481621 -      recoding above human span of attention causing meaning drift that
481622 -      causes continual mistakes, called bumbling. This leads to the
481623 -      entropy and cost escalation addressed in the AFIT article, which
481624 -      accelerates cost and delay. ref SDS 69 2838
481626 -       ..
481627 -      [On 981223 Tom Keesling wrote a memo to HQUSACE explaining how
481628 -      SDS improves management by strengthening accuracy of
481629 -      communication. ref SDS 67 HS8J
481631 -       ..
481632 -      [On 020217 Roy Roebuck explains how failed memory degrades DOD
481633 -      management to entropy. ref SDS 76 9360
481635 -  ..
481636 - The article supports studies reported on 950428 showing information
481637 - overload reduces management productivity. ref SDS 21 3921  It supports
481638 - Peter Drucker's report that people have given up trying to improve
481639 - communication, because the problem is too complex. ref SDS 15 3851
481640 -
481641 -      [On 981223 USACE manager reports meetings faile because nobody
481642 -      has time to find information, SDS solves the problem. ref SDS 67
481643 -      HS8J
481645 -       ..
481646 -      [On 020217 DOD program manager reports meetings degrade into
481647 -      entropy because people lack organizational memory, and SDS
481648 -      provides this new resource. ref SDS 76 9360
481650 -  ..
481651 - Rework caused by complexity that overwhelms human span of attention is
481652 - explained in NWO, ref OF 9 6915 and ref OF 9 4077
481653 -
481654 -      [On 000227 Dick Karpinski reports SDS avoids entropy. ref SDS 71
481655 -      2964]
481657 -  ..
481658 - The overwhelming biological drive to use bad management by taking
481659 - immediate action rather than work intelligently causes information
481660 - overolad that accelerates cost and delay due to continual bumbling
481661 - that requires continual rework under the entropic cost model.
481663 -  ..
481664 - The biological drive to use bad management is explained in POIMS.
481665 - ref OF 8 MQ6J
481666 -
481667 -      [On 990525 design professionals fail to develop an adequate
481668 -      record, and fail to review the record, contrary to policy and
481669 -      industry standards that require traceability to original sources.
481670 -      ref SDS 70 0966]
481672 -  ..
481673 - Continual bumbling is given the positive sounding name...
481674 -
481675 -                        problem handling
481676 -
481677 -      ...and...
481678 -                           expediting
481679 -
481680 - ...which give the appearance of progress under "feel good" management
481681 - practice, explained on 911123, ref SDS 9 1331, that relies on...
481682 -
481683 -                         guess and gossip
481684 -
481685 -      ...also,
481686 -                          hunch and hope
481688 -  ..
481689 - Information that is not organized, analysed and aligned, is commonly
481690 - called "noise" because it lacks "intelligence." ref OF 8 0582
481692 -  ..
481693 - The NWO... paper explains the impact of "noise." ref OF 9 0050
481695 -  ..
481696 - Examples across industry sectors are on 950327. ref SDS 20 0200
481698 -  ..
481699 - On 960205 a study that managers waste 70% of day in meetings. reflects
481700 - the compounding effects of communication that lacks alignment by
481701 - "busines metrics." ref SDS 25 5222
481703 -  ..
481704 - This shows the dominant role of communication in management, per
481705 - record on 970525. ref SDS 34 8888  The USAFIT article relates cost
481706 - growth as a function of entropy in communication.  Disordered
481707 - information results from "meaning drift" cited by Landauer in his
481708 - paper on LSA and knowledge acquisition, ref SDS 27 3734, and Cal Tech
481709 - seminar on project management, ref SDS 16 2074.  Meaning Drift arises
481710 - from the rate of receiving information, i.e., the correlation of time
481711 - and information, cited in Landauer's paper at ref SDS 26 6666.
481713 -  ..
481714 -
481715 -      [Telephone Game is another name for management by guess and
481716 -      gossip that causes information entropy. ref SDS 56 1526]
481717 -
481718 -      [On 970725 developed concept of using automated integration to
481719 -      transcent the either/or choice of discipline or innovation, so
481720 -      that discipline can bring innovation. ref SDS 47 6804]
481722 -       ..
481723 -      [On 970829 information overload and limited span of attention
481724 -      main problem of management communications, cited in book on
481725 -      Managing toward Accountability. ref SDS 52 2878
481727 -       ..
481728 -      [On 970910 executives do not have time to think. ref SDS 53 3479]
481730 -       ..
481731 -      [On 971008 USACE estimates cost of rework. ref SDS 55 1273
481733 -       ..
481734 -      [On 980304 Bill DeHart reported example from PG&E project. see
481735 -      ref SDS 57 3392]
481737 -       ..
481738 -      [On 980307 Andy Grove's book "Only the Paranoid Survive" says
481739 -      daily communication needs analysis to avoid ambuguity from
481740 -      reliance on mental maps. ref SDS 59 3668]
481742 -       ..
481743 -      [On 980316 example of rework caused by lack of notice, ref SDS 60
481744 -      1840.]
481746 -       ..
481747 -      [On 980412 CBS 60 Minutes reported on information overload
481748 -      problem. ref SDS 63 8956]
481750 -       ..
481751 -      [On 980417 report growth of Internet telephone lines, ref SDS 64
481752 -      2582; and, reduced earnings by firm where executives do not have
481753 -      enough time to think. ref SDS 64 4269]
481755 -       ..
481756 -      [On 980510 report that productivity declined and unit labor costs
481757 -      rose dramatically in 1st quarter of 1998. ref SDS 65 0000]
481759 -       ..
481760 -      [On 990126 communication snafu. ref SDS 68 3402]
481762 -       ..
481763 -      [On 990303 paper explains severe limits on ability of people to
481764 -      process information. ref SDS 69 6120  People "recode" information
481765 -      that causes meaning drift. ref SDS 69 2838]
481767 -  ..
481768 - The rate of entropy is impacted by the degree of congestion
481769 - (bureaucracy), ref SDS 38 5503.
481770 -
481771 -     Congestion is similar to complexity that relates to the number of
481772 -     organizations, people and processes that impact performance.
481773 -
481774 -        [On 980316 example of compound problem, ref SDS 60 2178.]
481776 -  ..
481777 - Information entropy results from "feel good management" cited on
481778 - 911123. ref SDS 9 1331; and later reviewed at Cal Tech seminar on
481779 - 921021, ref SDS 11 7486
481781 -  ..
481782 - Information entropy explains lawyers success in discovering forgotten
481783 - critical facts, and why executives fear keeping records, per meeting
481784 - with Morris on 890809, ref SDS 4 0070, and on 911121 reporting that
481785 - companies "purge" their records, ref SDS 8 5920.  An example of legal
481786 - discovery causing frustration and illustrating information entropy is
481787 - from the Santa Clara Jail project litigation, ref SDS 5 3890.
481788 -
481789 -      [On 980403 Max Blodgett advised of concern by USACE staff that
481790 -      managers fear accountability. ref SDS 61 4129]
481792 -       ..
481793 -      [On 980405 Bill DeHart advised that fear of accountability
481794 -      inhibits use of Communication Metrics to improve earnings. see
481795 -      ref SDS 62 5065
481797 -  ..
481798 - A study was proposed at Santa Clara University at ref SDS 23 7382,
481799 - based on original analysis of Communication Metrics with examples at
481800 - ref SDS 20 0023.
481801 -
481802 -      [See letter to University of Colorado on studying entropy using
481803 -      Landauer's LSA model, ref SDS 49 0070.]
481805 -       ..
481806 -      [See article on brain needs time to support learning, ref SDS 51
481807 -      8899.]
481809 -       ..
481810 -      [Book on management performance says communication is difficult
481811 -      and is primary cause of mangement problems, ref SDS 52 6666.]
481813 -       ..
481814 -      [See article executives don't have enough time to think, ref SDS
481815 -      53 3479.]
481817 -       ..
481818 -      [See rework source of cost growth due to information entropy, see
481819 -      ref SDS 54 2464.]
481820 -
481822 -  ..
481823 - An example of complex communications causing "entropy" may be Bill
481824 - DeHart's current project with Sprint and Bechtel, ref SDS 37 8211.
481825 - Article in PM Network gives example of poor communication causing $10s
481826 - of millions of dollars, ref SDS 35 7777.
481827 -
481828 - Another example may be Dave Vannier's project reported on 970603 at
481829 - ref SDS 36 5803
481831 -  ..
481832 - More examples are in the record on 950327 to define Communication
481833 - Metrics, ref SDS 20 0200.
481835 -  ..
481836 - The corellary would be cost reduction from providing "order" for
481837 - information, which is General Hatch's point about the value of
481838 - organization and analysis of information to provide business
481839 - intelligence. ref DRP 1 6172
481840 -
481841 -      [On 970711 began spreadsheet model to quantify information
481842 -      entropy, ref SDS 46 0089]
481844 -       ..
481845 -      [On 971008 USACE calculates cost savings from reducing rework
481846 -      caused by information entropy. ref SDS 55 1273]
481848 -       ..
481849 -      [On 970710 correlation between "empowerment" and entropy that
481850 -      degrades management standards at Intel. ref SDS 45 2001]
481852 -       ..
481853 -      [On 970728 "limitless budgets" buy off poor management caused by
481854 -      information entropy, from meeting at Intel. ref SDS 48 1144]
481856 -       ..
481857 -      [On 970708 asked Tom at USACE for comparable studies, ref SDS 43
481858 -      9607]
481860 -  ..
481861 - Research for developing the entropic cost model resulted in creating a
481862 - method to quantify in a structured manner the uncertainty of
481863 - information, ref OF 4 line 221.
481864 -
481865 -     This is particularly helpful, because it relates the concept of
481866 -     linking back to original sources.
481868 -  ..
481869 - The method to quantify "information uncertainty" seems to be based on
481870 - a polling of experts, ref OF 4 line 256, for an "optimistic, normal
481871 - and pessimestic" subjective guess procedure with respect to the
481872 - estimates of experienced practitioners in a particular field, for
481873 - example oil exploration, or weapons procurement, ref OF 4 line 238.
481875 -  ..
481876 - A "DELPHI" method was developed at the Rand Corporation, ref OF 4 line
481877 - 253, based on earlier independent work by C. Jackson Grayson in the
481878 - oil exploration business, ref OF 4 line 226.
481880 -  ..
481881 - Unfortunately, the paper does not offer any ideas on how to calculate
481882 - the amount of order or entropy in any set of information. The DELPHI
481883 - method is simply guestimates by "experts" who need do no more than
481884 - pick some numbers out of the air.  What would be helpful is research
481885 - identifying information entropy as a function of various factors that
481886 - can be identified, such as the number of meetings, reports,
481887 - organizations and so on involved in a project.  Generally, major
481888 - projects will specify communication elements, and these will spawn a
481889 - variety of other communications.  The ability to maintain order
481890 - degrades as a function of frequency, participants, issues,
481891 - commitments, and so on, similar to the randomness of mist in the wind,
481892 - which is the basis of the "straw in the wind" analogy, ref OF 6 line
481893 - 32, prepared at ref SDS 30, and ref SDS 31.
481894 -
481895 -      [On 970711 developing spreadsheet to build a model of information
481896 -      entropy. ref SDS 46 0089]
481897 -
481898 -
4819 -

SUBJECTS
Difficult to Calculate
Research How to Calculate
Cost Savings
Costs Overhead Increas Shows Rework
Information Entropy Errors Explosion of
Rework Avoid Cost Benefit Communication
Cost Savings Increase Span of Management
Cost Benefit of Change Risky to Adopt
Cost Savings Incredible, Conflict with

5911 -
591201 -  ..
591202 - Budgeting Cost of Better Communication
591203 -
591204 - The authors make the following blanket assertion:
591205 -
591206 -      The amount of effort expended naturally depends on the magnitude
591207 -      of the project and how much time and money management is willing
591208 -      to invest for information, a measure of the entropy in the
591209 -      information base, and the estimated cost outcome for a specific
591210 -      program. Certainly, the benefits as related to cost control
591211 -      should exceed the cost of administration, ref OF 4 line 300.
591213 -  ..
591214 - This is a happy conclusion since it seems to require a one time
591215 - expense to poll a bunch of "experts" on the amount of entropy in the
591216 - information base, ref OF 4 line 210, rather than to investigate the
591217 - information base to maintain order for effective decision support.
591218 - The Delphi approach seems to be to estimate the degree of poor
591219 - management that will occur and estimate its cost, then set that as the
591220 - budget.  Very few projects would survide such a process.
591221 -
591222 -     [See meeting with Intel on "limitless budgets" ref SDS 48 line
591223 -     333.]
591225 -  ..
591226 - The AFIT process is useful to develop a budget for "value at risk" so
591227 - management can readily see the cost/benefit of investing in
591228 - Communication Metrics to avoid cost growth by reducing information
591229 - entropy in performing the project.  There is also the opportunity to
591230 - discover income growth activities through alternate methods, etc., by
591231 - taking prudent risks.
591232 -
591233 -      [This positive aspect of creating order in information is
591234 -      discussed in another article, ref SDS 42 line 140.]
591236 -       ..
591237 -      [See follow up developing spreadsheet to build a model of
591238 -      information entropy, ref SDS 46 line 92.]
591240 -       ..
591241 -      [See USACE report on "rework" ref SDS 55 1273.]
591243 -       ..
591244 -      [Management training fails to cite cost of miscommunication that
591245 -      causes information entropy and rework. ref SDS 56 3481]
591247 -  ..
591248 - There is an interesting source cited in the bibliography:
591249 -
591250 -    2. Claude E. Shannon and Warren Weaver, The Mathematical Theory of
591251 -    (Communication (Urbana, Illinois: The University of Illinois Press,
591252 -    1949). p. 23 .
591253 -
591254 -    [Submitted email on Web to AF Institute of Technology at ref SDS 44
591255 -    line 107.]
591257 -     ..
591258 -    [See response on 970806, ref SDS 50 line 100.]
591260 -     ..
591261 -    [See request to Corps of Engineers for comparable studies, ref SDS
591262 -    43 line 115.]
591263 -
591264 -
591265 -
591266 -
591267 -
591268 -
591269 -
591270 -
591271 -
591272 -
591273 -
591274 -
5913 -