Showing posts with label Value Engineering. Show all posts
Showing posts with label Value Engineering. Show all posts

20090712

Eclipse of Reason



“He who fights with monsters might take care lest he thereby become a monster. And if you gaze for long into an abyss, the abyss gazes also into you.

Friedrich Nietzsche

Exiting the office I pull open the door to the hall to find a solitary butterfly frantically seeking a familiar environment as its wings beat furiously against the stale air of corridor with no ventilation. Mesmerized I watch unable to decide what to do, captivated by the poetic movement I watch the dieing moment of something remarkable and beautiful. The hall is devoid of any recognizable refuse in which each of us can seek comfort. Graceful pirouettes are silhouetted against the battleship grey drab interior of the hallway as panic increases in the frightened winged insect. Concerned that I might injury this fragile butterfly I decide to ignore its plight after staring listlessly for an extended period as pity swallows me. As helpless as the trapped butterfly, I turn my back retreating into the false sanctuary of my office. The image continues to haunt me as I wonder if the butterfly was able to escape the confines of the barren cold hall, while knowing that its fate was sealed the moment I turned my back on it. As the door snaps shut with a deliberate finality my mind recites a phase buried in the subconscious since childhood “There But for the Grace of God go I”.

This simple witness of desperation in the reality of hopelessness was the perfect idiom to one of the most disheartening personal repudiations I have endured in over thirty years of business. The residual effect won’t be understood for many years to come, as I restructure my views of the world that surrounds me. The sense of disbelief is debilitating as I find it hard to accept, so let me try to explain. We have a client that I have worked on and off for in excess of thirty years, always attempting to bring value to our relationship. In considering the needs of the client we saw and opportunity to expand their mission by understanding of how sustainability could be implemented in their business model. Recognizing that they did not have the resources to invest in the future we voluntary donated our time and effort to create the vision and the consensus to adopt this very forward plan of environmental leadership. Our personal investment was in the thousands of dollars because it was the right thing to do. After presentations to the board, president and complete acceptance of the direction, we identified a funding program unknown to the owner. We then invested more of our time at modest cost to them to write a grant in which they received almost a million dollars to implement the program we devised.

Elated at our success we were informed that according to procurement policy they where required to request public bids for the implementation of the grant program. Somewhat disappointed we understood the process and responded to their request for proposals which required another substantial investment of time. Being short-listed with three other firms for the project we prepared for an interview investing more of time and energy. To our surprise we received a call from the procurement officer notifying us that the selection committee was unable to make a decision and requested that we provide our best and lowest offer by 9:00 the following morning. Ignoring the fact that the process they requested is know in the industry as bid shopping which is illegal in many states, we worked late into the night trying to option out as much of the services we were providing as possible without negatively impacting the quality of the product we were attempting to deliver. Throwing caution to the wind we pared our original proposal to the bare minimum and reduced our fee basis by thirty percent.

Four days later we received a call that we were not selected for the project because we were still a couple of thousand dollars higher than the other firm on a one million dollar project. So after spending thousands and thousands of dollars on their behalf to create a project, have it approved, find the funding source, and acquire the grant funding, we were not selected because of a cost spread of a couple of thousand dollars. This single act of betrayal by a client is by far the most brutal disregard to value I have ever experienced in over thirty years of professional service and it will forever change my naive approach based on the inherent morality of public institutions being able to understand the value proposition. The most disheartening concept is that this action is not unique, but is a common business practice of our new economy, a false belief that a few dollars stripped from a thoughtful planning process will benefit the greater good. In reality short sighted planning ends up costing the institution hundreds of thousands if not millions of dollars in the long run, but it is impossibility for bureaucrats to conceive the relative value of money over time. As a society we are removing the basis underpinning of our economy, when we will forego value for economic decisions purely based on cost. Why not concede that the greatest economic force in the world is not longer willing to invest in its future. Is there any question why China and India are manufacturing empires as we continue to fool ourselves into believing that our nation in not past its pinnacle of greatness and is on the verge of eminent collapse.

My cynical opinion of society’s inability to act toward a collective good has been bolstered today and is becoming a repeating theme of my alienation from society. I was trying to determine a title to this blog post and stumbled on the title “Eclipse of Reason”. Just to kill some time I queried the title on the internet and was riveted by what came up on the screen and how relevant is was to my understanding of what is happening in this new economy or with society in general, although I had a difficult time placing my sentiments into words.

In 1946, Max Horkheimer wrote a book called “Eclipse of Reason” which was influenced by Nazi power in Germany. He was outlining how the Nazis were able to make their agenda appear "reasonable", but was also issuing a warning against this happening again. Horkheimer believed that the ills of modern society are caused by the misuse and misunderstanding of reason. If people use true reason to critique their societies, they will be able to identify and solve their problems.

“Eclipse of Reason deals with the concept of "reason" within the history of Western philosophy. Horkheimer defines true reason as rationality. He details the difference between objective and subjective reason and states that we have moved from objective to subjective. Objective reason deals with universal truths that dictate that an action is either right or wrong. Subjective reason takes into account the situation and social norms. Actions that produce the best situation for the individual are "reasonable" according to subjective reason. The movement from one type of reason to the other occurred when thought could no longer accommodate these objective truths or when it judged them to be delusions. Under subjective reason, concepts lose their meaning. All concepts must be strictly functional to be reasonable. Because subjective reason rules, the ideals of a society, for example democratic ideals, become dependent on the "interests" of the people instead of being dependent on objective truths.”

In order to understand Horkheimer’s premise we need to define both Objective and Subjective reasoning. “Objective Reasoning - Of or pertaining to an object; contained in, or having the nature or position of, an object; outward; external; extrinsic; -- an epithet applied to whatever is exterior to the mind, or which is simply an object of thought or feeling, and opposed to subjective. Objective means that which belongs to, or proceeds from, the object known, and not from the subject knowing, and thus denotes what is real, in opposition to that which is ideal -- what exists in nature, in contrast to what exists merely in the thought of the individual.” As explained by Sir. W. Hamilton. In other words Objective Reasoning is Objective is something that deals with or is learned because of another object, not your own experience.

On the other hand, “Subjective Reasoning – is defined as especially, pertaining to, or derived from, one's own consciousness, in distinction from external observation; relating to the mind, or intellectual world, in distinction from the outward or material excessively occupied with, or brooding over, one's own internal states.” Or in simple terms Subjective Reasoning is something that deals with or is learned by your own experience because you are the subject. Society has clearly shifted from objective to subjective reasoning and this is an ominous turn when subjective reason is dependent on the "interests" of the people instead of being dependent on objective truths. In terms of my experience the committee selected the other firm on the subjective belief that they would save some money as opposed to the objective truth that such a decision is going to cost much more in the long term. This decision was made with little regard to the fact that the other firm had no investment in the project which equates to less commitment to success, has little understanding of the project program which requires the owner to pay the other firm to get up to speed on the background information and has rewarded the concept of less critical thought toward solving the technical issues which always increases operational costs.

In this new economy the “interests” of the people are distilled to an over simplistic policy of least cost as professed by the financial accountants which run everything into long term failure though quarterly accounting which is devoid of projecting long term value. Think of the stupidity of this philosophy in practical application. Why change the oil in your car, when you can save $19.99 this week. Why take your high blood pressure medication, when you can save $2.50 today. Somehow we have decided that screwing everyone out of a few dollars will benefit us, when in reality we are undermining the value of loyalty in business relationships. Our next contact with this owner will be devoid of added value and will focus on the only principal they understand which is screwing them out of money at every possible opportunity. It is a truly sad testament to how far our once powerful business model has fallen. More concerning is how hard a landing society is going to receive unless we change our direction. Just try to compete with $2.00 a day labor from Indonesia especially if we discount quality. We can cry and bitch all we want about the trade deficit but don’t ask the individual to change their spending habits and buy American made goods what cost more.

Society has entered a new economy in which it values only the bottom line at the complete disregard for cost-benefit or added value. Honestly this mentality will destroy this nation and forever change the balance of commerce overseas. It is sad how quickly the world has declined and how acceptable this practice of lowest expectations has become. This post may be construed as sour grapes or a bruised ego, which has incited this negative rant, but look around and see the ideals that once were held so dearly now lie bleeding in the street.

I found an affinity with that small butterfly desperately confined by a reality larger than itself, in its attempts to seek a solution in an impenetrable situation. Unwilling to recognize the brutality of a sparse future in which nothing you can do will alter the outcome. Today both the butterfly and I toil in obscurity against a system than does not care and will not morn our passing. For an entire life I have held the fervent belief that if enough people screamed loud enough society would hear. It has become apparent that humanity is deaf, dumb and blind, unable to lift itself above the rising tide of benign apathy which will soon drown us all. As the old customer service joke goes “Today is not your day, and tomorrow doesn’t look good either.”


"To predict the behavior of ordinary people in advance, you only have to assume that they will always try to escape a disagreeable situation with the smallest possible expenditure of intelligence."

Friedrich Nietzsche

20070909

Culture of No


“Frugality without creativity is deprivation.”

Amy Dacyczyn

There is a sinister and insidious process plundering the great public spaces of our nation and few seem to neither notice nor care. Public apathy and ignorance has given this plaque on our sensibilities a foothold challenging the value and even existence of great public spaces. The first victim executed in this all out assault is the creativity of design. It has taken years of close observation to understand this subtle shift away from civic responsibility to the absolution of risk in the construction industry. Society has entered a period of future uncertainty where the bureaucrat and accountant are responsible for the artistic and design values of public spaces. Around the office, we call this new period the “Culture of No”. I am deeply troubled by loss of opportunity to create public spaces of meaning and relevance to further generations. Consider what our world might look like with out Central Park in New York or the Mall in Washington DC.

The creep toward chaos began thirty years ago when in a short sighted attempt to shed liability for the construction process the American Institute of Architects (AIA) positioned architects out of managing the construction process. The thought was if architects are going to be sued for managing the construction process then architects just will limit involvement and inherently shed their liability. This stupid act of contrition has relegated architects to a meaningless and ineffectual seat in the back of the construction industry bus. Once the master builder, the architect abdicated the only meaningful way of controlling quality assurance on the construction site and in the process exponentially increased their liability and risk of litigation. The architect is no longer at the table in a position of authority to defend the design or provide a rational for civic values. The AIA’s decision is one of the world’s greatest blunders. The only logical response to construction liability was for architects to take full control of construction process and insert themselves deeper into on site management. Alas this abdication created a vacuum to fill a fundamental need required by the construction industry and spawned the creation of a new profession, the construction manager.

While a few enlightened architectural firms recognized the opportunity and added construction management as a specialty service, most walked away from the table, leaving general contractors to fill the void. The fox is now running the henhouse as the industry spirals into an abyss that we may never recover from. Recognizing the enormous opportunity to limit risk and reap huge profits general contractors jumped at the chance to control the construction process, especially the budget. Within a short period of twenty years construction managers or what we call “general contractors at no risk” have inserted themselves into the construction process ahead of architects. While this seems benign the result is catastrophic, impacting every decision made during the conception and design of a project.

The sacred one on one relationship between the owner and architect in which design values are established, where art and civic responsibility are discussed, where the relevance of context is formulated no longer exists. Today the discussion managed by the construction manager constantly challenges every decision of the architect on the basis of cost or construction efficiency, before an architectural vision is born. It was once said that an idea at birth is most frail and ever so delicate that it can be easily killed before it has a chance to grow. In the current environment ideas never has a chance to be realized because it is suffocated immediately by the ponderous weight of substandard budgets and schedules exclusively defined by inept construction managers. The industry has evolved to the point where the owner and construction manager establishes a project budget before architect is even selected.

Consider the problem in this approach, a contractor with no training in design is formulating a budget before any exploratory investigations are begun. Without any real interest in design or commitment to artistic expression the construction manager assembles a series of simple white box assumptions which are primarily focused on square foot costs of other uninspired completed generic commercial buildings recognized only for their brutal ugliness. The budget is normally based on the least complex or vanilla solution. There is no consideration for civic responsibility or really any understanding of site context as the construction manager establishes the budget. The motives for the construction manager to set the bar as low as possible are oblivious, because in most cases it will be that same construction manager in the role of general contractor which will be responsible for delivering the project for that budget. In order to make it easy to achieve the goal, all unnecessary complications and complexities are avoided. The construction manager which is really the general contractor is now in position to play both sides against the center. Keeping the bar low and the pricing high allows the construction manager to reap huge profits at the expense of the public.

Once this uninformed vanilla budget is established it becomes law with few exceptions and the entire design process enters the value engineering (VE) stage. Early in my career value engineering was confined to the small world of bringing a project back into budget after prices were received by a competitive bid process. Today VE is a constant process of striping integrity from a project before it is fully conceived. The joke around the office it that “value engineering is of no value and it ain’t engineering”. For example a recent project was budgeted without geotechnical investigations. After the geotechnical engineer discovered a high groundwater table it was necessary to include a foundation dewatering system which would cost $500,000. Guess what the original budget established by some uninformed manager did not include a dewatering system, so it becomes the responsible of the architect to gut $500,000 out of a project which is already without frills. No discussion that this omission should have been considered by the construction manager. No discussion that the budget should be increase to accommodate the unknown site conditions. No, just cut the public improvements, just cut the plazas, just remove the grand entry, and just make everything we build look like a cheap target store. The worst of all is the construction manager doesn’t see anything wrong with that. A cheap target store is much easier to build, much more predictable to cost than a beautiful work of architecture.

In another project of significance we were asked to submit a proposal to a nationally recognized architect. We explored the beautiful and elaborate preliminary concepts developed by the architect, estimating in detail what each component would cost based on similar projects we have completed around the nation. When we were done we estimated the budget to achieve the architects schematic vision was about 1.5 million dollars. Presenting the estimates to the architect, the construction manager piped up and said they had only budgeted $175,000 for the work, a tenfold difference. Somewhat in shock I asked “What is that number based on? Did you even look at these drawings?”

The construction manager said “We gave the drawings to Mullet Contractors to give us a price. You know the inept, unqualified group that has been in court constantly because of construction fraud. You know that group of thieves that has been kicked off every project in the metro because they don’t know their ass from a hole in the ground.”

You mean you accepted this unqualified unresponsive number without validating it and this was the basis for your entire construction estimate? There was no information on materials, no specifications, no allowances, no established schedule or no direction given beyond this rough sketch?” I ask not believing how this is not considered a criminal act.

With total lack of concern he replies “Yeah, that’s how we did it and no we won’t change it”.

How does one ever begin to close the distance between $1,500,000 and $175,000. What will the public get from the incredible artistic vision by the architect? They will get another cheap looking Kmart with a parking lot, never a functioning urban space which creates great cities. The saddest part is that if the owner really knew the cost early in the process, he would have authorized the additional cost, but the gatekeeper of the budget is the construction manager and his culture is no. Whenever the construction manager needs to increase the budget in order to build the minimum requirement, they blame the overage on the architect and get to increase their fee to manage the overage.

In a recent example on an important civic building in which hundreds of thousands of patrons will visit each year, we discussed with the owner over four months the budget to create a grand public space respectful of the grand public. Our assumptions were slightly over 2 million dollars, again based on extensive experience and knowledge. When out of the blue we receive an email from the construction manager blistering us for not designing with any concern for budget and that the design team was being totally irresponsible. Confused we called a meeting asking for clarification, knowing we were working off our budget assumptions discussed with the owner. In the meeting the construction manager finally had to reveal the secret budget assumptions they were working with and for the first time provided line item budget pricing. They estimated that the civic masterpiece costing hundreds of million dollars on a large difficult site would only require $650,000 for everything around the building. When pressed on what was the basis of that estimate? They only offered that it was an unsubstantiated guess without supporting documentation. Let it be known that we were not dealing with a new inexperienced constructor manager but one of the top ten largest groups in the nation. Once again an inept uncaring untrained construction estimator is making decisions about how are cities will be designed?

In each of these examples, the construction manager defined an unrealistic budget which eliminates all opportunity for public space. They achieve credibility because everything they build is basically cheap and ugly, and when a challenge to their budget is made they can trot out fifty examples of cheap buildings as comparison. How can they get away with the destruction to our urban environments while lining their pockets with huge profits? The answer is easy; they have a facilitator, the risk avoidance governmental bureaucrat.

The culture of no is endorsed by the public officials who are responsible with protecting the public good. Bureaucrats are a relatively benign group of wall flowers devoid of artistic appreciation. They are simple managers that do what they are told and only worry about the criteria under which their performance is measured. Unfortunately we do not ask bureaucrats to create urban spaces of great value to society, we ask them to manage projects that are delivered in budget, on time and that adhere with the rules. As a result government bureaucrats deny any discussion which could threaten the schedule or more importantly the budget. This myopic fear of not delivering a project on budget makes the bureaucrat unable to adjudicate project objectives that require advocating for increased budget funding. The culture of no places the risk avoidance governmental bureaucrat as the gatekeeper of public benefit. When the process combines the construction manager’s personal agenda to keep it simple to make money and the bureaucrat’s inordinate fear of challenging the process, the result is a culture of no.

What was once an infrequent imposition on creativity has now developed into a process that rewards inept managers, greedy contractors and ignores the public good. The future of social environments is uncertain. Having considered the trend for many years, I’m pessimistic about the system changing anytime soon. The architect is helpless, the public has no advocate, the construction managers won’t relinquish control and the bureaucrat won’t do anything to be criticized about so the urban environment will continue to be a victim of the culture of no.


“The perfect bureaucrat everywhere is the man who manages to make no decisions and escape all responsibility.”

Brooks Atkinson (1894 - 1984)