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CONSTRUCTION KNOWLEDGE BLOG

November 4, 2011

Pick on Someone Your Own Sise
Filed under: People Skills — Tags: — nedpelger

I was running a job meeting yesterday for a project that’s had all sorts of challenges, yet the progress on site amazed me. The Superintendent has gotten all the trades working together in ways that exceed my project schedule and my expectations. It’s great to see guys shifting around on the jobsite work flow to be efficient and keep things moving. The job meeting was a pleasure as we all laughed about several items and addressed some concerns.

I started thinking about the value of humor on the job site. A good laugh lubricates social interactions, making everything run more smoothly. So inject some humor into your work today. Understand that humor has risks and try not to cross the line. But if the choice is do nothing or get a bit closer to the line than you’re comfortable with, nudge yourself toward that line.

The Economist had a tongue in cheek piece a few years ago addressing the “Problem” of children. They made the economic argument that smoking, driving and mobile phones all cause “Negative Externalities”…a situation where  those around the smoker, driver or loud phone talker were negatively impacted (annoyed) by the experience. The article went on to say:

Governments typically respond to such market failures in two ways. One is higher taxes, to make polluters pay the full cost of their anti-social behaviour. The other is regulation, such as emission standards or bans on smoking in public places. Both approaches might work for children.

For children, just like cigarettes or mobile phones, clearly impose a negative externality on people who are near them. Anybody who has suffered a 12-hour flight with a bawling baby in the row immediately ahead or a bored youngster viciously kicking their seat from behind, will grasp this as quickly as they would love to grasp the youngster’s neck. Here is a clear case of market failure: parents do not bear the full costs (indeed young babies travel free), so they are too ready to take their noisy brats with them. Where is the invisible hand when it is needed to administer a good smack?

The article went on to propose “Child-free zones” in airports, trains, bus stations, etc and advocated for a tax on children. Two weeks later, in the letters to the editor section, Jessica Morley age 6 responded:

Sir, you are wrong when you say that children are like cigarettes or mobile telephones. No one has to smoke or use a mobile phone, but everyone has to be a child and you were once one too. You need children to pay for the pensions of miserable old people like you.

Now pick on someone your own sise.

Yours,

Jessica Morley (aged 6)

CONSTRUCTION KNOWLEDGE BLOG

November 2, 2011

Gov’t in Construction: A Confederacy of Dunces
Filed under: Industry outlook — Tags: — nedpelger

Beacon Power Corp, which previously received a $43M US Dept of Energy loan guarantee, just filed for bankruptcy protection. Beacon developed a 20 MegaWatt flywheel storage facility in upstate New York to help manage electrical grid power fluctuations. LeChase Construction, Rochester NY, built the New York plant and hasn’t received final payment, making them the largest creditor. The photo below gives a sense of the facility.

Beacon Power had also received a $24M Smart Grid stimulus grant to build another 20 MegaWatt flywheel storage facility in Hazle Twp, PA. Since Beacon was still searching for financing for that facility, I assume it won’t be proceeding.

The US Government’s recent record on project funding has had some spectacular flame-outs. The most famous being Solyndra, which received a $535-million Dept. of Energy loan guarantee to make solar panels and filed for bankruptcy in September. As an added kicker to that story, the news today noted that the Solyndra former CEO was given about a half million dollar severance package.

Now I understand that many venture capital firms select losing projects, that the skill in picking a winner is far from a science. For that reason, though, the government shouldn’t be in the VC business. When the government tries to direct businesses with grants and loan guarantees, markets distortions occur. Solar panels all over Germany, which has so little sunshine, tend to be the result. Similarly, corn ethanol in the US, which raises food prices (putting many into poverty) and does nothing to improve the fuel balance.

On a more local note, I spoke last week to a buddy working as a bridge carpenter. He is helping construct a new bridge that boggles his mind in terms of complexity and uselessness. He sees the government simply spending cash for the sake of creating jobs. What a shame when so many bridges and other infrastructure projects really need to be completed.

I propose a merit based government funding process. To begin, the government stays out of VC type funding. A market already exists to fund entrepreneurs and the government can only pollute that process. The infrastructure funding, though, needs to be done by the government, but could be done in a non-political way.

The politicians would decide the amount to go into the pot for annual spending. An independent technical committee would evaluate projects in some double blind way and select those that deliver the most value. Then the politicians could vote only yes or no on the funding package.  Merit project funding could be one of the changes that helps America get back on the right track.

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