Showing posts with label quality robust design. Show all posts
Showing posts with label quality robust design. Show all posts

Saturday, January 19, 2019

Regulation Should Monitor and Control Process not License Occupations

Introduction

My email inbox presented some annoying articles which led to further annoying articles. For example:

  1. Victoria Considering Bill to Create Scheme for Registration of Professional Engineers
  2. HVIA says leave us out of Victorian Engineers Registration Bill
  3. Introducing a new engineering registration in Victoria, Australia
  4. MORE LABOR RED TAPE SET TO STRANGLE ENGINEERING
  5. Worth being a chartered engineer?
  6. Alternative to CPEng
  7. Freak freeway sign fall seen in shocking video nearly dooms driver in Australia
  8. Tullamarine Freeway sign falls and crushes car, injuring woman
  9. Opal Tower report reveals 'structural design and construction issues'
  10. Opal Tower report reveals ‘structural design and construction issues’
  11. Experts confirm Syd Opal Tower is 'sound'
  12. Opal Tower report due Friday to identify causes of cracks
  13. Welcome to the Faulty Towers state, where any mug's an engineer
  14. SCOSS/CROSS
  15. CROSS Australia (CROSS-AUS)
So defective road signs and defective buildings, and this shows need to grant license and monopoly to engineers, to protect the public. Grant a monopoly to a what? An engineer! oh! Whats is one of these  engineer things? Most probably a twerp with a fake honours degree (4 year B.Eng (AQF-8)) and maybe even a fake masters degree (MBA).

The Current Situation

Without regulation, at the very minimum a person wouldn't get anywhere near the design process unless they have the fake honours degree. Does the degree cover the technology over which these people claim expertise? No it doesn't, it covers  applied science and applied mathematics. Knowledge about the established technologies depends on industry. Therefore we rely on industry to impart knowledge. We also have learned societies which discuss practical application of science and codes as applied to established technologies, including the deficiencies of such codes and theories. Except in Australia, here we don't have learned societies we have Professional Cults. Confused organisations more closely related to trade unions, modern day rum corp and cartels, than learned  societies.

But still Engineers Australia has this additional assessment criteria where by it attempts to check experience in the real world. Depending on the year that maybe identified by MIEAust or by CP.Eng, the criteria for each maybe equal or different. However, either way, the criteria are so generic that all they really do is identify someone as a suitable as an employee. Someone working for McDonalds fast food outlet could probably pass the requirements, just they are not eligible for assessment as they don't have the fake honors degree. Significantly different than the American (USA) FE/PE exams or the UK part 3 examination of the IStructE.

Assessment Beyond Education

But still employment tends to be tied up by professional cults, hence the big national consultancies will push graduates through graduate development programmes, and would tend to ensure its employees have CP.Eng. So the design will have been carried out by people with a minimum of either:
  1. B.Eng
  2. B.Eng MIEAust
  3. B.Eng MIEAust CP.Eng
Exactly the criteria which Engineers Australia wants to use as the basis of granting monopoly through legislation. Even if the person designing the building was only B.Eng, most existing legislation is likely to reference CP.Eng as the requirement for those persons doing the regulatory checks and granting regulatory approval to go ahead and build.

The Regulation Problem

The problem however is that those people on the regulatory side are likely less experienced than those on the design side. Also the checks are likely to boil down to checking the designers calculations: such a check is not a valid independent check. Such checks end up as simple arithmetic checks, rather than a rigorous review of the logic and reasoning of the design decisions.

For example a designer may have used the simple formula M=wL^2/12 when a simple look at the drawings would indicate that the correct mathematical model would have been M=wL^2/8: so it doesn't matter if the numbers pushed through the first formula are correct, the mathematical model of the structure is invalid.


Design-Calculations vs Proof-Calculations

On large projects should distinguish between "design-calculations" and "proof-calculations". On small projects design calculations and final proof calculations are typically the one and the same: this is largely because on small projects, the design is repetition of what is known to work and only really producing proof-calculations. That is do not have to discover what works, we know this, we are just verifying the proposal is valid and does work.

Design calculations do not need to be conducted in accordance with codes of practice, or using exact theories, they can be quick and simple rules of thumb. Proof-Calculations do need to be in accordance with codes of practice, as their purpose is to demonstrate compliance with such codes.

Independent Check

However, the independent checker does not require the proof-calculations, they should only require a statement that they have been done, that the designer asserts that the proposal is fit-for-function, and that is by deliberate intent not wishful thinking. The checker then starts from scratch, and reads the drawings and written specifications and assesses if the specification-of-intent does truly propose something which is fit for its intended function. It is not a rubber stamp exercise by members of a silly form brigade (RPEQ's, RBP's).

Not Who, But What!

The problem isn't who is doing it, the problem is what is not being done. The consultants are not conducting a final review of calculations and decision process. Additionally consultants maybe cut-off from workshops and construction sites. Furthermore there is little design and management of the fabrication (workshop) and construction (site) process.

There is a silly notion that the documents approved by the local council are construction documents, and that such can be used to go ahead and build. Whilst on large projects there maybe something called workshop details produced, with the advent of high end software these drawings are likely diminished to part drawings.

Product Specification vs Process Specification

The difference between part-drawings and workshop details is that workshop details are produced for a specific workshop to meet its specific communication and documentation requirements and match its manufacturing processes. Proper process-drawings show raw materials and the correct orientation to jigs and fixtures. One workshop may drill holes using drilling templates or jigs, another may use a CNC drilling machine, and still another may align the drill by sight. The latter is likely to produce highly variable parts if producing more than one. Tooling and processes need designing and documenting. The people need training, and the process needs to be monitored and kept in control.

Moving on site the council approved drawings are just a specification-of-intent, they do not inform how to build anything, they describe what is to be built and provide a means of checking compliance. Additional drawings are required to manage the construction process, as with workshop fabrication there are additional tooling requirements, raw materials and workpieces versus final product. There are such requirements as:
  1. Formwork
  2. Shoring
  3. Props and Bracing
  4. Materials Handling (cranes and rigging)
  5. Scaffolding
All of which needs to be designed, documented and demonstrated fit-for-function. Clearly this is not being done: New Royal Adelaide Hospital site in turmoil after crane collision provokes site shutdown.

The CRC for construction innovation produced some guidelines for improving construction safety but was largely a process of drowning in documentation, rather than promoting good design, as with most systems derived from ISO:9000 quality standards. This is not because the standards require such documentation, but because the practitioners initially and largely only have one skill: they read ISO:9000, they otherwise understand zero about quality.

Poorly Designed Systems for Quality Assurance

Most engineering consultancies have quality assurance systems derived from renaming their contract document management systems to QA system: along with fabricators, and QA certifiers, they also have missed the point.

Documents typically (hopefully) have two identification codes for telling the difference between variations:
  1. Issue number 
  2. Revision number
Some organisations mix revision number and issue number. If printing each issue from CAD files, then this may be valid, as likely cannot guarantee that previous printout same as current printout (eg. layers maybe switched off). For traditional masters document and prints taken from, an issue is different than a revision. A revision code identifies changes to the document, and issue codes identifies who it has been sent to and why.

Revision numbers/codes identify defects in the documents and defects in the production process. The defects could be in:
  1. Design Process
  2. Drafting/Documentation Process
  3. Communication Systems
Last minute changes by the owners/client whilst construction is taking places indicates defects in the communication systems. The design consultants (architects and engineers) have failed to properly inform and/or educate their client. Thus they have failed to properly identify the needs of the client during the design process.

The old adage, whilst not necessarily numerically correct is: It costs $1 to make a change on the drawing board (in design office), $100 to make a change on the workshop floor, and $1000 to make a change on the construction site. This tends to hold true except for small projects where materials and labour are low cost compared to design services.

Increasingly though the greed of design consultants is pricing their services out of the process. Sure there are many who complain they should get paid more, but there are also many who should get paid considerably less. Why pay high fees to a design consultant when their knowledge is defective, deficient and otherwise inadequate? Trades complain of having to waste time fixing things because of design errors.

But we have a double problem the so called "engineers" think the trades don't know what they are doing, and the trades think the "engineers" don't know what they are doing. Both parties have inadequate education for the task at hand. Their knowledge should overlap, if there is no overlap then I suggest the "engineers" stay away from the trades people: you're not qualified.

Education vs Training

For the most part expect trades people to have at least certificate III (AQF-3) level qualifications: not a license or registration, but an education and adequate training. Training should be separate from education.

Education

Education concerns foundational knowledge and enabling competences, it would involve no more than 3 to 5 iterations or trials of a skill. Education is largely an evaluation process, either a person can demonstrate the skill after an introduction and a few trials or they cannot.

Training

Training is what olympic athletes, soldiers, and firefighters do. It is concerned with developing proficiency, it involves twenty or more trials, it is repetitive practice, it is making skills intuitive and desired responses second nature.

Qualification Frameworks

For each AQF award there should be an additional certificate of practice (CoP), it doesn't matter what level the award it will still be known as a certificate of practice.

Expectations of Increasing AQF Level

If the AQF was properly structured in its implementation, then moving from one level to the next would result in:

  1. an increased depth of knowledge, 
  2. increased independent thought, 
  3. increased personal responsibility.

Unfortunately occupational degrees issued by the universities do not comply: they simply lump a collection of subjects together to meet the wants and whims of professional cults, diminishing the value of the bachelor degree and the universities in the process.

If education and training were separated then "engineers" and trades would start at the same place, and would progress from AQF-1 upwards to the appropriate level.

A person at AQF-1 could be supervised by a person at AQF-2 because their knowledge overlaps. The person at AQF-2 should know the limitations of the person at AQF-1, as they have been through that stage. However the person at AQF-2 may not have the same training as the person at AQF-1. That is the person staying at AQF-1 should have greater proficiency at that level, than the person who has moved upto AQF-2.

So in the first instance we don't need registration or licensing, we just need the people with the appropriate education and training doing the work: that is the appropriate credentials which show they have completed the appropriate education and training.

So just need to know someone has the appropraiate award AQF-6 for example and the associated CoP. If they don't have the CoP then they lack adequate training. This training can be provided by purpose made training academies.

As a start I suggest 1 year of training for every 5 years of education, where 5 years (BSc MSc) is considered near complete knowledge for a specific area of practice. Where a research doctorate closes the gap in knowledge. Assuming 50 productive weeks in each year, then reduces to 10 weeks of training for each year of education. And for a short 10 week program (AQF-1), 2 weeks of training.

So problem we have is that the WFEO Washington (AQF-8), Sydney (AQF-7) and Dublin(AQF-6) accords define the education requirements but not the training. Second problem is delusions of grandeur, so have too many people aiming for the AQF-8 award, when real needs of industry are AQF-6, but not the Dublin accord requirements. A Dublin accord technician is superior to a drafter, but inferior to Australia's original engineering associates (for which I consider a better name is Associate Technologist).

If we educate and train Associate Technologists then we can better implement established technologies where they are needed. Do we need multistorey buildings? No we don't, they don't ease urban sprawl they are the cause of it in the first place.

The problem is we don't have people studying the right things. The concern is more with joining professional cults than learning and understanding. The reason for this is that the professional cults hijack the market place, and use fear, uncertainty and doubt to mislead the public. I say mislead because they deliberately create asymmetry of knowledge by using jargon, giving the impression you don't know anything about the subject, when all they have done is given a stupid name to something. But it's worse than that, some cults change the stupid names used, so your knowledge in an area becomes redundant. It's not really redundant, just not able to converse with the new generation of twerps until learn their jargon.

I don't care whether plumbers, train drivers, or operators of recording equipment call themselves engineers, or if a barber wants to create a business called hair engineers. The typical modern civil "engineer" is a ditch digging mud waddler who wouldn't know their knee from their elbow. They did not design civilisation, they did not generate knowledge and share such knowledge, and they didn't build civilisation. Someone gave knowledge to them: beyond taking such knowledge they have contributed naught of value to society. If they were all rounded up and executed, only their relatives would experience a loss.

For certain our industrial society needs knowledgeable people, but those learned people are not "engineers" as the professional cults define them. Just because a person holds a bachelor degree it doesn't make them competent in a given area of practice. How many people with a B.Eng are employed in management, and have neither adequate skill in engineering design, nor in management?

Experience

So besides education and training also need recognition of years of experience, or more importantly variety of experience. Kind of like military service stripes, and boy scout badges: but not quite. Yet another problem is the modern nonsense about loyalty to employers: I say nonsense because employers typically do not show the same loyalty to employees as they show to the business. Employees typically get kicked overboard as soon as the business is in trouble, and the owners profits are dwindling.

The problem with the loyalty nonsense is it gets in the way of the traditional journeyman route to experience. A designer needs to gain a variety of experience, and they seldom get that from working for the one employer. They need to chase projects and technology, to go where things are happening.

For example if your employer is primarily involved in stormwater drainage design then the closest you get to bridge design maybe a culvert. If you wish to gain experience about bridge design then you need to move, to change employers. The problem is you are not experienced enough to design bridges, so not going to be employed as an "engineer", but you may get on the project as a drafter.
But not if you want too high a wage, not if you are less than competent as a drafter, and not if you are a troublemaker questioning all decisions.

You have to be there as a curious trainee, asking suitable questions, gaining experience and understanding, putting proper effort into the drafting, and attempting suitable calculations after work hours in own time. From there maybe able to move to a position as junior engineer on another project. slowly building experience on significant projects, until ultimately able to be the lead engineer on a project.

Silly Occupational Classifications

But this is where professional cults and occupational bias gets in the way. How is a junior engineer different than a drafter, different than an associate technologist? The basic answer is they ("junior engineer") have knowledge about things which they are unlikely to ever use.

We do not need the industrial relations nonsense, set in industrial awards, about level 1 to 5 engineering associate, level 1 to  5 professional scientist, and levels 1 to 5 professional engineer. These occupations form an hierarchy, and in many organisations there is no need for anyone with education level greater than AQF-6: the associate technologist.

If we paid more attention to the tasks of the work at hand, instead of the wants and whims of the professional cults, then a graduate with a B.Eng would be employed as a technical officer (TO) not an engineer, not a professional engineer, not a junior engineer, not an engineer in training: they would be designer, planner or manager technicians.


Ranking Technical Officers

Where minimum education for technician would be AQF-5. Qualified drafters would be technician level (TO1), whilst unqualified drafters would be TO Zero's (TO0).

The basic ranking is as follows:

  1. (TO0) Technical Officer Level 0 
  2. (TO1) Technical Officer Level 1 (AQF-5) - Drafter, Design-Drafter, Design-Technician
  3. (TO2) Technical Officer Level 2 (AQF-6) - Associate Technologist
  4. (TO3) Technical Officer Level 3 (AQF-7) - Technologist
  5. (TO4) Technical Officer Level 4 (AQF-8) - Technologist
  6. (TO5) Technical Officer Level 5 (AQF-9) - Technologist

The ranking doesn't show "engineer", as such title reserved for those who push forward the frontiers of science and technology: and go beyond what they were taught.

All graduates would start out as an unqualified drafter (TO0), demonstrate they have interest in the technology and its proper specification. They would slowly move from focus on mere documentation under supervision to responsibility for dimensions, geometry, fit and clearances. This would take anything from 6 months to a year or more depending on the aptitude and attitude of the individual and the nature of the projects. If demonstrated appropriate skill, then they would move onto being a qualified drafter TO1 (If drafting not relevant to the technical field then other criteria would apply).

As a TO1, the next step to work towards, would be that of design-drafter (still at TO1), this is still AQF-5 level, the design at this stage would be qualitative, except with respect to dimension and geometry, that is it concerns form and function.

For example a structure requires appropriate forms of connection, depending on these connections it may then require additional cross-bracing. If the architectural form doesn't allow installation of cross-bracing, then the connections may have to change. It is all qualitative determining what the structure looks like. When get round to doing calculations some of it may change.

Connection design for example is an iterative process between drawing and calculation. The TO1 can start looking at industry manuals and standardisations, and start looking at some structural calculations. Their supervisor likely will give them sketches with calculations on them. They can start doing back of envelope calculations themselves to guide their drafting, so their drawings closer to the expected end result.

Past experience determines initial starting size for beams, and the connections. Prior results can be modified via simple theory to suit current project. For example bending moment is proportional to the square of the span: so if double the span then quadruple the moment, and therefore need to select a steel section with 4 times the capacity of prior project. The detailed calculations likely produce a different result, but will be in the ballpark. If there is significant difference between the end result and back of envelope calculations then need to explain the difference. The TO1 (TO2 wannabe) would thus be a check on the work of the TO2.

The next step would then be to become a TO2, which would be at AQF-6 level, that is an associate technologist. At this stage the person can work on their own projects, producing drawings and calculations. They would work on simple projects, without need of a assistance, but under the supervision of a TO3. Once they are able to complete the work without error, then they can move onto larger projects supervising one or more TO0's, and TO1's. If AQF-6 is their highest level of education, then this is where they stay, and their prime requirement is to get ...

... interrupted to go resolve others operating system problems. Now lost train of thought 17:22.


Now I part remember. 

As an associate technologist, having demonstrated competence in analysis/design, their next task is to develop skills in management and training, so as to assist in producing the next generation. That is they increase their breadth by getting additional AQF-6 qualifications.

If they have higher education AQF-7, then they move up to TO3. At which point the projects become more demanding, requiring higher level mathematical and scientific knowledge. Such projects however will be rare, and the primary task of TO3 is to provide technical review and supervision of TO2's and ensure that project doesn't involve higher level skills than a TO2 has.

The actual need for education at AQF-8 and AQF-9 would be extremely rare, so becoming TO4 and TO5 would also be difficult irrespective of education: as dependent on needs of the project not the whims of professional cults.

It is also to be noted that the task of the higher levels is to push knowledge down the hierarchy, not hinder application of knowledge, but to empower and enable.

So if the task is not within the scope of those educated at AQF-6, then that is largely because those at AQF-8 haven't been doing their job properly. Knowledge needs to be properly organised and managed, disseminated and shared with those who need: not held to ransom.

The task of a learned society is to collect, hold and safeguard knowledge, be its guardians, and enable and empower people to put such knowledge to proper use for the benefit of humanity.

By contrast the task of a professional cult is to hijack knowledge, use fear, doubt and uncertainty to con the public into granting undeserved privileges and benefits to the cult. {NB: I use the word cult rather than profession because members of the cults believe profession relates to ethics and high level of competence. Whilst I equate profession to profiteer devoid of competence. If everyone follows the nonsense: "Jack of all trades and master of none", and each seeks to specialise and pose as master, then have no Jacks who can identify that the masters know zero, and that such masters are less competent than a generalist would be.}

On Medicine

As for medicine. Wouldn't want unqualified person performing brain surgery was in one of the articles. Maybe not. But how do I know?

I recently spent time in RAH due to a heart attack. How do I know the cardiologists are qualified? How can I check? How do I know the medications prescribed are relevant?

I'm fairly certain the medical cult have never heard of Karl Popper. I'm fairly certain that most medical science is pseudo science and mere quackery. That it is based on poor use of statistics, and heavily biased towards selling drugs, not about caring for people's welfare.

To provide exaggerated example: they test a drug on rats, 80% show beneficial effect, 15% show no effect, and 5% die. Lets focus on the 80% and ignore the 5%, we have something good here we can make a profit from.

Back to my stay in hospital: I wasn't prescribed medications because required, I was prescribed because that is standard practice. Well I'm the little black swan, the standard practice is wrong, all the accumulated evidence for white swans is no good: the science hasn't been done.

{This is because I am on medication for high blood pressure. Though there is no mention of taking medication for high blood pressure: it is prescribed for other purpose. Yet, it is highly unlikely that if I had high blood pressure that the medication would place my blood pressure at the low end of ideal or into the low blood pressure zone. If I ever had an issue in the past it is most likely because it was low. Yet the specialist, the expert, has provided no response to the rehab nurses nor the GP. And the only reason I am seeing a specialist is because a potentially illegal supply chain cartel passed me onto said specialist without choice or option of any kind.}

But the solution applied isn't about common sense, it's about politics and careers. So have to bridge the gap in knowledge: do more than accept who knows and who doesn't, and ask the right questions. Get them to justify their decisions, because they don't decide what is best for my health, I do. Their place isn't as my boss or as my manager, they are there to advise, and their advice maybe defective. If the GP is scared to question the cardiologist then you have to do that yourself or accept without question.

As I have mentioned before whilst it is ok to have blind faith in the existence of god, it is stupid and irresponsible to have blind faith in those who purport to be the true messengers of god.

It is equally stupid and irresponsible to have blind faith in those who hold positions of authority. They cannot be held to be right simply because they have the power and authority to impose their will. You, we, I have the power to remove their power and authority. If they cannot provide reasonable explanation and justification, then they are not competent enough to be making the decisions. We do not have to submit to the arrogance and authority of their purported expertise.

We can test their competence even if we ourselves do not possess adequate knowledge. We can do this because the testing is not about the knowledge we have now, but the knowledge and understanding we hope to have to make the decisions we need to make, and for which we are responsible. We can learn. We do not have to acquiesce to their authority. Though many people would like to blame everyone else for their bad decisions, we cannot displace our responsibilities onto others.


Back to Buildings

Getting back to the buildings how would we know the building is acceptable? That a certificate of occupancy was issued, would be one way. But who issues the certificate of occupancy and after what process? The "who" isn't the biggest issue, the process is the issue.

Compliance with a code of practice produces low quality rubbish. The building industry would be one of the few industries where people run around declaring that they do it to the code, as if everyone else doesn't and you would be lucky to find someone that does.
Other industries tend to promote their product on the basis, that they set the standards everyone else would hope to meet, or their product otherwise exceeds the standards. They attempt to inform,  and educate people into understanding how deficient codes are. Sometimes it may be misleading or misdirection, but they certainly don't run around declaring that they only do as little as they have to: and otherwise implying that if the codes were not mandated then they would do even less.

The building industry produces low quality rubbish and the design consultants are part of the problem: but they think they are part of the solution. The output is low quality because it fails to meet the needs of society and poses more problems than it solves.

We have multistorey buildings and large industrial complexes which all give rise to urban sprawl: centralisation with an excessive radial reach is what causes urban sprawl, not mechanised transport. We have overly complex tangled transportation corridors. Do these people really know what they are doing? So they can calculate the stresses in the bridge but did we need the bridge?

Thousands of engineers can design bridges, calculate strains and stresses, and draw up specifications for machines, but the great engineer is the man who can tell whether the bridge or the machine should be built at all, where it should be built and when.[Eugene G. Grace quoted in Beakley & Leach(1977), "Engineering : an introduction to a creative profession"]
To improve status not only do these "engineer things" need to get the calculations right, but they also need to be spending time doing calculations for the right things and for the right reasons.

A one hundred apartment, tower block, doesn't provide shelter for anyone until the whole building is finished. Whilst 100 single storey dwellings provide shelter as soon as the roof is constructed, and people can occupy as construction of each one is completed. Furthermore such dwellings can be located in walking distance of their own central commercial district. Even if all the dwellings are based on the same design, an error in the design, poses less hazard to the occupants than an error in the design of the tower block.

The single storey houses however don't have the same prestige as tower blocks, just like dealing with the common cold doesn't have the same prestige as heart surgery. Just as unnecessary surgeries have taken place, likewise unnecessary tower blocks are built.

Despite how it  seems that councils hinder development, there isn't any where near adequate control over the built environment.



Revisions:
[(19/01/2019) 17:50]: Original
[(20/01/2019) 00:03]: Minor Modifications
[(09/02/2019) ] : Added Headings, rewrote some paragraphs, revised the technical officer ranking

Sunday, May 24, 2015

Ramblings on Pricing and Selling Time

"The successful producer of an article sells it for more than it cost him to make, and that's profit. But the customer buys it only because it is worth more to him than he pays for it, and that's his profit. No one can long make a profit producing anything unless the customer makes a profit using it. " [Samuel B. Pettengill]
Price is not cost plus desired profit. Price is the mutually agreed value of exchange between buyer and seller. Further more unless there are crazy laws in place, it is not necessary to make a profit on each item, it is the over all business which needs to make a profit. Considered another way the contents of a retail store are an assembly of components, it is the sale of this assembly which has to make a profit, not the sale of an individual component within the assembly. If a sole proprietor does not make a profit then they will not get fed: profits are their bread and butter. If a proprietary limited  (Pty Ltd) company with owner-operators does not make a profit, it does not matter as the owners are paid wages by the company which is a different entity than the owners themselves. Therefore a Pty Ltd company can operate as a zero profit company. If there are non-working shareholders then the company needs to make profits.

Desired weekly wages, annual salary or hourly pay rate, are simply numbers pulled out off a hat, they are subjective opinions, they are not a matter of science. At any point in time, there are items in the market place available at some currently defined price. Some of these things are essential to the individual for  survival, others are imposed needs by society, and still others are optional extras. Thus we can identify 3 different levels of income:

1) Survival
2) Social
3) Optional

For an individual can also identify their current level of income, this may be higher than the minimum social level but less than the desired optional level. Whilst we can calculate these levels based on prices in the market place none of these levels are fixed. The survival income for one person can be considerably different than that for another. There will also be differences between different geographical locations, and different cultures. The income levels are therefore relative values not absolute values. Further more individuals have differing capacities to adapt and improvise: so that whilst one person may struggle with a specified minimum wage, another person may flourish or at least get by comfortably. As I have mentioned many times before, once something is released to the market and environment, people will find uses for it way beyond the original intents of the designer.

In similar manner to the income levels for individuals, it is possible to work out different price levels for goods and/or services. However when working these prices out we should also give consideration to the entire assembly of goods and services, or the over all product mix, and  the over all performance of the business. Most important of all is what the buyer is willing to pay. An amount for the price which exceeds what the customer is willing to pay, isn't a price. The amount the customer is willing to pay, is an impression, a feeling, a perception of worth: something pulled out off a hat. That whimsical intangible perception of worth, is transient and can be changed.

So can work out accurately how long a job is going to take and then multiply by an hourly rate, the resultant value however is not the price unless a customer is willing to pay such amount. There should be no buts or may be's about it, the hourly rate was pulled out off a hat. Sure may have checked industrial awards for minimum rates, and checked job advertisements for market rates in excess of the minima: but at the end  of the day all the numbers were dreamed up by someone, and the numbers felt right, or they were all they could afford. Not much point conducting complex mathematical calculations with fiction.

So calculated an amount from time and hourly rate, and the customer perceives it as way too high. If the customer can perceive it is too high, then the person doing the calculation should also be equally able  to perceive that it is too high. Now could review the project, reduce feature's and thus reduce total time, or otherwise revise estimates of times for the existing features, however the real problem is that not every hour is worth the same value.

By being focused on selling time and using a constant hourly rate as a measure of self worth, proposed prices are exceeding the markets willingness to buy. If can pull a number out off a hat for desired annual salary or for hourly rate, then can also pull a number out off a hat to define a fixed price for a project.

Prices placed on goods in a retail store are an indirect negotiation with the customer. If they like the proposed prices they will buy, if they do not like the proposed prices then they will not buy. The retailer therefore has to adjust their prices in response to the market behaviour.

In a more traditional market place, there is a more direct negotiation between buyer and seller. Further more the buyers go to the sellers: there is no annoying people who are not in the market to buy. Such people have no stated need for the items, and no stated discretionary income they are willing to spend on such items, then some seller comes disturbing them: the negotiation has one major outcome no current sale and no future sale. No future sale because there is no price low enough to encourage keeping such an annoying enterprise in business.

Like a retail store, or mail order catalogue, the proposed price has to be there to be found by the potential customer. That means that potential customers need to have reason to visit the vicinity of the stores even though they have no need or intention of buying anything. Shopping malls, plaza's and precincts draw people in with regular consumable services, and whilst there, they may then become buyers of more discretionary items.

So for example, the confectionery stall in a department store draws parents, with kids, into the store. If the confectionery stall is near the middle of the store, the customers then have to pass more expensive items, where upon there is potential to buy such things. The confectionery may not make much profit itself, but it is essential to the over all experience of the store which ultimately results in sale of high value items. Similarly the cafe, potentially makes less profit than the department store selling electrical gadgets and operating from the same precinct. But without the cafe, the precinct is likely to be empty and no one buying tthe electrical goods. Owners of such shopping centres should take such things into consideration before charging the shop rents which are typically seen as extortionate. Be certain as to who is generating the traffic, and who is benefiting from such traffic.

The point is, that price, cannot be calculated. Calculate expected times, give consideration to the cashflow requirements over the time frame of the project., use an hourly rate if must do, but make the final proposed price a judgement. This can be done by applying weightings either to the over all calculated price or to the components of the calculated price.

It should also be noted that whether selling goods or services, there is a component of work which is not directly attributed to the product being sold. The cost of this work needs to be recovered by applying an overhead charge to each item sold. Say for example that intend to spend 2000 hours per year, but only 1000 of those hours are directly billable. The other 1000 hours is used up on adiministration, research design and development of product made available, marketing and finding new projects to work on, learning and training to keep up to date and develop greater proficiency, and a multitude of other minor activities too small to identify or otherwise track. So every hour billed has to cover the cost of every two hours worked. if throw sick days and vacation time in, then every hour worked has to cover even more indirect costs.

That a product has to be designed before it can be made, isn't always noted by the customer, plus many products are just repetitive copies, so there is an expectation that costs of design have been recovered already. Additionally such costs of design are hidden from the customer with respect to physical goods like cars and electrical gadgets, whilst with services it is not all that apparent that design is required in the first place. So can end up formulating an hourly rate which is heavily weighted by factors which have little value to the buyer of services.

Consider a retail store again. The store sits there and people come in and either buy or don't buy the goods which are on display. At the end of the year either the shop made enough money to cover the living expenses of the owner or it didn't. One major problem for the store owner is not so much the price of the items, but the mix of the items and whether or not they are of any value to any of the people who visit the store. If have the wrong product then it won't sell at any price. If have the right product but wrong price then it won't sell.

Now goods and services are interchangeable. A product previously offered as a goods, can be converted to a service or substituted/complemented by a service. A product previously offered as a service can be changed into a physical goods. For example when lawnmowers are few and expensive, then more likely to hire someone to cut the lawn with a mower. When lawn mowers are plentiful and low cost then people more likely to cut their own lawn, if they have the time. There are thus competing  circumstances which shift the demand in favour of either the service or the dependent product.

Similarly designing a building is time consuming activity, but if design the building once and distribute the cost of design across many buildings then the cost of design per item is considerably reduced. This is essential for small buildings, as the cost of engineering is not proportional to the size of the building but to the complexity and risk involved. Small buildings with the same structural form as large buildings require the same design effort. With small buildings therefore the cost of engineering can exceed the cost of the building. With large building projects, fees are likely to be a proportion of the capital value of the project: this can be far in excess of the costs and therefore highly profitable. Whilst for the small buildings the cost exceeds the market price of the engineering: and therefore its is not a viable business to engineer small buildings on a one-off project basis. There has to be repetitious use of the engineering, in the form of documentation, so that the cost of the engineering can be recovered by the sales of multiple documents. Price is therefore intimately tied to the product definition.

Another example is the design and development of web sites, this can be a time consuming exercise and expensive. However today there are many blogging platforms, and more general purpose platforms like WordPress. Almost everyone can build themselves a website in a few minutes. The value of the services offered by the website designers/builders thus decreases significantly. The web designers can jump up and down and complain about the quality of such sites, identify flaws, wish for regulations and monopolies, talk about solutioneering and insist that custom design is a must: but at the end of the day they have to prove the value of their services. Just like architects and engineers of buildings the majority just talk about custom design for the site, they don't actually do it.

A general principle is to introduce no more than 20% of the total features as new, novel and original. These 20% of the features will take 80% of the time. The implication is that if we therefore know 80% of the features or characteristics with certainty then we can calculate the total time for the project: however doing so is likely to generate an unacceptable time frame and unreasonable price if we resort to selling time.

Rather what it tells us, is that the time for 80% of the characteristics is relatively certain, and that it effectively defines a fixed product with a fixed price. The other 20% of the characteristics involve a high level of uncertainty, and therefore a highly variable cost and consequently unknown ultimate price to the buyer. I would contend that the majority of people want to buy off-the-shelf exactly what they want. They do not want the uncertainty of custom design at the point in time they seek suitable product to satisfy their needs. Designers and makers therefore need to be pro-active and make product available for selection. Concept documents are easier to produce than full production documentation, and documentation is easier than actual manufacture of physical object. When it comes to computers and digital products then production and distribution are relatively low costs.

A society built around selling time is going to be in big trouble when production times are cut to near zero. Whilst time may be a measure of an employees work, it is not a measure of the employees contribution to the income of the business. People become self-employed so that they get a greater share of the income that they perceive their work actually generates: though without all the resources of their previous employer the usual result is that the self-employed person earns less but possibly with less pressure. Some employees have to generate income to cover wages of other employees: employees who do not produce directly billable or saleable work.

If don't sell time then what do you sell? In the main sell expertise and know how, and willingness to do the work required. For example the person selling lawn mowing services could charge by the hour or sell at a fixed price. They have a willingness to do work that the home owner may not be interested in, further more they can develop expertise in grass and weeds, they can turn a weed ridden patchy lawn, into a well manicured lawn. Household lawns have relatively similar sizes therefore all take similar time to complete, so a fixed fee would be possible. However different lawns irrespective of the size may require different amounts of work to maintain depending on the environment, and depending on whether in a poor state needing improvement or a good state needing maintenance. This may therefore suggest having hourly rates and selling time. I suggest this is a bad idea.

To start with most things have a minimum fee. So for example say that decide want $30/hour and determine that the time required for the job is 0.5 hours, therefore the fee for the job is $15. From a perspective of convenience however people are likely to have more $20 dollar notes in their wallets than fives and tens, at a sale price of $15 the supplier needs a ready supply of $5 dollar notes to provide change to the customers. The hourly rate was a desired rate, its not an absolute. Does $20 seem unreasonable for the work? Note that people go into stores and hand over a lot more than that, for physical goods, in a few minutes.

Take from another perspective the job takes 2 hours and therefore the fee would be $60, does that seem reasonable and is it convenient to pay? Would it be better if the fee was dropped back to $50? Similarly is an hourly rate of $29.95 a sensible rate to have? It may mislead some people into working with blocks of 20 instead of 30, which is roughly the marketing objective of such prices: however the customer is not going to be happy with the final price if they believe they have been misled.

Note that it is the seller setting the buyer up with perceptions of price. A seller should have some awarenesss of average incomes, and disposable portion of income, for their market sector. Also if accept cheques or credit cards then the inconvenience of various denominations is removed, but then again there are minimum fees which are acceptable.

Given that in an industrialised nation less than 10% of population is involved in agricultural, can assume that the majority of the population is attempting to grab a share of the disposable portion of peoples income, that portion not required for food or other essentials. Assuming that with time all the other essentials also only requires a small portion of the population: housing for example, once it is built it can last for 50 to 100 years possibly longer: so with the bulk of the housing existing already do not expect many people involved in housing construction. So have a relatively small percentage of population supplying essentials, and rest trying to find something to supply.

Time isn't really something that people want to buy, especially if the output of the work effort is lower quality than they could produce themselves, and their own hourly pay rate is less than that of the service purchased. The funds available to the buyer are an important aspect of how they perceive value. For example say that a person can put $50 away each week, then they can save $2600 per year. Then chances are they are not going to be impressed paying some $1800 for a weeks worth of design producing a few drawings and some calculations: if the perception concerns selling and buying time and the report they get turns out to be defective relative to their needs but otherwise what they asked for. The longer it takes to save the money the more discerning the buyer is likely to be about the purchases they make: on the other hand they may lack adequate knowledge to make a proper selection of suitable supplier.

{... lost my track.}


However, just because should avoid selling time, doesn't mean shouldn't measure time.

Thursday, July 04, 2013

Some Interesting Articles

Some interesting articles I will comment further on when I get time:

1) Confessions of a Young Professional, Engineers Australia  Volume 85 No. 4, April 2013
2) The 30 year Failure Cycle, The Structural Engineer, Volume 91, Issue 5, May 2013 (IStructE)
3) How can Structural Engineers Contribute towards disaster mitigation, The Structural Engineer, Volume 91, Issue 6, June 2013 (IStructE)