Little Decisions Today Can Have Lasting Effects

30 Mar 2020 5:16 PM | Annmarie Uliano (Administrator)

by Don Kennedy, Ph.D., P.Eng., IntPE, CPEM, FASEM

When I wrote my first book, I asked for advice from the printer on size. The answer given was “it is personal preference.” I picked things like font size, page size, etc. on a whim more or less. After getting what turned out to be a life time supply of the printed books, I could see the lasting impact of these decisions. For example, shipping costs depend on weight and dimensions. My book just fits snuggly into a standard size 0 envelope. A few more words, bigger font, etc and I would need a larger envelope with a loose fit and higher shipping fees. I wished experienced people could more often suggest these kinds of impacts ahead of me learning by experience and too late to do anything about it.

Things that are happening today will impact our decisions with more weight than they objectively should. At work, we are all subject to grouping our costs into various accounting categories. Here is an example of how one company let current situations impact their future.

It is best practice to keep your accounting structure consistent to help learn from the data. If the categories change, it is next to impossible to compare current operations from the typical. I was once in charge of creating the budget breakdown for a project of about $100 million. The possible codes included filters for diesel engines and crossover piping. I had to get guidance from others on why these were categories and what exactly “crossover” piping was. In the past, the company had diesel engines instead of electric motors as their prime drivers. The year the accounting system was set up, they bought a large supply of fuel filters for these engines. As well, a capital project was in the works to modify many connections and the term used for the project was to install “crossover” piping. The accountants saw the one time expenditure on fuel filters and heard the word “crossover” piping and these became cost categories they would track. As it turned out, few filters were purchased before the diesel engines were replaced with remotely controlled electric motors.

On my $100 M project, there was approximately $20 M budgeted for substations, switchgear, motor controls and all the associated cabling. The only cost category set up from the days when lights and fans were the main expenditures was “miscellaneous electrical equipment.” The company struggled to determine why some types of projects cost so much more than other seemingly similar ones. Perhaps at one site the electrical infrastructure was sufficient to handle an expansion and in other cases, a new high voltage transformer was required. Since everything electrical got coded to “miscellaneous” it was difficult to tell without a detailed analysis.

Despite my best efforts, I was unable to persuade a change to the coding structure. To this day, reports continue to be generated tracking the zero values for filters and crossover piping, while a large portion of expenditures remains lumped under miscellaneous.

Be aware of how the present may not necessarily reflect future needs and spend an appropriate effort up front preparing structures that may have a lengthy time of use.

About the Author

Dr. Don Kennedy, a fellow of ASEM, has been a regular attendee of the ASEM conference since 1999, with particularly good participation at the informal late evening "discussions" (sometimes making it difficult to get to the morning plenaries). “Improving Your Life at Work” is Don Kennedy's ebook which includes a lengthy bibliography for people looking for references on management theory.

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