Human value: February 2009 Archives

The principle of "lean"  is to focus on value creation for customers, remove waste (including wasted time) and rely on the skills of your staff to improve and change.

Lets do a quick calculation. 

Lets assume the costs increase even more, from the current projection of costs of Euro 2 billion to Euro 2.5 billion. Depreciation time 50 years, interest rate 5 %.

It is estimated by many experts that on average 200.000 people will use this metro-line per day.

This means per user per day: 0,68 Euro depreciation, 1,20 Euro interest (or per year accumulated 50 and 87 mio). Which in real terms will be reduced to 1/3 after 50 years if we assume an inflation of 2 % per year.

If we assume this is interest paid to our own pension funds, so to our children, do you think it is worth the investment? Just look at the map of Amsterdam, see the connection with Schiphol and the big railway hub created in the south of Amsterdam. Think about the required shift in mobility,  from cars to public transportation.

You can be sure many people and many visitors will use this line extensively.

I believe it is very much worth the effort.

The recent turmoil about the rising costs of the new metro-line in Amsterdam (" Noord-Zuid lijn") leads to the usual comments and proposals by critics. More committees and more experts, tougher negotiators who can shift the riscs involved much more to the contractor, and so on.

I don't buy it. Yes, probably you can and should manage these projects better. But the reality of these one-of-a-kind complex projects with a lot of unknowns is that there is a lot of risc. Building infrastructure underground in an old city is in the highest category.

 

In the Amsterdam case, once you made the decision that you need the line and you do not want to tear down houses to be able to build the line, there is no alternative.

You could have tried to get a fixed price contract where there was hardly any risc of cost overruns for the government. I am certain that the contractprice would have been far far higher than the current revised projections: the contractor would have taken margins for every imaginable situation, even the ones that have not materialized and will not materialize.

Unfortunately our chosen representatives usually want to have their cake and eat it at the same time. The cheapest possible costs projection combined with an unwillingness to understand and accept riscs. 

 

And for Amsterdam? The real mistake was the deal with the central government. All cost overruns are for the city, creating a heavy burden (from 300 mio Euro to currently 900 mio Euro or more).

I do not like professional soccer and its crazy ecosystem. A warped world.

Therefore it is amazing to see a ritual on TV just moments ago.

The players of Fiorentina, losing an important game in their home stadium against Ajax Amsterdam, say gooodbye to their opponents when they leave the field. In two lines, creating a honor guard lane.

I just learned that their trainer has introduced this as a standard in the team, at every game they play at home.

He has earned my deep respect. 

Apparently the new management of the NS (National Rail in Holland) understands this concept. This morning in peak traffic several senior managers of the NS walked through my Intercity, talking to everyone about how the service was perceived, asking about problems and suggestions. 

A good start, keep it up.

The traditional newspaper business is under pressure.  With the rise of Internet, an increasing number of TV channels and more communication facilities people has more choice where to get information. The early erosion was in the 2 bread-and-butter revenue streams: advertisements to buy and sell stuff (now taken over by the likes of Ebay and Marktplaats and Craigslist)  and advertisements for personell (Monsterboard and other job-boards). The trend hass accelerated now that other advertisement spending is dropping.

Some people are asking for a bail-out, Sarkozy floats plans for mandatory "free" newspapers for youngsters. 

In my opinion, all these measures are looking backwards, trying to shore up an old business model against the tide.

Luckily  there are others who look forward: the NY Times has released an API to search through their database. Om Malik has an excellent article on the potential of this new approach.

In my opinion the NY Times gets it: connect and share is the name of the game .

More and more organizations have gotten wind of the fact that Big Content was trying to get their infamous anti-piracy laws injected into this agreement, bypassing national lawmakers and representative bodies. After all, it is very difficult NOT to ratify a complete body of international agreements which have been negotiated between many countries. If you reject the agreement, you must reject it in total and face the economic damages.

 

So many groups have tried to get more information  on the state of the negotiations, so national and EU-parliaments can influence the negotiations before being confronted with a binary decision. No such luck. A worrying fact.

Ars Technica has an excellent overview of the state of affairs.