Forerunner Corp. Blog

The Blog is Moving

2009-06-15T14:28:00.000-07:00

I would like to announce that my blog is moving to the ForeRunner Corporation website. Please go to:

forerunnercorp.com

Just click on the Blog button to read the latest. I want to thank all of you reading this for your loyalty and your kind words. I hope that the new format and location allow for an even better experience.

Again, thank you.

Bill Groskopf

Dead Cat Bounce

2009-06-01T13:10:00.000-07:00

There is a lot of cautiously good news for the energy business these days. The market is up, strongly so. While there remains plenty of bad economic news, like tulips in the spring, there are now occasional bits of good news on the economy. The price of oil, that bellweather of our industry, is over $ 60 a barrel. The tsunami like shock wave of bad news has swept over us the past 6 months, crushing everything before it. But like a shock wave, it is now past and we raise our heads out of our cellars and look around. Mirabile dictu - new projects are beginning. Today, it is easy to believe in spring.

But the question that haunts us all - Is this spring or is it Indian Summer? To use the language of the trading floor - Is this the beginning of a new bull market or is it a Dead Cat Bounce? The market uses the phrase "Dead Cat Bounce" to describe a market rally in a falling market. Metaphorically, it works off the fact that even though a cat is dead and has no life, it will still go up (bounce) somewhat if dropped far enough.

While I believe it a gruesome image, I do like the phrase. It has that combination of dissonance and vaguely scandalous thought that I strive for in my daily life. And it speaks so well to our current dilemma. Are we seeing the beginning of new and vigorous growth, or are we watching a dead cat that has fallen several hundred feet? No one knows the answer until well into the future, at which point it only allows us the pleasure of saying, "I told you so."

In the here and now however, decisions need to be made. Decisions that must be made in the fog. Decisions that can be ridiculed at some future date by those who know the outcome. The decisions that are made will affect peoples' lives. Across the country, people are struggling with this decision. Should I buy a new car, or should I keep the old one? Should we buy that bigger house our growing family needs, or do we make do for awhile yet. Do I commit our company's resources to a new capital project, or do I save my cash to buy my competitor's facilities out of bankruptcy? Our futures are being shaped by these decisions.

Notes from Dubai

2009-05-14T04:02:00.000-07:00

I am sitting in a hotel room looking out at the tallest building in the world. It soars upward, a spare spear thrust into the sky. But it shares the window with many other skyscrapers equally picturesque. But it is the sheer number of cranes and the hazy sky that really dominate the scene. This is Dubai, crossroads of the United Arab Emirites.

Change is the key word in this part of the world. On the way from the airport to my hotel, my cab driver took the wrong turn, momentarily lost, because the road had changed since he last drove to this part of town. It seems that every road and every building is under construction.

I have come to participate in the vast surge of resources being drawn to this particular corner of the world. The strong gravitational force powered by capital spending pulls us all into its orbit. The concourse of the hotel and business meetings are a kaleidoscope of peoples and cultures. In a meeting yesterday, I met a young woman engineer from Russia. Her look was so definitively Russian, that I could imagine her as the model for one of those "Soviet Worker" posters so popular among the International Left in the 1930's. Working at the desk next to her was another young woman, veiled, in the garb of traditional muslims of the desert. I was driven back to my hotel by a young sales engineer from India. From the cynical tenor of his conversation, he must be an avid fan of the local equivalent of "Talk Radio". They all worked for an entrepreneur from Lebanon whose manic focus on business echoed the many hustling startups in our own country that have made our economy so vibrant.

The impact to the newcomer is strong. Walking into the air terminal, the sheer power of the extravaganza overpowers you. Grasping for a metaphor, it comes to me; Las Vegas on steriods. The architecture of the skyscrapers is not the sober economics driven square boxes that we have come to know in the West, but the arresting curves and cantilevers of imaginative architects given the freedom from economics to bring their fantasies to life.

And yet the next day allows one a more measured reflection. Standing in my window, I can count 31 construction cranes. If I could see in other directions, I would count equal numbers in those directions as well. Yet nearly all of them are strangely unmoving. While traffic is busy, there are no trucks to be seen. And while there are the blue coveralls of construction workers visible, their numbers are few. It appears that the real estate bubble may not be restricted to Phoenix and Las Vegas.

But the iron and steel of the energy business is outside the financial districts of Dubai. Though slower than before, the energy infrastructure of the Gulf continues to build. Even more than Houston, this is the energy center of our universe. Can we compete here? Can we play with the "big boys"? Conversations with numerous customers in the area give evidence of the opportunity. The same organizational strengths, coupled with a self effacing approach to client relations, that have allowed us to prosper in the domestic market will play well here.

And so as I return to Denver, I am struck by the opportunity here. But I am also sobered by the reality of the world outside our borders.

Value

2009-05-01T12:05:00.000-07:00

We are a service company that provides an ill defined service. Its hard for us to even tell people what we do. Are we an engineering company or a project management company? Are we responsible for the engineering within a project or the execution of that project? Are we the Owner's consultant or his sub contractor? Are we responsible for our part of the scope or are we responsible for the scope? The answers to those questions have a big impact on us, but the answers are slippery. The answer, of course, is that we are what our Client wants us to be at any particular point in the project. And if what our client wants us to be conflicts with what the contract and payment terms negotiated by the client's purchasing group require us to be, we can only hope that the project turns out well.

But back to the question, what is our value? As a service company, that is an important question. It is the most important question; driving as it does, everything that we do. Yet again the question, what is our value? If we can't define our service, we may face some difficulty in measuring its value. We are left with the realization that our value is in the eye of the purchaser, i.e. our clients that own and operate the projects that we work on. And what is it that our purchaser sees? How does the purchaser of our services decide with whom to do business? How does he value our service? How do we compete for his business?

Those who purchase our services are virtually all engineers. They are people who deal in numbers and facts. A case for value, solidly built on numbers and facts is what engineers want to see when faced with purchasing decisions. So when an engineer from an engineering services company sells engineering services to an engineer (how much wood could a woodchuck chuck . . . .)!! What is the sales conversation? What data does an engineer use to prove to another engineer that his particular engineering services company is superior his competitors?

The sales conversation with the purchaser must be meaningful to the purchaser. What is meaningful to the purchaser? The answer always boils down to the Four Horsemen, i.e. Time, Money, Performance and Quality. Any engineer worth his salt should be able to measure time, money and performance in his sleep. Quality may present a greater challenge, but there are many standards from the API, AGA, ASTM, etal. that control quality. It might take more work, but "quality" can be measured by a determined engineer.

Since Time, Money, Performance and Quality can be measured, the naive observer would expect engineering service providers to have reams of data on their performance relative to those criteria. The naive observer would be correct if that data was an important criteria in making purchasing decisions. Since the data does not exist, the more world wise observer would deduce that data is not an important criteria in making purchasing decisions.

But logic cries out that engineers always use data to make purchasing decisions. What is wrong with the engineers that buy our services? Have they been seduced by the Dark Side of the Force, i.e. business development? They say and we believe that they buy based on hard numbers. Yet our sales literature is full of pictures and abbreviated resumes called bios, with numbers few and far between. Either we are fools or pictures are in fact something that influences our client's purchasing decisions. Neither answer is comfortable to either party in the transaction.

In the darker marches of the night, my mind conjures images of a Beauty Contest. We have replaced the Talent Competition with our resumes. Instead of the Swimsuit Competition, we parade pictures of our projects. And yet, what are we to do? For in truth, there are no numbers.

Pity the poor client. He has no reliable way to estimate what a project will cost until the engineering is done. How can he measure Money or Time? Engineering Services must be purchased and used before either Time or Money can be defined, let along measured.

Where is he to get historical numbers to base his decisions on? He can only get them from his suppliers, i.e. us, or he can use internally generated numbers. Yet both sources resemble fun house mirrors at the county fair. Our numbers are suspect for a number of reasons. One of the most important is that like Garrison Keilor's community of Lake Woebegon, the projects that we do as engineering companies are all above average. We tend not to talk about our problem children.

Even more to the point, we, both ourselves and our clients, suffer from a lack of numbers. It seems that client organizations operate on a "need to know" basis. Obviously engineering contractors are not in the "need to know" category, with the result that we hardly ever know how much it cost to build one of the projects we design. Even when we construction manage, procure and do the cost tracking for a given project, deference to the sensitivities of the construction contractor, as well as internal client stakeholders, require that much cost data is unseen by us. The common tendency to add operational costs into the capital accounts; or conversely, supplement the project budget from other accounts further clouds any project cost accounting or tracking.

As a result, both our clients and ourselves are without the historical project cost information that would allow for any kind of performance tracking or ranking. Thus, we dress up in our pictures of past projects and flash our resumes.

Buffoons or High Priests?

2009-04-22T08:35:00.000-07:00

Well it happened last Friday. Our EPA declared that CO2 is a "dangerous pollutant". While it came as no surprise, given the political and cultural tenor of the times, it still came as a shock when announced. Something like watching a train going off the tracks; at some point it becomes inevitable and you know that it will happen, but when the crash finally comes it still stuns you.

How did we come to this? The enormity of this decision confounds the senses. Not only was CO2 declared a dangerous pollutant, but so was methane (as well as nitrous oxide and various fluorocarbons). Taken to its logical conclusion, this gives the EPA the legal authority to regulate every aspect of our lives. It not only gives the legal authority; but, in fact, mandates that it be done. It is the law and is taken seriously. Carbon dioxide (CO2) is everywhere, in enormous quantities. It is essential to life and part of everything that we do. While the action is regarded as a means to chastise the energy industry, it will be a case study for future generations on the Law of Unintended Consequences.

But to ask the question again, how did we come to this? Is our whole culture on drugs? I suspect that most of our senior policy makers were at Woodstock, but this action gives evidence that they never left. There is an Alice in Wonderland quality to this whole thing that reeks of mind altering substances. Either that or we have turned over our future to the Three Stooges.

We voted for "Change". And we got change. But what is the change that we are getting? Who is making the decisions? What is the basis of the decisions that are being made? Make no mistake. Once made these decisions will be with us for the rest of our lives and our children's lives, for good or ill. The changes themselves are so bizarre that one is left with only two choices.

If people take actions that are counter to all common sense, facts and cultural norms, our first thought is that they are in fact buffoons. US energy and environmental policy is now being made by the Three Stooges. Imagine for a moment if you will, Carol Browner as Mae West and Ken Salazar as W.C. Fields. Perhaps our Governor, Bill Ritter, might be thought of as the Masked Bandit. Then watch their last movie together, "My Little Chickadee". At least it will provide a humorous counterpoint our current situation. As funny as it is, I do not think that those driving policy today to be buffoons. They are smart and dedicated people, with a record of accomplishment that gives the lie to that pleasant fantasy.

Instead, we are left with the other option. A much more dangerous and potent possibility. That is that they are people of faith. They are true believers. People of faith see the world differently than does the common man. Their faith gives them power. Whereas a simple policy maker might be persuaded to see reason if given a luxurious suite at the Super Bowl, a person of faith sees only utopia and takes delight in scourging the weak one who might be tempted by that suite. They are blind to the simple pleasures and failings of the rest of us. People of faith have been called to make this a better world, and if it takes suffering to make it a better world, so much the better. More importantly, they are indifferent to our suffering. It seems to be a truism that people of faith often love the masses, but have no sympathy for the individual.

We are now called to worship Mother Earth, sometimes known as Mother Nature. We tend to think of her as a kind and nurturing soul, in contrast to the harsh patriarchal God of Abraham. But a wise man (Tennyson) who came before us described her true nature "Nature, red in tooth and claw". But we will learn and our priests will see that we are made to suffer, in order that we are worthy of paradise.

An earlier generation, one more familiar with societies that tried to create paradise here on earth, had a saying about the environmental movement. They said that "the green tree had red roots". They were engaged in a great struggle lasting across generations with totalitarian movements. They recognized that the environmentalists shared a history and a world view with those who had created paradise in Russia, in China, in Cuba.

Cold Harbor

2009-04-10T13:10:00.000-07:00

As I shared some time back, our conference rooms at ForeRunner are named after historical events. I chose the names to remind me of what I felt to be important lessons. Leadership of a company, or any other group of people, is a daunting task. Since there are so many opportunities to lose one's self in the fog, I felt it necessary to remind myself of certain basic themes I felt important if I was to become the manager I wanted to be. One of those ways was to name our conference rooms as reminders of what I needed to remember.

And so we have a conference room named Cold Harbor. I admit one of the reasons for the selection is simply the name. The dissonance of the name appeals to that melancholy which is such a large part of me. But it was really the events that transpired there some 145 years ago that drew me to name it so.

Early June of 1864. US Grant, the future president of the United States has assumed supreme command of the Union Army and has been hammering Robert E. Lee's Army of Northern Virginia for a long month. Beginning at the Wilderness, and following at Spotsylvania, Yellow Tavern, North Anna and many more, the two armies have slammed into each other with a sustained fury. The Rebels, under Lee, have always been heavily outnumbered, usually by 2 or 3 to 1, but have consistently defeated Grant and his army. Grant is seeking to break through Lee's army to capture Richmond, the Confederate capital.

Grant's army has sustained heavy casualties. He has already lost nearly as many men as Lee had at the beginning of this campaign, yet the industrial might of the North continues to supply him with inexhaustible supplies of fresh men and equipment. Yet Lee and his men continue to defeat him again and again. The roads between the front and Washington DC are jammed with both ambulances hauling the wounded back and columns of fresh faced reinforcements coming down to be thrown into the meat grinder that is the front. The Northern newspapers are screaming in large headlines at the horrific losses of men and treasure. Now the maneuvering armies confront one another once more near a small town called Cold Harbor, directly north of Richmond. The Rebels get the first and dig in, throwing up walls of tree branches and earth walls.

For two days the Union Army probes the Rebel defensive line, learning just how strong this line is. In late afternoon of the second day, Grant orders a massive assault for the next morning. The men in the Union lines are no fools, even though they know this is to be a fool's errand. An atmosphere of doom pervades the Union ranks. Over the past two days they have tramped through fields containing long unburied bodies, now skeletons, dead soldiers from a battle fought here two years before, Gaines Mill. They have seen the impregnable defence lines they face.

That night, many of the Union soldiers write their names on slips of paper that they pin to the back of their uniform. This is so that they can be identified when their bodies are carried from the battlefield the next day. In fact this is the origin of the dog tags our soldiers wear today. And so the next morning, they obey their orders and move forward in their long lines. Unbelieving rebels behind their walls watch the foolish advance. The guns fire and it is soon over. Union soldiers in their thousands lie dead and wounded before the walls of the Rebel line. In a final insult, for two days Grant refuses to request a truce so that he can pick up his dead and wounded, as he does not want to admit that he has again lost the battle. The wounded moan and cry for water, often dying on the ground between the two lines during the two day wait. The dead do what comes naturally in the summer heat, contributing to the horror of the scene.

Accepting the gift of leadership entails responsibility. The decisions that managers and leaders make have consequences. But the immediate consequences of those decisions are often escaped by those that make them. As the organization becomes larger and more impersonal, this becomes more and more the case. Whereas US Grant became President of the United States, with his portrait on the $ 50 bill. It was Private John Doe who felt the fear of the march into flashing guns and the pain when that metal tore his body apart.

While it may not seem fair, it is the way of the world. Some must lead and some must follow, if we are all to prosper. Yet it behooves those who lead to respect and care for those who follow. We who lead are ever in danger of belief in our press clippings. We are ever in danger of being captured by our emotions. Leadership has consequences. If we want to be good leaders; even more importantly, if we want to be decent people, we will remember that.

An Arrogant Crow

2009-04-07T13:06:00.000-07:00

My wife and I spent her Spring Break in Southern California. I admit I am fond of California. I wouldn't want to live there, but it is a great place to visit. Its a bit like going to the Kingdom of Oz, even though it bears more resemblance to Girls Gone Wild than Judy Garland. But it is a land that lives in the midst of fantasy; but when we look behind the curtains we don't see the kindly old Wizard, but instead the Terminator.

My wife likes to take walks and I like to be with her, so I tag along. One morning we came upon a large well fed crow drinking from a puddle alongside the sidewalk. As we walked closer and then passed this bird, it showed absolutely no fear and gave us no more than an irritable stare. Much to my wife's annoyance, I passed into silence as I pondered what I had just seen.

How far we have come. Wild creatures, once known as vermin, that show no fear of man. Crows, prairie dogs, coyotes, et al. once feared us, and with good reason. We earned our reputation that Darwinist's of an earlier generation gave us, i.e. Killer Apes. But that was before Walt Disney taught us that rodents are just like us, only cuter. And then we discovered that we are hurting Mother Earth. All 6,000,000,000,000,000,000,000 tons of her are in danger and needs saving. As I said, we have come a long way baby.

But the fact is that earlier generation named us well. We are Killer Apes. We did not build our present civilization by being nice guys. It is no accident that wild animals no longer carry off our children for an easy meal or that rodents do not carry culture destroying plagues. Of course, we have changed and aren't like that anymore.

Ok, so what is the point? The point is that the environmental movement in the United States is probably coming to a reckoning in the next few years. The charming vision we now have of Mother Earth has joined apple pie, the flag, school teachers and emergency responders as icons we all love and respect in our culture. Yet since the beginnings of Western Civilization some 3,000 years ago, we have battled nature. We have seen nature as something to be battled or used, an opponent to test our mettle against.

So far, the environmental movement has not caused Joe the Plumber any pain. But now we are at the tipping point. Carbon control legislation offers enormous costs with no gain. Saving Mother Earth is now going to cost, its going to cost a lot. A fuzzy dreamy consciousness lies at the heart of modern environmental consciousness. We believe it because it makes us feel good about ourselves, and it doesn't cost anything. We get to have our cake and eat it too.

That is probably going to change. Western Civilization has always been about bigger, better, faster, cheaper. We will be pragmatic, we always have been. But we are also pretty ruthless when it comes to improving our standard of living. Maybe that crow will show a little respect next time we meet.

Developers and Other Clients

2009-03-24T19:11:00.001-07:00

We work for quite a number of different clients, but their projects are to a degree, very similar. We do projects of that type because we have experience and expertise in doing them. They are familiar to us. Because of that similarity, we tend to look at all of our clients as being similar as well. It is a simple thing, but perhaps not a wise thing, for us to make that assumption. Our unconscious thinking being that if the projects are similar, the clients must be similar.

It is a simple assumption, and under most circumstances, does not create problems. Similar facilities require similar engineering, after all. The degree of detail and documentation may be different, but a certain body of engineering work is necessary to allow the facility to be built. And so we persist in our naive perception of our clients.

But in fact our clients are very different. To the extent that we recognize differences, we personalize them. Both they and we are human beings, with the likes, dislikes, biases and prejudices that are common to that condition. As a result, we easily see differentiation among our clients based on their differences as people, rather than on their differences as organizations. But there are profound differences among our clients based on the type of organization that they represent. Too often we are blind or indifferent to those differences. And those differences can have a material affect, on our business, as well as on our ability to successfully execute projects.

The type of projects that we do require substantial financial commitments on the part of the client. As a result of this simple fact, our clients tend to be large publicly owned corporations. Those corporations usually have mature organizations with well developed procedures and protocols for handling the complex financial, legal and organizational issues involved in building, and more importantly operating, complex and costly facilities. To an extent, we are not even explicitly aware that these procedures and protocols exist. It is simply the environment that exists in which we do projects. It is like asking the fish about the water, and having the fish answer, "What water?"

But there are other types of client out there, and for which we work. One of these other types is what I call, the developer. Developer organizations are often just a few individuals, sometimes a single individual. Their business plan usually revolves around recognizing a business opportunity, determining the facility necessary to capture that opportunity, raising the money to build the facility and then building it. Once built and operating, it is sold to a larger organization, with the developer on to the next opportunity.

Since it is our desire to be a successful business, as well as a successful project driven engineering company, we must take into account the different imperatives that drive the developer client organization as opposed to the large corporate client organization. The first step is to recognize that we provide a different value to the developer than we do to the corporate client.

In the case of the corporate client, we provide the spectrum of resources necessary to accomplish the desired result. The mature organization of the client knows what it wants to do, how to do it and the constraints within which it will be done. That client simply needs some organization to provide those resources in an efficient and cost effective manner. The developer organization is looking for something different. They are looking for the knowledge of what needs to be done. Crudely put, the corporate client is looking for muscle, while the developer is looking for brains.

But here is the trap for us as a business. The scale of work done by the corporate client, as well as the dynamics of that organization, require that large and sophisticated outside organizations actually accomplish the work necessary to execute the project. Not only must the project be built and put into revenue generating service, but the client organization itself has a commitment to operating that project facility into the future. The operation of that asset and similar assets creates potential liability with many stakeholders. Thus the need to proceed on projects in an orderly and measured manner according to the procedures and protocols of the corporation. Thus an organization like ForeRunner employs people engaged in executing those projects for their clients in the manner expected by those clients.

In contrast, the need of a developer is for the basic design and to just get it done. Often the need for that basic design is driven by the financial organization providing funds to the developer. Professionally done high level drawings are as much a part of the business plan presented to potential financial partners as is the pro forma. Once a workable design is in place, many developers will become a DIY (Do It Yourself). Given that the goal of the developer organization is to create an asset that can then be sold, project execution is driven by expediency and short term considerations.

An interesting metaphor for the difference between developer client and corporate client might be that of auto racing. Working for the corporate client might be viewed as being in a car rally. Performance is measured by hitting all the milestones at the correct speed and time. Working for a developer client might be viewed as a drag race. Getting from start to finish is the sole criterion. The car may well be throwing parts all over the track and on fire, but crossing the finish line in the shortest time is the only thing that counts.

Thus working for developers can be a difficult game for engineering companies. Engineering companies often give away their ideas, or sell them cheaply. The idea being that they will capture the client with their ideas, but will then be able to sell the manhours necessary to execute the ideas. This strategy is a real loser for the engineering company in working with a developer. The developer is looking for the ideas, and if they can get them for free, so much the better.

Peggy Noonan and Kaitlyn Marie

2009-03-02T14:07:00.000-08:00

I must tell you about a major change in my life and, as it happens, the subject of this post. My oldest daughter, Suzanne, has made me a grandpa. There is a new girl in my life. Her name is Kaitlyn Marie and her picture is alongside. As I am sure you will agree, she is beautiful. And as you can also see, she has a sparkling personality.

We haven't been formally introduced, but I have fallen in love from afar. When we do meet, I know that she will immediately bewitch me. I have always been a sucker for pretty girls with flair. Just ask my wife and daughters.

Though I am new to it, I suspect that being a first time grandpa is different than being a first time dad. Having been a dad, I remember it as being very immediate. It comes like an avalanche and leaves you gasping for air. One day you are a carefree child in a man's body. The next you are an adult. The humdrum things of your life are suddenly changed beyond recognition. There is this little person that is totally dependent on you. What had been a drive to the grocery store in normal traffic and a simple suburban home yesterday, was now an environment full of danger. Drinking a few beers after work now seemed like very risky behavior in case something happened.

I am very new to the gig, but I think grandpa's have a different perspective than dad's do. I probably won't put the pacifier in boiling water when Kaitlyn drops it on the floor or the dog licks it, unless her mother is looking anyway. We did that for Kaitlyn's mom, Suzanne, who was our first. But as our family grew, we just couldn't keep that up. Which helped us learn that kids are pretty tolerant of dirt and germs.

But grandpa's worry too, just about different things. Which brings me to Peggy Noonan. Ms. Noonan, who was once Ronald Reagan's speechwriter, writes a column for the WSJ that I look forward to every week. She has a rare gift of putting into words what we, as a society, are feeling. At least those of us who are of a certain age and cultural sensibility. Last week she titled her column, "Remembering the Dawn of the Age of Abundance". Coming at the same time as Kaitlyn's birth, it affected me powerfully.

Ms. Noonan is old enough, as am I, to remember when we didn't live in an Age of Prosperity. Back then, the nightly news carried pictures of burning US helicopters in the Iranian desert, Soviet tanks rolling unopposed through Afghani villages and lineups of blindfolded hostages in front of AK-47 wielding students. Inflation roared through our economy, we waited in lines a block long to fill up our cars with exorbitantly priced gasoline and our cities were crime infested warrens that had seen little new construction in decades. Our wise men told us that things would only get worse in the future because our culture was a failed one that would be replaced by cultures better able to cope with a world of declining resources.

Then things began changing. Slowly we dug our way out of the funk we were in. We started to believe in ourselves again. We worked, we invested, we dreamed. Once more our country became a beacon of freedom, a place where people came because they wanted a future for themselves.

Our economy boomed because we were inventing things. We celebrated entrepreneurs like Bill Gates and Steve Jobs who were building exciting new industries. Our economy was growing in productivity by leaps and bounds. Inflation was stopped in its tracks, our cities got cleaner and safer, energy became cheap. The Soviets were chased out of Afghanistan, the Berlin Wall was pulled down and Francis Fukayama wrote an influential book about the end of history because Western Civilization had proven itself so superior that it could have no credible future competition.

But then we started to read our own press clippings. We started to live beyond our means. Yesterday's luxury item became today's necessity. We created the "aspirational consumer"; that is someone who was living beyond their means, but who hoped to someday be able to afford the lifestyle they were living today. I think we know in our gut that we will not return to that economy anytime soon. Our political class is busy enacting reforms eerily reminiscent of the late 1960's which led us into the economic horrors of the 1970's.

Kaitlyn will grow up in this future that we are now creating. Most of the news today is bad and there doesn't seem to be any bottom to the economy in sight. The danger level in the world is rising sharply as political opportunists realize that the world's policeman has gone home. Our government is out of new ideas and falling back on failed ideas from the past.

But like Ms. Noonan, I am optimistic about the future. The excess of the past years needed to come to an end. There is a lot of poison that needs to be drained from the system. We need to find our way again and will try many bad ideas until we are ready for good ideas. We will have foolish leaders until we again develop wise leaders. We will get back to basics. We will rediscover our greatness and Kaitlyn will grow up and live in a great country.

ForeRunner's Anniversary

2009-02-18T10:24:00.000-08:00

Today, February 16th, is the thirteenth anniversary of ForeRunner. Like almost everything else in my life, it began with no plan or goal in mind. There was just the overpowering need to leave the now, the familiar, and just be free. Even now the memory of that wild rush of freedom that came with leaving my previous job has the power to intoxicate and enchant.

Viewed by a rational person, it was a stupid thing to do. I had a very good job with a very good organization. I had four kids, two in high school, one in junior high and a fourth in elementary school. In the coming fall, the oldest would begin college, with the thought of at least 12 years of college tuition payments following. The amazing fact was that my wife allowed me to quit. She gave up paychecks and health insurance. She much later admitted to how frightened she was. But she never let me know. So much for the myth that I have any sensitivity at all.

February 15 was the last day at my old job. February 16, a Friday, was the first day at ForeRunner. I had bought a new desk at Oak Express that was delivered to my new office that day. My new office was a 10’ by 14’, room with attached closet. But it had a window with a tree outside. While my old (bigger) office was on the 17th floor of a downtown building with multiple windows on an expansive view of the Front Range, I was very excited about this new place.

The next day, a Saturday, I built shelving for my new office out of 2x4s and plywood. It was a sight. The office building had a small landing outside its entrance. I can still remember plugging my saw in there, cutting the wood and using my DeWalt 12 volt battery screwdriver to put the pieces together. I am sure the other tenants’ in the building thought that Jedd Clampett had moved in when they saw what was going on. But they held their peace, at least that first day. It was an all day job, but Diane and the kids came over with McDonald’s for lunch. It was a great day.

Monday came and what I had done began to sink in. An office can be a lonely place. Time passes very slowly. It gives you time to think. After awhile you get tired of thinking. I used the phone to call people. I left a lot of messages. I learned a lot about receptionists and caller screening. I sent out mailers to the people I knew and the people I didn’t know. The silence was deafening.

A month passed. Then another month passed. Then four more months were gone. I had watched the leaves on that tree outside my office bud, leaf out and now in a few more weeks those leaves would be falling off. One day the phone rang and it was a client. They had a pipeline project in Texas and needed someone to help them. The downside was that I would have to work out of their office to do the job. I heard myself politely turning the job down and hanging up the phone.

For the next two weeks, I rehashed that conversation again and again. Against my taking the job was that I would have traded an executive position with a window office for a contract job in a cubicle was more than my pride could handle. Can you tell that I am status conscious? Also the job looked like it wouldn’t lead anywhere. On the other hand, our finances were in the toilet. As for going nowhere, how can you go anywhere when you don’t know where you want to go. More than once, I came within an inch of calling the client back. Calling him back and begging, if need be.

And then, miracle of miracles, the phone rang again. A large engineering company wanted to talk to me about specialized consulting on a large project they had. Actually, this sounded even worse. But it was “consulting” not “contract engineer”. Euphemisms were important. Also the thinking of the previous couple of weeks had brought home the depths of the financial hole we faced. So I went in and talked to them. If I am honest, I will say that I went eagerly.

On the Saturday over Labor Day Weekend, I sat down with three people I had never met before. They explained the project they wanted me to help them with; and amazingly, I realized it was the same project the client had talked about two weeks before. Yes, I would still have to sit in the client’s office. But my pride was beaten and I recognized that God was trying to get my attention. I accepted the humiliation of my fate.

The next few months were tough. Returning to a job level I thought left behind played on my mind. Yet those months were among the most important in my life. After doing projects as an engineering contractor for the entirety of my career, I now did a project from the perspective of an owner. It was truly an epiphany and forever changed my ideas about how projects should be done.

That project was where ForeRunner began. After a couple of months, the scale of work required more help. At a fateful lunch, Creg Hughes agreed to leave his budding career in financial services and join me. I met so many of the people, future clients, employees, competitors and friends, that were instrumental in the future of ForeRunner on that job.

From those humble beginnings, ForeRunner came to be. We have had our successes and our failures. But that first project created our foundation of respect, both for the needs of our clients and for our own people, as well as the vendors and contractors with which we work. Along with that respect, I came to understand humility, another foundation stone of our company. Humility is not something that comes easily, especially to engineers. Yet that was the genesis of the company, and being true to our beginnings requires us to remember from where we came.

CEO's - The Genie of Accountability

2009-02-09T10:05:00.000-08:00

It won't go away, nor should it. Tens of billions of dollars were given in bonuses to employees of financial institutions that went into the tank. The suspicion is that some of those billions were taxpayer dollars. The idea is outrageous. It makes our blood hot. The very people most visibly at fault for the economic meltdown are leaving the disaster scene with bags of cash, ala Scrooge McDuck. Where is the justice?

Our collective rage is focused on the leaders of those organizations, the CEO's, rather than the employees who were given outsize bonuses as well. I feel that these leaders, these CEO's, have failed as stewards of the resources which they managed. We trusted them to use their position and their knowledge to make this a better world. We expected that they would get rich from their position, but we also expected them to care about the good of the business they managed. In this, they have failed badly. We expected them to be greedy. We did not expect them to have no shame.

Shame. What an old fashioned word. Has anyone heard it used in the last twenty years? It is so old fashioned that it is quaint. Before we all got so smart, before we all became educated and modern, the word spoke to our sense of community. It was a word that recognized we all had responsibilities and obligations to the world that we lived in. We are only human, and so will fail on a regular basis. And as we fail, we will exhibit all those traits that make us lovable, i.e. greed, as well as her sisters, lust, gluttony, laziness, anger, envy and pride. But our sense of shame drove us to say we were sorry when we failed. Sometimes it even drove us to be noble rather than self serving.

But then shame can only exist in the company of humility. Humility is another word that has fallen out of use. To be ashamed requires one to be humble, to recognize that you have let your fellows down. But I see no sign of that on the national stage that these titans of industry stride across. They are smarter than we are, they are better connected than we are and they know it. Even as they are on camera before Congress,the righteousness they feel can be seen. They know that as soon as Britney Spears or Tiger Woods make news, we will forget. Then they can return and resume their mastery.

But are CEO's so different? How many athletes on your favorite sports team have left or arrived because of a more lucrative contract? As it happens, I have been a Yankee fan all my life. I trace my love of the Yankees to growing up far out in the sticks and watching baseball on tv. It is exciting to be a fan of a team so committed to winning. But even I am uneasy about the naked power of money used by the Yankees. I watch Alex Rodriguez and the other "best in class" talent fail in October, again and again. I cannot help but compare their smooth superiority to the heart shown by Bernie Williams, Paul O'Neill and others when they did win World Series. But seeing an old scratchy news reel of Lou Gehrig's Farewell Speech makes my eyes mist up, for it shows how far we have come.

And yet it is our modern age. We are awash in consultants who tell us how to have great organizations. These business masters tell us that we must have metrics and we must have accountability to be successful. We must measure things and then hold people accountable to deliver those things that can be measured. And we follow the advice of these masters. We do measure things and we do hold people accountable. CEO's get to be where they are by consistently delivering those things that are measurable. Alex Rodriguez, A-Rod to us fans, got his $ 400 million dollar contract by consistently making and exceeding the numbers. I expect that A-Rod shows that emotionless sense of superiority because he is delivering. He is doing what he is paid to do. His numbers are fantastic.

I am reminded of the many stories about the genie who grants three wishes. You have heard them I am sure. Some wandering soul finds a lamp and rubs it. A genie appears and grants three wishes to that person. The person asks for those things we all aspire to, wealth, position, love. But each request has an unforeseen flaw that frustrates the meaning of the request. So after three failed dreams, the genie returns to the lamp, satisfied that he has been accountable. He met his metrics and granted the three wishes The wandering soul returns to his wandering, worse off than before.

We Are to be Chastised

2009-02-02T10:28:00.000-08:00

It is a dangerous thing to be the black sheep in the family. Some members of families just don't fit in. Whether in a family or a company, there are individuals that just seem to always go their own way. There is something in their psyche that makes them contrary, needing to push away from the rhythms that most people follow. They are outriders, following their own version of the truth, their own path to the future.

Reactions to the black sheep by those safely within the flock range from bemused tolerance to avoidance to indignant confrontation; that confrontation usually being handled by those keepers of the family tradition, the elderly aunts. But that is in normal times. When disaster strikes, the gods must be appeased.

There is in the human being, and in the societies that he creates, a realization, an understanding deep in his heart, that there is a power greater than himself. Most of the time we are able to ignore this if we so choose. Going to church on Christmas or pledging solidarity when a celebrity champions the cause of world peace on an awards show allows us to keep this knowledge hidden from ourselves. But then disaster strikes. We come face to face with our own powerlessness and it scares us. And when we are frightened, we lose the civilized part of our consciousness. We fear and we will act on that fear. If disaster strikes, it must be because we have angered the gods. In common with our ancestors who gathered around smoky fires in dark caves, we look for a sacrifice that will satisfy the rage of that which is greater than us.

If the gods are angry, it must be because someone among us has angered them. Which brings us to the black sheep. The meltdown of our economy is a disaster in search of scapegoats. While bankers and financiers have come in for their share of public anger, they have not been black sheep. They have just been greedy, but we understand that, we are all familiar with greed. If that makes the gods angry, then we are all in trouble. Damp that thought before it gets too far.

But the oil and gas business is another matter. We drill into Mother Earth and scar her with our pipelines. We cause the air to be contaminated with carbon dioxide. We use chemistry, mathematics and other black arts. No one understands what we do or how we do it. And we have been making way too much money over the past couple of years. Surely we are the reason that the gods have made flipping houses unprofitable. We are the black sheep. And the others around the fire are looking at us and their hands are searching for their clubs.

Like the black sheep who have gone before us when sacrifices needed to be made, we are about to be chastised. Henry Waxman has replaced John Dingell as Chairman of the Energy Committee. Carol Browner is the "czar" for energy policy in the new administration. Stephen Chu is head of the Energy Department. Ken Salazar is head of the Interior Department. The oil and gas industry looks around for a friendly face and sees only executioners.

It is dangerous thing to be the black sheep when there is fear in the cave.

Leadership on an English Beach

2009-01-20T10:45:00.000-08:00

It was early morning in late summer. The location was somewhere on what we now know as the Dover coast of England. As the sun came over the eastern horizon, it showed the beach and cliffs behind it in soft light and dark shadows. A stiff breeze kept the temperature brisk and the surf crashing along the flat beach.

Somewhat off the beach, caught in the surf are a number of wooden ships, keels aground but caught in the waves and rocking with them. Behind those ships and further out is what appears to be a large fleet of similar ships. Crowding the decks of the ships are closely packed men dressed in armor and carrying shields, more than a few of them retching from sea sickness.

Spread along the beach facing them is a large mass of men yelling and shaking spears at the ships out in the water. They are a motley crew with a few mounted on horses, most of the rest on foot, but no small number of them riding chariots along the flat beach. Virtually naked, their faces and bodies are painted in a brilliant cobalt blue. Their hair, dressed with a thick mixture of sand and grease, stands straight out or up in what we might think as punk styles.

The year is 55 BC and the ships are carrying Julius Caesar and two of his Gallic Legions, the VIIth and the iconic Xth. This is the largest amphibious opposed landing in Europe before the D-Day landings some 2,000 years later. This Roman army is here to begin the conquest of the land they know as Brittania. We have an eyewitness account of this scene written by Caesar himself. And as he freely admits, there is a problem.

The ships that the Romans, freshly built by Caesar, are in do not have flat bottoms so they can come up on the beach. They have keels and have run aground some distance out from the beach in deep water. To get ashore, the legionnaires have to climb down netting into 6-8 feet of water and move through that water and surf to the beach. The men probably average 5 feet in height and are weighted down with around 60 pounds of armor as well as a bulky shield. As soon as they are in the water, they are at risk of being hit by a storm of arrows and spears from the Celtic tribesmen (ancestors of today’s Irish, Scots and Welshmen) on the beach. Already there drift half submerged bodies, smudging the water a bright red, of the first wave of Romans who have tried to move onto the beach.

On board one of the ships stands Julius Caesar, prominent in the bright red cape of a Roman general. His men have stopped going over the side into the water, despite the sticks of their centurions (Lieutenants). The centurions are not trying to get the men moving all that hard, as many of the bodies in the water are fellow centurions. All have watched with dismay, the death of those few who have already gone before. Those left have lost their courage and will not go forward into what seems certain death. All eyes are now on Caesar, who seems to be fresh out of ideas. It is truly a moment of crisis, with fate in the balance.

At that moment a centurion of the Xth Legion looks over to Caesar, makes eye contact with him and then jumps over the side of the ship carrying the eagle of the legion. Nothing happens for a minute as shock grips the men watching. The eagle of the legion, made of silver and life size, was the totem and spiritual heart of the legion. Always put in the safest place on the field of battle possible, to lose the eagle was to lose honor and live in humiliation. After a moment everyone begins going over the side in a surge of men that carries the day and brings the Romans to victory on the beach.

Julius Caesar was in a position that almost every manager can empathize with. You are in a tight situation with no obvious way to get out of it. Not only that, but it is clearly your screw up that put your people in that position, and everybody knows it. To get out of this mess is going to require that some of your people, but not the manager himself, take the pain of fixing the problem, i.e. lots of OT and weekend work, angry confrontations with customers, months on a bitter construction site, etc. What do you do?

The answer that we all hope for is a volunteer that steps forward, looks around at the others and says, “Follow me”. Julius Caesar got the answer he needed on that summer morning. The Roman Senate had given him the command, but he needed his people to go above and beyond the ordinary to make him the victor on that summer morning so long ago.

As managers in today’s world of business and of projects, how do we get our people to rescue us from our mistakes? We are given our position as managers by the Company. But we will be a success because our people follow us with enthusiasm and willingness to do what it takes, including bailing us out when we get them in a tight spot.

Did We Make Money Last Year?

2009-01-13T08:52:00.000-08:00

The end of the year is past us and a new one dawns before us. If you are in the business world, that particular time of year requires that you find out if the business made money last year. It is something everyone wants to know. Of course the owners are interested. But they come in a poor second to the people that really matter, i.e. the IRS and the banker.

You would think it pretty simple for a business to know such a basic thing. You would think so anyway. While people can usually look at their bank statement, W-2 forms and an investment or two, allowing them to make a fair guess about their own financial situation. Most businesses, including ForeRunner, are on what is known as the “Accrual” system.

Without dipping into the fantasy world of GAAP (Generally Accepted Accounting Principals) and its reversals of common sense, our biggest unknown revolves around whether certain clients will actually pay the invoice we have already counted as revenue. Our costs are real, as the people doing the work get paid every two weeks. But our revenue is only a promise by our clients to pay us. Most clients pay their bills on time, blessed be their name. Others, being held captive to the new CFO’s plan to climb the corporate ladder, practice cash management; essentially meaning that they operate by using their suppliers’ cash. After the required number of calls to Accounts Payable and the client project manager, they will pay.

But this year we have a number of clients who have been negatively impacted by the events of the past year. How is that for a euphemism? Some of our clients are short of cash. I have been there, on a much smaller scale of course, but I have been there and it is hell on earth. My heart goes out to those in that situation. But what do you do when you don't have the money to pay your bills?

Experience suggests that most clients have read Carl von Clausewitz, the great German strategist. Carl, if I may be familiar, said that the best defense is a good offense. You may have come across this insight before and used it yourself. It is a powerful strategy. Rather than a straightforward negotiation over possible discounting on past due invoices, simply declare the service provided to be faulty and/or poorly done. Simply put, the strategy calls for the client to say that "I am not paying you because you did a bad job", rather than "I am not paying you because I am short of money right now."

Of course the strategy works. Carl is still quoted 200 years after his lifetime because he knew how to play the game. The strategy recognizes the reality that an engineers work is not and can not be perfect, but that same engineer is professionally bound to a standard of perfection and is very vulnerable to anyone pointing out the dichotomy . It also provides a justification for acting in a manner that would normally make one feel badly about themselves, i.e. not paying one's bills.

The strategy works, but it has its costs. Both sides know what is really going on, at least once they disentangle themselves from the emotional stew that is created. Trust, that fragile spirit, is lost once again. In the middle of the night, once again we will come face to face with what we do and why we do it.

The next time we work together, and we will for this is a small world saturated with irony, we will bear the scars of previous disappointment. But then that is the world of most projects, hope tempered by experience.

Natural Gas and Europe

2009-01-08T08:03:00.000-08:00

At a chance moment yesterday evening, I caught my favorite newsperson, Katie Couric, pronouncing that President Obama's term in office would be defined by his success in getting the economy back on track. As you might guess, I view the connection between the word, newsperson, and the person, Katie Couric, with a smile. She may well be right however, she has good writers after all. But I remember how George Bush's term in office would be defined by "Compassionate Conservatism".

I think that President Obama might spend much of his time in office dealing with issues outside domestic economy recovery however. The world is becoming a very scary place. Large scale economic upheaval, such as we are experiencing now, always causes political upheaval. Would Barack Obama have been elected if the Dow was still at 14,000? And we are a very stable country. As a case in point, our old friends the Russians have shut off the supply of natural gas to the Ukraine. Imagine if you will, that your supply of natural gas was cut off in the middle of the winter. Europe is a cold place in winter.

The Ukraine, a part of the Soviet Union less than 20 years ago, borders Russia and the European Community. It is trying to become a part of the European Union, with excellent prospects of that happening. That is until this summer and Russia's invasion of Georgia, a sister to the Ukraine. Now Europe, and NATO (the US), are faced with a Russia that is drawing lines in the sand. And Russia is using tanks to draw those lines.

I think that it is a cold winter indeed in Europe's capitals, especially in those rooms in which responsible adults are meeting. They know that Europe has sheltered behind the US military presence in the world while their own forces have become weak to the point of non-existence. They know that the presence of the US military has allowed them to indulge elements of their populations in "feel good" posturing about the realities of power politics. Their populations now believe in peace at any price and view their protector (the US) as the world's villain. Their populations are rapidly aging, their welfare costs rising, their economies weakening and now they are faced with an aggressive resurgent Russia. Their social fabric continues to fray under the burden of large unassimilated Muslim immigrant populations. They have no recourse but to smile and accept Russian extortion.

Yet the political unity of the European Union is weak. Under the strain of Russian aggression, what will happen? Will the French or German public see any necessity to defend Poland? What about the Ukraine? Where is NATO in all this? I don't think the US public wants to be engaged in European confrontations.

The Ukraine is dependent on Russia for energy. But the pipeline that carries Russian gas to the Ukraine also carries natural gas into Europe. It is a fact that pipelines flow in both directions. LNG landed in Europe can flow gas back into the Ukraine. It would only take some money and time to provide the Ukraine and Eastern Europe with alternative gas supplies. But doing so could incur the wrath of Russia. Those tanks again.

It will be interesting to see what happens. In the entire span of recorded history, Europe has not been a peaceful place. There is no reason to think that its future will be any different.

Monday Morning Lawyers

2009-01-05T08:49:00.000-08:00

I am a creature of habit. There are certain parts of my life that need to be comforted by unchanging ritual. Monday morning is the most important of these. I think of it as the Monday Morning Rite. In my past, I would get very depressed on Sunday night at I contemplated the beginning of a new week of work. To make me feel better, I designed a Monday morning to look forward to; a transition from life unfettered to the discipline of work. The Monday Morning Rite for me is an early morning 7 mile run (slow jog actually), followed by a long shower; and then on to an apple fritter (world class) and coffee at the Donut Hut. For the next hour I drink coffee, nibble on the apple fritter and work on the latest NY Times Sunday Crossword. After that I go to work.

This morning the thermometer showed 9 degrees outside. I can be compulsive, but 9 degrees makes even me bow to reality. So I went to Club USA and did the elliptical machine. I hate treadmills and elliptical machines. All you can do is watch the mindless television news. But trapped in the torture machine that is the elliptical machine, I watch it. It seemed this morning that many of the commercial ads were for personal injury law firms. Everybody in Denver is familiar with the strong arm of Frank Azar, but he is not alone. Not by a long shot.

Time moves very slowly on the elliptical machine. In that interminable wait for the next tick of the clock, I had no choice but to think about lawyers. Most people are of two minds about the legal profession. On the one hand, lawyers are the butt of mean spirited jokes, and as Shakespeare among others reminds us, the source of much (all) trouble in this world. Yet from Perry Mason to LA Law to Boston Legal, lawyers are shown as noble, and even more importantly, sexy. How many times have you heard a proud parent announce their clueless college student to be in pre-law?

It has been my sad fate as a company executive to get to know a number of real lawyers. Hence the importance of the Monday Morning Rite. Despite a strong predisposition to find them as dastards, I have liked most of them. They are just ordinary people, no matter how much I want to throw stones at them. They have a job to do, mortgage payments to make and a conscience to live with. The sad fact of human existence is that underneath it all, we are just people. Hence the need for lawyers.

And that is the source of our schizophrenia. We are human beings. Which means that we screw up on a regular basis. Despite our best intentions, we hurt ourselves and others all the time. We are arrogant, lazy, greedy and envious. To make matters worse, we display a decided tendency to sanctimony. Is this not a fertile ecology for the legal profession? One might imagine the situation as a large warehouse with heaps of spilled corn on the floor, with plenty of dark corners and a warm damp atmosphere. Is it any wonder that there are rats?

And yet we aspire to be better than we are. We are heirs to a tradition that speaks of truth and justice. The Profession of Law is the embodiment of that tradition. Theirs' is the language of justice and the righting of wrongs. While we recognize the failings common to our condition, we also believe in something better. We are all faced with situations or institutions that are powerful, leaving us helpless and vulnerable before them. We need a champion that protects us from the power of the state, from the impersonal procedure bound insurance company or employer, from the implacable results of our own folly.

And so we have the personal injury law firm, the "ambulance chaser" advertising on early morning and afternoon television. My nose curls with the odor of damp moldy corn and the rustle of unseen rodents in dark corners. But I also hear the echos of Marcus Tullius Cicero, of Thomas More, of John Marshall, of Thurgood Marshall. And so while I continue to snort when I think of lawyers, I am also glad that they are there.

Reflections on a Graduation Commencement

2008-12-11T11:29:00.000-08:00

Last Saturday, I passed a milestone in my life. My youngest son graduated from college. The last of my four children to complete the marathon of modern education. Every parent wants to give their children what is good, what is best. In our case we wanted to give our children the tools to succeed in whatever life sent their way. To that end we encouraged independence but required education. So it was that we sent them to go to college, a somewhat imperfect means of attaining that end.

I am proud of my youngest in attaining his degree with honors. He chose to attend his graduation ceremony, so it provided the opportunity to visit campus one last time. It was with some nostalgia as I sat in the auditorium watching the excited buzz of a graduation. I can still see my oldest daughter's face in the back seat as our car backed out of the driveway on her way to the first day of Kindergarten those many years ago.

Sitting in my slightly dirty but completely broken seat in the auditorium, I was lost in cherished memories of the past. But the man seated behind me had the kind of voice that carries. He was conducting a monologue in an authoritative, but somewhat pompous, manner. So I knew immediately that he must be my age. When his voice showed signs of running down, a younger male voice would ask a worshipful question, properly phrased to display knowledgeability of the subject of the monologue. Ah I thought, it must be a boyfriend of the older man's daughter. Not yet a son-in-law, as he is still trying to create a good impression.

The older man was speaking of how short sighted and foolish the voters in Colorado were. It seems they had voted down all the bond issues for education in the recent election. In short, Colorado had too many old people, childless couples and far right Republicans. The obvious solution was to move education spending from the hands of the voters to the wise and farseeing councils of Public Policy. It is probably with some jealousy that I listened to the conversation, as would have any man in my position. It isn't often that we get to speak at length. To be listened to with respect is just a fantasy. This man was living the dream.

Just then the ceremony began. Coming down the aisle before us was a long line of older people dressed in somewhat bizarre costumes, with some of them carrying colorful banners with archaic writing on them. Walking in a slow and self conscious step, they were a mixture of solemnity and nervous chatter. While their dress was the height of fashion at the court of Henry II or Richard the Lion Hearted, it was not so stylish seen against basketball nets.

Going out for lunch after the ceremony, my eye caught a newspaper headline that spoke of the latest failure of the Big 3 Automaker bailout. And the day's events made me sad. For I fear that our school system will follow our automaker's into bankruptcy. Or worse. Bankruptcy at least offers the hope of a new beginning. Continued funding of failed companies and managements simply provides for continuation of the sadness and failure.

The latest issue of the New Yorker magazine has an excellent article about teaching. The article points out that research shows the difference in student outcomes between good teachers and poor teachers is simply staggering. But, it continues, we don't know how to predict whether someone will be a good teacher or not. It compares teachers to pro football quarterbacks. We can't predict whether a college quarterback will make it in the pros or not. We just have to let them play, or teach. But our present system for hiring, paying and employing teachers depends on meeting certain qualifications. Yet none of those qualifications have any measurable validity in predicting or determining whether the teacher is any good at teaching.

Members of my family and friends of my family are teachers. They are good people and they work hard. More than most, they take ownership in what they do. Everyday they make a difference in lives of children. To quote a great book, they are the "salt of the earth". They trust their leadership to do right by them.

I don't know any of the United Auto Workers, or the leaders of that union. But I think that the same could be said of the UAW members who work on the assembly lines of General Motors, Ford and Chrysler. Their fathers were at Omaha Beach on D-Day. They jumped out of helicopters into the Ia Drang Valley. Many of their sons are on patrol in Iraq or Afghanistan. They trusted their union leadership to do right by them as well. But their leaders failed them. And now they must beg for money, or else they will be thrown out in the street. And even if they do get the money, what of their pride, being forced to live on the dole?

But a long time ago, their union's leaders became more interested in protecting their people from competition and from new ways of doing things. Company management spent more and more time figuring out how to out negotiate the union. Cars weren't what they focused on. People were going to buy whatever they made anyhow. And so a few brave consumers started to buy Toyota's or Datsun's . You know the rest.

Now we have some brave consumers that are buying charter schools, or faith based schools. They are buying anything that is not controlled by the unions and the rigid managements that deal with them. I worry for those I know and love who are teachers.

Just Say No to Chili's

2008-12-01T13:41:00.000-08:00

I lost my temper over the Thanksgiving Holiday. It happened unexpectedly and quickly. Late Sunday afternoon, we were in the San Diego Airport returning to Denver. Our flight was delayed for a couple of hours due to mechanical problems. But as I told my son-in-law, you learn to accept inconvenience when traveling. Otherwise the petty frustrations will take years off your life from induced stress. As it turns out, those were fateful words.

We decided to slip into the Chili's Restaurant at the airport for some food and drink. Finding a table we chatted amiably until the server made her way to our table. Asking for drinks, she took our orders for the art of the bremaster. As expected, she asked my son and son-in-law for their ID's. And then it happened.

She asked for my ID. Caught off guard, I looked back at her with a question in my eyes; and I am sure a look of pure evil. I got back a very determined and no nonsense look. Feeling my blood pressure rapidly to a dangerous level, I took my driver's license out with a decided lack of grace. Reacting to the new chill in the air, the server took great care in looking over my license. This was now a game of power and the victor would leave no doubt as to who won. While I had not raised my voice or thrown any tableware, my family was noticeably silent for some moments after the exchange. The contest had not gone unobserved.

But why did I get so mad so fast over such a trivial incident? Just to satisfy your morbid curiosity, I would be enormously flattered if anyone mistook me for under 50, let alone under 21. What little hair I have is gray, and there is more than a trace in my face of past laughter. Obviously I hadn't taken my own advice about letting petty frustration roll off your back. This was the definition of petty, and it had definitely not rolled off my back.

But where do we draw the line? Requiring me to prove my age to get a beer is silly. Mindless is the word I used with my family at the time. My age is so far past the legal drinking age that it is obvious. It is mindless and it is also petty.

And it occurred in that modern epitome of both the mindless and the petty, an airport. How many times have you watched as an elderly lady has her dignity removed while strangers watch during a "random" search of her person as we pass through Security? How many times have I discovered holes in the socks of my fellow passengers? Large signs threaten us with jail for comedy, as we, mindless robots with straight faces look straight ahead and mechanically thank the uniforms who wish us a nice day.

The outrage I feel is not for the reasons for which we engage in this mindlessness. It is because of the very banality of it. It is banal and we stand helpless as individuals before it. Fear of assault in the courts over perceived injustice or unjust discrimination has caused managers to take decision making from the hands of their employees. And they are sensible in doing so. Any prudent manager will decide that it is better to have a million embarrassed grandmothers or angry old beer drinkers than an ACLU lawsuit over discriminatory profiling.

I understand why we do what we do. And I do not say that I have a better idea. But I must protest. I must hurl my defiance in the face of "The Man". I must let some small part of the world know that I am a man, and I will fight if pushed far enough. Thus I declare to the world that I will take action. I will fight back.

I will say no to Chili's. I will take my business elsewhere. I declare that I will never enter a Chili's Restaurant again.

Happy Holidays and Moral Hazards

2008-11-23T15:50:00.000-08:00

One of the journalists whom I admire is Daniel Henninger of the Wall Street Journal. I look forward to his column called "Wonderland" every Thursday in the WSJ. He isn't quite up to the level of adoration I have for Peggy Noonan, but I do like what he has to say. His latest, "Mad Max and the Meltdown", is right on target.

He points out that, as the holiday season approaches, we don't say Merry Christmas, we say Happy Holidays. We fear that we will give offense to someone by use of the word Christmas. Instead we trivialize with the neutral phrase, Happy Holidays. How many other words do we not use anymore? How many subjects do we not discuss because we fear giving offense?

That is not to say that we should be yahoos, speaking without sensitivity to the concerns and differences among us. But because we do not speak of the things that matter, we have become a people who do not know the difference between right and wrong. We live in a neutral moral universe. That is not to say that we are not ethical people. We are indeed ethical, but ethics is a lawyer's word. Ethics is about following the rules, not about right and wrong.

CEO's took hundreds of millions dollars home in pay and bonus compensation from companies that were shortly to fail. But we shall find that they were following the rules. They may have fudged the truth from time to time, but we will probably find that their words were carefully phrased and their actions calculated to stay within the guidelines of their agreements by which they earned that money. I have every reason to believe that they were ethical.

At the same time, millions of everyday people seeking home loans lied about how much money they made, or how much money they already owed. But what do you expect on a "No Doc" home loan? Wink, wink, nudge nudge. Perhaps they were not ethical, but unlike morality, ethics is always weighted in favor of the rich and powerful.

Moral hazard is the phrase that our euphemism obsessed generation has coined to describe what happens when people do what appears to be ok and is expected behavior, yet is clearly wrong. In the discussions of the causes of our current meltdown, the thoughtful among us cite moral hazard as the cause. Moral hazard is endemic among us. Are you surprised when someone goes through a red light anymore? Are you surprised when you look down at your speedometer and see that you are clearly exceeding the speed limit?

Mr. Henninger's point is that our society, any society, depends on moral sentiments. Capitalism depends on the great majority of the people in the system being able to be trusted. Our culture is based on us knowing right from wrong, and doing the right thing most of the time. Capitalism depends on its participants being moral creatures. Otherwise we live with contracts and laws.

In my years as CEO of ForeRunner, I had to negotiate numerous disputes with clients. In none of those disputes was the contract of any use. In each case, we sat down and negotiated a settlement. Sometimes it took years and extensive legal maneuvering, but in the end, we sat down and accommodated each other. We resolved our dispute, recognizing that each of us had done wrong and that there was right in the other's position.

Without a moral framework on which we agree, how do we live? Mad Max gives us a picture of the alternative.

A Tummy Tickler

2008-11-12T12:06:00.000-08:00

The coming year, 2009, promises to be interesting. More than interesting, I can only compare my feelings to the last few feet of the climb on a roller coaster before it goes over the top to plummet into the interesting part of the ride. There is an ancient Chinese curse simply rendered as, "May you live in interesting times".

My business, my livelihood, depends, to a substantial extent, on money spent by our client companies to develop natural gas supplies in the United States. The direction of that market is up for grabs. There are powerful forces pushing in opposite directions. It is like two freight trains heading toward each other. A crash seems inevitable.

The election of the Obama administration confirms the nation's desire to become green. The fact that the Democrats control the legislature ensures that green legislation will pass with little challenge. This is unbelievably bullish for natural gas. Every green initiative turbocharges natural gas usage as a practical matter.

Yet the very success of the industry in increasing natural gas production over the past few years, along with the oncoming recession and credit crunch, have dropped natural gas prices by close to 50% since July. Idle drilling rigs are lining up in empty lots across the energy producing states. Producing companies that have led the drilling effort have been heavily dependent on easy access to credit, which is no more. The number of natural gas wells being drilled in the United States seems to be coming down hard and fast.

But the natural gas wells that we have drilled in the recent past are different. All wells decline over time. But as an industry, we are used to thinking in terms of 10-20% declines in production per year. Our new wells, in shales and tight sands, decline at 60-70% per year rates. Without large numbers of new wells, natural gas production is going to fall hard and fast.

Yet there is a doubling of LNG production capacity coming onto the world market over the next 18 months. LNG has not been a factor in the US, because Asian markets have taken nearly all of that gas. But now the Asian natural gas market is crashing because of the financial crisis worldwide. A lot of that LNG will now come to the US, because we are the largest market. And because we can pay for it with dollars. In times of crisis, everyone wants a secure currency. And LNG liquefaction plants run 24/7/365, because they have large debt loads to service. Any margin being better than no margin. It is likely that natural gas will flood into the US Gulf Coast and East Coast, as that is where the LNG terminals are.

I am convinced that the natural gas industry is bright. Our culture's desire to be fashionably green and our country's need to have energy security guarantee that. But we look to be heading into a hard dip.

When I was a kid back in the old days, my parents would take us for drives along the country roads. There were places where the car would go over a rise in the road fast enough to give you a little weightless feeling. As kids, we always knew where those places in the road were, and we would always beg our parents to speed up to give us that feeling as the car went over them. We called it a "tummy tickler". I think 2009 is going to be a tummy tickler for the natural gas business.

A Childrens' Beach and Raptor Nests

2008-10-20T19:18:00.000-07:00

One of the pleasures of having adult children living in other parts of the country is the excuse to travel. My oldest daughter and son-in-law live in San Diego where we visited them recently. Since they live in San Diego they do get a few visitors and one of her favorite places to take them is the Seal Beach in La Jolla. Along with the beach, she has always loved animals.

It seems that the city fathers of La Jolla decided to build a breakwater some years ago. Their purpose was to create a sheltered beach near the very popular beach that fronts La Jolla. The sheltered beach would create a nice sandy beach and calm sea pool for young children close beside the natural beach where their parents would be. Very family friendly and Californian in its conception.

But there were unanticipated problems. The seals took over. No children there now, just seals and some daring adults. It seems seals can be pretty territorial, as the occasional human who trespasses is in danger of being bitten. Picture the middle of a busy beach in front of an upscale Southern California city, with a breakwater sheltered beach that supports a large and thriving population of seals and other wildlife. Occasionally the sea lions move in and chase the seals away, but the sea lions really prefer the rocks further down the coast. The day I was there, the seals were surrounded by innumerable tourists gawking at them, snapping their pictures. An elderly gentlemen disturbed their ease and chanced bite marks on his ankles by walking among them on his way to go snorkling. Two scuba divers followed the old guy, again chancing the seals displeasure.

Not only are the seals there, but birds and more birds. The ubiquitous sea gulls are there of course. But there are pelicans and many other species, oblivious to the humans that surround them. In fact, two sea gulls were within four feet of me when they decided to participate in the Circle of Life. In all it was a picturesque morning. Saturday morning at the Southern California beach. Human beings, animals and birds crowded together on prime beach front. A beautiful picture of live and let live, as well as witness to the beginning of new life.

And then I came home. One of our projects is just finishing. The project was a pipeline through the Wyoming prairie and it suffered major budget and schedule problems due to wildlife restrictions. Productivity issues associated with wildlife restrictions cost not thousands of dollars but millions. Bear in mind that the construction contractor was on a construction corridor 100 feet wide surrounded by trackless prairie for upwards of 100 miles in every direction. It seems that animals and birds in Wyoming are much much more sensitive than they are in Southern California. So much for the image of the prairie and its rugged nature.

At the risk of belaboring the point, there is a raptor mating pair that nests every summer within 100 yards of my house; in suburban Denver with constant traffic on busy streets within a few hundred feet. There is a family of coyotes, as well as foxes, that live within the same general area. In the early morning, an occasional deer can be seen trotting along the creek. Cottontails swarm everywhere.

And yet on a pipeline right of way, the sight of a raptor nest brings an immediate halt for at least 1/2 a mile. In large parts of the West, construction is not allowed for months on end because it will disturb the deer or elk. Sometimes the nature of the cultural and business environment in which we operate seems to me surreal.

I think every responsible person wants to exercise stewardship in the way we live in our physical world. There is no question that we have sometimes been shortsighted in the way we use the physical world in the past. Yet the scene of the California beach calls the rituals that we perpetuate in the wilds of Wyoming to account. There is much science and study validating the need for those rituals. But who pays the scientists who study the wildlife on Wyoming range? Would those scientists have a job if they found no need for the wildlife restrictions in which we engage on that range? They are hammers in search of nails. Like all other hammers, they find them everywhere they look.

Is our society arrogant? Do we suffer from what the greeks called hubris? Do we believe that whatever burden we place on the productive members of our society is ok? If we ask our businessmen to dig holes and then fill them in, that burden will have no harmful effect?

China and India rise in the east, awakened giants flexing their new muscles. Russia returns to the arena eager to regain its pride. Everywhere, new and old competitors build for a new future and seek their place in the sun. Accustomed to our economic strength, we debate how many angels can dance on the heads of pins.

What a Difference a Client Makes!

2008-10-14T12:54:00.000-07:00

Two of our people received a note of gratitude by email from their client today. Rare enough as an event, it made its way through the company grapevine. I am always grateful for these expressions of thanks from clients. I am so proud of this company, the people in it and the projects that we do. It makes me feel so good when some of our people are recognized by a client for doing well. Believe me, the muted praise is a much rarer bird than its cousin, the disgruntled complaint.

But this note of gratitude was especially sweet. It was some 15 months ago that I spent more than a few hours in uncomfortable meetings with a very angry client project manager over the failings of these same people. It is seldom that things work out this way, but irony abounds in this instance.

Two projects, just eighteen months apart, for the same client. Two projects, similar facilities, and with the same construction contractor. On the project just finishing, our client expresses gratitude for the excellence of the job done and for the level of service given. On the previous project, that same client made it clear that he thought us to be buffoons, if not worse.

So what happened? Did they learn their craft on that first project and then put that learning to good use on the second? As these folks have long years at their craft, I don't believe that to be the case. While we all continue learning if we are worth our salt, I am more than sure that the quality of the work product and attitude of service were very similar.

In all honesty, the biggest difference on the two projects was the client. The client organization was represented by one individual on the first project and by a different individual on the second project. Both of the client's people were competent and experienced individuals. But there was a human connection, a relationship if you will, on the second project that did not exist on the first project.

To those of us who have experience in the project world, or just in life, this is not all that surprising. We are social animals and form connections with each other. It is how we feel about each other that allow us to work well with each other, or not so well. If you think well of those you are working with, you believe and trust them.

When the people you are working with inevitably make mistakes, you overlook them and understand what they were trying to do. You give them grace. When you are expecting those you work with to make mistakes, you will of course find those mistakes and think the worst of them for fulfilling your expectations. You give them judgement.

This is a world of business, for both ourselves and our clients There are large sums of money at stake. There is the safety of many people depending on the work that we do. We have responsibilities to many stakeholders to be diligent and faithful in the discharge of our work. There are contracts that spell out those responsibilities. There are professional codes of conduct that speak to those responsibilities. We can not, not do we wish to, evade the responsibilities that we have taken up, both ourselves and our clients.

Yet there is more to life than fulfilling contracts and upholding professional standards. The first project, where there was no relationship, was a bitter and vindictive place to work. As they always do, people chose sides and joined the battle. There was anger and many tense meetings. And that anger and tension was not only at the level of the folks doing the work. At every level in both our own, the construction contractor, and the client organization, unpleasantness reigned over that project.

On the second project, life was a lot more worth living.

Market Realities

2008-10-13T16:23:00.000-07:00

The selling wave in the stock market has swept all before it. Like the tsunami that swept Malaysia a few years back, it has left destruction in its wake. To the extent that it influences the close US Presidential election, its effect will be large but uncertain.

But those who have lived through it will probably never view the stock market the same. The inevitability of positive stock market returns shown us by internet based retirement calculators and smooth financial planners is gone from our minds. Instead we have seen a savage beast that can turn on us and rip our guts out, leaving us bleeding and hurt.

Of course all those retirement planners and investment counselors warned us that the market was volatile and that we could lose all we invested. But then they turned around and asked us whether we wish to invest for a 7% return per year, or 10%. Indeed, they sounded similar to the clerk at McDonald's asking if we wished to super size our Combo Meal. Accustomed to the mind numbing disclaimers invented by lawyers, we assumed the warnings about possible losses of our investments in the stock market were merely the same drek we see when we purchase new software.

It has been nearly two generations since we have seen a real bear market in the United States. By bear market, I mean a stock market that goes down by 50% or more. It is a scary thought. Is this a market like the 1930's or the late 1960's-70's? I don't know. By the time you read this, we could all be breathing a sigh of relief as the market soars back above 10,000. Or we could be shaking in our boots as the Dow resumes its dive. Maybe it will do both.

I started following the stock market at an early age. I can remember charting stocks on graph paper, by hand, on the kitchen table. I couldn't invest because I didn't have any money. But I traded on paper and in my mind. With paychecks from my first job out of college, I bought some stock in a CB radio manufacturer. I bought at $ 0.75 a share and watched as it rose to $ 24 a share. I then rode it all the way down to bankruptcy, finding out the difference between trading on paper and trading with money. I would have said that I learned the difference, but I am afraid there is a good chance I would ride it all the way down again. So the word "learned" is probably not the right one. Much later, I bought Enron at $ 12 per share because it couldn't go any lower. We all know how that turned out.

The financial future for many of us looks differently than it looked a short time in the past. Whether the market rises back as swiftly as it fell, or continues to drop, we have been surprised. Something totally unexpected has happened, and many of us are groping for a plan of action. What do we do?

At a time like this we seek wisdom. We seek a model of action to guide us in how we should react to such events. Those who came before us were no wiser, or no simpler, than ourselves. But since they came before us, we can learn from their lives and seek to emulate their example, or avoid their mistakes. As you will not be surprised to learn, the American Civil War provides an example to me about what can happen when one is caught by surprise and at a severe disadvantage.

In the early spring of 1863, Robert E. Lee's Army of Northern Virginia reigned supreme. They had defeated their opponent repeatedly, the Union Army of the Potomoc under various generals having fallen prey to Lee's genius. A new general was given command of the Union Army by the name of Joe Hooker. Young and charismatic, he laughed at the elderly Lee and declared that God had better have mercy on Lee, for he would have none.

Putting in place a brilliant plan of action, Hooker surprised Lee, exulting in his mastery over his opponent. Many would say that Hooker's plan was genius; with the first part of it executed perfectly. Caught between the jaws of a trap and outnumbered 3-1, Lee was surprised and in a bad way. Many investors are in a similar position today. Realizing that he was in a very serious position, Lee devised an audacious response. And importantly, he acted on it.

Two days later, Hooker has been surprised and his army shocked by Lee's counterpunch. Reeling from an attack he had not expected, he faced his situation. His plan was now in ruins, but he still vastly outnumbered Lee and had a very strong position. But he needed to act. However it seemed that Joe was in shock from the unraveling of his plans and was unable to make a decision. While Lee improvised and attacked, Hooker daydreamed and was unable to concentrate on what he needed to do. His officers waited in vain for orders while Lee's smaller force struck again and again.

Known today as Chancellorsville, it was nearly the end of Lee's career. Instead it became what many regard as his greatest victory. Joe Hooker put together a great plan and put it into action. But when reality kicked back, he fumbled and failed to act. Today Robert E. Lee's reputation as a leader of true greatness is secure, while Joe Hooker has given his name as a euphemism for the world's oldest profession.

It didn't have to be that way. But they both were given a catastrophic surprise that changed all their plans. How they reacted when reality kicked back is how we remember them.

Greedy CEO's and Leadership

2008-10-01T11:02:00.000-07:00

Greedy CEO's are in the news. The words greed and CEO are pretty tightly linked. If you watch tv or read newspapers, I am sure that you understand. Type the words "greed" and "CEO" into Google and you get 1,080,000 hits. That 's a lot of hits. Type in the words "Britney" and "nutcase" and you only get 116,000 hits. As a former CEO, I feel both defensive and hurt when I think about it. But I can't really disagree with what is being said. There are a lot of stories in the newspapers that are pretty outrageous.

I think that the outrage is pretty widespread. Corporate America has a lot to answer for. Both sides of the current political campaign keep talking about CEO greed. The financial aid package over our sub-prime mortgage fiasco is hostage to the need to punish CEO's. While the idea of congressmen berating CEO's for greed and immoral behavior is both comic and outrageous, we expect more from our business leaders than we do from our politicians.

Here in Denver we are periodically treated to pictures of former CEO Joe Nacchio walking in and out of courtrooms with what appears to be a smirk on his face. For those of you who may not be familiar with Joe, he was the CEO of our local telecom. In a familiar story, he pocketed hundreds of millions in pay, options and bonuses while his company did a swan dive. Joe was quotable when he was on top and insufferably smug. When his company went on the rocks, he was indicted for insider trading. He was somewhat tenuously convicted. He is now appealing and widely expected to win on appeal.

Joe Nacchio is our evil CEO in Denver, but he is just one of dozens, or even hundreds, around the country. A lot of people were hurt by Joe, and his counterparts at many other companies have done the same and worse. Fat cat CEO's presiding over failing companies have left a legacy of distrust and suspicion that have poisoned us all.

There exists a school of thought that says, "Business is business". We negotiate contracts with each other. We hire each other through formalized procedures that try to completely define our responsibilities to each other. That school of thought would say that if it isn't in the contract or the Law, it doesn't exist. That school of thought would say that if the contract or law doesn't specifically prohibit something, it is OK to do it. I would expect that in reality, everything Joe did was legal or in accord with his employment contract.

But I think that very few of us want to live in a world where "Business is business", with other obligations non-existent. The evident passion of those talking about greedy CEO's shows evidence, strong evidence, for the truth of that. And that is not to say that we want to be socialists or communists or live in communes. Those alternatives have been tried and found wanting. We do want to live in a free market country and are comfortable with business. Our market, and our businesspeople, have given us a standard of living that is the envy of the world. The material prosperity created by our business people have allowed opportunity for the broad mass of us to pursue leisure and personal growth undreamt of anywhere else in time or space.

And yet we are unhappy with them. To judge by the political debate, passionately unhappy. Why?

Because we are human beings. We are not the idealized robots, ruled by logic and seeking to maximize our income, used by economists in their models of the economy. We are the same people who hunted mammoths and built wooden ships to find new lands. We naturally come together in social groups to better our lives or protect our families. Today we call those social groups, companies. Rather than hunt mammoths, they engage in business. Whether we hunt mammoths or engage in business, we need leaders. Without them, we get trampled by the mammoth, or we go bankrupt.

But leadership is a special calling. In all times and places, leadership has its rewards. Even more, leadership brings with it, power. Successful groups delegate power to their leaders. Decisions have to be made, and decisions without the power to enforce them are not decisions; instead we call them the minutes of committee meetings. But when we allow another power over our life, we do so willingly only if we trust them. And we trust them only if we feel they deserve our trust.

When one of the hunters slips and the mammoth rounds on him, we expect the leader of the group to be concerned about saving the one who slipped rather than his own escape. It was expected that the captain of the ship would go down with his ship when disaster struck. We expect our leaders to look into the future and see the opportunities and dangers coming down the road toward us. If they use that knowledge for their own gain rather than for the good of those they lead, we feel betrayed.

We used to call that honorable behavior. We don't use the word "honor" much anymore. Actually, I think that it is officially a politically incorrect word. But honor is what is missing in the behavior of our business leadership, our CEO's. But then, where would they have learned it? We don't talk about honor. I don't recall it being evaluated in performance reviews. People are promoted into the executive suite because they are "accountable" and have good "metrics". Why should we have any reason to expect it?

Cui Bono?

2008-09-24T08:20:00.000-07:00

The title of this post is not a misspelling, but instead a Latin phrase. I hope you don't think me pretentious, but in my fascination with all things Roman, I find their ancient culture very insightful into our own day. That Latin phrase, contained in a famous speech delivered nearly 2,100 years ago, is translated to mean "Who benefits"? In our own day, an equivalent thought might be expressed as "Follow the money".

The phrase was originally spoken on a tension filled day before the Roman Senate by their President (Consul). Named Marcus Tullius Cicero, he was telling them to not only listen to what was said, but give consideration to who stood to benefit from what was said. The lives and fortunes of his audience depended on discerning the truth between very different stories being told about the events happening around them. I have a print in my office, a cheap print, of a painting showing the moment of Cicero's speech. Arms raised with face expressive, he asks his audience to not get caught up in the oratory, but instead to think about who had the most to gain and why.

Wise words that echo to our own day. Today, our well being and future prosperity of our children are bound up in a public debate about energy. Our civilization is based on the use of hydrocarbon fueled energy. We have achieved wide spread health, prosperity and material wealth undreamt of in earlier ages because of our access to plentiful and cheap energy. Now our elites have decided that such energy use causes unacceptable harm to our environment and must be largely ended. It is with almost a unanimous voice that our leaders in government, science, media and last but not least, business, speak this vision of future disaster to us.

As Cicero warned his colleagues, "Who will benefit"? The broad consensus of people and institutions speaking this opinion should cause us to heed the warning. Consensus of opinion has such a poor track record that we should always be suspicious. When everyone believes something, they are almost always wrong. But why is this such a passionate issue, and pursued with such righteousness by those who are charged with leading us?

We have heard those that speak talk of our responsibility to our children and grandchildren. How can we leave them a world caught in the grip of a warmer climate? Imagine the horror of Denver having a climate like Houston? I admit that to be a frightening future prospect.

Who among us will not sacrifice for our children? On the other hand, those who speak with such passion about the dangers of a warmer climate are silent about the looming Social Security disaster, or the dangers posed by the public debt of our nation and other governmental entities. Why the seriousness about a possible future trend in climate, well within past norms, when there is only silence about very real and large financial burdens we have already imposed on our children?

"Cui bono"? We look to our scientists for answers. Energy and environment are their expertises. The physical world has grown far too complicated for us to rely on common sense anymore. We have seen technology move so quickly with such impact on our lives that we have child like faith in what science tells us. Yet we fail to distinguish between engineering and science. Engineers build things that work, admittedly with a debt to the insights of scientists. Scientists speculate about ideas.

Engineers are paid because they build things that work. On the other hand, scientists are paid by the government or other public entities. This means that speculating about the correct ideas is very important to scientists. Refer to the life of Galileo for proof of this. His colleague, Giordano Bruni, was burned at the stake, vividly further demonstrating the danger of going against the consensus as a scientist. And then remember that the voices in the public debate about global warming are scientists, not engineers. Driving through the millions of acres of dead pine trees in Colorado is additional testimony to the power of politically correct ideas in environmental science. Scientists that don't support the idea of future disaster caused by hydrocarbon fuels simply won't get grant money or that university tenure. "Cui bono" indeed.

In a world of 24/7 news, prosperity is a non-starter. A future of happiness and peace fill no hours and sell no advertising. If there are no crisis, then one must be found. There is no celebrity gained, books sold or Nobel Prizes won, if there is no problem.

We look to business to act as a counterbalance to the sometimes presumed foolishness of the media and government. After all businessmen are conservative and sober, focusing on the facts, and immune to the whims of fleeting public opinion. But we forget that business exists to make money and that they exist in the moment, with little thought for the past or future. It was Lenin who declared that businessmen would sell him the rope that he used to hang them with, showing he understood business very well.

Permit me a moment to state my real opinion. As a civilization, we are in the middle of a debate on energy which will have very real and very serious consequences. In that debate virtually everything said in the public square is demonstrably nonsense. But who will stand up and say that the emperor has no clothes? Cui bono?

Monongahela

2008-08-22T09:32:00.000-07:00

In the early history of ForeRunner, our administrative assistant brought up the idea of naming our conference rooms. I suggested that we name them after historical events. Nobody said no, so I gave them the names of different battles. No one ever asked why, simply writing it off to one of my many eccentricities. The battles chosen were never asked about either. As it happens, they are all from US history, but not the most well known. It may well be that today ForeRunner employees think the names simply obscure places on the map.

As it happens, they are all battles. To me they represent management lessons. They are metaphors for ideas and situations that I believed, at the time some 6-7 years ago, were important for me to remember. Many times as I have sat in those conference rooms, or walked by them, I have meditated on the lesson that I saw exemplified by the name on that room.

Over the years, things change. My perceptions of the way people work together and a company is managed have grown more nuanced. If you think on things over time, your thinking on that subject becomes more complex as well. A case in point is our smallest conference room. Its name is Monongahela, quite a mouthful unless you are from Pittsburgh.

The Battle of Monongahela took place in July of the year 1755 near the banks of that difficult to pronounce river. A large force of British and Colonial soldiers were marching from the Colony of Maryland to evict the French from what we now call Pittsburgh. Moving through the wilderness of the Pennsylvania forest, they had spent most of their march building a road to get them where they wanted to go. The British column had just crossed the river when they ran into a combined force of French and Indians. Though the British outnumbered the French and Indians by at least two to one, the British were routed and suffered what could only be described as a massacre.

Moving along a narrow road through the forest, the British were ambushed by their enemy firing from behind trees and rocks. British officers responded by attempting to form their men into line where they could fire in unison per the approved drills they had been taught. The officers out in the open were of course prime targets for those shooting at them from behind trees and were soon casualties. Firing lines of British soldiers waited for their dead officers and sergeants to issue orders to load their weapons. The choking clouds of dark grey smoke from the guns firing hid everything. Groups of Indian warriors crept up behind them with tomahawks intent on taking scalps. The heat and humidity of a Pennsylvania forest in July completed the hell for those British soldiers in their bright - red - woolen uniform coats.

I must admit that the situation always reminded me of a project. Moving from the ordered world of an engineering or design office, I would go to the job site. The behaviors and reasoning that served me well in an engineering office often failed completely in the very different environment of actually building what had been designed on paper. Monongahela was always a very personal warning to me about the dangers of being an "engineer" in the field or on a startup. I must be careful to take off my bright red woolen uniform and replace it with the buckskins of the French and Indians when I went on site.

Having learned to wear buckskins and face paint while on site over the years, I was often in a position to watch engineering companies on projects. Well versed in the parade ground drill of providing engineering packages, they ran afoul of the realities of client organizational politics or construction contractor/client alliances. Just as the lined up red coated soldiers of General Braddock were tomahawked from behind and scalped at Monongahela, so too were the engineers and designers of engineering companies ambushed by the non-technical realities of projects.

That is as far as my thinking went then. Heeding the implied lesson of Monongahela, we created an organization that was able to move from the engineering office to the field, and back again. We stressed a flat flexible organization that could move among the trees and rocks of our project fields as the French and Indians at Monongahela did. We focused on people that could operate in the smoke of an ongoing project. No parade ground drill for us. We were going to wear buckskin, not bright red woolen uniforms.

But we grew and our clients changed. Loose groups of savvy individuals work well until the project becomes more complex with higher standards of performance required. The French and Indians handled the ambush well, but only the British could build a road through the wilderness from Maryland to Pittsburgh in 1755. Being flexible was no longer enough. We needed to be able to handle the parade ground drill, and all that it implies, as well as the flexibility to deal with the unexpected.

It is useful to look at the British after Monongahela. They did win the war. After all, we speak English, not French. The British learned painful lessons there, but they learned how to maintain their organization and win in the forests of America. They didn't abandon their well drilled infantry in the bright red uniforms, but instead learned how to utilize tactical innovations like skirmish lines. They added elite forces like Rogers Rangers to scout and keep the French off balance. It was the British who captured Montreal on the Plain of Abraham to end the war, the French and Indians never came near New York or Boston.

So that is why we have a Monongahela Conference Room. It is a metaphor for where ForeRunner came from, and where it is going. We still wear buckskin. If you want to see bright red woolen uniforms, go to Buckingham Palace (or Jacobs or CH2MHill or Washington Group). But we can do the parade drill of engineering packages as well as anyone.

Tales from the Front

2008-08-07T09:31:00.000-07:00

Recently we got one of those phone calls. On a Friday afternoon, the client, normally a nice guy and generally inclined to spend a large part of his conversation on pleasantries about what's on ESPN, spoke to us over the telephone in a tense voice. We needed to be at a meeting the following week to talk about "the project". Our questions met evasive answers by an individual who obviously wanted to cut the telephone call short.

After the initial flood of depression, we checked with our accounting department. Our suspicions were confirmed. This client had stopped paying their invoices nearly four months before. Just as surely as thunder follows lightning, clients not paying their bills means they are going to take us to task. What had looked to be an upcoming pleasant weekend now looked to be time spent in worry.

The meeting at the client facility passed as you might imagine. With no forewarning of what was to be talked about, we found out that we were seriously deficient as engineers, designers and professionals. Not only did the client project people chastise us, but a spreadsheet wizard from corporate headquarters added that ominous cloud of unspoken power which corporate projects so well. While we were not accused of moral turpitude, the accusation of sloppy work is close enough to it for people in our profession.

In defense of our client, they are in a bit of a sticky wicket. As a business, their margins are under very serious pressure and their stock price is suffering badly. They are in the middle of a very large expansion on multiple fronts of which we are a very minute part. And similar to most everyone else's large capital projects, the news on the cost and schedule front is uniformly bad.

So here we are. A productive relationship, nearly 5 years in length, is at risk. The client now owes us a substantial sum of money. Any question about settling this matter is stonewalled by the client. They have our work product and are using it for the purpose it was intended. They are talking about all the future work coming up and their need for our services. We have been here before.

How do we proceed? We have looked in detail at the "shoddy work". Its hard to see what the uproar is about. The client and contractor are demonstrably deviating from the construction drawings with predictable results. But are we being objective? Reasonable people need to sit down and deal with the issues.

From long experience, I know that the client has no intention of doing so until the project is over. At that point, the client has a functioning facility and has our money. The client is then the sole arbiter of right and wrong, as well as the consequences that accrue from that determination. We may then stand humbly before their desk with our hat in hand to receive what they choose to hand out, or pursue the nuclear option.

A good businessman reading this will wonder how we let our client get so far behind in paying his bills. A good question. Going back to our accounting department, we did ask the question. We have been diligent in calling the client accounts payable group on a regular basis. We have been regularly told that the invoices in question were lost or had been incorrectly code, additionally the client is in the midst of an accounting system upgrade. Such problems are so common with large clients that we did not suspect a problem, given the length and closeness of the relationship with the client. You may draw your own conclusions about the truth of those statements.

Business often makes me feel dirty. When I operate as a project professional, I can see myself making the world a better place. I can do what is "right" without stopping to count the cost. There is little gray in the world of the professional, there is simply black and white. Of course that is not true, but when I am in my professional world, I can fool myself that it is so. But there is always a cost and somebody has to count it. And pay it. That is the job of the business person. The world is a very gray place and there are consequences to everything, both good and bad.

Yet there is something about business. Business seems to allow us to forget those things our mother's (and father's) taught us about the way to live in the world. As I said, business hardly ever makes me feel good.

Update on the House

2008-08-01T09:22:00.000-07:00

As many of you know, I am building a house in the mountains. I say that because the subject of "how the house is coming", is usually what people ask about when they meet me. I am not a chatty guy and I suspect that most people struggle with what to talk about when they meet me in a situation where conversation is required. The truth is I struggle with what to talk about too. The well known pitfalls of building houses is a safe topic for both sides.

Safe at least conversationally. In other respects it is a perilous course indeed. As with any project, you don't know what you don't know, at least until you know it. And then, you knock yourself on the side of the head for not seeing the obvious. But then I am used to being thumped for missing the obvious. Not only have I been married for 34 years, but I have long acquaintance with clients.

The latest drama revolves around where the house is located. We have it located with precision on the drawing, to multiple decimal points in fact. We have designed it around the topography of the site. It is one with the land. On paper.

Actually the house will go on a spot of land that until late last fall was trackless forest. Of course being a professional with years of engineering under my belt, I brought in a surveyor to create a drawing of the site and its topography. Locating the shapeless box of the undesigned house on the created drawing, I engaged a contractor to cut down the trees for the driveway as well as the house site last October. Desiring to pour concrete for the house foundations as early as possible the next spring, the trees needed to come down last fall to accommodate our expected schedule. We needed to move fast to get this house built.

Over the winter months, design did not proceed with the dispatch assumed. And the footprint did change. Needless to say, we didn't pour concrete early this spring. Virtually all the assumptions about time and money driving my decisions last fall were wrong.

Since my wife is not an engineer, it often helps her to see things rather than just look at them on paper. In an effort to make the house more real to her, I took her and the drawings to the site in late May. We marked off the location of the house with stakes and string. To my surprise, the house was not exactly where I thought it was. To my surprise, there were a fair number of trees that need to be cut down.

But it seemed a fairly manageable number of trees to be removed. Since I anticipated construction to begin in a few weeks, we needed a contractor to begin work removing the trees in short order. As an engineer I know that only foolish general contractors do not require hard dollar subcontracts but not having the time to define the work scope exactly, I engaged a willing contractor to remove the trees on a $/tree basis. Since I had estimated the number of trees to be removed at around 30-40, I agreed on a generous figure per tree with the contractor. It also helped that he was my youngest son earning money for his last semester in college.

But remembering how the last contractor had mistakenly cut down trees that were marked to remain standing, I determined this time that I would mark all trees to be cut down with a large orange "X" spray painted on the trunk. Surprisingly enough, when I did this I found that I needed to cut down 85 trees rather than the estimated 30-40. My budget had just doubled. The contractor was very unwilling to renegotiate the rate. After all, he anticipated no repeat business from me.

About halfway through the work, a design change occurred, necessitating a small reroute of the driveway. With trepidation in my heart, I took my can of orange spray paint and the revised drawing to the site. Some time later the number of trees to be removed had grown to 180. Again the contractor proved unreceptive to renegotiation on the basic rate per tree. When I proposed that we withhold payment for the work already done to encourage our reluctant contractor's price discounting, my wife didn't think that would be nice. Telling her that my client's did it all the time in similar situations had little effect on her, and thus my, position.

Yesterday my son finished the job. As I sit here writing this I am anticipating his arrival and request for final payment. He is of course quite happy about the 450% overrun. Contemplating the resulting negative variance in my budget, I simply hit myself on the side of the head for missing the obvious.

Launch Jets

2008-07-25T08:03:00.000-07:00

I think that I am an incurable romantic. Let me hasten to add that I mean romantic in the literary sense of the word. In the literary sense, a romantic is one who creates stories about the world. How that works out in my life is that I have a metaphor, or a story, for everything.

That serves as the platform for this day's post. As background to the topic, our company, ForeRunner, is committed to the idea of being a good place to work. This isn't an easy commitment. Once you get past the idea of month long vacations and four hour work weeks, the idea of what constitutes a good place to work means different things to different people. We are very concerned about what ForeRunner employees think about working here and work to find out. The results we get are certainly not always what we want to hear, and responding to the issues raised is thorny and often without any ability to solve those issues.

As one who has spent his adult working life in and around engineering companies, I have often thought an interesting way to see them is as aircraft carriers. They are full of highly trained people engaged in complex tasks requiring a high degree of teamwork. To carry out their job, the people on board must be committed to precision and smooth operation of sequential and interdependent tasks, which if not done "right" have serious consequences.

Yet there are two different classes of people on board that aircraft carrier. There are the pilots and there are the crew. Together they are a team, but the pilots experience a very different reality than those who stay on the boat. The glamour of "Top Gun" and Tom Cruise aside, carrier pilots live in a different reality. Their commitment is a different commitment than that of those who stay behind.

In an engineering company, it is a useful distinction to distinguish between those who go out to the job site and those who do not. We are all a team, and equally important to the ability of the company to perform our mission. But those of us who go out to the job site experience a different reality than those who stay behind.

In my teen years, I often daydreamed about piloting a Phantom over North Vietnam, imagining the sudden klaxon alert of a SAM launch or the flash of light signaling a MIG intercept. But very poor eyesight meant that it would always be a daydream for me. But those who were privileged to fly had a very different reality than the team back on the carrier whose work and effort allowed them to be in that position.

Too many times to count, I have driven a rental vehicle onto a job site in some remote area, or walked into a conference room filled with client personnel. Every time I did it, my body reacted. I am not sure if my heart could have beaten any faster or my stomach been more full of butterfly's if I had been in that Phantom. My reality of that project was much different than the draftsmen and engineers back in the office who also worked on those projects.

We live in the reality we experience. A good place to work is defined by the reality we experience. If we work in an office, a good place to work is often defined by the length of our commute, being able to work from home or having control over the work we do and how we do it. Professional decorum and reasonable expectations about timeliness are a given.

If we are in the "cockpit", we experience a different reality. We are lonely, in a hostile location and experiencing severe emotional upheaval. Then a good place to work is calling in and hearing a friendly voice that picks up the phone on the first ring. It is hearing that wonderful phrase, "I'll take care of it right away". Sometimes when we come back we are jumpy and might need a drink. Some of us might even kick our dog if they bark too much.

We are a company that contains both realities. We will continue to do our best to be a good company to work for. But mutual understanding and respect go a long way to bridge different realities. It is a foolish pilot who doesn't respect his deck crew. Most crews will cut the pilot some slack when they see his hand shaking.

But I would invite you to climb into that cockpit. Unlike the Navy, the qualifications to move into that launch position are minimal. Most anyone on that project team can work their way into the cockpit. All you have to have is that desire to strap in.

Once you launch off that deck, you will not want to be anywhere else ever again.

Low Imagination Energy

2008-07-11T12:39:00.000-07:00

This week was the annual COGA (Colorado Oil and Gas) show. It is our local yearly come together where we brag, sell and commiserate with our fellows in the oil and gas business. Our keynote speaker this year was Boone Pickens, well known "maverick". Boone sounded a clarion call for windmills and natural gas fueled vehicles as a vision for the future of energy in the United States.

Windmills and natural gas fueled cars? Give me a break. My first thought was this is another example of why history treats those who know how to make money so poorly. Good businessmen, almost by definition, are lacking in the charisma that stirs the imagination necessary for great deeds. Of course we would all be cold and hungry, living in dirty caves haunted by vermin, if not for businessmen. But they don't often understand how to move beyond short sighted logic and excite the passion that drives us to the heights.

But my second thought was for the dullness of imagination in our present culture. After all Boone, and those like him, are not going to do more than hold a mirror up to what we believe possible. Currently there is an ad running on the radio about the wonders of HD Radio. The ad talks about the wonders of HD Radio and the built in intelligence of the radios that can use it. But the adman then wonders about where his flying car is? The ad is built around the idea that HD Radio is part of a wonderful future that was promised us decades ago (remember the Jetson's). Well the radio is here, but where are our flying cars?

As an immature teenage boy, interspersed with furtive visits to the pages of Playboy magazine, I was an avid reader of science fiction. In fact my absolute all time favorite novel is "We All Died at Breakaway Station" by Richard Meredith. But in everything I read was such a sense of optimism about the future that I am now living in. It was just an accepted fact that we would flying around the Solar System with large numbers of people living in "space" by now.

Well, teen age boys, despite their outward sophistication, are very naive. Reading Playboy to learn about women gives undeniable evidence of that. But our failure of imagination about energy is depressing. Our culture's expectation then was that we would be well along on the way to breaking the light speed barrier by now. Instead we are talking about building windmills to power our civilization. We are congratulating ourselves that the United States can be the "Saudia Arabia of Wind". I don't know whether to laugh or cry.

I don't think that starships will be powered by windmills. I don't think they will be powered by natural gas either. We may create a really nice culture where every body uses hemp grocery shopping bags, composts their waste and takes a bicycle to work. We may "save the Earth" and all sing Kumbaya. I believe we can create that future if we wish to. And it may be a very pleasant place to live if you have a certain dullness of spirit. The Shire portrayed in "Lord of the Rings" comes to mind. But it will also be a dead end and exist at the sufferance of those nations and peoples who continued to imagine of greatness.

Gettysburg III

2008-07-02T09:20:00.000-07:00

One hundred and forty five years ago today, the sun came up over the humid haze of mid summer outside a small town in Pennsylvania. The morning breeze carried that peculiar sweet and sour smell that visitors to a meat packing plant would recognize in the air. That distinctive odor mingled with the acrid smell of gunpowder as well as the odor of latrines for tens of thousands of men, further mingled with the odor of tens of thousands of horses and cattle. There was no mistaking it for a vacation spot.

Greeting that dawn was a manager without any good options. His opponent, the Union Army of the Potomac under George Meade, held a strong position and time was very much on the Union side. But perhaps most troubling was his sense that he had been failed by his senior leadership team. His soldiers had again displayed the élan that had won victory after victory. But their leaders had failed those men, and him, badly. But what to do about it?

The manager, Robert E. Lee, had made his choice during the night to attack the center of the Union line across more than a mile of open field. He was going to throw 9 brigades, 15,000 men, in an attack straight up the middle. His men would be advancing in ordered rows of marching men under Union fire for over 10 minutes before they would be able to return that fire. Even under the most favorable outcome, thousands of his boys would not return from that walk across the field.

But who would lead that attack? I imagine that Lee's heart ached for his strong right arm, Stonewall Jackson. But Stonewall lay in a cold grave back in Virginia, lost in Chancellorsville's wild melee. If Lee was human, he must have wanted to punish those who had left him with this choice, to make them accountable for this sad state of affairs. He had not wanted to fight here, and once engaged, opportunity after opportunity had been lost. Ewell had been cautious when boldness was necessary. Stuart had abandoned duty to engage in headline hunting. Longstreet had sulked because his advice had not been taken, letting victory slip from their hands because he was in a snit.

But instead of giving vent to his frustration and anger, Lee sought out Longstreet and engaged him in awkward conversation. Lee laid out his plans, tapping Longstreet to command the advance. Longstreet argued passionately against Lee's plan, advancing his own plans instead. It is a familiar argument for both, repeated many times in the past months. After patiently hearing him out again, Lee again orders his planned advance. Longstreet begs that command be given someone else. Lee, with sadness and resignation in his voice, tells Longstreet that no one else can do it as well as he. He, James Longstreet, is ordered to command the attack; seeing to it that it is coordinated and handled according to plan.

And so it happened. We remember it as Pickett's Charge, but it would be more rightly called Longstreet's Charge. Again it was late. Again the Confederate artillery was poorly coordinated. Again the Confederate attack was disjointed and poorly led. Again the courage and spirit of the individual soldiers and unit leaders was superb. Again the Confederate's failed, admitted defeat and returned to Virginia.

Who was accountable? Who was to blame? On whose head should the responsibility for failure be laid? In our modern world we believe in accountability. Review performance on objective criteria, measure performance and then mete out justice. When things go wrong, someone must be blamed for failure. Certainly the question of who lost Gettysburg has been endlessly debated in the years following.

Was Lee too bold? Was his invasion of Pennsylvania reckless? Was he overconfident and overcome by pride? In retrospect, this certainly seems the case. Yet, hindsight also argues that Gettysburg was lost by the Confederacy rather than won by the Union.

Did Longstreet let his ego get out of control? Did his pouting prevent him from doing the job he was assigned to do, and for which he was well competent? Certainly the operations over which he had control were carried out poorly and with no evidence of good management. Yet, is it right to assign responsibility for successful execution of a task to one who believes that it will fail?

True to his character, Lee accepted full blame for the action. He was not much for accountability. When his men succeeded, he praised them. When his men failed, he accepted the blame. If his judgement indicated one of his men unsuitable for their position, he quietly saw to it that they were posted somewhere more suited to their talents and without public humiliation.

The demands of the war required Longstreet to be sent, along with his men, to Tennessee. There Longstreet quarreled with his new boss. But rather than continue to work with him as Lee had done, his new boss exiled him to an out of the way backwater where Longstreet would be free to pursue his own plans. Those plans went nowhere and the following April found Longstreet back in Virginia under Lee again. After the war he rose to senior management in the federal bureaucracy where he seems to have been comfortable.

California Dreaming

2008-06-27T13:21:00.000-07:00

I have spent the past week on vacation in California. Let me start by saying that I think about California very fondly. I spent the first 10 years of my married life, as well as the first 10 years of my career in the energy business in California. Three of my children were born here. I like California. To be honest, there isn't much not to like.

But California is different. California reminds you of that neighbor in your youth. Tall, blond, athletic and popular. Life was easy for them outside the classroom. In the classroom no one knew whether they were smart or not, because being smart wasn't cool in any case. They charmed the teacher. On tests and homework they had eager and willing help from those wanting to enter their golden circle. They breezed through college and just when faced with the uncertainty of the "real world", a remote elderly aunt passed on leaving her entire fortune to them. Despite their undeniable superiority, they weren't arrogant or bad mannered. They were just very likable. And it seemed the world had been created to be their private country club.

They lived in a different world. And that is California. We in the Rocky Mountains cherish the beauty of our mountains, but California has mountains too. Higher ones in fact. Everything that we have, they have more of it. Not only do they have more of it, but it is better too. We can only look on in helpless admiration and envy.

In the past, we made a curmudgeonly virtue of our envy. We put bumper stickers on our cars telling Californians to go home. But we have admitted our envy and little is now seen of that misplaced defiance. We now fund advertising campaigns for Californians to come and rescue our falling real estate values by buying our houses as vacation homes.

One soon learns that California is a green state. They are making great strides in reducing carbon emissions and becoming "sustainable". Everywhere there are signs and reminders that California is seeking environmental purity. My daughter and son-in-law live in a large city in Southern California. While the city is in near bankruptcy with dangerously failing infrastructure, they will be severely penalized if they do not properly sort their garbage into various "recyclable" bins.

Given California's history, I am sure that they will successfully meet their goals for carbon reduction and "sustainability". Driving through California one sees many utility corridors. Great corridors where large pipelines and electrical power lines bring our energy into California for their use. Not that they really need the energy, just like everything else, they have more energy reserves than we do. They just have chosen not to use theirs. After all, producing energy can make such a mess.

And to add insult to injury, foreign energy sources compete to supply California as well, thus keeping us in our place. If we don't help the popular kid cheat on the pop quiz, we will lose them as a friend and have to eat lunch with the rest of the nerds.

Looking at California, one can only conclude that God plays favorites.

Project Storm Clouds

2008-06-09T14:30:00.000-07:00

We are considering a project with a client and I must say that it should be a great project. The project itself is right in our sweet spot. The client is solid with the two basics that every client must have. They want to build something and they have a lot of money. And I should add that they also possess the great intangible that is necessary in a great client. They like working with us and the personal relationship is solid, at least so far.

It should be a situation where everybody comes up a winner and life is beautiful. But my honest assessment is that we are both getting ready to walk into a deep and dark canyon of perilous events. It would be tragic to watch a good relationship turn into a sour and contentious one because we place people in impossible situations, i.e. projects beyond hope of redemption. I have seen it happen so many times and I would hate to see it happen again. People that once enjoyed each others company and trusted each other become bitter and vindictive. People and companies that once thought well of each other and operated in an atmosphere of trust spread vicious rumor and delight in finding fault.

Just as a strong wind and dark clouds on the horizon are a warning to the prudent traveler, so the prudent project manager watches the client's weather. The storm clouds on this client horizon are ominous and dark.

One of the storm clouds centers around the old standbys, budget and schedule. Of course the client will not share the details of his CAPEX. God forbid that we actually know anything about those deep secrets. But we listen when the client talks and we see the project stop and start. It is almost certain that the budget is being deliberately starved to meet a needed rate of return by reducing the cost and shortening the time before revenue starts. This fits because the schedule is being shorted significantly below what reasonable people would estimate.

Of course, most projects don't have enough money or enough time. That is just business as usual. We all know that if you give a project team adequate money or time they will just waste it. But what really concerns me is the evidence of fear within the client organization. I have been on many projects with clients driven by fear. I don't have any memory of where we, or they, were successful.

The second major storm center on the horizon is the client procurement group. They have enormous power within the client organization and they will buy everything on the project. They are all nice people and of good moral character, but they exist in their own world. They buy on price and do not see the need to involve engineers in purchasing decisions. While I have no evidence, I would be willing to wager fairly large amounts of someone else's money that they see expediting and shop inspections as a waste of money. I would also bet that client procurement hasn't the people or resources to do so even if they thought it necessary, having previously earned brownie points with their executive management by cutting waste.

The third major storm center on the horizon is the client operations group. It is a pretty safe bet in an operating company that Operations is an important player. Experience to date indicates that operations won't be involved in any meaningful way in the design of what is to be built. While this is pretty much SOP, we usually get at least lip service from the client about how important and necessary operations input is. With this client, the operations group is silent and headquarters is cavalier about the silence.

This makes me worry about how much good will or understanding exists between operations and the "home office." In the absence of good will or understanding, I have usually found either active hostility or indifference. Both are deadly to projects. Unless the project is a true "greenfield" project, there is an established operating entity that will take over the operation of the project to be built. Once the project moves to construction in the field, that project starts to move under the control of the operating folks. They can delay it, they can change it or they can use it to get what they want from the "home office". Any of these possibilities are catastrophic to a project already on the margin.

But all the above is not fact, it is only my guts rumblings. Brave and bold men operate on their gut. I am just a timid engineer trying to manage the storms of the energy business. There are many good people who rely on this company for their livelihood. If we just do cream puff projects, we will soon run out of work and those good people will have to look for another job. At the same time, some of the best projects we do are those we don't do.

Old Lessons Relearned

2008-06-05T11:18:00.000-07:00

I got to spend a small part of yesterday working on what I hope is soon to be a construction site. As you may know I am hoping to build a house in the woods west of Denver, actually a place called Conifer. Last fall I cleared the timber from the driveway and house building site to be. Prior to clearing the area, I had a land surveyor do a topographic survey of that area to be cleared. I also had an architect work with me to develop house plans for the site, using the topographic survey.

Yesterday I went out to look at clearing some additional area in the trackless forest. In doing so, I used distances on the survey to locate some spots on the site that had been cleared. It turns out that the house is not where I thought the house was. Of course being a consulting engineer in real life, my immediate, almost programmed, response is that it is all on paper and changes are easy. But then the owner part of my brain kicked in and I had a tantrum moment thinking about the well known failings of contractors, surveyors and consultants.

The fact is that everybody did their job. But the project manager was a little out to lunch. The surveyor did an accurate job of surveying the topography of the site, but there aren't a lot of natural tie points to give somebody on the site an easy way to orient themselves to the drawings. If you can't orient yourself, you will orient yourself anyway. If the human brain doesn't have any facts, it will create a story. I did in fact have a story rather than an orientation. The surveyor, like most all service oriented people, did what the project manager asked him to do. The project manager should have asked for more.

But the real killer was that somebody did make a mistake. It simply boggles my mind that somebody made a mistake, but it did happen. There was a tree with a bright orange ribbon around it. It was located at a strategic point on the site and allowed easy identification of the front of the house. It was not supposed to be cut down. A specific conversation between the contractor and the project manager was had at the beginning of the tree clearing job. That conversation occurred beside the tree and was specific about the need to not cut it down, with many fingers pointing out the large orange ribbon.

But it did get cut down. The contractor, called to task, disremembered the conversation. The architect wanted justice done, the tree replaced and the contractor blackballed. The project manager hemmed and hawed. It was all business as usual.

While the architect fumed, the project manager remembered. Although the project manager in question has a real talent for hemming and hawing, he also remembered the wise practice of construction management and inspection that he had often advocated. And he was convicted by his own failure to practice his craft well.

I Love the Smell of Weld Smoke in the Morning

2008-05-23T08:54:00.000-07:00

On a beautiful spring morning sitting in my office (with all due respect to Robert Duvall), my thoughts turn to the "right of way". I extend my sympathy to those of you in this business who have never experienced the freedom and beauty of the "right of way".

I came late to pipelines. My career in the energy business began in refineries. For a long time I thrilled to watch the big structures of steel and concrete come together in those big plants. My own specialty, control systems, allowed me to exercise creativity and independence, while having a star role in the greater things being done. But the winds of change blow and we find ourselves in places we would never have thought.

And so I came to pipelines; and so I came to the "right of way". After a career of being inside a fence, chance afforded me the opportunity to get outside the fence. After a career spent walking through canyons of concrete and steel, I drove a 4-wheel SUV along the apparently endless right of way of a pipeline crossing open country. After a career spent watching electricians bend conduit, I watched massive D-9 Cats push over big pine trees in the woods of east Texas.

While my arrogance knew no bounds when starting up process units in refineries, I knew my place in the pipeline world. After all, how many people do you know who got stuck in a pipe yard? I can still remember walking over to the foreman of the group unloading pipe to ask for a tow out of the washout where I was high centered. I still have a bias against Ford Explorers on account of that long walk in full view of the grinning crew.

And so now here I am, a manager sitting in an office. Its a corner office, with a great view of foothills of the Rocky Mountains and the occasional hawk that sits in the tree outside. But I miss the morning meeting with the inspectors and strategizing with the right of way agents on landowner negotiations. I miss getting into a pickup and driving out to watch the "firing line". I miss being a little slow when it comes time to close the gate.

Engineering is a dry business. We work with paper and computer screens. It is important work and the success or failure of projects rides on our efforts. But don't miss the opportunity to smell weld smoke in the morning. It makes it all worthwhile.

Gettysburg II

2008-05-12T09:33:00.000-07:00

So I am up for another venture into history for insights in the management of people and projects. Gettysburg is such a fertile ground, because it was so important in our country's history, and the story has been so well told by folks such as Michael Shaara and Clifford Dowdey, among many others.

The second day of Gettysburg came early. The Confederates under Robert E. Lee hadn't achieved the success that they might have on the first day because of the unexpected aggressiveness of the Union forces and the unexpected lack of aggressiveness on their own part. But as usual, Lee had a plan and was ready for the second day.

On the left side of the Union's line were some steep wooded hills that could be dominating if held by the Confederates. To that end, Lee met with the man he called "his old warhorse", James Longstreet. Lee's plan called for Longstreet's men to move up from Seminary Ridge and occupy those hills early in the morning of the 2nd Day. The time that Longstreet would move up was fixed at 9 AM that morning.

Meanwhile, Lee would go to the far side of the Confederate line and coordinate with its commander, Dick Ewell. Ewell's had used the discretion Lee gave his senior commanders the day previous to pull up short, leaving the retreating Union Army with a strong defensive position. The old Dick Ewell had been an aggressive hard driving commander in the past. But he had recently taken a bride, and a new appreciation of life may have taken some of the fire out of his belly. Ewell's job today was to fake an assault by the Confederates to distract the Union from what Longstreet was doing on the other side of the line. Lee would be there to ensure that it was done with sufficient energy to be successful in its purpose.

But it seemed Longstreet had other ideas. Longstreet, recently returned from a semi-independent command, now fancied himself a strategist. Upon hearing Lee's orders, he disagreed with the idea and put forward his alternate plan. Lee politely heard him out and re-explained his own reasoning, but then told him to move forward as ordered.

9 AM passed. 10 AM came and went, 11 AM as well. Lee worried that something had happened and rode his horse the 3 miles back to Longstreet. Nearing noon, Lee found Longstreet where he had left him. Longstreet had not moved at all, presented a weak excuse to Lee and began again to argue for his plan of action. The imperturbable Lee heard out Longstreet, but ordered him to attack as originally planned.

Longstreet finally began moving his people into position. One can guess that he did so with a bit of an attitude and not with the dispatch that might have been hoped for. Finally at 4 PM, rather than 9 AM, Longstreet moved forward to occupy the positions that we remember as Little Round Top, the Peach Orchard and the Devil's Den. Students of the Civil War will be familiar with those names as they were scenes of desperate fighting that took so many lives. Longstreet's men were repulsed with heavy losses.

As it happened, the Union forces had got into position only shortly before the Confederates attack. If Longstreet had gone forward at 9 AM, the hills would have been empty and been his without loss. With the high ground in Confederate hands, the Union Army's position was hopeless. They could attack the Confederates in strong defensive positions or retreat, allowing the Confederates to put Washington D.C. under siege.

Lee's position at the end of the 2nd Day is one many managers have found themselves in. You have good people that know their job and do it well. But things have turned to crap, your people aren't following the agreed upon plan, but instead pursue their own agendas. When called to account and forced to comply, they follow the letter of the plan rather than its spirit. What do you do?

I don't believe there is a textbook answer. To go back to Gettysburg, we can see what Lee did. While we do not know what his thoughts were, we know that he took no public action, made no public criticism of Longstreet. On the following 3rd Day, Lee again entrusted Longstreet with the main action. Once more Longstreet sulked, pressed his own ideas and had to be forced into action. Again he failed, with resulting heavy losses. Again Lee took no public action and kept Longstreet as his chief lieutenant. For the failure of the entire enterprise, Lee accepted full blame and made no public excuses, while praising the performance of his people.

Was Lee correct in his response? Certainly, his overall record on the field would say that he was usually right, but then again, he did lose at Gettysburg. Longstreet was experienced and capable. His standard of performance was high based on any objective job description, a job that had few competent performers on either side. He was steady, but perhaps not the man for inspired performance. When in conflict with his boss, he was not a "team" guy, but pursued his own agendas. What would you have done?

Pine Beetles and Stewardship

2008-05-05T11:23:00.000-07:00

I just got back from a weekend in the Grand Valley of Colorado, otherwise known as Winter Park. And I am mad. The beautiful green forests are no longer green but an ugly reddish brown, no longer the color of life but instead the color of death. Literally thousands of square miles of pine forest are dead, or dying. An epidemic of tiny beetles and their fungal parasitic host have nearly completed the process of destroying Colorado's pine forests.

Let me repeat that I am mad. What I see in those dead trees is a failure in stewardship on the part of those we trusted with our public lands. Stewardship is a very important word to me. I grew up on a working farm. My father is a farmer, and as far back as my family is traced, we were farmers. Stewardship is a farmer's virtue. It is a realization that you might own the land today, but it was there before you and will be there after you. It is keeping faith with those who came before you. They held the land in their time and provided stewardship over it such that you can enjoy its bounty today. It is keeping faith with those whom you will pass it onto in the future. As did those who came before you, you want to leave it better than you found it. That is stewardship.

Getting back to my anger, why? Those little pine beetles and fungus spores are simply nature. Contrary to Walt Disney, nature is violent and brutal, with wholesale extinction of entire species almost an anyday affair. Some of my most vivid memories of life on the farm are of late afternoon hail storms that obliterated our crops. I can remember walking out after a late afternoon storm and seeing the ground covered with white ice. The green plants that had been there just minutes before were now no more than a tossed salad. Months of hard work and all the money spent on seed, fertilizer and fuel, gone in just minutes, destroyed by the blind hand of nature.

But I also know that getting angry at nature is silly. Nature does what nature does; it is simply water running downhill. To be angry at what nature does is a useless exercise that only hurts you. Nature certainly is not out to get us. But that does not mean that we must accept what nature does without recourse. Nature can be negotiated with. That is what engineers do. That is what the profession of engineering is about. Water flows downhill, that is nature. But water can be dammed up and used to generate electricity as it flows downhill. That is an engineer's negotiation with nature. I have always seen that as an essential part of stewardship.

But why the anger about pine beetles and dead pine forests? I am angry because it didn't have to be this way. Because the forests have been artificially protected, they are dense, with little diversity and they are old. Forest fires have always been stopped. Logging has not been allowed. Nothing has been allowed. Pine beetles are always around, killing off the weak trees in the forest. But it takes special circumstances to create the near universal kill off we are seeing. Those special circumstances took human intervention. It took human action; or more accurately, human inaction, to create the circumstances that have ruined our pine forests.

Our public lands, our public forests, are being managed by caretakers. Caretakers do not practice stewardship. Caretakers are simply passive managers who erect fences to keep out the world. Caretakers simply deny that time passes and circumstances change. Behind those fences things fall apart and crumble. One of the most powerful forces of nature is entropy, the inexorable process of decay.

Stewards try to make things better, because they are keeping faith with those that came before and those that will come after. Sometimes risks must be taken in the attempt to be better. Caretakers simply keep it from being used and take no risks, ensuring that disaster will eventually happen.

Projects as Football

2008-04-29T13:50:00.000-07:00

I've just had another meeting with a client that expects engineering drawings to be perfect, beyond misinterpretation and cover all possible questions that a constructor might ask. This is a seductive idea. As engineers we, of course, have no tolerance for error or ambiguity. As consumers, we expect what we buy to be without flaw. Put those two ideas together and the client is being perfectly reasonable. This is simply a reaffirmation of Murphy's Golden Rule after all. Package a reasonable client and Murphy's Golden Rule together and I am left without a lot I can say.

But how do you tell a client that is reasonable, as well as has the money that pays for our services, that they are wrong? Obviously by using diplomacy, charm and euphemisms, as well as picking up the tab for a long and langorous tasting at a trendy brew pub.

That being said, I think the issue is not about engineering, but about something else entirely. That something is the strategy of project execution. We simply establish scopes, budgets and schedules and go forth into the wide world expecting the success that is our due. But the strategy that we use to execute a project is critical to its success. Strategy is not an ivory tower concept, it is the calculated plan of action that takes into account the way the world works, the situation we are in and the result we wish to achieve.

Consider the way a football coach plans his defense. He has limited resources, eleven men on the field of action, limited by time and the skills those eleven men bring to the field. He needs to use those resources to prevent the opposing team from scoring points.

Coaches know that they win or lose the game on the line of scrimmage. But they also know that there is only so much they can do on that line of scrimmage and that they have limited resources. There are only 11 players and 60 minutes.

A project execution team can be compared to a football defense. Rather than preventing a touchdown, their job is to prevent the perversity (ha ha) of the universe from damaging the project they are executing. The way resources are deployed is the strategy for executing the project.

It often seems that the strategy we, as an industry, employ is simply a goal line stand. Everybody up on the line of scrimmage and try to beat the crap out of the guy on the other side. We go home to drink our beer at night bloody and bruised, but happy in the knowledge that we did the best we could. If a receiver or running back gets past the line, easy score. In the project world, that equates to perversity whapping us on the side of the head with a big stick.

In football, most teams employ a defense in depth concept. There is a defensive line that does the heavy lifting on every play. But behind them is a linebacker corp that adjusts to the situation and works closely with the line to stop whatever the other team throws at them. And behind the linebackers are the safeties and cornerbacks which take care of the mistakes.

Engineering services are the defensive line of a project execution team. They do the heavy lifting. Their job is to prevent perversity from scoring its points. They define what needs to be built and how it is to be put together. They are in charge of getting the material necessary to where it needs to be. If they do their job well and the universe isn't too perverse, projects go smoothly. In a football game, if the defensive line stops all the offensive plays on the line of scrimmage, the game is easy and scores are low.

But coaches know that people aren't perfect and that offensive teams (the perversity of the universe) are very crafty and have a lot of really good players. The defensive line does not stop every offensive play on the line of scrimmage. That is what the linebackers are there for. In this metaphor, project procurement plays the part of linebacker. Aggressive linebackers read the way the play is going and react accordingly. Strong procurement sees the way the project is going (expediting, shop visits and receiving) and facilitates adjustment with vendors, engineering and construction to deal with developing situations.

If the football makes it past the line and linebackers, safeties and cornerbacks pick it up and minimize the damage. That is the job of construction engineering in our metaphor. Construction engineering is charged with dealing with the problems that get through. They are the final line of defense. Aggressive backfield players watch the play developing and react accordingly, They can do this because they have the time and perspective to do so.

One of the key questions in the makeup of any strategy is marginal effectiveness. The quality or completeness of engineering services product, drawings and specifications, is a function of time. That time is measured both in manhours and as a time line. Increasing quality or completeness requires both, more manhours and more time. From the standpoint of an effective project execution team, where do we get the most bang for the buck by adding manpower?

As noted previously, most project execution strategies seem to be oriented toward the goal line stand. Occasionally there is a lone safety or single linebacker, Even more destructive, the line and the backfield almost always play on different teams.

Faith

2008-04-22T10:22:00.000-07:00

I attended the Rocky Mountain Electrical League's Workshop on Carbon Issues. The focus of the workshop centered on what the electrical power industry thinks about carbon dioxide emissions. As it turns out, they think about it a lot. That thought is leading them to plan an unprecedented upheaval in the way the United States generates electricity. The cost of that upheaval will also be unprecedented, both for energy consumers and society. Paradoxically, the short term large scale beneficiary of that upheaval will be the natural gas business, not the nascent renewable energy business.

One of the strong impressions I carried away from that workshop is a renewed appreciation of how our lives and society are governed by faith. I define faith as that which we believe, but can not prove. Our workshop began with an excellent presentation by Randy Udall. Mr. Udall is a charismatic presence that powers his presentation about why carbon dioxide is a problem and the dire consequences of ignoring its increased presence in our environment.

Everything that Mr. Udall said however, depends on acceptance of his underlying beliefs regarding global warming. I stress the word, beliefs. While there is an ocean of data regarding carbon dioxide and global warming, there are multiple interpretations of that data. None of which show predictive power. Therefore, an objective person must conclude any interpretation of that data is faith, sometimes known as a hypothesis.

But Mr. Udall's presentation is the faith that our culture and government has accepted. Alternative ideas about climate are simply no longer treated seriously, at least in the circles of culture and government that matter. We have a faith, and that faith is global warming. A faith needs those who interpret the faith and tell us what that faith requires of us. That is Mr. Udall's job.

Interestingly, the people I knew at the workshop weren't persuaded that global warming was real, and that therefore carbon dioxide emission controls were not necessary. But as you might guess, they were all engineers. And in matters of faith, engineers are generally not welcome as we have a tendency to raise inconvenient observations. But we did not loudly voice our critical thoughts. Instinctively we know that we are dealing with faith, and official faith is always alert to heresy. Heresy is never good for your career. We may talk about foolishness over beers, but not in the presence of those who interpret the faith.

But as I look over our energy industry today, we are poised to embark on actions that will cost us dearly. Those actions may well be necessary, but we take that on faith.

Hillary, or Obama, or John?

2008-04-15T08:34:00.000-07:00

The political season is upon us. The media, and news junkies everywhere, are in a frenzy over permutations in the penumbra of chance remarks by the political candidates. I used to be a dedicated political junkie, but had to swear it off some years ago. I just couldn't handle the constant emotional triggering. Talk radio could get me in such an uproar during commutes, that I had to quit.

But politics is important to the energy industry. We will always be an industry that goes through cycles as energy supplies go out of balance with energy demand. But those cycles are driven to extremes by the politics of our great nation. Our last major cycle of boom and bust was almost catastrophic, in large part because of US politics. Price controls on domestic oil and gas production had the predictable effect of depressing supply and increasing demand. Allowing "new" production" to sell at a market price, artificially inflated, predictably drove our industry into a wild frenzy of drilling.

When the price controls were removed the market, again predictably, rationalized. The resulting chaos, as "new production" prices dropped and "old production" rapidly increased left scars on our industry that are still affecting our thoughts and actions. I, for one, sold residential real estate for a year. If you don't think that the picture of me discussing the color of living room carpets with potential house sellers isn't funny, think about it again.

The recent debacle in ethanol simply reinforces the point. US energy policy has an enormous effect on the lives of people. While it is comforting to believe in the silliness of our political class, they are not stupid people. But they are driven by political considerations, not economics or engineering logic. They have the jobs they do because we put them there. They may be fools, but they are our fools.

So what Hillary, or Obama or John think about energy is very important to me, my job and future. I have to tell you that I don't want to apply for a job with ReMax again. It didn't work the first time and I have a greatly lessened tolerance for the effect of "realtor beige" discussions now. I have a lot larger mortgage as well. The potential collateral damage is huge.

My parents repeatedly told me that you should never discuss sex, politics or religion. So it is with a fair amount of inherited guilt that I write the next paragraphs. But what the heck, this is the 21st century.

I have to tell you that I feel pretty good about our future, electing any one of the three. Let me narrow that statement a bit. Concerning the impact to the Denver based energy market from election by any of the three candidates mentioned, I feel pretty optimistic. None of the three would appear to have any past interest in energy. That means that they don't have any axes to grind, beyond their obligatory lip service to our greed and the pain we cause Mother Earth.

There doesn't seem to be a lot of political fire behind high energy prices. We are all hurt by $3 gasoline, but it's different this time. The last time energy prices went up like this, there was fire in the political belly. Our political masters had to do something, and right now, or there was going to be rioting in the streets. Even the Great Father Figure, Walter Cronkite, was angry. I interpret that to mean that the chances of really stupid legislation this time to be relatively small.

What is very positive about Denver and energy is the need to do something about Iraq. If we were honest with ourselves, we know that the reason we went into Iraq is oil. The US public wants out of Iraq. Some want to cut and run, while others want to leave with honor and a declaration of victory, but the broad public wants out of Iraq. But the problem is that Iraq sits in the middle of the world's oil supply. Simply leaving the Middle East to its own devices and the consequent chaos in energy won't work without a fallback position.

At some level most of us know this to be true and will vote accordingly. From a political point of view, the only fallback position that will sell to the general public is "Energy Independence". "Energy Independence" is emphasizing and publicizing renewable energy, while working to increase domestic energy supply. On a number of different levels, Denver is the big winner here.

Increased domestic energy supply means greatly increased production from the Rocky Mountains. Denver is the regional hub of the Rocky Mountain energy production business. Denver can hardly lose. Our level of activity is high simply based on economic factors. But as politics begins to drive "Energy Independence", our level of activity will be turbocharged by the political incentives, in whatever form they may take, that will come from our need to increase domestic production of energy.

Renewable energy is the public centerpiece to "Energy Independence". Today and for some time to come, it is not a serious piece of the solution. But it is the necessary cover to cope with the perceived degradation of the environment caused by increased domestic production. After all, most of the increased energy production will come from federally owned lands. To allow this use of federal lands will require political trade offs, that is, a serious commitment of money to renewable energy development and production.

Here is where Denver is a double winner. Denver is rapidly becoming a hub of the renewable energy industry. Our workforce, our energy experience and our physical setting make this a natural development. A large part of that money committed to renewable energy will be spent in Denver. The public stance and actions of our current Governor lead one to believe that he has made this connection and is acting on it.

So my thought is that no matter who wins the election, Denver's energy future is likely to be prosperous and secure.

Gettysburg

2008-04-10T13:06:00.000-07:00

Since my wife works in the school system, we take a week for spring break. As the kids no longer live with us, we travel that week. This year we went back to Virginia and visited some of the major Civil War sites. Diane, my wife, is obviously a real trooper. The first one that we stayed at was the most iconic site of all, Gettysburg.

While I have always been interested in history, it has become more immediate to me as I have matured as a manager. History is simply the story of how people interact with each other in different situations, which is of course the practice of management. The history of conflict has always seemed to have special application to the business of projects. Both battles and projects are highly pressurized situations greatly affected by the personalities of the people involved, subject to the constraints of time and space.

While the horrible tragedy of battle and war overwhelm us, they can also provide "real life" examples of people and situations under pressure. While a forest fire or blast furnace are very different than a rusting nail, they both are examples of oxidation. One is awesome in its fury while the other goes unnoticed, but both involve the same chemistry.

At least that is what I tell myself. Perhaps it is just a little boy's excuse to spend time daydreaming about people and events so much greater than he. In any case, my wonderful wife had gotten us a room at a motel just across the road from the Lutheran Seminary. The road was not just a road, but was indeed the Chambersburg Pike. The modest ridge our motel stood on was Seminary Ridge and the equally modest ridge to the west was Herr Ridge. All names immortalized in the great crisis that was Gettysburg.

Coming out of my motel room in the morning and standing in the parking lot, I could look to the west and see down the Chambersburg Pike. A short distance across the road to the south was the cupola at the Lutheran Seminary. It didn't take a lot of imagination to seen John Buford standing up there, binoculars in hand, watching the advance brigade of Henry Heth's Division moving down the road toward him. The first day of three terrible days was beginning.

Success, or failure, at Gettysburg would pivot on different individuals at different times. But maybe none so pivotal as the actions of John Buford. Commanding a small force of ill regarded cavalry scouting in front of the Union army, he rose to the occasion by choosing to act unexpectedly. He became a hero. Many would say that the Union won the battle at Gettysburg because of John Buford. Many would say that if the Union had not won at Gettysburg, the Confederacy would have won their independence. Think about how different the world would be today.

Certainly the Union was glad that John Buford was at Gettysburg that day. Which raises the question, "Do we want John Buford's in our organizations?" The easy answer is of course we do. How can we not want strong decisive leaders in our organizations? That is, of course, an interesting point. Buford, in what might be called an operational position, had been passed over for an executive command just 6 weeks earlier. The man who was promoted over Buford was regarded by most as a weaker candidate, but considered more polished. Buford certainly had a strong record, in a branch of the Union army that had almost no one with a good record. But a more political candidate got the position of overall cavalry commander.

Indulging in a bit of post game analysis based on how I read his record, I would speculate that John Buford was an opinionated hard nosed individual. He was probably pretty sure he was right, and more than likely, ready to say so. He had strong opinions about things, and they weren't the politically correct opinions. His ideas about how to deploy cavalry proved decisive at Gettysburg, but they were not the "conventional wisdom". Also, I don't think John practiced and polished his political skills. Operating organizations tend to want people like John when the chips are down, but they can be hard to live with from day to day. They can be very uncomfortable to have around, particularly around headquarters.

Also, John did take a very large risk with his men. Under the most likely scenarios, he would have lost a lot of his men for no positive result. An objective observer at the time could probably have said that he was willfully careless with the lives of his men at Gettysburg. While we celebrate the John Buford's of the world when they are successful, someone else often pays the price when they fail.

Picking an Architect III

2008-03-06T08:37:00.000-08:00

Picking up where we left last time. The construction driveway is in and the tree stumps have been cleared. We did it with somewhere around 3 feet of snow on the ground. Luckily the frost was only 6-12" deep into the ground. I have the feeling when the snow does melt, there will be a lot of mess to clean up, but for now, the driveway is in and we have access to the site.

So the next step up is to get a water well drilled. Given the experience of the driveway contracting, I decided to handle this myself. Calling up two local water well drillers, I get a bid from each one after showing them the location I want for the well. In the best tradition of the engineering profession, I give each one a look at the site and point out the location I want for the well. Like good contractors they give me a folksy sashay around the well site and their ability to handle each and every possible eventuality. The sun is shining and the bluebirds are singing, even in February.

Good written quotes, explicitly listing assumptions, pricing and known information, come in the day after the site visit in the case of both contractors. I make my decision and authorize one of the contractors to do the work shortly thereafter. A day after that, the contractor not chosen calls me up and wonders how his quote looks. Uh-oh. In a flat business like voice, I tell him that I chose the other contractor to do the job. After a pause, he asks the natural question, "Why did I choose the other contractor?"

To tell the truth, I don't have a good reason. The price was close enough that a choice based on price alone would sound weak in my ears, my pride as an engineer required a better reason. They both were experienced and had a good reputation. The real reason was that the driller chosen had charmed me. He was an old oil and gas geologist from Kentucky and had that bluegrass charm. That doesn't cut it as a rational reason either. So I lied. Or rather I provided a plausible excuse. The beauty of the simple hard logic of the engineer when confronted with the complexity of human interaction takes refuge in the comfort of a little white lie.

What happened next certainly proves that there is justice in the world, at least when viewed by the drilling contractor not chosen. We mobilize on site and drill the water well. It soon seems that this is not a well chosen spot ( pun intended). Hard rock interspersed with clay/rock mixtures ruin drill bits and slow down drilling. At the end of a weeks drilling, we are at 925 feet and a well that flows 1.5 gpm. Not only are we going to have a big expensive high pressure pump, its not going to be pumping much water. This is not a good well, it will work, but I had hoped for much better.

Now disaster strikes. In casing the well, it turns out that the sides of the borehole around 400 feet down won't hold. They keep caving in and the driller can't hold the well casing without its breaking. Something about a mix of weathered rock and clay not being stable. Not only do we have a poor well, but we don't even have that. The most realistic option is to cement the well and start over. The driller and I, looking at our boots and kicking the dirt, make half-hearted comments about sharing the cost in an equitable way and moving on. The precision and logical beauty of the bid process had been totally destroyed by the chaos of inscrutable nature.

But chastened now, the driller and I seriously consider where to drill the next time. Before, the driller had simply accepted the location I chose. At the time, the driller had said that the site looked ok to him. But in all honesty, I had appeared as the knowledgeable owner, while he had been the humble contractor, trying to get the work. Now we were both in the manure and somewhat humbled, for the minute at least.

The driller took off his Kentucky Colonel persona and got out his geologist's hammer. We walked along the road and took notice of things that I had not even seen before. He brushed a thick layer of snow from a number of rock outcroppings and inspected the newly visible rocks. The driller's son, who actually ran the drilling rig and had let his father do the talking up to now, found his voice. He had a lot to say about the practical issues of particular locations and rock layers. Over the course of fifteen minutes, I learned a lot about the geology of my land.

Choosing a new location, we decided to move forward and drill again. Doing what we should have done the first time, success smiled on our efforts this try. We found a 12 gpm well at 325 feet.

What Can We Do as a Client?

2008-02-26T08:26:00.000-08:00

I haven't been posting to the blog lately because I have been on the road; hopefully bringing in new business along with expressing appreciation for existing business. But in any case, I have been in conversations with our clients. This is always valuable. Sitting in an office and listening to people that work in your own organization is easy, but deadly to our effectiveness as a project organization. If I don't get out, I soon start believing that everyone at ForeRunner grew up in Lake Woebegon.

One of our clients asked me a question that left me without much of an answer. The question was, "What can we do as a client to make our projects turn out better?" Talk about the opportunity to trot out the cliches! A masterful cliche user such as myself could have gone on for hours without really saying anything. And it is the safest course to not say anything to such a question, because we are of course treading on very dangerous ground. It is a question akin to one's wife asking if a certain dress makes her look fat. Those of us on both sides of the great divide know that an honest answer is neither wanted nor expected.

But being an engineer, I as well as my fellows, laugh at social norms and try to make an honest answer. That my wife is still with me after some 33 years is testimony to the essential grace of her character. However, clients are a different matter entirely. My answer to the client was that the client's culture dictated how projects were done in their own organization. Some client cultures lend themselves to doing projects more effectively than other client cultures. But the client culture is what the client culture is. Suggestions made by myself, or any other outsider, were of little use unless they were compatible with that client culture.

That is true enough, but not very helpful. ForeRunner is good at doing projects. If we are not, we wouldn't be in business, because that is what we do. If a client asks for advice about how to do projects, we should be able to offer more help. In that spirit, I would like to offer some of my perspective on how clients can be more effective at doing projects.

My answer to this client was true as far as it went. The client culture is all pervasive and immensely powerful. It is the environment within which projects will be done. Methodologies for improving project metrics will not work unless they are implemented in such a manner to mesh with that culture. But that is also the largest single opportunity for the client to improve their ability to effectively do projects.

Any outsider such as ForeRunner is necessarily outside that client culture and will consistently engage in actions that, while well intended, result in blunders when viewed from within that culture. In other words, we will consistently belch at the dinner table, simply because we do not realize that it is bad manners.

My experience of projects is that they are not graceful eagles flying majestically through their sky, but instead resemble wounded ducks. The competing requirements of the different client stakeholders make most projects awkward creatures even at their beginning. And after that beginning, the project's life is a long chain of compromise brought on by changes and discovery of unknown obstacles.

From my viewpoint, what many projects suffer from is the lack of a broader perspective from which to view the decisions that must be made in the course of a project. Projects with poor outcomes generally suffer from poor decision making rather than poor engineering or design. But the people making those decisions, both on our part and the clients, are smart and experienced people. We wouldn't expect them to make very many poor decisions. What project decisions on the ground generally lack is not good decision makers, but information and perspective.

Projects are done to advance business goals, not technical goals. Project decisions need to be made on the basis of sound technical thinking, but the judgement calls and strategy of project execution need to be driven by business goals. Only the client can provide the business perspective into the project execution mix. I would invite our clients to do so, with the sure expectation of better and sounder project execution to be a result.

Figure Skating or Hockey

2008-02-05T13:51:00.001-08:00

I have often made the statement, "ForeRunner is not an engineering company". Most people then ask, "Well, what is ForeRunner then?". I respond by saying that we are a company that does projects. Often the conversation moves on from there with people shaking their heads about small differences.

There is an old line that describes most peoples approach to the world. It goes something like this, "If it looks like a duck, and it quacks like a duck, it probably is a duck". Since we look like an engineering company and quack like an engineering company, the outside world thinks we probably are an engineering company. After all, we don't sell a product or operate any facilities, what else can we be? But still we try to draw a distinction, where much of the world sees no meaningful distinction. Why keep pushing a point that seems of so little moment?

Other than stubbornness, I feel there is an important point to be made. To be sure, it is a subtle point. But I feel it is one that is valuable and needs to be made. However let there be no mistake, we are a company of engineers, as well of other highly specialized technical people. And we make no apology for that, we are proud of who we are and what we are. We did not gain our skills and qualifications easily or with no price attached. We worked hard to become what we are.

But if a company of engineers (and other technical types) doesn't want to be known as an engineering company, what does that mean? What are we trying to say? It isn't original with me, but I like the ice skating analogy. The technical abilities and knowledge that we bring to the market are skills.

Ice skating is a skill as well. Highly skilled ice skaters can use their skill to compete in the world, just as skilled engineers compete to bring value to themselves and their world. Ice skaters bring their skill to the world in different ways. Ice skaters compete in Figure Skating competitions, going all the way to the Olympics if they are successful. Or ice skaters compete by playing hockey, reaching the NHL and the Stanley Cup if they are successful. In either case they can achieve great success as a result of the practice of their skill.

But they practice their skills in different manners. In figure skating, the ice skating is valued as an art form. The ice skating is an end in itself. Form is valued over function, with the quality of the form valued by subjective judges. Each judge of the art brings different subjective criteria. Some judges value precision and perfection of form as the highest expression of the skill. Other judges give the highest marks to those who exhibit creativity and purity of expression. But who is to argue with a judge? Figure skating is an art form and art is subjective. Judging art is only opinion, perhaps informed opinion, but still only opinion. And my experience is that whoever pays for the art has the ultimate opinion.

The skill of ice skating finds a different expression in the game of hockey. In hockey, ice skating is a means rather than an end. The hockey players must be very good skaters, but their skating is functional rather than an art form. Skating style is valuable only as it contributes to a winning team, rather than as an art form.

My concern about calling ForeRunner an engineering company goes to the nature of how we use our technical skills. In my experience, many, if not most, engineering companies tend to regard themselves as in the practice of figure skating. In those organizations, engineering is an art form with arbitrary standards. After all, an engineering company's product is engineering. The quality and value of engineering, unless used in the service of building something, is subjective.

In saying that ForeRunner is a company that does projects, I am attempting to make the case for playing hockey. We have great engineers and other technical people here, but I want us to take pride in the things we cause to be built rather than in the paper we produce.

Part of what we have always striven to do at ForeRunner is to bring the right people into the company. Not necessarily the most well educated, or the smartest or the most experienced people, but the right people. Who are the right people? People that can bring a high level of skill, that can play on a team and that can focus on an objective goal. People do not focus on perfecting our art, but in using our art to make the world a better place.

I Hate to Bid II

2008-01-14T09:59:00.000-08:00

Why do I hate to bid? In a previous post, I bared my inner feelings and said that I felt it implied a lack of respect for us as engineers. There are other reasons. Let me tell you a story.

Some time back we provided a bid for the engineering on a large project to a client. The bid package itself from the client was very well done. It provided a detailed and complete scope of work, along with exactly defined deliverables and schedules. We were bidding against only two other companies. The facility in question was nearly identical to another facility that we had designed in the past year.

While the individual project manager for the client was new to us, we had a long and successful track record with the client. Given all these things, we thought we knew with a high degree of precision the manhours necessary to complete this project. And so we entered our bid with a fair degree of optimism.

We received word sometime later that we had been unsuccessful and that another company had been selected for the bid. We made our usual attempt to gain information from the client about the bid, i.e. how high were we, where did our bid fall short, etc? As usual, the client would not reveal anything, even the identity of the winning bidder. This is pretty standard procedure for all clients. God forbid that we learn anything that might help us do a better job on a bid for that client in the future. It seems to me that most clients think engineering companies major decision in a bid is to determine whether we want a 600% profit margin or are willing to live with a 500% margin.

As is the case in such situations, we went on to other things. In our disappointment at losing the bid we simply voiced the platitudes we always use. These are generally to the effect that "the client did not appreciate our special expertise" or that "the competitor had bought the job".

A few months later, a chance encounter allowed a visit with the client project manager. In the course of the conversation, the client project manager opened up with a rare degree of candor and openness about ForeRunner's bid and his selection process. I applaud and salute him for speaking to us about the issue.

It turned out that we had submitted a bid with the lowest price. On the basis of lowest price and manhours, we were the clear winner. But in fact, we had come in third out of 3 bidders. We came in last. The client had made his selection based on a matrix of different factors. Ratings in each of the catagories in the matrix were based on "soft" criteria, that is a score based on subjective feelings.

As it happens, the client project manager is an experienced professional with good judgement. I would use subjective criteria myself to select an engineering contractor. But we did spend some $ 20,000 to put together a bid. Instead, we participated in a beauty contest.

To pursue the metaphor further, a bidding situation can be compared to a poker game. It is a game with its own set of rules. A beauty contest is a different game with a different set of rules. It is hard to play the game when we don't know what the rules are.

Picking an Architect II

2008-01-08T10:24:00.000-08:00

Well, its time for the next story about building a house, with accompanying observations on how project professionals are seen by the owners for which they work.

I need to build a driveway into the location where my house will be. We had a pretty late fall this year and were able to work later than we expected in the high country. With the trees finally cleared, I wanted to bring a contractor in to rough grade the driveway and take out the large tree stumps. I found a local guy who came recommended and he was prepared to do just that. Its fairly simple, the road just needs to follow the centerline of the area cleared of trees. Once major snowfall occurs, construction work will get tough.

As it happenned about that time, an associate told me that I should use my architect as a project manager and I should leave the driveway project to the project manager. Convicted by the soundness of the argument, as well as the practicing what I preach argument, I did just that.

My architect eagerly assumed the responsibility and took charge. It turns out that the architect doesn't believe in the wisdom of hiring contractors except through the bid process. In truth, he takes a rather dim view of the entire contracting industry. The only way to work with a contractor, in his opinion, is with a rigorously defined job scope, well defined bids and regular inspection. Those things of course require a scope of work and a job walk, which do take time.

To make a long story short, we now have 30" of snow on the ground and no construction driveway. This lack means we cannot drill the well and cannot do the geotechnical work for the house foundations and septic system. Without those things, a building permit will not be issued. Chances are, our schedule took a fairly a hit. That is, if we had a schedule.

On the other hand, we have defined the job the driveway contractor needs to do. Progress can be monitored and we can have some assurance that I will be getting good value for my money.

Now as an owner through this process, I was a bit frustrated. The job is straightforward and the costs low. We are not risking much in the overall CAPEX budget and time is valuable.

As the owner, I can override the architect and say "Just get that guy out there and get it done. I don't care whether we save a few hundred dollars." But that means in our first collaboration as owner and project manager, the owner says "I don't trust or accept your judgement."

But what do I hire a project manager for, if not his judgement?

I Am Legend

2008-01-04T09:31:00.000-08:00

Over the holidays, I and my family went to see the movie, I Am Legend. Loosely adapted from the novel of the same name by Richard Matheson, the movie owes more to influences by H.G. Wells The Time Machine and modern Hollywood sensibilities than to the novel.

In any case, it was an intense movie and will certainly keep you awake and on the edge of your seat. But what really struck me was the climactic scene at near the end of the movie. The hero, muscularly acted by Will Smith, has discovered a cure for the plague which has turned humanity into combination vampires/ghouls. He is holding the vial which can cure the plague, allowing things to be set right and a new day of hope dawning. But the leader of the night people, full of anger, rage and hate, continues to hurl himself against the transparent plexiglass wall which holds Will Smith safe from the attack.

It is extremely painful to the leader of the night people, but he continues to hurl himself against the plastic wall while a horde of his followers gather behind him. Soon the wall is cracking and visibly breaking down. Will Smith pleads with him to stop, to allow him to save the world from the plague. But there is no stopping. The wall continues to break down while outside the night people gather, intent on the pleasure of tearing Will Smith to pieces. Resigned to his fate, Will pulls the pin on a grenade and waits for the inevitable inrush of hate, knowing that he will exact his revenge.

What struck me as I watch it was the sense that this is so much like project work. I have been there so many times at the end of projects. We have run out of money and out of time, rational thought and considered judgement have long departed. There is nothing left but emotion and sheer will. If you get in my way, I will just go right over you, whether you are right or wrong, good or bad.

We have all disappointed each other and failed each other so often that we just don't care any more. The Owner, the Contractor and the Engineer just throw themselves at each other no matter how much it hurts and how little it helps. And we all pull the pins on our grenades so that we don't go down alone.

And then it is over. The sun comes out. We can all imagine the lawyers, accountants, and auditors moving onto the scene. They have not yet begun to bayonet the wounded and strip the dead, but it will come.

And then we go do it again. Another project comes along and we eagerly wait for it. It is almost as if we can't wait to feel our shoulders hitting that hard wall and the rush of that emotional charge. If you have done projects like I have, I recommend the movie to you. See if you don't feel it too.

Best Places to Work

2007-12-18T10:20:00.000-08:00

We participated in a contest sponsored by Colorado Biz magazine this year. It was about being "The Best Place in Colorado to Work". Basically they have a questionaire that a company's employees fill out anonymously on the internet. They then take the results of that poll and subject it to some proprietary formulas, with the resulting company rankings announced.

We did fairly well, coming in #13 (lucky number) in the rankings. I have to admit that I felt proud of that ranking. We also get a statistical analysis of the responses, again with total anonymity for the employees.

They have a nice awards ceremony where they announce the rankings, a bit like the Academy Awards. Acceptance speeches strictly kept short. I even wore a jacket, no tie however. It seemed that a key element in companies that ranked higher than ForeRunner centered on allowing dogs to come to work. A "dog friendly" policy seemed to be what it took to be a "Best Place in Colorado to Work".

Being a good place to work is something that I do take very seriously and it is one of the four main elements in our business plan. I don't want to give it just lip service, but be serious about it. But what does that mean? What is a good place to work? How do you become one?

In my earlier life I was a controls engineer, so of course, all my instincts tell me that you need a feedback loop to achieve any goal. You must measure the variable you wish to control. You then compare that measurement against where you want to be and take a corrective action. Then you measure that variable again, repeating the process. So what measures a good company to work for? (Sorry about the dangling participle.)

While I applaud Colorado Biz for sponsoring this contest, I don't think that a "dog friendly" policy weighs heavily in most peoples thoughts. But I could be wrong. How do you know? We had about 70% of our employees take the poll, which was a high percentage among those companies participating. But what about the 30% who didn't participate? It is their workplace also. Would their participation have skewed the results?

Of those who did participate, 100% of them agreed that they were proud to work for ForeRunner. I admit this made me very proud of this company. It says that 90 out of 90 people are proud to work here. Before this, I wasn't sure that you can get 90 out of 90 people to agree that the sun comes up in the east.

In any case, we are serious about this being a good place to work. Like almost all the important things in life, you can't define it or come up with a checklist that determines it. But you know it when you see it.

Energy Independence

2007-12-17T13:18:00.000-08:00

The latest issue of the Denver Business Journal had a good editorial on the energy business in Colorado, and by extension, the entire Rocky Mountain region of North America. It concerned the current battle locally over allowing drilling on the Roan Plateau north and west of Rifle, Colorado.

The editor, one Mr. Westergaard by name, made a serious point. Energy independence is important to the US. A lot of the energy we need and rely on is controlled by political entities that are unstable at best. Because of that fact, we are forced to be "friendly" to some rather odious people. And when they step too far over the line, we are forced to put our people in harms way. Balanced against that brutal reality, we obsess over whether some fly fishermen will need to drive past pipeline scars on the way to their fishing hole.

As it happens, our local paper ran a five part series on the energy industry in Colorado last week. It was well done and ran to some 25 pages. As these things go, it was balanced and fair. But as so much of modern media, it was long on emotion but short on reason and logic.

Energy use is not an addiction, it is not a morality issue. Human life without access to large quatities of cheap energy is brutal, unpleasant and often short. A priviledged few live well at the expense of multitudes whose muscle power feeds that priviledge. "Green" renewable energy may be a reality in my grandchildren's lifetimes, but they are stalking horses for political agendas today.

As a culture, we need to continue to explore and work on better ways to generate and use the energy we need. But to pretend that we will not continue to require ever increasing quantities of hydrocarbon energy into the foreseeable future is to lie to those who depend on us. Those of us who are professionals have an obligation to speak the facts to the public on this issue.

I Hate to Bid

2007-12-03T15:00:00.000-08:00

We got an invitation to bid on a project the other day. It is pretty much in our sweet spot, or at least what we perceive is our sweet spot. It is the size project and the type of project that we do very well at. The problem is that they want a lump sum bid. Not only do they want a lump sum bid, but there are a total of 8 bidders. What do we do?

Let it be said that this is a large client and a big player in our industry. We can't ignore them. We must be responsive. So like good little contractors we will sit down with the voluminous paper provided and sharpen our pencils.

But I need some emotional release. I just hate this bid crap, it can really get me going. Bidding engineering is bad enough, but getting bids from 8 engineering companies? I am the type of person that builds a 500 page novel out of a single incident. I infer an endless series of things about something like this. They come flooding into my mind in situations like this.

Let me tell you my story. It is a story about hopelessness. It is a story about there being no way to win here. This is a losing hand all the way around. What are our options?

First, we can decline to bid. After investing all that marketing and relationship building energy, we decline the opportunity to do business. Procurement people really don't like that. And in a company that bids 8 engineering companies on a routine project, procurement obviously carries a big stick.

Second, we bid but put in so much contingency that we're safe. We know we won't get it but at least we are responsive. Well we have just created an indelible impression in the clients mind that we are a "high priced" firm. You don't want that hanging on your head. In this business, it is easier to overcome a moral turpitude conviction than a reputation for being "high priced".

Third, we bid the specification as we think the client intended it. Always a dangerous option, we put together a bid that allows enough time and money to do the project with the inevitable delays, additions, changes and other cost/time disadvantages that we know will occur. Given 8 bidders, this is virtually guaranteed to be a waste of time for us unless we really miss something and make a bad mistake.

Fourth, we bid the specification as written. An even more dangerous option, we put together a bid that takes advantage of what is actually written and bring a lawyer's sensibility to it. We put a good strong contracts person on the project to enforce the contract. We may well win the bid, but almost certainly lose the client.

I think what bothers me most is what I see as a lack of respect. As professionals, respect is important to us. Obviously the options above are broadly drawn, but I think valid as to our options. As a professional, as an engineer, I think the third option the proper way to go. I have been around long enough to feel comfortable about that being the general feeling among practicing engineers.

But in the situation we are placed in, that is a foolish way to proceed. We are forced to act in a way that is against our professional judgement. But that is precisely what we offer to the world, our professional judgement.

As an engineering service company, we are totally dependent on our clients. Business is very Darwinian. We will become whatever the market requires us to be. Whenever we are placed in a bidding situation by our clients, I am reminded of that fact. And I admit to a great deal of discomfort with that unpleasant fact.

Picking an Architect I

2007-11-27T07:41:00.000-08:00

After 30+ years of marriage, my wife and I decided to tempt fate. We are going to build a house. Despite well meaning advice from friends, we march forward into a task that brings to mind a phrase about fools and angels.

The first part is easy. Easy, that is, if you ignore the financial part of it. But getting land is the easy part. My lust for land knows no bounds. I look at "Land For Sale" ads with the same interest others might view centerfolds or Gucci handbags. But with land in hand, what next?

To build a house, you need an architect. How do you pick an architect? That is a question for me that literaly drips with irony. This is my money, this is my house and this is my wife that I want to be satisfied with the process and the end result. I must pick a professional to design something that is near and dear to my heart. If there are any clients reading this, they must be smiling.

In any case, I got a book for my wife to read called"How To Work with an Architect". There was a lot of talk about communication, as you would expect. And that is the essence of any design process. Those of us who want to build things know how to use them, in this case, we know how to live in a house. But we don't know how to design a house. A skillful architect needs to know how to listen to our conversation about living in a house, and then figure out what that means.

Our satisfaction with the house will be based on two things. First of all is our ability to articulate our most important information about how we live and how we want to live. Information about how much money we want to spend and what kind of time spans are involved. We need to as clearly as possible, tell the architect what our vision is for our house.

Second of all, and of equal importance, is the architect's understanding hearing of our vision. And then his taking of that combination of needs, money and time to produce a design that fits our needs.

The real heart of the book however was a series of checklists that served to define the contractual relationship between the owner and the architect. The checklists were all about setting very objective criteria in the design process. The architect was tied both financially and contractually to a very specific vision of a house. Before the first serious conversation took place between the architect and the owner, the architect was incentivized to spend as little time as possible on our house or with us. He was incentivized to produce as simple and as basic a package of drawings as possible. Because of the nature of our business relationship, the likelihood of the architect taking much ownership in the project is not high. He will want to get in and then get out of the project in the minimum time possible.

After the architect produces his design, we are going to be working with a construction contractor for some 9 to 12 months. Once we have committed to that contractor, we will be spending some 20 to 40 times the amount of money with the contractor that we spent with the architect. Once we have committed to that contractor, that contractor will have the power in the relationship not us as the owner. Every contractor we work with is going to be much more sophisticated than we are about where cost and quality can be cut without being seen.

Having spent my working life designing and building unique "one of" projects that were very important to the owners of those projects, I ignored the advice of the book and its checklists. Luckily my wife and I agreed on our choice of an architect. But I chose him for two basic reasons. First, because he had no set fee for the work, but simply charged by the hour. He is not going to be trying to economize his time to maximize his profit margin.

Secondly, he came across as someone who would listen to what we wanted. He talked about how the type of design would dictate what drawings were needed. He talked about the need for the architect to stay involved during construction to make sure that the design intent was followed and that no compromises in construction quality were allowed without our knowledge.

I have to tell you that he was preaching to the choir.

180 on Natural Gas

2007-11-26T10:44:00.000-08:00

Is there any business that is as big a political football as the energy business? And is there any part of the energy business that is subject to such wild swings of emotional hysteria as that part of the energy business associated with natural gas? I suspect that the nuclear business might be, but natural gas is close behind. Like the Wilson sisters of Heart, they are the wild sisters of the energy business.

It was well within my working lifetime, the late 1970's, that our political establishment passed laws that forbade natural gas to be burned to generate electrical power. We were sure that we were running out of natural gas and we just knew we shouldn't waste it to generate electrical power. We had plenty of coal back then. And the climate threat that we were all worked up about was nuclear winter. Sober scientific opinion envisioned glaciers over most of the United States.

Now the political establishment, as well as Oprah and Al, is worked up about global warming. In 30 years our future has changed from freezing to death to drowning when all the glaciers melt. Instead of forbidding the use of natural gas to generate electrical power, it is now being mandated.

Is this just political theater, or should we be concerned? Everybody has an opinion, but facts seem to be in short supply. The facts haven't changed in the past 30 years, but their interpretation has completely changed.

It may be political theater, but it has real consequences. Assuming $ 30/ton PRB coal delivered, it delivers a kilowatt of electricity for just under 2 cents. Assuming $ 7/MMBTU natural gas, it delivers a kilowatt of electricity for 5 1/2 cents. This is only the energy cost of a kilowatt, but it goes up over 125%.

Given today's focus on reducing CO2 emissions, the two wild sisters, natural gas and nuclear, are the only game in town for truly significant energy generation. While solar and wind are the current darlings of the energy business, a 1,000 megawatts of either take up a lot of real estate with very unattractive mechanical structures. Also you don't pull a 1,00 megawatts of energy out of an ecosystem without altering its micro-climate. How can that not become a worrisome problem in the future.

Junior High Deja Vue

2007-11-16T08:59:00.000-08:00

I just had a conversation in the hallway with one of our discipline managers. I had just come out of our weekly business development meeting, and he asked how it had gone. In a flippant mood, I answered that, "It had gone just like it always did. Business development meetings reminded me of bathroom conversations in Junior High."

He looked at me strangely, as you might imagine, and I am sure went back to his office and worried about the management of the company that he worked for. I hope he is not dusting off his resume. But I can't help it. I have been involved in the sales of engineering work for getting close to 30 years now. And it just fits. I can't help thinking about it in those terms because it fits so well.

The language is almost identical, with phrases such as "Do they like us? What do they think of us? Did we make them mad? How do we get them to like us?", being used all the time. The situation is similar as well. Our clients and ourselves are very similar, yet very different. We need each other but don't understand each other. Generally our meetings with each other are marked by emotional awkwardness and a certain tension.

We went to the same schools, to outward appearance we do the same work and are in the same industry, but we have become different from each other. We really don't understand what is important to each other in our business lives. Our distrust and fear of vulnerability to the other prevent us from virtually ever discussing or talking about the real issues that impact us.

The fact that we are technical people working in business compels us to think about our relationship in strictly objective measures. But who among you on the client side really believe that selecting an engineering service company can be done on a spreadsheet? Who among you on the engineering service side have found your best clients to be those with the highest profit margins?

A successful client/engineering contractor relationship is a powerful force that can accomplish great things. But that relationship is built upon what any other relationship is built on, i.e. trust, shared goals, openness, integrity, a willingness to believe in the righteousness of the other. Relationships don't happen overnight. They happen slowly over time, because relationships only happen when we make ourselves vulnerable to the other party. Being vulnerable takes time because we can get hurt when we are vulnerable. Client careers can be damaged. Engineering service companies can be put out of business.

And that is why business development is like junior high. In junior high, we begin to learn, as people, how to be vulnerable to each other.

CO2 Emission - Is it serious?

2007-11-15T08:53:00.000-08:00

There have been a few interesting clouds in the sky the past few days. I think that they are important, but I don't quite know how or why. Cases in point:

One of our regional electrical power utilities had a serious application for a large coal fired power plant to be built in our region rejected by that state's utilities commission. The reason stated for that application's rejection was its contribution to CO2 emissions. The power is needed and this plant's application has been moving forward for some time.

The Governor of our state came out with a very public statement about how Colorado was going to be serious about CO2 emission reduction. Even more interesting was the presence of the CEO of our electrical power utility at the side of the Governor. That CEO runs an electrical power utility that is very heavily dependent on coal fired power generation, and is in fact mid-way through the construction of another 1,200 MW of coal fired power generation.

A report on how our states utilities commission agrees with the concept that regulated utilities should be allowed to make an increased rate of return based on that utilities contribution the economic benefits resulting from enhancing Colorado's health and welfare. CO2 emissions were mentioned.

At the Oil Shale Symposium hosted by the Colorado School of Mines recently, the major concern voiced by industry, academic and governmental participants was the anticipated increased CO2 emissions.

I don't know what this means. But I have some ideas. First of all, CO2 emission reduction is going to become important. No matter the science on global warming, CO2 emission control is here. It appears that the culture has decided that we need to control CO2 emissions and serious decisions with real financial consequences are going to be made on the basis of that concern.

On a very parochial basis, this is probably good news for ForeRunner for a number of reasons:

Control of CO2 emissions means a lot more complexity to doing projects. This is obviously good for a company that does projects. On any energy project, the need for outside specialized project services goes up as project complexity increases. That rise in need for our services is not proportional, but exponential.

In a world where CO2 emission needs to be controlled, natural gas is the fuel of choice. Since that is a very large part of our business, that is good for us as well.

The Rocky Mountain Region is rich in untapped natural gas reserves. We are a major player in the Rocky Mountain natural gas service market. It looks like Rocky Mountain natural gas has another strong driver for its continued health and expansion.

Bronco Pipeline

2007-11-14T11:14:00.000-08:00

The news today in the Rocky Mountain energy patch is the Spectra's proposed new pipeline, called the Bronco Pipeline. As I understand it, it will take natural gas from Meeker or Opal as the supply terminus of the line and move natural gas to the west coast, nominally the Malin Hub on the PG&E System in Oregon. This follows onto proposed extensions by various companies of the Rocky Mountain Express Pipeline to various points on the East Coast.

All of these projects are important because they move natural gas produced in the Rocky Mountain Region to markets for that gas. Energy development in the Rocky Mountains has always lagged, primarily because the price of the energy produced in the Rocky Mountains has almost always been low relative to that produced in other parts of North America. Not only has the price of the energy been relatively low, but the cost of producing it has been relatively high.

While the cost is high for a number of reasons, the low price of the energy is simply that the Rocky Mountians do not have much of a market for that energy. The local market is pretty small relative to the amount produced. As a case in point, most of the natural gas produced in the Rocky Mountains must be transported to the west coast or to the midwest to be used. So pipelines are very important. And we don't have enough of them, so plans for more of them are always to be encouraged. Particularly for those of us who build them.

The Barnett Shale around Dallas, Texas has become the hottest play in the United States, not because the resource is better than those found in the Rocky Mountains, but for many of the reasons that have held down Rocky Mountain production.

First of all the gas is accessible to strong natural gas markets. It can be moved to Gulf Coast or midwest markets without a need for costly new pipeline capacity. Secondarily, the local infrastructure is friendly to natural gas production. Plans for new production are met with a positive reception rather than hostility. As a producer, if you are going to get lower prices for your product and it is going to cost more to make your product, you don't really want to be everyones' enemy as well.

Procurement and Other Evils

2007-11-12T12:15:00.000-08:00

In one of the many visits I make to what we hope to be new clients, I met with a group of the that Owner Company's people. One of those folks was the Director of Procurement. He was a very nice fellow and looked to be very competent with the best interests of his company at heart.

Most of the conversation centered around the great difficulty this client was having in bringing projects in on budget or schedule. These fine people were being savaged by their management because of their perceived inability to manage projects, i.e. costs were not in line with budgets and schedules were not being met.

Just as hammers see nails everywhere, the Director of Procurement was sure that better purchasing practices would be a large part of the solution. He was interested in how contracts and purchase orders could be better structured to achieve cost protection for his company. As is often the case with Corporate Procurement, the focus was on risk avoidance rather than risk management.

While the subject of why projects regularly overrun their budgets is something that we could talk about for days, (in fact I have, see my last two columns in the ForeRunner Precedent) I experience is that procurement is more often the problem than the solution. Projects revolve around two centers of activity; purchasing and construction. Everything on a project is subservient to those two activities. So purchasing is very very important to projects.

But like everything, projects need to be managed. That is the function of Project Managers. In my view, everybody and everything in a project reports to the Project Manager. When that is not the case, projects suffer. Projects especially suffer when the most important elements, purchasing and construction, are outside the control of the Project Manager.

Going back to my meeting at the possible future client. The organizational titles for the project people at the meeting were "Manager" and "Supervisor". The organizational title for the procurement person was "Director". The client was very open and honest about their difficulties in successfully executing projects. I think the titles of the people in that meeting say it all.

Are We Professionals?

2007-11-06T15:35:00.000-08:00

One of our employees asked the question; "Why don't we stamp all of our drawings?" A simple question, but one full of implication. The statutes of our state, Colorado, are quite clear, at least to the non-legal mind, about the issue. Those regulations state that engineering drawings are to be stamped by a Registered Professional Engineer, registered in the State of Colorado. Very simple and very clear, again to the non-legal mind.

Of course, there is a standard litany of reasons why we don't:

Standard practice; Working with a wide variety of engineering contractors over the past 30 some years, I have never seen it done as a standard practice except where required by a permitting authority or by the client.

Owner Exemption; Owner's of engineered facilities are specifically exempted from the requirement to stamp drawings. As contractors to those Owners, we are exempted as well.

Specialized Clientele; Since we do not work for the general public, but for a specific knowledgeable clientele, we do not fall under the rules whose intent is to protect the general public in the application of a specific body of knowledge, i.e. accountants, lawyers and doctors.

But I took the question to a lawyer whose practice is the engineering profession. He said that he had never been asked that question before. Imagine that!

In any case, he rendered an opinion for us that stated the rules were unclearly drafted, and that in his opinion, we were operating in a legal and ethical manner without stamping drawings. So the system works. The regulation says "Stamp your drawings." The lawyer says, "That isn't what the law says."

But the real question is whether engineering is a profession or is Engineering a Profession. If engineering is a profession, then we mean that we are white collar knowledge workers. Our interaction with the world, our projects and clients, is governed by contracts and generally accepted rules of doing business in the modern world. If Engineering is a Profession, then we are a Profession, and entitled to be treated as such.

As an example, a drug prescription cannot be filled without a Physician's signature. Should it be possible to purchase a pressure vessel or control valve without an Engineer's signature?

Buying up Engineering Companies

2007-11-05T09:21:00.000-08:00

Headline this morning is that Jacobs Engineering, a 48,000 headcount company, is buying Carter Burgess, a 3,200 headcount company. Does it seem to you that engineering companies are being vacuumed up into a few large mega-companies? By most measures, a company with 3,200 professional knowledge workers is quite large. Yet its assimilation into Jacobs will barely nudge total employment in that company.

Seeing all these engineering companies being acquired makes me wonder, "Are these acquisitions the animal spirits that signal a market top?" As someone who spent a couple of years selling real estate in the eighties, I am very sensitive to any hint that the market for engineering services is going down. After all, the market wisdom that I subscribe to says that a hot market is good evidence that the top has been reached. And if a top has been reached, that means that the future is down.

Yet, in this case, I think that the people buying up engineering companies have got it right. Our society has under invested in infrastructure, especially energy, for so long that we have a lot of catching up to do. Most reasonable people would judge that the balance will change soon and investment in infrastructure will again be a driving force in the domestic economy.

Conditions certainly seem favorable for such a change. Our economy is awash in investment capital today, available at very low interest rates. Instead of investing in sub prime residential real estate, investment in solid investment return genereating assets is growing more attractive. That has got to be very positive for capital spending, which is what provides an attractive environment for engineering companies.

It is also true that our political establishment is coelescing around the idea of reducing US dependence on foreign sources of energy. It does seem to be an idea whose time has come. While the idea of complete energy independence is whistling past the graveyard, it is a fact that the North American continent can produce a great deal more energy than it does today. But to produce that energy in the safe and environmentally acceptable fashion will not only be expensive, but will require large sophisticated project organizations that can operate on a large scale with access to a broad spectrum of intellectual resources. Those organizations must also be sophisticated in dealing with the spectrum of public stakeholders who will be affected by such projects and who must be appeased for them to go forward.

Which brings us back to Jacobs, whose market is primarily large capital intensive energy projects, and their purchase of Carter Burgess, strong in infrastructure permitting and planning. Perhaps the market is indeed evolving in its mysterious way to create organizations necessary for the coming century. On the other hand, most evolutionary developments are dead ends. Put down your money and make your bets!