CONTACTS 
0201 - Corps of Engineers, SFD            415 977 8400 fax 8483
020101 - Mr. Thompson F. Keesling, Architect; Assistant Chief =415 977 8473
020102 - Construction Operations Division =415 977 8480
0202 - Corps of Engineers, SFD            415 977 8400 fax 8483
020201 - Mr. Max R. Blodgett, II, P.E., L.S.
020202 - Chief =415 977 8444; Construction Operations Division =415 977 8480

SUBJECTS
COE Evaluation Communication Metrics
Analysis, Review, Research
Institutionalize Communication Metrics
CE HQ Evaluation
Calculate Risk Management Exposure NPV

1007 -
1007 -    ..
1008 - Summary/Objective
1009 -
100901 - Follow up ref SDS 42 0000, ref SDS 41 5180.
100902 -
100903 - Received a proposed letter from Tom to Jim Jones.  Developed some
100904 - figures below for review by Tom that provide a format to evalute cost
100905 - savings per Jim's request on 970926, ref SDS 40 0552.  Transferred the
100906 - analysis in this record to the file at ref OF 1 2435.
100907 -
100908 -     [Completed analysis at ref SDS 44 5562.]
100910 -      ..
100911 -     [See Tom's edits at ref SDS 50 3994.]
100913 -      ..
100914 -     [See submission of final version to Jim Jones, ref SDS 53 2979.]
100916 -      ..
100917 -     [On 971011 added edits to correlate limited span of attention to
100918 -     span of management, ref SDS 54 1221.]
100920 -  ..
1010 -
1011 -
1012 - Discussion
1013 -   ..
101301 - Tom said he sent an email yesterday.  Since I did not get it, he
101302 - will re-submit.
101304 -  ..
101305 - We discussed the possibility of Tom talking to Merry Goodenough about
101306 - estimating the savings to the government on the claims by Dutra, based
101307 - on the SDS record prepared to-date.  I explained the idea of crafting
101308 - the record as an appellate brief, and so it should directly assist the
101309 - parties in resolving issues discussed in the record.
101311 -  ..
101312 - It may be that COE counsel have not yet had the opportunity to review
101313 - the record in sufficient degree.
101315 -  ..
101316 - Tom seemed to indicate he will try to discuss this with Merry.
101317 -
101318 -
101320 -  ..
1014 -
1015 -
1016 - 0827 received Tom's letter
1017 -
101701 - Received ref DRT 1 0000 from Tom, per above discussion, and our
101702 - meeting on Monday, ref SDS 42 0000.  Tom proposes the following
101703 - message to Jim:
101704 -
101705 -     It is very dificult to determine the cost savings for the
101706 -     application of Communications Metrics within the district
101707 -     organization without a longer test period for evaluation.
101709 -      ..
101710 -     However, I feel confident that if there was a format that you
101711 -     wanted the information presented in that that might help focus my
101712 -     efforts to provide the cost information.  I am sure that when
101713 -     Project Management was integrated into the Corps of Engineers that
101714 -     there was a cost benefit part of the decision making process and a
101715 -     similar one done for the decision to utilize the Resident
101716 -     Management System. Again if those could be furnished to me it
101717 -     would help in me preparing the cost analysis that you requested
101718 -     previously and which I had  provided a narrative response earlier.
101719 -
101720 -         [On 971001 prepared memo to use Tom's ideas in memo to Jim
101721 -         Jones. ref SDS 45 0000]
101723 -  ..
101724 - Analysis:
101725 -
101726 -     1.  If Jim is really interested in this iniative, it does not
101727 -         matter much what we say.
101728 -
101729 -     2.  If he is getting tired of Communication Metrics, and other
101730 -         stuff has his attention, it does not matter what we say.
101732 -          ..
101733 -     3.  If we have a shot, we want to be positive, present specific
101734 -         areas of savings and ask him how he wants it formatted.
101736 -          ..
101737 -         Since we have already acknowledged it is difficult to estimate
101738 -         savings exactly, and Jim has made the same point, maybe we can
101739 -         avoid re-stating it again, and simply identify areas of
101740 -         savings based on his ideas.
101741 -
101742 - ..
101743 - Developed following analysis of cost savings from Communication
101744 - Metrics, per Jim's request at ref SDS 40 4225, and put it in the file
101745 - ref OF 1 2435, mostly as the "Attachment" at ref OF 1 1835.  It
101746 - reflects Max Wideman's suggestion to focus on cost savings as the best
101747 - measure of added value, ref SDS 19 2294.  Developed measurement of
101748 - cost savings by reducing "rework," which Max cited at ref SDS 21 1817.
101749 -
101750 -         [See edits next day at ref SDS 46 line 160.]
101752 -      ..
101753 -     Dear Jim,
101755 -      ..
101756 -     Per discussions last Friday and my email on Sep 4, here is an
101757 -     estimate of savings from Communication Metrics.  I am not sure
101758 -     about differentiating project from operations costs, since the
101759 -     latter are calculated as a multiplier of project budgets. Seems
101760 -     like if we save on project budgets, then savings will acrue to
101761 -     operational budgets based on the multiplier.
101763 -      ..
101764 -     In any case, savings on operations can be estimated based on the
101765 -     common value of communication for operations and projects.  In
101766 -     other words the benefit of Communication Metrics to weekly
101767 -     progress meeetings, for example, would be similar for District
101768 -     staff meetings. Organizing the record and analysing alignment of
101769 -     project decisions, would be valuable for operations, as discussed
101770 -     in the notes of your telecon with Welch on Sep 26, ref SDS 39 line
101771 -     263.  We can therefore estimate operation budget savings by
101772 -     calculating savings on the Oakland Harbor project, and applying
101773 -     an adjusted percentage to the cost of operations.
101775 -      ..
101776 -     This method results in the following estimated savings:
101777 -
101778 -                                               Original   Estimated
101779 -                                               Budgets   Adds  Final
101781 -      ..
101782 -     Direct cost of Oakland Harbor was:             $42M   10  $52M
101784 -      ..
101785 -     COE Supervision and Admin was 8%:                3M    1    4M
101786 -
101787 -        Total estimated final cost............................ $56M
101788 -
101790 -      ..
101791 -     Cost Avoidance
101792 -
101793 -        Navy Sewer Line                     .4M
101794 -        Soft to Hard Polygon Change        1.0M
101795 -        Todd/Schnitzer Wing
101796 -          Contaminated Materials Claim     2.0M
101797 -                                          -----
101798 -          Total Cost Avoidance.............3.4M ................ 3.4M
101800 -      ..
101801 -     Cost Savings on Budgets
101802 -
101803 -        NSL                                 30K
101804 -        Soft to Hard Polygon                60K
101805 -        Other issues                        68K
101806 -        Re-work                            170K
101807 -                                          -----
101808 -                                           328K       328K
101810 -         ..
101811 -        Progress Meetings for 2 years     $117K
101812 -        Re-work            "  "  "       1,054K
101813 -        Litigation         "  "  "         780K
101814 -                                       ---------
101815 -                                         1,951      1,951K
101816 -                                                  --------
101817 -          Total savings on budgets................  2,279K       2.3
101818 -
101819 -                                                               ------
101820 -        Total savings on project............................... $5.7M
101821 -
101823 -      ..
101824 -     Communication Metrics Cost for 2 years
101825 -
101826 -               200K x 2 - 50K               400K
101828 -      ..
101829 -     Welch made special effort on Oakland to demonstrate
101830 -     validity of Communication Metrics.  Allow additional
101831 -     budget for normal staffing
101832 -
101833 -                                            150K
101834 -                                          -------
101835 -        Total cost of savings............. $550K                  .6M
101837 -      ..
101838 -     ROI.........................................................  9
101839 -
101841 -      ..
101842 -     District Operation Savings
101843 -
101844 -     Estimate 5.7M savings on $56M adjusted project is approximately
101845 -     10% savings.
101846 -
101847 -     Assume Oakland Harbor was unusual due to bankruptcy of contractor,
101848 -     and so savings was larger than typical project, so estimate 6%
101849 -     savings on typical projects. District operations may be less prone
101850 -     to communication errors for the reasons in the letter to Jim on
101851 -     970926, ref SDS 40 line 280. A conservative estimate is 4% savings
101852 -     on District operations.  The District budget is approximately $65M
101853 -     per year.  $20M is non-project outlay.  Savings then would be:
101854 -
101855 -        [See further analysis leading to 6% estimate, ref SDS 49 line
101856 -        170.]
101857 -
101858 -                .04 x 20M      =  $800K
101860 -      ..
101861 -     Estimated cost would be       200K
101863 -      ..
101864 -     The record on Oakland constructon operations indicates there is a
101865 -     good chance savings can increase by using Communication Metrics
101866 -     from the beginning of a project through the design phase.
101867 -
101869 -      ..
101870 -     Detailed Cost Savings
101871 -
101872 -     This has two components:
101873 -
101874 -         1.  Cost Avoidance, which is speculative
101875 -
101876 -         2.  Cost Savings on Budgets which reflects direct
101877 -             reduction in level of effort.
101878 -
101880 -      ..
101881 -     Navy Sewer Line
101882 -
101883 -     Marc McGovern, Construction Manager on Oakland reported
101884 -     Communication Metrics identified a solution to the Navy Sewer
101885 -     Line problem, ref DRP 2 line 834.  Over many months the
101886 -     Contractor identified a potential change due to alleged defects
101887 -     in contract drawings.  At the Progress Meeting on 961015, ref
101888 -     SDS 45 line 600, the contractor submitted a proposal for:
101889 -
101890 -          Extra Cost to stabalize slope per Dwgs.        $373K
101892 -      ..
101893 -     Analysis showed a possible basis for a changed condition, but
101894 -     Communication Metrics discovered alignment in the underlying
101895 -     record which had been overlooked that eliminated this cost.
101896 -     The contractor realized improved earnings at no increase to the
101897 -     Corps of Engineers.
101899 -      ..
101900 -     Corps of Engineers staff invested approximatley 100 hours in
101901 -     administering this matter in the three months prior to
101902 -     application of Communication Metrics.  It is estimated that at
101903 -     least another 100 hours would have been expended by the Corps
101904 -     but for the solution identified by Communication Metrics.
101905 -
101906 -             200 hours at $150/Hr                          30K
101907 -
101909 -      ..
101910 -     Partnering Supported by Communiction Metrics Yields Savings
101911 -
101912 -     Saving $400K and improving the Contractor's income posture
101913 -     advances partnering objectives.
101914 -
101916 -      ..
101917 -     Soft to Hard Polygon Change
101918 -
101919 -     From approximately October 1995 to March 1996 the contractor
101920 -     notified the Corps of Engineers it had encountered hard
101921 -     material at various locations where the drawings showed the
101922 -     material was soft.
101924 -      ..
101925 -     A series of RFPs were issued.
101927 -      ..
101928 -     The contractor responded to all RFPs at once on 960730, seeking
101929 -     a total of approximately $7M extra payment.
101931 -      ..
101932 -     The Corps maintained the contractor bid the same unit price to
101933 -     dredge in areas shown as "hard" as it bid to dredge areas shown
101934 -     as "soft," and so argued additional payment was not warranted.
101936 -      ..
101937 -     A major source of communication arose over the form of the
101938 -     original RFPs which requested a lump sum price for work that
101939 -     was bid as unit price. The form of the language became so
101940 -     embroiled as to cause the cost-sharing sponsor to argue on
101941 -     behalf of the contractor's cost request, despite the fact that
101942 -     the cost-sharing sponsor regularly voiced opposition to the
101943 -     contractor's claim.
101945 -      ..
101946 -     Communication Metrics was begun in September 1996.  Within a
101947 -     month or so it was applied to the Soft to Hard Polygon claim.
101949 -      ..
101950 -     Analysis showed:
101951 -
101952 -        1.  A number of mathamatical and contractual errors in the
101953 -            contractor's submission.
101954 -
101955 -        2.  Lack of alignment between the record of samples taken in
101956 -            the field that spawned the RFPs, and the sweeping scope
101957 -            of the RFPs which converted an entire polygon from soft
101958 -            to hard, rather than merely acknowledge, that a
101959 -            particular polygon may contain some material that is
101960 -            harder than it is soft.
101962 -             ..
101963 -        3.  Evident support for the Corps of Engineer's position
101964 -            that no increase in payment was warranted.  A strategic
101965 -            adjustment was recommended to withdraw the 3 or 4
101966 -            original RFPs and combine them into a single RFP #19
101967 -            with an express requirement to submit a unit price.
101969 -             ..
101970 -            This strategy transcended the hours, days and weeks of
101971 -            argument between the Contracting Officer's team and the
101972 -            contractor about application of FAR regulations.
101973 -         ..
101974 -         Total savings is approximately $7M.  We will estimate
101975 -         savings resulting from the contribution of Communication
101976 -         Metrics as:
101977 -
101978 -                                                      = $1M
101980 -          ..
101981 -         Additionally, approximately 400 hours was saved by the
101982 -         strategy of combining the RFPs.  This is computed as a
101983 -         week of the project team, as shown below:
101984 -
101985 -                           400 x $150                 =  $60K
101986 -
101988 -      ..
101989 -     Todd/Schnitzer Wing Contaminated Materials Claim
101990 -
101991 -     The contractor encountered underwater debris in an area of the
101992 -     work.  Communication Metrics aligned the record of conditions
101993 -     found in the field with the notice by the contractor and with
101994 -     contract provisions.  This supported a determination that a
101995 -     changed condition existed.  An RFP was crafted to enable the
101996 -     work to procede so that payment was equitable to the contractor
101997 -     and to the Corps of Engineers.
101999 -      ..
102000 -     The contractor refused to perform the RFP, claiming later events
102001 -     established that contaminated materials existed in the
102002 -     Todd/Schnitzer wings which required special handling at increased
102003 -     cost.  Due to communication mixups from not applying Communication
102004 -     Metrics RFP 20 was rescinded by the District, relieving the
102005 -     contractor from a direction to perform the work. Eventually, the
102006 -     contractor claimed $15M in extra payment was needed to perform
102007 -     additional debris removal work, estimated by the government at
102008 -     approximately $500K.
102009 -     ..
102010 -     Communication Metrics tracked conflicting promises and
102011 -     unsubstantiated contentions by the contractor claiming it had
102012 -     commissioned tests proving contamination.  Since this matter
102013 -     remains open, for purposes of this estimate the savings
102014 -     attributable to Communication Metrics is approximately:
102015 -
102016 -                                                        = $2M
102017 -
102019 -      ..
102020 -     Mud Bucket, Weekly Planning, Completion Schedule Update
102021 -
102022 -     During the short period Communication Metrics was used, it
102023 -     revealed the contractor was not performing a large number of
102024 -     requirements.  Problems that were being worked by Corps of
102025 -     Engineers staff were shown to be contractor responsibilities. A
102026 -     prominent example was the meeting on 961213 where the contractor
102027 -     presented an updated schedule with many pages of backup support.
102028 -     Communication Metrics revealed the backup did not support
102029 -     contractor projections and that the contractor either with
102030 -     deliberation or inadvertance misrepresented and concealed from the
102031 -     Corps of Engineers at that meeting on 961213, its true intentions.
102033 -      ..
102034 -     For this order of magnitude estimate, rather than explain every
102035 -     matter, we estimate savings as follows:
102036 -
102037 -           15 issues x 40 hours per issue
102038 -
102039 -                       450 x $150                     =  68K
102041 -      ..
102042 -     Progress Meetings
102043 -
102044 -     As a result of contractor difficulties leading to major claims by
102045 -     the Contractor, the Corps of Engineers began staffing weekly
102046 -     Progress Meetings with 10 to 15 people from Engineering,
102047 -     Contracting, Construction, Environmental, etc.
102049 -      ..
102050 -     This attendance posture was intended to improve "communication"
102051 -     among affected staff whose work may have been impacted by
102052 -     various issues.  It may have been intended to demonstrate
102053 -     heightened scrutiny and concern by the Corps of Engineers in
102054 -     improving performance by the Contractor.
102056 -      ..
102057 -     Communication Metrics demonstrated this level of attendance was
102058 -     unnecessary.  Better understanding was achieved through the
102059 -     meeting notes, and it was maintained through the record, rather
102060 -     than become distorted by constant recall from each attendee.
102061 -     Follow up was more rigorous and effective using the Action Item
102062 -     system endemic to SDS that supports Communication Metrics. As a
102063 -     result Chief Con Ops was able to order attendance restricted to
102064 -     RE, PE and the Communication Manager. The PM attended on
102065 -     occassion, however, as Herb Cheong's memo states, research
102066 -     prior to meetings and post meeting briefings by the
102067 -     Communication Manager ensured more thorough and productive
102068 -     meetings, ref DRP 2 line 736.
102070 -      ..
102071 -     A conservative estimate of cost savings assumes avoid 5 people
102072 -     for 1.5 hours per meeting for the 2 year duration of the job.
102073 -
102074 -            5 x 1.5 x 52 x 2 = 780 hours x $150       = $117K
102076 -      ..
102077 -     The more important contribution of Communication Metrics is
102078 -     making meetings productive, as discussed under re-work.
102079 -
102081 -      ..
102082 -     Rework
102083 -
102084 -     Authorities cited on 930216 recognize "rework" is a major source
102085 -     of cost escalation, ref SDS 3 4633, and on 970713. ref SDS 21
102086 -     1817.  Costs arise from errors of induction due to limited span of
102087 -     attention from analysis of organic subject structure on 910221,
102088 -     ref SDS 2 RR5I, and review of Jeremy Campbell's book, "The
102089 -     Improbable Machine" on 900303, ref SDS 1 5555, and increase over
102090 -     time as the information base tends toward entropy, per study by
102091 -     U.S Air Force Institute of Technology, see review on 970707,
102092 -     ref SDS 20 0108, and letter on 970929, ref DIP 8 0001, confirming
102093 -     discussions on 970926, ref SDS 40 3377.  The meeting with Intel on
102094 -     970728 shows the cause of rework. ref SDS 25 4818
102096 -      ..
102097 -     Landauer's paper on human cognition reviewed on 960324 explains
102098 -     complexity of subjects. ref SDS 7 8566
102099 -
102100 -         [On 971002 did more work on idea, ref SDS 46 2464.]
102101 -
102102 -         [See example from Web project on rework caused by lack of
102103 -         notice. ref SDS 55 1840]
102105 -          ..
102106 -         [On 970910 executives at major financial institution do not
102107 -         have enough time to think. ref SDS 35 3479  On 980416 firm
102108 -         reported reduced earnings due to increased operations costs.
102109 -         ref SDS 57 4269]
102111 -          ..
102112 -         [On 971008 received report from USACE covering these ideas.
102113 -         ref SDS 53 1273
102115 -          ..
102116 -         [On 980412 CBS News 60 Minutes broadcast a program segment on
102117 -         information overload causing widespread problems. ref SDS 56
102118 -         2085]
102120 -          ..
102121 -         [On 980511 report U.S. business productivity declined and
102122 -         unit labor costs rose dramatically. ref SDS 58 0000.]
102124 -          ..
102125 -         [On 980630 article on calculating cost benefit of knowledg
102126 -         tools. ref SDS 60 0606]
102128 -      ..
102129 -     The more common description of "rework" is "problem handling"
102130 -     discussed in a PM Network article reviewed on 951212, ref SDS 6
102131 -     4433 and when that fails, costs are either absorbed as "Murphy's
102132 -     Law" or litigation expense is incurred, ref SDS 3 line 267.  This
102133 -     estimate for rework looks only at costs that are absorbed, since
102134 -     litigation expense is considered separately.
102136 -      ..
102137 -     "Rework" in management reflects inability to attain closure on
102138 -     issues, as cited in the PMI presentation on 970910, ref SDS 35
102139 -     line 464, due to conflicts between decisions and the record that
102140 -     leak out over weeks and months.
102142 -      ..
102143 -     A common example are meetings where understandings among attendees
102144 -     are argued at length, per ref SDS 3 line 241.  Decisions are
102145 -     developed, reviewed, changed and changed again due to lack of
102146 -     alignment with controlling authority, e.g., the record of
102147 -     performance, contract provisions, policies, regulations, laws.
102148 -     Communication increases exponentially, new players come on the
102149 -     scene and no one knows original objectives because of a limited
102150 -     span of attention in human biology, ref SDS 32 line 224, which was
102151 -     described as "not having enough time to think" in the PMI
102152 -     presentation on 970910, ref SDS 35 line 468.  Of course people are
102153 -     thinking all the time. The real problem is that the number of
102154 -     things to think about exceeds the span of attention.
102155 -
102156 -           [Stanford closed its Project Office manned by best of best
102157 -           ref SDS 47 line 104.]
102159 -      ..
102160 -     Acrimony replaces thoughtful dialog, progress declines, posturing
102161 -     and belligerence permeate every aspect of communication, per
102162 -     experience at Chips with Lockheed, ref SDS 9 line 1022, and Intel,
102163 -     ref SDS 14 line 109, and on need for psychologists, ref SDS 5 line
102164 -     137.
102166 -      ..
102167 -     Communication Metrics reduces rework in two fundamental ways:
102168 -
102169 -        1.  It aligns understandings and therefore decisions with
102170 -            the complete record, including controlling authority.
102171 -
102172 -            This alignment process avoids the steady drip, drip of new
102173 -            and unforseen correlations that prevent closure under
102174 -            conventional practice because people to do not have enough
102175 -            time to think of all of the factors that impact success,
102176 -            ref SDS 35 line 476.  Technology makes it possible to apply
102177 -            expertise to identify more controlling factors
102178 -            prospectively, rather than wait to discover them through
102179 -            trial and error.
102181 -             ..
102182 -        2.  Action Items are scheduled and maintain visibility
102183 -            linked to original reasoning and factual basis, so that
102184 -            needed action is not forgotten by the arrival of new
102185 -            tasks each day.
102187 -      ..
102188 -     On Oakland, there are approximately 10 key players:
102189 -
102190 -                                                   Hrs/Week
102191 -                                               Planned    Actual
102192 -
102193 -        Project Engineer                           40       45
102194 -        Inspector Supervisors                      80       90
102195 -        Inspectors AE                             240      250
102196 -        Resident Engineer                           5       20
102197 -        Construction Manager                       10       22
102198 -        Chief of Construction Operations            2        6
102199 -        Asst. Chief Con Ops                         4       15
102200 -        Projct Manager                              5       12
102201 -        Design Engineer                             5       10
102202 -        Chief of Engineering                        2        5
102203 -        Contract Officer                            3       10
102204 -        Contract Specialist                         2        5
102205 -        Environmental Engineer                      2        5
102206 -                                                 -----    -----
102207 -            Total hours per week................. 396      495
102209 -      ..
102210 -     Actual time to manage the work is 25% above budgeted time, but for
102211 -     District staff the investment is 200% - 300% greater which causes
102212 -     significant reduced attention to other matters, snowballing
102213 -     reduced effectiveness on everything. [per suggestion by Morris on
102214 -     971007, ref SDS 51 7005]  This condition leads to cursory
102215 -     treatment and escalating reliance on "guess and gossip" cited in
102216 -     the Corps of Engineers report, ref DRP 2 3649, and in the NWO
102217 -     paper. ref OF 3 5821
102219 -      ..
102220 -     The amount of time lost due to rework can be calculated from the
102221 -     difference between the typical agenda prepared for meetings which
102222 -     reflects subjects that are recognized as material to performance,
102223 -     and the actual number of subjects "discovered" and tracked by
102224 -     Communication Metrics, per meeting with Intel on 970728,
102225 -     ref SDS 25 3002, and analysis on 970726, ref SDS 24 6639. A second
102226 -     factor is the number of links (citations, references) that align
102227 -     understandings in the record, since this represents specific
102228 -     conflicts that require corrections.
102230 -      ..
102231 -     The agenda for the 961001 Progress Meeting had 10 substantive
102232 -     items, ref DIP 3 line 19, per ref SDS 10 8388.  This is a typical
102233 -     agenda for weekly progress meeting.
102234 -
102235 -         [See telecon with Bill DeHart on 971005, ref SDS 48 4921.]
102236 -
102237 -         [See support from telecon with Max Wideman, ref SDS 51 5920.]
102239 -      ..
102240 -     Communication Metrics actually tracked the following factors at
102241 -     weekly progress meetings (using new SDS utility, ref SDS 26 0001):
102242 -
102243 -                       Partici-        Sub-  Cita-  Action
102244 -         Date   Time    pants  Words   jects tions  Items
102245 -
102246 -         961001 1000      19    1125    40     10      7
102247 -         961009 1300      19    1861    47     29      9
102248 -         961015 1000      15    2193    61     32      7
102249 -         961022 1000      21    2974    57     24      7
102250 -         961029 1000      15    2898    60     44     12
102251 -         961105 1000      14    3671    65     36     11
102252 -         961112 1000      14    4553    56     91     16
102253 -         961119 1000      13    4377    48     93      4
102254 -         961126 1000      12    2811    39     59     11
102255 -         961203 1000      11    1416    27     30      2
102256 -         961209 1330       4    3162    31     69     14
102257 -         961219 1000       4    2521    28     48      9
102258 -         961230 1330       4    1956    32     37      6
102259 -         970106 1200       6    2626     6     32     15
102260 -         970106 1400       6    1753    22     27      6
102261 -                                      -----  -----   ----
102262 -                                       619    661    136
102263 -
102265 -          ..
102266 -         Since, as noted, common practice identifies about 10 subjects
102267 -         per meeting, then for these 15 meetings, a total of 150
102268 -         subjects would have been worked.  Communication Metrics
102269 -         identified 619 or 469 more.  This reflects additional rigor of
102270 -         Communication Metrics that identifies correlations and
102271 -         implications so that rework is avoided, per meeting with
102272 -         Intel, ref SDS 25 5920.
102274 -          ..
102275 -         Citations should be added to this amount because they
102276 -         reflect alignment which is impossible under conventional
102277 -         management and leads directly to re-work.
102278 -
102279 -                  Additional Subjects     469
102280 -                  Citations (alignment)   661
102281 -                                         -----
102282 -                                         1130
102284 -          ..
102285 -         Assume each missed subject and alignment results in one (1)
102286 -         hour of re-work.  Therefore, Communication Metrics produced
102287 -         savings of:
102288 -
102289 -                  1130 x $150   = $170K
102291 -          ..
102292 -         Total savings on project for 2 year job.
102293 -
102294 -               3 x 4 x 2 x 170  = 4,080
102295 -
102296 -            Assume normal bell curve and that period when Communication
102297 -            Metrics was applied was at or near peak activity, so that
102298 -            actual savings is only 30% of peak rate.
102299 -
102300 -                    .3 x 4080                          = 1,224K
102302 -          ..
102303 -         Average savings per week over 3 months
102304 -
102305 -                  $170/12 = $14K
102307 -          ..
102308 -         The weekly savings from Communication Metrics correlates
102309 -         with increased expense for Corps of Engineers staff that
102310 -         was otherwise required to perform "problem handling" that
102311 -         escalated to putting out fires that developed on Oakland.
102312 -
102313 -                 90 x 150 = $14K
102315 -          ..
102316 -         A major advantage to using Communication Metrics rather
102317 -         than increasing District staff time, besides freeing staff
102318 -         for their normal duties, is that Communication Metrics
102319 -         produces a record that is constant that can be used over
102320 -         and over again without the evolution in understandings when
102321 -         "too many cooks" get embroiled in the "kitchen."
102322 -
102324 -      ..
102325 -     Litigation
102326 -
102327 -     Jim Stout, former District counsel who specialized in contract
102328 -     litigation, examined Communication Metrics work product on the
102329 -     Oakland Harbor project.  In a meeting on 961015 Jim advised the
102330 -     Contracting Officer, Tom Benero, that the methodology of providing
102331 -     context and alignment with requirements and prior events and
102332 -     commitments is helpful to the District, and should be continued
102333 -     for the duration of the Oakland project to assist in resolving
102334 -     disputes.
102335 -
102336 -         [On 980520 Max Blodgett reported that District Counsel
102337 -         attributed substantial savings to Communication Metrics. see
102338 -         ref SDS 59 2405]
102340 -      ..
102341 -     Communication Metrics was ended OA 961231, although Welch
102342 -     performed some pro bono work for a week or so to support
102343 -     continuity of in-progress initiatives.
102345 -      ..
102346 -     The Contractor filed for chapter 11 bankruptcy at about the same
102347 -     time.  Contractor claims have since escalated to more than $60M.
102348 -     District counsel have requested support from Communication Metrics
102349 -     for the reasons cited by Jim Stout, who has since retired.
102351 -      ..
102352 -     Communication Metrics is intended to avoid disputes and
102353 -     litigation by using concurrent discovery to accomplish win/win
102354 -     results for the Corps of Engineers and for the Contractor, as
102355 -     was done on the Navy Sewer Line matter.  Such outcomes advance
102356 -     our partnering objectives.
102358 -      ..
102359 -     Of course situations arise, where, for example, a contractor in
102360 -     severe financial difficulty may find it useful to present
102361 -     unfounded claims in hopes of salvaging its existence.  This
102362 -     observation makes no reference to the Dutra situation per se.
102364 -      ..
102365 -     Where litigation cannot be avoided, the record produced by
102366 -     Communication Metrics is essentially court-room ready evidence.
102367 -     This saves the Corps of Engineers significant legal expense.
102369 -      ..
102370 -     Currently, the District has two full time lawyers working on
102371 -     the Oakland project, and approximately 6 claims management
102372 -     staff.  We estimate for the project the Communication Metrics
102373 -     would, if used, permit reduction of one-half lawyer and 2
102374 -     claims management staff.  Assuming this savings accrues for a
102375 -     year, which seems likely based on current progress, the total
102376 -     savings would be;
102377 -
102378 -              2.5 x 40 x 52 x $150                   =  780K
102380 -      ..
102381 -     Saving $780K of direct expense of course is not the big prize. The
102382 -     interest of the Corps is to ensure that it avoids having to payout
102383 -     more than is equitable to the contractor.  We have identified
102384 -     above some specific issues claimed by the contractor which appear
102385 -     at this time will result in cost avoidance, or savings, of
102386 -     approximately $3M attributable directly to Communication Metrics.
102387 -     ref SDS 0 3168 and ref SDS 0 2501
102389 -      ..
102390 -     This savings comes at a cost of $50K. Since the Contractor's
102391 -     claims have escalated to over $60M. Communication Metrics should
102392 -     realize a much larger savings or cost avoidance, if applied for
102393 -     litigation support.
102394 -
102395 -         [On 981028 District paid $30M on claims over $60M, which may
102396 -         reflect value of Communication Metrics in some degree, as
102397 -         reported at ref SDS 61 9152]
102398 -
102399 -
102400 -
102401 -
102402 -