CONTACTS 
0201 - A. R. Construction Company           415 656 2800
020101 - Mr. Ronald Arana; President =415 656 2806
020102 - aramet@aol.com

SUBJECTS
Inquiries

0403 -    ..
0404 - Summary/Objective
0405 -
040501 - Follow up ref SDS 22 0000, ref SDS 19 0000.
040502 -
040503 - Left message with Jacki.  Ronald is at a meeting.
040504 -
040505 - Submitted ref DIP 5 0001 linked to this record to confirm
040506 - understandings.
040507 -
040508 -
040509 -
0406 -
0407 -
0408 - 1602 Ronald called back
0409 -
040901 - The meeting with the City was today, postponed from last Monday.
040902 -
040903 - He still wants to consider me and feels are in agreement on $89K, but
040904 - are apart on distribution.
040905 -
040906 - I explained compromise on a number of points.
040907 -
040908 - Ronald did not recall that.  He will read the letter for our meeting
040909 - on 991021 again.
040910 - ..
040911 - I asked him to return the Com Metrics report by USACE.
040912 -
040913 - Ronald said his lawyer, Bill Last, is familiar with my work, and wants
040914 - to have a meeting with me and Ronald.
040915 -
040916 - I will call Ronald about Thursday to see about meeting again.
040917 -
040918 -
040919 -
040920 -
040921 -
040922 -
040923 -
0410 -
0411 -
0412 - Discussion
0413 -
041301 -  ..
041302 - Mobilize PM
041303 -
041304 - Follow up ref SDS 22 0228.
041305 -
041306 - The steps needed to accomplish Ronald's objectives include...
041307 -
041308 -   1.  Agreement finalize
041309 -
041310 -   2.  Configure office at ARC
041311 -
041312 -       Procure CPU
041313 -       Configure CPU
041314 -       Install CPU
041315 -       Install furnishings
041316 -       Install telephone
041317 -
041318 -   3.  Inspect vehicle
041319 -
041320 -       Procure any repairs required
041321 -       Parking???
041322 -
041323 -   4.  Meeting ARC office staff
041324 -
041325 -       Introductions
041326 -       Procedures
041327 -
041328 -           Ronald explain president's vision of goals and time tables
041329 -
041330 -           Rod's time in the office will evolve as we ramp up to full
041331 -           support and implementation.
041332 -
041333 -       Communication Metrics
041334 -
041335 -           Ronald explain goals, set training and support objectives
041336 -           Rod explain general concepts
041337 -
041338 -   5.  Golden Gate Park Reservoir project
041339 -
041340 -       Preliminary review plans and specs
041341 -       Review contracts
041342 -       Meeting ARC team, estimators, Ronald, Superintendent
041343 -       Review plans and specs
041344 -
041345 -
041346 -  ..
041347 - Scope of Work Project Manager - Risk and Opportunities
041348 -
041349 - Follow up ref SDS 22 3855.
041350 -
041351 - We reviewed the level of effort for ARC project management...
041352 -
041353 - ARC has following projects...
041354 -
041355 -   1.  Golden Gate Park starting                       $7M
041356 -
041357 -   2.  City College nearing completion, superintendent quit, see
041358 -       separate analysis. ref SDS 22 3431
041359 -
041360 -                                                       $3M
041361 -
041362 -   3.  Port of Oakland, 3rd bidder, but pursuing entitlement to be
041363 -       named lowest responsible bidder.
041364 -                                                       $8M
041365 -
041366 -         Ronald may have indicated receiving a letter that the Port is
041367 -         negotiating with the bidder who was too low.
041368 -
041369 -         ARC would have a strong case to make that this violates
041370 -         competitive bidding statutes and procedures, which harms the
041371 -         Port and all contractors.
041372 -
041373 -   4.  Oakland Navy project, ARC low bidder, concerned too low
041374 -
041375 -                                                       $2M
041376 -
041377 -   5.  City of San Francisco Garage, low bidder, being challenged by
041378 -       another contractor who is non-union
041379 -
041380 -                                                       $8M
041381 -   6.  Pat's project being completed.
041382 -                                                       $4M
041383 -
041384 -   7.  Claims.........                         $500K - $2M
041385 -
041386 - Potential value at risk............................  $35M
041387 -
041388 -
041389 - This is a complex situation that requires effective management to
041390 - realize budgeted earnings, and avoid loss.
041391 -
041392 - Ronald noted today that he is willing to take a risk that Rod Welch
041393 - can provide professional project management.
041394 -
041395 - Driving back to the Welch office for our meeting, it was discovered
041396 - that important documents were forgotten at the ARC office, which
041397 - Ronald needed.  On 970910 a presentation by the Project Management
041398 - Institute (PMI) reported that every executive faces the growing
041399 - complexity of information overload, ref SDS 5 3479, reviewed recently
041400 - on 990924 as the main cause of mistakes, loss and conflict in all
041401 - human enterprise. ref DIP 2 0001
041402 -
041403 - Communication Metrics helps meet this challenge by using technology to
041404 - make leadership effective, as reported by the U.S. Army Corps of
041405 - Engineers. ref DRP 1 6172
041406 -
041407 - In order for this to be effective, however, another consideration must
041408 - be faced.
041409 -
041410 - Ronald's success has produced a well deserved life-style, as with all
041411 - successful businessmen, of taking direct action when opportunity or
041412 - problems appear.  Andy Grove, CEO of Intel, calls this the "inertia of
041413 - success," reviewed on 980307. ref SDS 7 3740
041414 -
041415 - Consideration of Communication Metrics shows willingness to avoid the
041416 - "inertia of success" by recognizing new challenges that must be met in
041417 - order to reach the next level of growth, also cited by Grove.
041418 - ref SDS 8 1660
041419 -
041420 -
041421 -
041422 -  ..
041423 - Change from Owner Directed to Project Management is Difficult
041424 -
041425 - Follow up ref SDS 22 0458.
041426 -
041427 - A very big challenge will be arranging communications with ARC staff,
041428 - subs and customers so that Project Management is effective.  In a
041429 - small business, everyone feels the presence of the owner, and the
041430 - owner's risk and authority encourage taking immediate and direct
041431 - action, rather than acting through the Project Manager.  On a human
041432 - scale, it is very difficult for a man of action, to draw back and
041433 - allow others to take actions that may seem at the moment to be
041434 - incorrect or at least less than optimal. as set out in the record of
041435 - the meeting on 991019. ref SDS 19 2590
041436 -
041437 - Ronald cited his practice of "controlling the controllers," referring
041438 - to his support for onsite superintendents, who provide construction
041439 - administration, and represent ARC with owners, design professionals,
041440 - and subs.  He advised that ARC maintains a staff of 3 full time field
041441 - laborers/mechanics.  This reflects the focus on subcontracting.
041442 -
041443 - There was discussion of plans to hire an experienced office
041444 - administration person when Jacki takes maternity leave in February,
041445 - showing continued commitment to improving management.
041446 -
041447 - Ronald explained his goal to brain-storm with the Project Manager and
041448 - other key people to create a powerful "business machine," and to avoid
041449 - back-door channels that undermine communication.
041450 -
041451 - He reiterated the practice of letting people "fly" on their own,
041452 - including the Project Manager.
041453 -
041454 - We recognize this is the correct posture, but only time will tell if
041455 - the chemistry is effective.
041456 -
041457 -
041458 -  ..
041459 - City College Situation Needs Project Management
041460 -
041461 - Follow up ref SDS 22 3431, ref SDS 19 0660.
041462 -
041463 - Ronald advised that during the 6 hour meeting yesterday to review
041464 - project status and formulate plans as a result of ARC's superintendent
041465 - suddenly quitting, the architect disclosed that his firm had, also,
041466 - had a key employee suddenly quit. The Dean of the college advised of
041467 - similar past problems. ref SDS 21 2205
041468 -
041469 - Ronald remarked that everyone seems to be pulling together to address
041470 - a crisis.
041471 -
041472 - The risk and allure of Crisis Management is reviewed in the review on
041473 - the "High Cost of Medical Mistakes." ref DIP 2 2904 developed on
041474 - 990924. ref SDS 14 2066
041475 -
041476 - Evidently ARC's superintendent who quit had not been performing normal
041477 - duties the past several weeks, and has left a backlog of tasks to
041478 - catch up.  The range of issues and seriousness will unfold in the
041479 - period ahead.  Sometimes people quit suddenly when past unauthorized
041480 - and high-risk initiatives eventually result in emanate exposure of
041481 - failure or loss, and they are not equipped emotionally to face
041482 - colleagues and superiors.  Ronald did not discuss having discovered at
041483 - the meeting yesterday any major problems.  He indicated the person who
041484 - quit may have gotten a better offer from another firm.  Ordinarily
041485 - getting a better offer would not cause a professional person to quit
041486 - without notice.
041487 -
041488 - Ronald seemed to indicate this may extend completion by a month or
041489 - so.  He now expects to complete the project in 3 months.
041490 -
041491 - Ronald feels he could complete the City College job.  Currently he
041492 - has assigned Pat to help, and his estimating crew are also filling in
041493 - while Ronald adjusts to these new circumstances.
041494 -
041495 - He has decided to take the $2M job in Oakland on which he was low
041496 - bidder Tuesday. ref SDS 19 7138  He can hire a superintendent for that
041497 - job, who can be used to finish the City College project.
041498 -
041499 - These conditions reflect elevated risk to ARC.
041500 -
041501 - Com Metrics is a risk management process which Ronald cited in our
041502 - meeting on 991015. ref SDS 17 5175
041503 -
041504 -
041505 -  ..
041506 - One Year Agreement with Quarterly Check Points
041507 -
041508 - Follow up ref SDS 22 4216, ref SDS 19 8933.
041509 -
041510 - We confirmed terms Ronald proposed on Tuesday for me to work with ARC
041511 - for a year, and provide check points every 3 months to mutually
041512 - evaluate progress.
041513 -
041514 -
041515 -  ..
041516 - Payment Once a Month
041517 - Consultant Agreement for Welch Co, Rod Welch Project Manager
041518 -
041519 - Follow up ref SDS 22 4217, ref SDS 19 4966.
041520 -
041521 - We confirmed ACR will contract with Welch Company, and will issue
041522 - payment once a month for project management services.
041523 -
041524 - ARC will present Rod Welch as the "Project Manager."
041525 -
041526 -
041527 -
041528 -  ..
041529 - Welch Provides Leadership and Training at ARC Office
041530 - ARC Offers Transportation; Goal to Minimize Travel Time and Expense
041531 -
041532 - Follow up ref SDS 22 0690, ref SDS 19 0799.
041533 -
041534 - We confirmed ACR will provide a vehicle suitable to support
041535 - professional project management.
041536 -
041537 - Welch will provide leadership and training at ARC's office in using
041538 - Communication Metrics and professional project management, as
041539 - discussed on 991019.
041540 -
041541 - Ronald plans to support transition to Communication Metrics by using
041542 - Pat to help develop initial contract management for the Golden Gate
041543 - Park Reservoir project.
041544 -
041545 -
041546 -  ..
041547 - Automation Plan - $5K to $10K
041548 - Communication Metrics on the Internet Shows Self-Evident Benefits
041549 - Office Ergonomics Support Efficient use of Com Metrics
041550 -
041551 - Follow up ref SDS 22 4819, ref SDS 19 3038.
041552 -
041553 - We confirmed ACR will provide adequate office facilities, including
041554 - computers and Internet access to support professional project
041555 - management, as discussed on 991019. ref SDS 19 3038
041556 -
041557 - Ronald feels comfortable that the City will be willing to provide
041558 - computer files needed for Communication Metrics, per analysis in
041559 - connection with the letter from Pat on 991019. ref SDS 20 0875  He
041560 - advised that project plans and specs are provided to contractors on a
041561 - computer disk, and the contractor prints the number of copies needed.
041562 -
041563 - This is a good solution and indicates that prior the problems working
041564 - with the Corps of Engineers may be solved on this project.
041565 -
041566 - The next big challenge will be converting ARC and City standard
041567 - construction management forms into HTML for display on web browsers,
041568 - so we can embed links that provide the control and "intelligence" that
041569 - Ronald wants.
041570 - ..
041571 - Ronald mentioned today that working with Communication Metrics
041572 - online is an eye-opening experience.  This aligns with planning on
041573 - 971021 in creating the system. ref SDS 6 9999  It reflects favorable
041574 - assessment from Dave Vannier at Intel on 990907. ref SDS 12 0149
041575 -
041576 - Ronald said that his son has already mastered the Welch system of
041577 - "clicking" online to get background, authority and alignment with
041578 - requirements and objectives.  Ronald feels it is much easier to
041579 - "click, click, click" than to hunt for documents and information in
041580 - mountains of paper, and to search endless email lists for information.
041581 -
041582 - In order for this method of "click, click, click" to support daily
041583 - management, we need to create standard construction forms in HTML for
041584 - display on web browsers, e.g., transmittals, submittals, RFIs, etc.
041585 - ..
041586 - HTML conversion may cost $4K or so.
041587 -
041588 -    It might be possible that the City would isse a change order to
041589 -    defray this cost, if we can present the cost and time advantages.
041590 -    This would be reviewed in visiting with the City's Project Manager,
041591 -    propsosed on 991015. ref SDS 17 3630  In fact, the City may
041592 -    already be working on this project.
041593 -
041594 - Ronald says ARC has a scanner, but he is not familiar with
041595 - performance.  Accordingly, this may be another item of cost, since
041596 - without doubt some scanning will be necessary.
041597 -
041598 - The cost of 2 computers will run about $3K.  We discussed that we may
041599 - only need one new one, but I am going to lobby hard for the second
041600 - one.
041601 -
041602 - Accordingly, a ballpark budget is $5 - $10K.
041603 -
041604 - The cost of DSL access for a year at the ARC office and on the GGP
041605 - project, will run about $3K, which is an extension of telephone
041606 - service.
041607 -
041608 - DSL is important, because it will give ARC access to the Interent at
041609 - the 3rd Street office, which is not now available.
041610 -
041611 - Ronald explained he is getting Welch correspondence now on his son's
041612 - computer at home, because of problems reported on 991014. ref SDS 16
041613 - 2673
041614 -
041615 -
041616 -
041617 -  ..
041618 - Payment for SDS and Mobilization Supports ARC's Goals
041619 -
041620 - Follow up ref SDS 22 0924, ref SDS 19 3270.
041621 -
041622 - To protect ARC's interests, we considered paying for the SDS program
041623 - on the basis of half at the start of the project, due on 991026 in the
041624 - amount of $2,500, and the other half, due in three months at the end of
041625 - the first check point, in the amount of $2,500.  If ARC decides not to
041626 - proceed, then it will not owe the second payment of $2,500.  ARC can
041627 - further deduct $2,500 from the monies owed for the last month of
041628 - service, if ARC elects to stop using SDS.  In other words the 3 months
041629 - is a trial period.  However, if ARC elects to continue using SDS, then
041630 - it will owe the $2,500 plus payment for the last month of service.  In
041631 - that case, Welch will support ARC with program updates and support for
041632 - a period of a year at no additional cost to ARC.
041633 -
041634 -
041635 -  ..
041636 - Payment to Commence According to Value Added for the Project
041637 -
041638 - Follow up ref SDS 22 5320, ref SDS 19 3504.
041639 -
041640 - There was no specific discussion today on this subject, however, I am
041641 - not meeting with the City Engineer, as planned on 991015, per Ronald's
041642 - instructions yesterday. ref SDS 21 3224
041643 -
041644 - This reduces the level of effort during the current period.  Therefore
041645 - I am willing to accept payment for one week of time instead of two, as
041646 - set out in the letter on 991015. ref DIP 4 3621
041647 -
041648 - Ronald seemed to indicate today that part of the reason for not
041649 - wanting me to meet with the City Engineer is to avoid having the City
041650 - discover the potential for using Communication Metrics in dealing with
041651 - the contractor.
041652 -
041653 -
041654 -  ..
041655 - Project Management of $80K+ for $12M+ Volume is Good Investment
041656 -
041657 - Follow up ref SDS 22 9766, ref SDS 19 3740.
041658 -
041659 - We reviewed monthly payment ideas discussed on Tuesday.
041660 -
041661 - I offered to accept payment in the amount of $6K per month, as Ronald
041662 - proposed, for the first three months, so that ARC can assess
041663 - performance of Welch and Communication Metrics.  If ARC decides to
041664 - continue with Welch, then it will owe $3K for the balance earned
041665 - during the first three months, and payment for the following 3
041666 - quarters will be at the rate of $7K per month.  If ARC decides not to
041667 - continue, ARC will not owe the $3K balance for the first three months.
041668 - The fourth transition month can be paid at $6K rate.
041669 -
041670 - This allows ARC to assess Welch and Communication Metrics at a rate
041671 - ARC believes is fair.  It provides a window of opportunity to discover
041672 - whether increased payment to the $7K per month rate is justified by
041673 - increased earnings.
041674 -
041675 - It will pay for...
041676 -
041677 -     •  launching ARC's new projects
041678 -     •  expert claims support.
041679 -     •  professional project management expertise.
041680 -
041681 - Lessor payment will not provide the quality of management needed to
041682 - meet the risks and opportunities ARC faces, as reviewed above.
041683 - ref SDS 22 3855
041684 -
041685 - Ronald feels the Welch proposal is not fair.  He does not have a good
041686 - feeling about these ideas.
041687 -
041688 - Ronald seemed to indicate that he feels Welch and Communication
041689 - Metrics are worth the $90K or so contemplated in this package for 12
041690 - months.  This aligns with self-evident benefits he cited above.
041691 - ref SDS 22 4968
041692 -
041693 - There was concern expressed about "big risks" ARC faces in accepting
041694 - the Welch method of payment.
041695 - ..
041696 - Ronald offered to pay at the rate of $6K per month, rather than
041697 - $7K per month for a period of one year, plus an incentive bonus that
041698 - would work as follows...  At the end of the year, he would assess on a
041699 - scale of 1 - 10 ARC's satisfaction with Welch and Communication
041700 - Metrics.  If, for example, satisfaction is found to be "6" then ARC
041701 - would pay Welch 60% of the difference between the $6K rate and the $7K
041702 - rate plus the $5K cost for SDS and mobilization.
041703 -
041704 - This is an imaginative solution that seems to present a wide range of
041705 - eventual interpretations.
041706 -
041707 - Ronald will let me know if ARC wants to proceed.
041708 -
041709 -
041710 -
041711 -