From 5145d3859f92dedfcedbe55e9eb38880b08a590b Mon Sep 17 00:00:00 2001 From: Zane Meyers Date: Tue, 8 Jul 2025 07:25:20 -0400 Subject: [PATCH] vault backup: 2025-07-08 07:25:20 --- expected-value-of-perfect-information.md | 6 +++++ new-additions/evpi-takeoff.md | 9 +------ .../the-failure-of-risk-management.md | 23 +++++++++++++++--- purpose-of-estimating.md | 3 ++- strategy.md | 24 +++++++++++++++---- supertopics.md | 3 ++- 6 files changed, 51 insertions(+), 17 deletions(-) diff --git a/expected-value-of-perfect-information.md b/expected-value-of-perfect-information.md index f91b9da..9a94b43 100644 --- a/expected-value-of-perfect-information.md +++ b/expected-value-of-perfect-information.md @@ -4,9 +4,15 @@ In [[decision-theory]], the expected value of perfect information (EVPI) is the price that one would be willing to pay in order to gain access to [[perfect-information]] +The perceived *value* of decreased uncertainty +must be weighed against its *cost*. + This concept provides the basis for the solution of one or more [[open-problems]]. To reduce [[risk]] in [[construction-estimating]], an organization pays in estimator hours. These hours have a direct cost in salary and benefits, however the greater cost is the opportunity cost of tying up an estimator who could otherwise be starting a new project. + +In many cases, the utility of doubled throughput +far outweighs the increased risk of individual bids. \ No newline at end of file diff --git a/new-additions/evpi-takeoff.md b/new-additions/evpi-takeoff.md index 3926fec..9fbf825 100644 --- a/new-additions/evpi-takeoff.md +++ b/new-additions/evpi-takeoff.md @@ -2,13 +2,6 @@ Expected value of perfect information (EVPI) -The perceived *value* of decreased uncertainty -must be weighed against its *cost*. - -Takeoff purchases certainty with estimator hours. -Estimator hours have a not insubstantial real cost in salary and burden, -however the opportunity cost may exceed this. - Count-based takeoff speed increases with count. *** @@ -27,4 +20,4 @@ their success being a matter of perspective. ## Naming Conventions (Use Case vs. Description) Naming by use case is intuitive for those without estimating or field experience, -but has the side effect that those acustomed to the names will inevitably treat them as descriptive. +but has the side effect that those accustomed to the names will inevitably treat them as descriptive. diff --git a/new-additions/the-failure-of-risk-management.md b/new-additions/the-failure-of-risk-management.md index ee459a1..985f487 100644 --- a/new-additions/the-failure-of-risk-management.md +++ b/new-additions/the-failure-of-risk-management.md @@ -6,8 +6,10 @@ by Douglas W. Hubbard ## Key Takeaways -Qualititative risk analysis -(i.e. risk matricies, scoring charts) +### Qualitative Metrics Must Be Avoided + +Qualitative risk analysis +(i.e. risk matrices, scoring charts) departs from legitimate statistical methodology and has no robust evidence to suggest its efficacy. There is good reason to believe that such methods @@ -15,11 +17,26 @@ are deleterious to their intended purpose in contradiction to the common response that they are "better than nothing". +### Utility as a Measure of Value + Expected Value (Probability × Magnitude) alone can not predict or inform risky decisions, except for risk-neutral parties. People and organizations are risk-averse -~~TODO: see chapter 6~~ +... + +* [ ] Finish this paragraph. (see chapter 6) ➕ 2025-07-04 + +### Expert Opinion Must Be ~~Adjusted~~ + +Expert opinion is valuable despite its flaws. +... + +The book details the statistically observable tendency for people +to underestimate risk and to be overconfident in their beliefs. +It describes the process of "calibration" +by which people can be trained to compensate for this bias +and make predictions far more accurately. ## Mentioned Topics and Abbreviations diff --git a/purpose-of-estimating.md b/purpose-of-estimating.md index e1af21e..a8cd91d 100644 --- a/purpose-of-estimating.md +++ b/purpose-of-estimating.md @@ -16,7 +16,8 @@ For some owners, money is no object, and standardization is far more important than any potential construction savings. -These owners can be expected to decline every [[value-engineering]] option offered. +These owners can be expected to decline every [[value-engineering]] option offered +(see [[gold-plating]]). ## For the Contractor diff --git a/strategy.md b/strategy.md index 1df9f44..71ddbe4 100644 --- a/strategy.md +++ b/strategy.md @@ -2,7 +2,9 @@ The field of strategy is concerned with the optimal solutions of problematic scenarios. -## Decision Theory +## Disciplines + +### Decision Theory Decision theory concerns @@ -10,14 +12,28 @@ Decision theory concerns ~~no competition~~ ~~internal optimization~~ -## Game Theory +### Game Theory Game theory concerns decisions made in competition with other intelligent actors. Predictions of competitor behavior in bids and market movements are made with a game-theoretic lens. -### Auction Theory +#### Auction Theory Auction theory is a subset of game theory -that specifically addresses the \ No newline at end of file +that specifically addresses the competitive bid format +typical of construction project award. + +## In Construction Contracting + +**Executives** inform **Risk Tolerance** +**Risk Tolerance** informs **Minimum Estimate Certainty** + +### Bid Strategy + +Project cost certainty + +#### Expected Competition + +### Estimation Strategy \ No newline at end of file diff --git a/supertopics.md b/supertopics.md index 0205006..ac30a25 100644 --- a/supertopics.md +++ b/supertopics.md @@ -1,3 +1,4 @@ # Supertopics -Supertopics are a concept I use to visualize and categorize my knowledge and interests. \ No newline at end of file +Supertopics are a concept that I use +to visualize and categorize my knowledge and interests.