vault backup: 2025-11-21 15:31:28

2025-11-21.md

@@ -0,0 +1,37 @@
+---
+id:
+aliases: []
+tags:
+  - authorship/original
+  - destiny/permanent
+  - status/draft
+  - type/daily
+title: 2025-11-21
+---
+# 2025-11-21
+
+## 2025-11-21 10:11
+
+> [!quote] [ELECTRI's Industry Benchmarking Tool - ELECTRI International](https://www.electri.org/research-overview/electris-industry-benchmarking-tool/)
+> ### Hours Burned vs. Hours Earned
+>
+> Definition:
+> Comparison between portion of project estimated hours complete
+> compared with the actual hours spent on the task.
+> This is the labor performance factor
+> (needs to reference the labor factor used at bid time for a full comparison).
+
+This is a terribly problematic metric.
+
+If a project went over its material budget
+despite standard rigorous oversight
+where would you first look,
+construction or estimating?
+In almost all cases the safer bet is estimating.
+Why should labor be different?
+
+Wherever there is budget variance
+there is a persistent tendency to blame construction
+before estimating.
+
+[[purpose-of-construction-estimating#The Myth of Estimate Accuracy]]

bid-price-modeling.md

@@ -0,0 +1,122 @@
+---
+id:
+aliases: []
+tags:
+  - authorship/llm
+  - destiny/fleeting
+  - status/complete
+  - topic/estimating
+  - topic/risk
+title: Modeling Bid Prices Under Intrinsic Cost Uncertainty
+---
+# Modeling Bid Prices Under Intrinsic Cost Uncertainty
+
+> [!warning]
+> This text is almost entirely LLM output.
+> I don't intend to keep or use any significant portions of it.
+
+Consider a construction project characterized by an intrinsic but unknown final cost $C$.
+Prior to project completion, $C$ cannot be observed directly;
+instead the estimator possesses only a probability distribution over feasible outcomes.
+
+Let $(\Omega, \mathcal{F}, \mathbb{P})$ be a [probability space](https://en.wikipedia.org/wiki/Probability_space)
+describing the estimator's uncertainty,
+and define the true cost model as a non-negative random variable
+
+$$
+C : \Omega \to [0,\infty)
+$$
+
+with [distribution](https://en.wikipedia.org/wiki/Probability_distribution) $\mu_C$.
+
+The distribution $\mu_C$ summarizes all available information at the time of bidding,
+including quantities, labor productivity uncertainty,
+market conditions, subcontractor pricing variability,
+and correlation structures inherent to the estimator's assumptions.
+
+Although the natural mathematical representation of cost is thus a distribution,
+procurement mechanisms typically require that each bidder submit a single deterministic price.
+
+Denote this bid by
+
+$$
+B \in [0,\infty).
+$$
+
+> Read as
+> "$B$ is an [element](https://en.wikipedia.org/wiki/Element_(mathematics))
+> of the interval from zero to infinity, including zero."
+
+A bid $B$ may be viewed as the output
+of a pricing [functional](https://en.wikipedia.org/wiki/Functional_(mathematics))
+
+$$
+\Phi : \mathcal{P}([0,\infty)) \to [0,\infty),
+$$
+
+mapping a cost distribution $\mu_C$ to a scalar.
+
+Examples of such functionals include:
+
+### 1. Risk-neutral expectation
+
+$$
+\Phi(\mu_C) = \mathbb{E}[C],
+$$
+
+> Read as "Phi of mu sub C equals the expected value of C."
+
+where $\mathbb{E}[\cdot]$ denotes the [expected value](https://en.wikipedia.org/wiki/Expected_value).
+
+### 2. Risk-adjusted expectation
+
+$$
+\Phi(\mu_C) = \mathbb{E}[C] + \lambda\sqrt{\mathrm{Var}[C]},
+$$
+
+> Read as "Phi of mu sub C equals the expected value of C plus lambda times the square root of the variance of C."
+
+where $\mathrm{Var}[C]$ is the [variance](https://en.wikipedia.org/wiki/Variance)
+and $\lambda>0$ is a risk-loading parameter.
+
+> This mirrors mean--variance pricing common in portfolio theory.
+
+### 3. Quantile-based pricing
+
+$$
+\Phi(\mu_C) = Q_p(C),
+$$
+
+> Read as "Phi of mu sub C equals the p-quantile of C."
+
+where $Q_p$ is the $p$-[quantile](https://en.wikipedia.org/wiki/Quantile)
+of the distribution.
+
+### 4. Utility-maximizing bid
+
+Under a bidder [utility](https://en.wikipedia.org/wiki/Utility) function $U$,
+
+$$
+\Phi(\mu_C) = \arg\max_{b\ge0} \; \mathbb{E}[\,U(b - C)\,].
+$$
+
+> Read as "Phi of mu sub C equals the argument b greater than or equal to zero
+> that maximizes the expected value of U of b minus C."
+
+> [$\arg\max$](https://en.wikipedia.org/wiki/Arg_max) is the value of $b$ that maximizes the expression.
+
+***
+
+The central tension is:
+
+* The ontologically correct representation of project cost prior to execution is a **probability distribution**, whereas
+* The procurement mechanism requires a **deterministic scalar**.
+
+The study of such pricing functionals $\Phi$ sits within
+[stochastic optimization](https://en.wikipedia.org/wiki/Stochastic_optimization),
+[risk measures](https://en.wikipedia.org/wiki/Risk_measure),
+and [mechanism design](https://en.wikipedia.org/wiki/Mechanism_design).
+Understanding how different choices of $\Phi$
+compress and distort the underlying uncertainty $\mu_C$
+has direct implications for bidder profitability, competitive strategy,
+and how risk is allocated across the construction market.

bid-process-strategy.md

@@ -15,7 +15,7 @@ title: Bid Process Strategy
 ## Scope
 
 This note is intended to describe bid process strategy
-especially in terms of [[strategy#Auction Theory]],
+especially in terms of [[auction-theory]],
 which specifically addresses the competitive bid format
 typical of construction project award.
 
@@ -38,3 +38,31 @@ Bidders will accept a lower payout or even a loss
 in order to retain employees.
 
 **Backlog Deficit** drives up **Utility of award**
+
+## Factors Brainstorm
+
+This is a list of semi-independent factors
+relevant to the contractors decision of if and how to bid.
+
+### Key
+
+* `> [!info]` --- **Fact:** an indisputable truth or term definition
+* `> [!important]` --- **Logical Consequence**
+* `> [!tip]` --- **Relationship**
+* `> [!success]` --- **Desirable Outcome**
+* `> [!failure]` --- **Undesirable Outcome**
+
+> [!info]
+> The exact cost of a construction project is **uncertain**
+> until it is completed.
+
+> [!info]
+> Customers request bids as a 
+
+> [!tip]
+> Spending _more_ time on estimates
+
+> [!tip]
+> Estimating _more_ projects leads to _more_ opportunities for award.
+> Estimating _fewer_ projects leads to _fewer_ opportunities for award.
+

estimating-culture.md

@@ -35,6 +35,28 @@ Because they are not expected to ever look at their work again,
 they have no incentive to reveal errors
 as they can simply plead ignorance if the error is discovered.
 
+## Incentives
+
+I strongly oppose any project-based incentive structure for estimators.
+Such a structure is at odds with the [[purpose-of-construction-estimating]],
+and is an example of a [perverse incentive](https://en.wikipedia.org/wiki/Perverse_incentive).
+
+This behavior should be regulated by an accompanying _disincentive_ structure,
+but equivalent punishment becomes unfeasible
+before monetary rewards become effective.
+The absolute worst disincentive an estimator faces is termination,
+which, with fully-remote options available, is only an inconvenience.
+
+The timeline to recognize an estimate was deliberately misrepresented
+is not much shorter than that of the project.
+
+Such incentives therefore create a [[game-theory|competitive game]]
+between the estimator and the employer
+where the employer is hopelessly outmatched,
+and the estimator's [[strategy#Strictly Dominant Strategy|strictly dominant strategy]]---
+resisted only by their moral conviction---
+is to abuse the system: to bid fast, lie often, take the bag, and leave.
+
 ## Collaboration
 
 Estimation is a profession ripe for productive collaboration.
@@ -80,9 +102,3 @@ to embrace the statistical aspects of our field.
 
 * Be competent with every tool available to you.
 * Always assume there is a better way to complete a given task.
-
-## Incentives
-
-I strongly oppose any project-based incentive structure for estimators.
-Such a structure is at odds with the [[purpose-of-construction-estimating]],
-and is an example of a [perverse incentive](https://en.wikipedia.org/wiki/Perverse_incentive).

game-theory.md

@@ -0,0 +1,59 @@
+# Game Theory
+
+## Domains
+
+### Auction Theory
+
+[[auction-theory|Auction theory]] is a subset of game theory
+
+<!-- TODO: -->
+
+#### Reverse Auction
+
+In a reverse auction,
+bidders compete for the right to _sell_ a product or service.
+
+#### Sealed-Bid Auction
+
+Opposite of a conventional "open" auction,
+in a sealed-bid auction,
+bid prices are hidden from the bidders.
+
+[[uncertainty#Information]]
+
+<!-- TODO: -->
+
+## Terminology
+
+### "Solved" Games
+
+<!-- TODO: -->
+
+### Symmetry
+
+## Typical Games
+
+### Chicken
+
+| Player A \ Player B |   Player B: Back Down   |   Player B: Hold Firm   |
+|:------------------- |:-----------------------:|:-----------------------:|
+| Player A: Back Down |        Tie \ Tie        | Lose face \ Gain status |
+| Player A: Hold Firm | Gain status \ Lose face |        Die \ Die        |
+
+### Prisoner's Dilemma
+
+| Prisoner A \ Prisoner B |    Prisoner B: Cooperate    |      Prisoner B: Defect       |
+|:----------------------- |:---------------------------:|:-----------------------------:|
+| Prisoner A: Cooperate   | Serve 1 year \ Serve 1 year |    Serve 3 years \ Go free    |
+| Prisoner A: Defect      |   Go free \ Serve 3 years   | Serve 2 years \ Serve 2 years |
+
+### Stag Hunt
+
+| Hunter A \ Hunter B | Hunter B: Hunt Stag  | Hunter B: Hunt Hare  |
+|:------------------- |:--------------------:|:--------------------:|
+| Hunter A: Hunt Stag | Eat stag \ Eat stag  | Go hungry \ Eat hare |
+| Hunter A: Hunt Hare | Eat hare \ Go hungry | Eat hare \ Eat hare  |
+
+### Ultimatum Game
+
+### Dictator Game

purpose-of-construction-estimating.md

@@ -18,8 +18,6 @@ which would take far longer than allotted for bid,
 
 ## The Myth of Estimate Accuracy
 
-<!-- TODO: -->
-
 This is a dangerous superstition
 which encourages unproductive conflict.
 
@@ -27,6 +25,20 @@ Operations is blamed for failing to meet targets
 not intended for the purpose,
 ...
 
+***
+
+Construction contract bids are inherently risky.
+
+Executives want to bid because construction can be profitable.
+Executives hire estimators to mitigate risk of loss.
+
+An estimator's value is determined by their 
+
+An estimator's job is to mitigate 
+
+
+Estimators downplay the 
+
 ## For Each Party
 
 ### For the Solicitor

strategy.md

@@ -14,48 +14,28 @@ title: Strategy
 The field of strategy is concerned
 with the optimal solutions of problematic scenarios.
 
-## Decision Theory
+## Domains
 
-Decision theory concerns
+### Decision Theory
 
-* ~~internal problems~~
+[[decision-theory|Decision theory]] concerns choices
-* ~~no competition~~
+made by a single party, based on environmental conditions
-* ~~internal optimization~~
 
-## Game Theory
+"Player vs. Environment"
 
-Game theory concerns decisions
+### Game Theory
+
+[[game-theory|Game theory]] concerns choices
 made in competition with other intelligent actors.
 
-Predictions of competitor behavior in bids and market movements
+"Player vs. Player"
-are made with a game-theoretic lens.
+
+## Terminology
 
 ### Dominant Strategy
 
 A dominant strategy is one
 that results in the better outcome.
 
-### "Solved" Games
+### Strictly Dominant Strategy
 
-<!-- TODO: -->
-
-### Auction Theory
-
-Auction theory is a subset of game theory
-
-<!-- TODO: -->
-
-#### Reverse Auction
-
-In a reverse auction,
-bidders compete for the right to _sell_ a product or service.
-
-#### Sealed-Bid Auction
-
-Opposite of a conventional "open" auction,
-in a sealed-bid auction,
-bid prices are hidden from the bidders.
-
-[[uncertainty#Information]]
-
-<!-- TODO: -->

the-failure-of-risk-management.md

@@ -29,6 +29,10 @@ by Douglas W. Hubbard
 * Certain Monetary Equivalent (CME)
     * also called Certainty Equivalent
 
+One or more curves referenced in the text are
+[Indifference curves](https://en.wikipedia.org/wiki/Indifference_curve)
+but not referred to as such.
+
 ## Key Takeaways
 
 ### Definition of Risk

uncommon-syntax.md

@@ -12,3 +12,20 @@ title: Uncommon Syntax
 * **i.e.** --- _id est_ ("that is")
 
 * **e.g.** --- _exempli gratia_ ("for example")
+
+## Symbols
+
+* $\therefore$
+
+* $\vdash$ --- turnstile,
+  denotes logical consequence
+
+* $\vDash$ or $\models$ --- double turnstile,
+  denotes [semantic](https://en.wikipedia.org/wiki/Semantic "Semantic") consequence
+
+  > [!quote] [Double turnstile - Wikipedia](https://en.wikipedia.org/wiki/Double_turnstile)
+  > read as
+  > "[entails](https://en.wikipedia.org/wiki/Logical_consequence "Logical consequence")",
+  > "[models](https://en.wikipedia.org/wiki/Model_theory "Model theory")",
+  > "is a **semantic consequence** of"
+  > or "is stronger than".