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Friday, 16 July 2010

Problem ICE

It seems, according to todays papers, that the ICE trains "Climate Control" plant is unable to deal with sustained temperatures of over 32*C. The investigation has also revealed that the decision to install this plant, rather than a more robust system, was made by the accountants on the basis of cost. For me this is yet another proof that "Cost/Benefit" analysis is often deeply flawed and fails to consider all the factors which may be in play in any extreme situation.

Such considerations are often simply reduced to a "number" in the assessment which is supposedly considering two of the factors involved - Likelihood/Frequency and Impact/Severity. This is put into a sort of scale, so the assessor decides that an event may only occur once in every thousand journeys and yet it may have an impact, when it does, of crippling an operation. So a "score" is assigned of - say -9 on the Impact/Severity Scale and perhaps a 3 on the likelihood. Now the assessor has a choice. Likelihood is low, though severity of the event is high. The choices are spend the money on reducing the likelihood or simply put aside money to meet the possible damage/repair costs. This is where the accountants that infest Boardrooms step in. These gys can tell you the cost of every paperclip, but not the value to be gained by using one.

Now the questions are reduced to "How much will it cost?" Once they have decided that the frequency of an event, such as days when temperatures are above 32*C, is low and the number of people likely to be affected is relatively small, the accountants will insist that "compensating anyone affected" is less than investing in installing more expensive and more robust equipment, the dice are caste. This is what decided a small reduction in the overall length of a major family car in the US. It saved the manufacturer $200 per car, but it put the fuel tank into the crumple zone inside the luggage space. In a rear end impact the tank could be ruptured, dousing the interior and the occupants in petrol.

The manufacturer reasoned that only about 12,000 people might be killed or injured out of sales totalling half a million world-wide. The $200 per car saving, they reckoned, was worth the risk. Pity about the 12,000 of course, but profit came first. That manufacturer was almost put out of business by the subsequent lawsuits and has only recently been saved by further the US Taxpayer from the results of further bad decisions based on "Cost/Benefit" analysis.

I wonder when we will learn?

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