Raise the red flag fast when a capital expense project starts to go in the wrong direction
Published on Tuesday, 24 September 2013 10:05:32 Written by Marc
In my neck of the woods, if you want to become an engineer, you must first graduate from university and then work under the supervision of a senior engineer for 2 years. This is commonly called god-fathering but a better word might be mentoring. Anyhow, I always get a kick out of god-fathering a junior fresh out of school. I like this because it enables me to exchange with young eager minds and see the world though their eyes. I love learning and I am naturally curious, so I find it amusing to hear about their vision of the future and how they feel they can contribute at improving the working environment of companies in general. I had a conversation about a year ago with such a junior engineer. This young woman had graduated from college then worked for a few years in a manufacturing plant. She quit her job to go back to school and completed her engineering studies. Although quite young, she has some real life experience and the conversation was interesting. One of the questions she had for me took me off-guard: when do you raise a red flag? When a capital expenditure project is not turning out the way it should and no longer corresponds to expectations, at what point should we raise a flag to a superior or higher management? I was surprised by the question because I found the answer obvious. In my mind, the very moment you get the feeling that things are not on track, you raise your hand and start asking questions. You stop the press! Houston, we have a… well you know what I mean?. The idea is to raise that red flag as soon as possible since it’s always easier to fix a problem upstream than downstream. The best example of this is the cost to move a brick wall from an AutoCAD drawing versus moving a brick wall once erected. For a second I was thinking that she might be joking asking such a trivial question. Since our conversations were always frank and open, I told her straight out what I was thinking. But she said ‘I am serious’, for you it’s easy to raise a flag, you’re an executive in the company, if there is something going wrong you just pick up the phone and call anyone and you don’t risk getting fire or blamed. For me, people might point fingers or it could get me in hot water. Again, I was surprised by her comments. According to her, being a relatively new employee and a junior in her field, she would be blamed if she flagged a problem. I gave her a few examples, which reassured her and then insisted that if ever this situation manifested itself, she should come to me right away. We were after all, working for the same company. Afterwards I did speak with colleagues and friends from other companies about the comments my young colleague had made. It turned out that for many people, the fear of raising a red flag is high. Unless companies shy away from this fear culture (like some automobile assembly lines for example) and encourage employees to speak out and break the process on occasion, at least the time to check things out, then there will always be resistance and employees will shy away from raising that dreaded red flag and look away. Moreover, the only looser here is the company itself because the longer the people wait, often the more money is wasted in one direction. I also always found that raising a flag as early as possible makes people less afraid of accepting some of the blame and correcting the situation. Once you wait too long then it becomes more of a blame game than anything else. Therefore, when in doubt, I would always encourage raising that flag. Worse case it may simply be a false alarm and this will happen at times. However, not raising it is worse because sometimes the outcome can turn into a disaster that could have been avoided. Moreover, people rarely are blamed for raising a false alarm, but they do get into serious trouble for letting things get out of control.
Related Articles:The Fine Line Between Normal and Capital Expenses Capital Expenditures and the Multiple Reasons for Their justification How to Plan out Your Real Estate Capital Expenses over the Years – Part II Getting a Fair Deal on Major Expenses as a Tenant Energy Saving in Buildings; How Much and How Fast?