Suppose we have hired a contractor to build a bridge. We issue partial payment for the project in the form of a financial instrument (presumably in a mutual fund or something else that bears interest) which only pays out in X years from now if the bridge does not collapse by then. We then monitor the price of this instrument, particularly the sales by those holding it, in order to obtain information about the quality of the bridge. This allows us to obtain this information without incentivizing anyone to deliberately sabotage the bridge project (assuming we prohibit short-selling).
Huh.
@neoliberalism-nightly
construction surety bonds
So they (or rather, something like them) do exist. Though in this case, I’m thinking that these are offered to the employees, rather than, or in addition to, the company, with less access to the external market for a while, so that we can obtain this information in addition to not rewarding if the project fails to complete adequately.
And perhaps, more importantly, offer these across all sectors of government contracting and even public sector employment generally.
Though… if we have the mechanisms, why the fuck do we still have so many massive time and budget overruns?
And why aren’t we using these on government IT projects?
So many of them fail spectacularly, imagine if we made 1/3rd of the pay into deferred compensation in this format. We could not only see some of these failures coming and plan for them, but we could drive some of these people that cannot deliver a project and turn everything into dragged-out, cost-plus, out of the sector.
>why does the government still pay out so much extra money to their connected contractors?
But of course there are budget- and time-overruns in private contracting as well.
When I’ve seen it, it has typically been one of the following:
- Commissioned personnel pushing through a contract that’ll be good for them but not good for the company
- rank optimism
- VIPs slowing things down by being too busy to have time for you when you need the go-ahead signed
- VIPs slowing things down by being too fucking self-important and unable to get it hard unless they first delay a project by grandstanding
- Seriously don’t get me started on VIPs
- On my tombstone, just write “Sure he’s dead now, but you should see what he did to the other guy once he learned they’d changed the project requirements during the project.”
Sounds like some of these government contracts need what I’ll call “adversarial review”. Imagine, having a department who gets paid by reading through the contract and thinking of all the ways to fuck it up.
Not just some rubber stamp review, but getting paid for all the flaws (and by the magnitude of the flaw) they find.
There’s gotta be some way to bring the rate of costs and fuckups down. Certainly, other countries that are also developed are paying much less for infrastructure.
How do you keep that productive? Criticism is easy, accurate and actionable criticism is hard. Who criticises the critics? Scott’s IRB experience for example didn’t even have payouts per criticism, ordinary human and bureaucratic motivations were enough to make it counterproductive.
Perhaps we put a contract synthesizer on top that pits the two sides against each other a few times and decides which criticisms actually matter to the organization, and then we also issue a few more employee deferred compensation instruments based on things like the number and magnitude of change orders.