(Parkinson’s Laws)
In high finance, there are two types of people: those who have a lot of money and those who have nothing. A millionaire knows exactly what a million is. For an applied mathematician or an economics professor (who, of course, live on a shoestring), a million pounds is as real as a thousand, since they have never had either. However, the world is full of intermediate people who don’t understand millions but are accustomed to thousands. These are mainly the members of financial committees. This gives rise to a well-known but yet unexplored phenomenon – the so-called law of familiar sums: the time spent discussing a point is inversely proportional to the amount being considered.
In essence, it cannot be said that this law has not been studied. There have been studies, but the chosen method did not prove effective. Researchers placed too much emphasis on the order of the issues being discussed and somehow concluded that the most time was spent on the first seven points, after which everything would proceed on its own. Years of research were wasted because the main premise was incorrect. We have now established that the order of the points plays, at best, a supportive role.
To achieve useful results, let’s forget everything that has been done so far. We’ll start from scratch and try to understand how the financial commission works. To make it clearer for the average reader, let’s present this in the form of a play.
ChairmanLet’s move on to item 9. The floor is now given to our treasurer, Mr. Mac-Dub.
Mr. Mac-DubGentlemen, before you is the estimate for the construction of the reactor, presented in Appendix N of the subcommittee report. As you can see, Professor Mac-Pup has approved both the plan and the calculations. The total cost is up to 10 million dollars. Contractors Mac-Foot and Mac-Yard believe that the work can be completed by April 1963. However, our consultant, engineer Mac-Vor, warns that construction will be delayed at least until October. He is supported by the renowned geophysicist Dr. Mac-Grunt, who believes that additional soil will need to be added at the bottom of the construction site. The project for the main building is in Appendix IX, and the reactor drawings are on the table. If the committee members deem it necessary, I would be happy to provide more detailed explanations.
ChairmanThank you, Mr. Mac-Dub, for your exceptionally clear presentation of the case. I would like to ask the commission members to share their opinions.
Let’s pause here and consider what their opinions might be. Let’s assume that there are eleven people in the commission, including the chairperson, but not the secretary. Four of them (including the chairperson) do not know what a reactor is. Three do not understand its purpose. Among those who do know, only two have any idea of its potential cost – Mr. Noy and Mr. Brus. Both of them are capable of saying something. Let’s assume that Mr. Noy will be the first to speak.
Mr. NoyWell, Mr. Chairman… I’m not really confident in our contractors and consultants. If we had consulted Professor Sim, and signed a contract with the company “David and Goliath,” I would feel a lot more at ease. Mr. Dan wouldn’t waste our time; he would immediately tell us how long the work would take, and Mr. Solomon would straightforwardly let us know if we need to add more soil.
ChairmanWe all certainly appreciate Mr. Noah’s enthusiasm, but it’s too late to invite new consultants. True, the main contract hasn’t been signed yet, but significant amounts have already been spent. If we don’t agree with the paid advice, we’ll have to pay just as much again. (Approving murmur)
Mr. NoyI request that my words be included in the minutes.
ChairmanOf course, of course! It seems Mr. Bruce wants to say something?
Mr. Bruce is almost the only one who understands the issue. He could say a lot. He finds the figure of 10 million suspicious – it’s just too round. He doubts that it’s necessary to demolish the old building to clear space for access to the site. Why is so much money allocated for “unforeseen circumstances”? And who exactly is this Grunt? Wasn’t he the one that an oil company took to court a year ago? But Bruce doesn’t know where to start. If he refers to the blueprints, the others won’t understand them. He’ll have to explain what a reactor is, and everyone will take offense at that. It’s probably better to say nothing at all.
Mr. BruceI have nothing to say.
ChairmanDoes anyone else want to speak? Alright, good. So we can consider the project and budget approved? Thank you. Am I authorized to sign the contract on your behalf? (Nods of approval.) Thank you. Let’s move on to item 10.
Aside from a few seconds when everyone was rustling papers and blueprints, point 9 took exactly two and a half minutes. The meeting is going well. However, some people seem a bit uneasy. They are worried that they may not have performed well during the discussion about the reactor. It’s too late to delve into the project now, but it would be good to show, while everything is still ongoing, that they are not slacking off either.
Chairman10. Bicycle shed for our employees. The company “Kus and Chervi,” contracted to carry out the work, estimates that it will cost £350. The plans and calculations are before you, gentlemen.
Mr. TупNo, Mr. Chairman, that’s a lot. I see that the roof here is aluminum. Wouldn’t it be cheaper to use roofing felt?
Mr. GrubRegarding the price, I agree with Mr. Tup, but I think we should cover it with galvanized iron. In my opinion, we can manage it for 300 pounds or even less.
Mr. SmelI will continue, Mr. Chairman. Is this shed really necessary? We already do too much for the employees. And it’s never enough for them! They’ll want garages next…
Mr. GrubNo, I don’t agree with Mr. Smelov. In my opinion, we need the shed. As for the materials and pricing…
The debate is going smoothly. £350 is easy for everyone to picture, and anyone can imagine a bike shed. The discussion lasts five minutes, and sometimes they manage to save fifty pounds. By the end, the participants sigh contentedly.
ChairmanItem 11. Snacks for the meetings of the United Charitable Committee. 35 shillings per month.
Mr. ToupWhat do they eat there?
ChairmanIt seems they are drinking coffee.
Mr. GrubSo, that means it comes out to… Let me see… 21 pounds a year?
Chairman. Yes..
Mr. SmelGod knows what! But is it really necessary? How long have they been in session?
The debates are heating up even more. Not every committee has people who can tell tin from sheet metal, but everyone knows what coffee is, how to brew it, where to buy it, and whether to buy it at all. This topic will take an hour and a quarter, by the end of which those present will demand new data from the secretary and postpone the discussion to the next meeting.
It is appropriate to ask whether a dispute over a smaller amount (say, 10 or 5 pounds) will take even more time. We do not know this. However, we dare to suggest that below a certain amount, everything will go the other way, as the commission members will again be unable to present it. It remains to determine the size of this amount. As we have seen, the transition from disputes of twenty pounds (an hour and a quarter) to ten million (two and a half minutes) is very abrupt. It is extremely interesting to determine the threshold of this shift. Moreover, this is important for the matter at hand. For example, let’s assume that the lower indifference point is at 15 pounds. Then the presenter, bringing the figure of “26” to the discussion, can present it to the attendees as two amounts: 14 pounds and 12 pounds, which would save the commission both time and effort.
We are still hesitant to draw definitive conclusions, but there are reasons to believe that the lower point is equal to the amount that a regular member of the commission would not mind losing or donating to charity. Research conducted at races and in places of worship will help shed more light on the issue. It is much more difficult to calculate the upper point. One thing is clear: it takes the same amount of time for both 10 million and 10 pounds. We cannot consider the specified duration (two and a half minutes) to be completely accurate, but both amounts indeed take on average between two and four and a half minutes.
There is still a lot of research to be done, but the results, once published, will generate great interest and provide practical benefits.