Lottery savings accounts

"Lotteries are a tax on the stupid." We've heard this before but this simplistic statement ignores the entertainment value a poor person gets from dreaming about getting rich by purchasing a ticket. Being down and out is a tough situation and the thought that a $1 ticket can bring you riches is worth the purchase price.

My statistics professor once told me: 'The odds of winning the lottery are tiny, but by buying one ticket, you have improved those odds infinitely from zero to this number. Buying two tickets only doubles these odds so stick with one ticket." I use that philosophy when the mega millions gets above a quarter billion.

But I'm not poor and I already save about 20% of my income. How can we encourage the poor to save while still giving them the hope a lottery provides? A long time ago I dreamed of machines located next to the lottery machines at the convenience stores that people could load their money into a retirement account and see the balance and predicted amount at retirement every time they used the machine. Then they would have a choice between instant gratification and long term savings.

But I like a system even better as reported on in today's NY Times article. Here several credit unions offer 'Prize-linked savings accounts.' A small percentage of the interest rate is dedicated to monthly prizes which are randomly given to people who deposit money into their accounts that month. Not only do you have published winners, everyone else wins because they all save money for their futures.

Columbus the Risk Manager

An attendee at one of my Risk Management Presentations, Paul Juska, shared with me the term paper he put together showing the likely Risk Management activities Christopher Columbus went through to get financing for his trip to the Indies. It was well done and entertaining so I asked if I could publish it on my blog. Paul graciously agreed so I have posted it here for you to enjoy.

Dear PM Advisor. Aug 25, 2014

Dear PM Advisor,

I struggle with all the Earned Value Formulae. Any hints for making this portion of the PMP test easier to study for?

Can’t see the value in Albuquerque

Dear Can’t,

Once you struggle with the more philosophical questions on the PMP exam you’ll see the calculations like those Earned Value ones as a breath of fresh air. But first let me give you some hints to make these easier for you.

You are usually given some numbers and asked to calculate the rest. I’m going to assume you know some elementary Algebra before you take the test. Here are the three numbers you are usually given: 

Planned Value (PV), Actual Cost (AC) and Earned Value (EV). 

If they are evil they will give you one of the below formulae and you will need to use that basic Algebra to determine the missing number from above. Either way, you’ll need to remember the following formulae and below I’ll show you the easy way to do this.

There are four rules to remember:    

1. EV always come first in the calculation
2. AC goes with anything that says Cost
3. Negative Variances are always bad
4. Indexes less than 1.0 are always bad

So let’s put these rules to the test. You are asked to calculate Cost Variance. You get Variances by subtracting one number from another. Rule 1 says EV always goes first. Rule 2 says AC goes with any Cost calculation.

Thus CV = EV –AC     Simple, right?

What does that leave you with for Schedule Variance?  EV goes first, Rule 2 is not in effect so the only thing left to put in the equation is PV.

Thus SV = EV – PV.

The same two rules apply for the Index calculations.

Cost Performance Index requires EV to go first, only this time the EV goes in on top of the line. 

We’re talking about cost so AC goes on the bottom.

Thus CPI = EV/AC

SPI must use PV since that’s all that’s left.

Thus SPI = EV/PV

Rules 3 and 4 help you convert formulae into reality. If you have a negative SV, you are behind schedule. A negative CV means you are OVER budget. Don’t get confused by the negative number. Negative is bad, being over budget is bad.

Same with the indexes. Less than 1 is bad so a SPI of 0.8 means you are behind schedule. Over 1.0 is good so a CPI of 1.2 means you are UNDER budget.

Remembering these hints will help you with about 5 of the 200 questions you will be faced with. For those that require TCPI or ETC, you just have to memorize the formulae. More on these in a future post.

Good luck,

PM Advisor

Send your questions to Bruce@RoundTablePM.com

Ninety-third excerpt from 'Twelve Towers'

          The family saw many more monks on Glastonbury, all with the same hair style. They at first didn’t recognize Father Drew as he came, smiling, into their presence. “Welcome, Gwilym! Welcome Grainne! And welcome to you too, Bleddyn, Jac and Llawen. And you two must be Madoc and Brice. Let me show you to the guest house.”

          Father Drew took them along the street towards the abbey. The houses lining both sides of the street leading from the dock to the abbey were built with knee-high stone foundations and the daub was all in good repair. The walls were all painted white. The roof thatch all seemed twice as thick as normal.

          They stopped at the door of a substantial home. The front door opened into a large hall with a fire-pit in the center and lots of niches in the walls full of bedding. There was a trestle table with four chairs and a bench. Cooking implements rested on the short wall of the fire-pit. The fire was going and Gwilym noted with satisfaction that smoke was making its way through the thatch without filling the room. Half of the room had a loft as a ceiling that caused Gwilym to duck his head.

          There was a smaller room attached to this hall. Shelves stretched from wall to wall, their ends built into the walls. The shelves were already stocked with barrels of flour, corn-meal and salt. Dried meat, bags of apples, vegetables and fungi hung from a beam.

          “Thank you father,” said Gwilym. “We’ll be most comfortable here.”

          “I will leave you to settle in here, Gwilym. Shall I escort you to Avalon now, Grainne?”

          Madoc gave his mother a sharp look. She smiled at the priest. “Not just yet, Father Drew. Gwilym and I still have things to discuss.”

          The priest blushed deep red, looking from Gwilym to Grainne. “Oh…” he stammered. “Will you all join me for supper in two hours?”

          Gwilym’s family moved into the house while Grainne unpacked a few items from her cart. Gwilym, noticing this, asked her what her plans were. He had enjoyed the three weeks they had spent together and was afraid of losing her now.

          “Let’s walk up the tor!” she announced to the family. The boys raced ahead, Bleddyn with Brice on his shoulders, leaving the adults to walk up alone. Grainne took Gwilym’s large hand in hers.

          “You are a wonderful father. You will raise your boys to be strong men. Strong in every way. Smart, caring, learned, careful, funny, loving.”

          Gwilym smiled and looked at her, surprised that tears were flowing from her eyes. “What is the matter, my love? Why do you cry?”

          “Can I leave Madoc with you? I’ll visit almost every day. But I have to return to Avalon. And he can no longer live there. Can he stay with you? Play with his brothers, learn how to be a man?” Her tears were flowing down her cheeks and dripping off her chin.

          “You told him you wouldn’t do that. I thought we could all stay together. Why not marry and raise all the boys together? What about Brice? Won’t he miss his brother?”

          Grainne stopped and knelt down on the grass halfway up the Tor. She covered her face but Gwilym couldn’t fail to hear the heartbreaking wail that tore from her chest. He sat in front of her and wrapped her in his arms. “Grainne, my love. Why? What is more important than raising your sons?”

          She shook her head and kept crying. Gwilym stroked her soft hair with his calloused hand. He looked behind him to see his boys playing on the top of the Tor, trying to scale the large rock standing there.

          Finally, Grainne calmed down and uncovered her face. She looked at Gwilym and he was shocked to see emptiness in her large, green eyes. “You ask what is more important than raising my sons. There is only one thing more important. Protecting them and other children from the danger that comes next year is more important.”

          “When the hordes stream out of their boats, do you think they’ll leave our boys alive to fight against them when they get older? Of course they won’t! They’ll slaughter them!”

          “Protecting our offspring and other British children, hundreds, thousands of years in the future is more important than staying with my son this year. But I will miss him. And Brice will miss his brother. So we’ll visit almost every day. We won’t be far.”

          Grainne stood up and they climbed the Tor. The boys had stopped playing and were watching the adults. They smiled at the boys to reassure them. Gwilym looked over the lake. There seemed to be a connection between the surrounding land and the island through swampy land to the woods. Further away from this peninsula he saw swamp dwellings sitting on poles like herons at the water’s edge. He noted the ferry he had taken earlier today. He was troubled to see that this was the sole island in this portion of the lake.

          “Where is Avalon, Grainne? I see the willow where I summoned you many years ago. But this is the only island. And apart from the woods behind us, it seems to be made up of the Glastonbury religious settlement. Is Avalon in the woods? I see no buildings, no smoke rising.”

          Grainne gave a half-smile. “We share this island, Gwilym. Avalon and Glastonbury are one place in two different times. The priests cannot come to Avalon but we can travel to Glastonbury. A trick of the mists. I’ll take you there in a few days.”

To read the entire first draft in one shot, click here:

Dear PM Advisor. Aug 18, 2014

Dear PM Advisor,

How would you define and measure EVM?

Regards,

Hugo

Dear Hugo,

That's a quick question with a long answer.

I define Earned Value Management as the only objective way of measuring that you get what you pay for. It is an objective way of determining true project % complete because it uses baseline costs to give you credit for completion of tasks.

Here is a link to the method I use to measure EVM:

Good luck,

PM Advisor.

Ninety-second excerpt from 'Twelve Towers'

          An hour before sundown, the light started to increase and Gwilym noticed that the trees ahead were thinning. He had been trying his best to hold to the westward path Grainne had been following. The trees ended in a farmer’s field. He called Bleddyn to halt and they ran ahead to scout out the exit from the forest.

There was a north-south cart track that bordered the forest and the visibility along this to either side was excellent. Gwilym squinted his eyes toward the south and made out a straight line there. “Is that the road?” he asked Bleddyn.

          “I think so,” he replied. “Looks like it’s about a mile away. Shall we get back on it?”

          “No. Let’s stay on the side roads as much as we can.”

          They exited the forest and made their way along the track until they found a farmer’s path leading west.

          Grainne woke on the morning after her spell, ravenous and asking to eat meat in the first time since Gwilym had met her.

          Traveling over the back roads and open farmland, they spent five more days getting to their destination. Gwilym hid his face at every habitation. It became clear that no-one in this region was searching for Grainne and the boys.

          On the fifth afternoon they arrived on the shores of the lake on which Glastonbury Tor rose. They rang the triangle that hung from the small traveler’s hut and waited for the ferryman to bring the barge. Gwilym looked around him, seeing the grass-covered path that wound through the trees to the left. A few rocks stuck out from the surface of the lake edge.  His eye strayed to the old willow where he had called for Grainne during Kaitlyn’s fatal labor. He caught Grainne’s eyes. She changed the unspoken subject. “We never finished our conversation of the Holy Grail, Gwilym.”

          “The Holy Grail. You said I was of the same bloodline as Jesus. I can’t believe you are perpetuating that old lie about Jesus and Mary Magdalene. That seems so out of character for the man.”

          “You can share the same blood as Jesus without Him ever conceiving a child, you know.”

          “What?” he looked puzzled. Then his brow cleared. “Joseph? His uncle Joseph fathered a child in Avalon?”

          “Yes. The first in a line of sons that has extended for 500 years. And your sons are just the latest in that line.”

          Gwilym thought for a long time before asking, “Were all those boys fostered out?”

          “Some returned as adults to breed again with the Avalon line. Sometimes the mothers left with them. For two hundred years the line left Avalon. Then it returned to re-energize the other Avalon line.”

          “But along the way it must have been mixed with many other bloodlines. It could scarcely be recognizable now.”

          “You forget that only boys come from that line. The blood is strong and stays with the boys.”

The ferry approached. Grainne looked into Gwilym’s eyes and told him, “Ask me the question you have been avoiding.”

          Tears sprang to Gwilym’s eyes. “Who is…” his words caught. “Who is my mother?”

          “I will bring you to her in a few days. She still lives.”

          They drove the carts on board the ferry. The boys gathered around the adults to share their excitement at taking this trip. Jac looked at his father. “Why are you crying, Da?”

          “I’m just happy to be coming home, son.”

          “Why does this priest have funny hair, Da?”

            Gwilym wiped his tears and looked at the monk poling the ferry. While his robes were typical monastery wear, the man’s head was shaved on the sides, leaving a dome of hair covering his head. He shook his head. “I don’t know, son. We’ll ask Father Drew.”

To read the entire first draft in one shot, click here:

Elie Wiesel's plea for Middle East peace.

Warren Bennis: Taught leaders

A giant in leadership died this week.

He wrote many books about leadership and spent his lifetime educating and mentoring some of the world's great leaders. If you get a chance, read one of his books:

For more on hhis life, read his NY Times obituary.

Small oversight leads to huge problems in largest tunnel project

Bertha before drilling began in July 2013. CreditTed S. Warren/Associated Press

It's been 18 months since I first blogged about Seattle's big dig project: the tunnel to replace the Alaskan Way viaduct. This was a huge project including the world's largest drill bit with a 57.5 feet diameter. I remember reading a few months ago about the bit hitting an unknown object that caused it to stall. What's going on now?

A hole dug by Bertha, the tunnel-boring machine that went dormant last December.CreditDavid Ryder for The New York Times

In a recent NY Times article, we learn that the pipe it hit back in December caused damage that has stalled the drill until next March. Rescuing the bit required the drilling of a shaft to reach the damaged area, shoring up the tunnel it already dug to prevent it from collapsing, replacing huge parts then making further repairs.

A crane hoisting a tunnel-boring tool at a construction site where a large shaft is being dug to get to Bertha. CreditDavid Ryder for The New York Times

One of the biggest problems is the size of everything involved. When everything is scaled up, the cost and time to repair problems scales up exponentially. The eighteen month delay and hundreds of millions in budget overruns all stem from an eight inch diameter steel pipe that nobody involved in the project knew was in the way of Bertha. I'd love to see the official risk management of this project.