Why we should not have Open Tenders

Malaysia have again gone against conventional wisdom and come up trumps by forsaking the widely accepted practise of having open tenders for construction and supply contracts.It can be easily proven that there is more negatives of Open Tenders that far outweighs its usefulness.

Let me enlighten the bewildered on the sharp and focused thinking of our good leaders that have led to the adoption of negotiated tenders.

1. Open Tenders is BAD for the ENVIRONMENT >>in an open tender,documents are issued to interested parties for submission of their priced bids.These documents also includes stacks of drawings making it a very thick total package of a few tons.And as there will many tenderers,there will be tons and tons of paper,gallons of ink,litres of glue and not to forget the destructive heavy metals in the staples.And the tenderers will need to use paper,ink and electricity (from coal powered plants ) to price their bids.All in all,it will be a huge big mess for the environment and the future of our children.
2. Open Tenders is BAD for FAMILIES >> To price for a tender properly ,hundreds of manhours are necessary.And in an open tender ,prices must be extremely competitive thus even more effort is needed to come up with a reliable costing.Multiply that by the number of people bidding,and you can just imagine the number of children without their parents...who are toiling away throughout the night working the numbers.This will impact on the family unit and if not addressed early will lead to a future generation of maladjusted children.IN a negotiated project the margins of 40% slapped on top of the cost means only minimal work as there is sufficient margin for errors...and it involves only a small select group.
3. Open Tenders creates animosity and bad for UNITY>>In open tenders,there is competition.Its a barbaric event not unlike the graditorial fights in the Roman times.Do we want to regress into such barbaric times?Do we want someone to win and gloat over the many many losers?Its not the formula if we are striving for a close knit unity nation.
   
4. Open Tenders creates SOCIAL PROBLEMS >> In an open tender,there will be many parties vying to be the winner.AS such,each will be working hard to lobby and improve their chances.The lobbying will involve all stages and also many people...thus the karaoke lounge and massage parlours will be quite busy places.This will create social problems on a LARGE SCALE across a broad distribution within the Malaysian society.In this regards a negotiated contract will involve only a small group and is often the practise,more of the lobbying is done overseas thus reducing immorality in our country
5. Open Tenders creates wide scale CORRUPTION>>as explained in 4..open tenders requires lobbying by many to many at all levels.Obviously,an essential would be the lubrication,the baksheeesh...and with this "many to many" scenario,the practise will become a norm and widespread at all levels of the society.In negotiated contracts corruption, if any is more self contained to a select group thus ensuring that the average people are protected from such evils.
6. Open Tenders provides SUCCESS to the country>>Malaysia have one of the biggest population of exotic and expensive imported cars,watches,fashion etc...and also big huge mansions and Rm3000 per ft2 condominiums.This fantastic success will not be possible with open tenders..with the low margins,contractors will be lucky to survive and be able to afford even a Honda Cub and an alarm clock.

There are many2 more reasons of why Open Tenders is so old hat and not the best practise.Suffice the 6 above to start the thinking process for us to appreciate how smart and how much foresight our political leaders have.

Stimulus Package Perspectives Part 1

The latte is half full.
My good friend,a well known entrepreneur and budding tycoon, is holding court and espousing his views on what the government must focus on in the Second Stimulates Package.

• There is almost a 50% decline in wealth especially among the rich.The poor are not extremely affected as they are not exposed to the stock markets,properties and such investments.In fact,some of the poor is extremely lucky (or is it foresight?)that as they do not have any money to invest,their investment portfolios have not suffered any distress.
• Even if we are to assume that the poor have some investments,lets assume a figure of Rm 100..his loss will only be Rm 50.However,my friend with a portfolio valued at Rm 12 million have lost Rm 6m.It will be very difficult to put a case that the poor have suffered more than the rich based on those figures.Surely,even a cockeyed,SPM drop out knows that Rm 6m is much more than Rm 50.
• The poor is basically capable of maintaining their lifestyle regardless of economic cycles and financial crisis.The reason is simply because they are poor..which is acceptable in any developed society.
• However,the rich will have to give up so many necessities to survive the recession.No more first class on the whim trips to London is the least of their concern.Their bigger problem will be to tell their kids that new handphones only 4 times a year,LV is only for Mom and only 3 weekly dinner outings to Lafite/Prime now.The deprivation of such essentials will certainly affect the kids potential to contribute to society as they reach adulthood.
• It is a well known and accepted fact that consumer spending is necessary to boost the economy.It can be easily proven that even in the good times the poor have not played their role in this aspect of generating economic growth.Just a cursory review will demonstrate the absolute absence of 52 inch LCD TV,LV handbags and Ferraris in poor households.On the other hand the rich have done their duty towards consumerism...as a test..you can blindfold any of them and they can still reach Naza Showroom and Starhill.
• The property market is driven by the rich.The poor have demonstrated their unwillingness to buy properties even during the good times.Even with discounts,easy credit and low interest rates the poor have not shown any interest to buy properties in Bangsar,KLCC,Kiara.It is essential that the property market is sustained...as any impairments will have to be recognised by the banks..and that will reduce their asset values...raise NPLs...curtail available funds for them to give loans..and meet their KPIs.Obviously,this will reduce the bonus payments and have a major impact on liquidities and GDP.The poor fortunately do not have such risk.
• However the package must be fair to everyone.It is not possible for the government to compensate everyone even though the government is a responsible one.
• It is also better that monies is given DIRECT to the people and not through development schemes,negotiated contracts,JKKKKKs and such complicated and high overheads mechanisms.

The proposal ,my friend finally revealed is basically to compensate for only 50% of losses suffered and it is to be across the board...regardless of race,religion,color of the eyes ,poor or rich...
Thus my friend should get a straight cash compensation of Rm 3m and the poor will also get his fair 50% compensation.The Rm 3 m loss is as my friend forlornly accepts his contribution to nation building.
His proposal have merits as it will remove the stigma of negotiated contracts,APS,licenses and quotas as a tool for generating economic growth.

Now the latte is half empty.

Turnarounds in 7 easy steps

There will be a huge demand for "Turnaround Artists" as the impact of the financial crisis bites into corporate performance.Every single individual in this planet has the essentials to be the corporate maestro if proper guidance is given.
Firstly it is a question of coming in at the low point and leaving before the next downturn.Secondly it is about following the rules.
This briefing is about the rules...diced and sliced to the barebones for easy assimilation by anyone with double digits IQ i.e the ultimate dummy guide for all aspiring "Turnaround Artists."

1. Clock in at 6.00 am on the first three days and clock out not earlier than midnight.Ensure the press is fully informed and waiting at the lobby for your arrival and departure.Do not provide refreshments to the Press.
2. Make a lot of noise blaming the previous management.Buzzwords includes cash crunch,legacy issues,funding mismatch,misguided strategy,behind the curve..the gist is to tell the world that the business have been destroyed beyond redemption.
3. Change auditors,financial controller,company secretary...and bring a coterie of young impressionable group of guys with lengthy list of qualifications.The role of these guys is to photostat,run errands,make coffee and ensure that no one gets past to see you.
4. Create huge losses by making provisions,right downs,asset impairments..and whatever else you can grab your hands on.There are hidden gems such as intangible assets,share premium accounts that you should not neglect.
5. Go on austerity drive by reducing pay and perks for all employees,forced discounts from all your suppliers,subcons,vendors and retrenchments.One effective trick is to have Press coverage of u taking an Air Asia flight.By the way,once you are in Singapore,it will be safe enough to fly SIA first class cos not many press ppl gets to be in the front.
   
6. Sell all assets except your table ,chair,whiteboard...if you have done Step 4 properly you will have lots of profit from this step thus immediately impressing your bosses of your acumen and generating easy pickings for ur targetted KPIs.And of course,u hv improved the Balance Sheet,have the cash pile...so forget the assets.Assets is a problem cos they cost money and takes a bundle to operate and maintain.
   
7. Go and beg for a big concession,price/rate increase,negotiated projects from the Prime Minister
   

Thats all you need to do really.As an aside,maybe you should cultivate "Corporate Social Responsibility" wisely.If you focus right you may get a few Dato Seris to add to your name.

Good Luck and as a kindly reminder in the event you fail to turnaround the company you can stll blame Legacy Issues and Greenspan.

Politics of Nudity

Elizabeth Wong,Chua Soi Lek,Vijandran.
Variations on a theme.
The theme is exposure.
But the script is different.
But the objective maybe the same.
Hope the ending will be different.
Variations on a theme,
And not by Erik Satie.

Blame it on EXCEL Spreadsheets

I have a theory that the collapse of the financial systems over the last 20 years ;whether it is the subprime,internet bamboozles,telecommunication misfirings etc is caused by EXCEL..and I refer to the spreadsheet offering by MicroSoft and not the isotonic drinks nor the massage place in Sukhumvit.

EXCEL have enabled massive amount of numbers with complicated formulas linked to multitudes of appendices to be easily managed and crystallized.Within seconds of changing a parameter,a new set of numbers can be generated.If done manually,it may take millions of manhours assuming the men are not prone to making mistakes along the way.If they are like me..a wanderer in the mind it will take forever.

This sort of power over numbers is given to anyone with a few hundred bucks to spare and a modicum of intelligence to create the spreadsheets.Microsoft have made it so easy...its like click,click,drag,click..even a hairdresser can do that.Of course,the smarter ones especially those with Doctorates in Physics can create even more awesome "models" of unlimited variability to reflect the complexities of the world we live in.

Thus,the spreadsheeters are the new Masters of the Universe and the artist that can create the most complex models are the Demigods of the Universe.With these fantastic financial modelling,every single mystery of the financial universe can be predicted to the last nano bits.
From these complex models grew the industry that created the hedges,the derivatives,the derivative hedges,the insured hedge derivatives and other magnificient "risk averse"instruments of wealth.

And as everyone basically uses EXCEL to an extent,there are convergence within the various Demigods spreadsheet creations and the models became self prophecial.But eventually,someone must have realised that the Emperor was nude...and that started the collapse.

Thus my conclusion is the financial collapse would not have happened if we only have VisiCalc one page maximum spreadsheets running on Apple 2 with 40MB hard disk.

But we still need EXCEL..we can't live without the early morning "what ifs " with the EXCEL.And no bankers will give loans with a one page spreadsheet.And,furthermore without EXCEL the bankers will realise that we have no idea of what our business is all about.

Thus,my recommendation is that we continue with EXCEL but MicroSoft have to introduce some new "functionalities".One is the moral test function and the next is business sense function.If there is failure to meet the criteria of the two new functions,then the user will be reverted to the one page VisiCalc option.

Mr Gates>For further enquiries and meeting on this proposal please email me and despatch 2 first class return tickets.

Value creation

The beauty of synergies encapsulated in the simple equation of 1 plus 1 is equal to -1.
For immediate examples look at the recent merger exercises by SimeDarby amongst others.

Or maybe,we can reverse into demergers to create value i.e 1 divided by 2 is equal to -1.The shining example of this strategy is the TM corporate exercise.

The next viable option would be to demerge a merged corporation and then merge it with one half of a demerged entity.The equation will be bracket 1 plus 1 divided by 2,,then a slight pause before we add that results to bracket 1 divided by 2 and then divide by 2. Simplified ;

-1/2 + -1/2= -1

They must be something wrong with my maths as everything comes back to -1.Is it because I have not added the consultancy and transaction fees or is it because I am a natural optimist.

Let me talk to my pyscho and will clarify soonest.