Wednesday, March 31, 2010

Toot



It may be that your whole purpose in life is simply to serve as a warning to others.



Recently Honestly Lay Bare, Mrs Honestly Lay Bare, Auditor 1 and Auditor 2 went on a holiday.

This holiday necessitated a flight and as such we rented a car at our destination.

The car had all the modern conveniences that one would expect with the exception of one thing - its horn didn't work.

And today dear reader the existence of car horns is the focus of our post.

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Car horns have become part of everyday life. One can hardly find a car without a horn (we did!). Car horns date back to the earliest of horseless carriages. In the early 1800s, steam carriages were becoming popular in Britain.

For the safety of pedestrians and animals, a law was passed stating that "... self propelled vehicles on public roads must be preceded by a man on foot waving a red flag and blowing a horn."

It didn't take long to realise that a horn in the automobile itself, operated by the driver, was much more efficient.

Over the years, there have been many studies and designs in an attempt to produce horns that are pleasing to the ear but still able to penetrate the low frequency rumble of traffic noise. Up until the mid 1960s most American car horns were tuned to the musical notes of E flat or C. Since then, many manufacturers have moved up on the scale to notes F sharp and A sharp.

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When you drive a car knowing that you don't have a car horn you drive very differently than if you do have a car horn (or as was the case with the Honestly Lay Bare family for the first three days we thought we had a car horn).

Why is that?

Honestly Lay Bare and Mrs Honestly Lay Bare summised that the knowledge of the existence of a car horn allows you to take more risks driving content in the knowledge that you have an early warning system that can alert other people to your taking of the risks.

Another interesting side effect of having no horn is that you cannot provide "feedback" to other drivers that have caused your concern or ill.

So the morale of the story is two fold.

Firstly, an early warning system is essential in the management of risk and allows for immediate feedback on your assessment of the risks taken.

And secondly, if you are ever on holidays with the Honestly Lay Bares, make sure that their car has a horn before you agree to a lift!

Post based in part on Car Horns - A History www.cogapa.com/history

Wednesday, March 24, 2010

The Demise of AF447


All the world is a laboratory to the inquiring mind.

A fascinating article from Popular Mechanics about the lessons learnt and being learnt from the tragic demise of an Air France passenger jet in May 2009.

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Seven miles above the empty expanse of the South Atlantic Ocean, on May 31, 2009, an Air France A330 passenger jet cut through the midnight darkness. The plane had taken off 3 hours earlier, climbing from Rio de Janeiro on a northeast heading, its navigation computers hewing to a great-circle route that would take the flight 5680 miles to Paris.

At 10:35 pm local time, one of the co-pilots on the flight deck radioed Atlantico Area Control Center in Recife, Brazil, and announced that the plane had just reached a navigation waypoint called INTOL, situated 350 miles off the Brazilian coast. The waypoint lay just shy of the Intertropical Convergence Zone, a meteorological region along the equator famous for intense ­thunderstorms. Staff at Atlantico acknowledged the transmission and received the airplane’s reply: “Air France Four Four Seven, thank you.”

It was the second time within the past 12 hours that the jet, F-GZCP, had crossed this stretch of ocean, having flown the Paris-to-Rio leg with only 2 hours to refuel and load passengers before departing again. Such was the lot of the four-year-old long-haul plane: a repeated cycle of flight and turnaround, as rhythmic and uneventful as the phases of the moon. But the routine was about to be broken.

After receiving AF 447’s transmission, Atlantico asked for the estimated time it would take the aircraft to reach the TASIL waypoint, which lies on the boundary of the Atlantico and the Dakar Oceanic control areas. At that point communication would pass from Brazil to Senegal. AF 447 did not reply. The controller asked again. Still, there was no reply. The controller asked a third and fourth time, then alerted other control centers about the lapse.

According to the flight plan filed by AF 447, the plane should have crossed into Dakar Oceanic at 11:20 pm, at which point the flight crew would have made radio contact with Dakar to confirm their position. They didn’t. They also failed to contact the Cape Verde controller, whose airspace they were supposed to enter at 12:43 am. As time went on, controllers along the aircraft’s route began to worry that the problem was more than just a communications breakdown.

By 3:47 am, the flight should have appeared on the radar screens of Portuguese air traffic controllers. It didn’t. An hour later, Air France contacted the Bureau d’Enquêtes et d’Analyses pour la Sécurité de l’Aviation Civile (BEA), the French equivalent of the United States’ National Transportation Safety Board. By 8 am, French authorities officially reached what had become a grim, unavoidable conclusion: Air France 447 had disappeared.

Vanishing without a trace is not supposed to happen in this day and age. The globe is crisscrossed by constant ship and air traffic. A constellation of satellites orbits overhead, and communication is nonstop. Yet, for a few days in early June, it seemed that the impossible had happened. Air France 447 and the 228 people onboard were simply gone. There was no distress call or wreckage; there were no bodies.

Within hours, the French government deployed a search-and-rescue airplane near the TASIL waypoint. Over the next few days a flotilla of ships and aircraft arrived to assist the search operation, including a French nuclear submarine and a research vessel withan unmanned deep-water submersible that were dispatched to find the flight data recorder, or black box.

Yet for days nothing was found. The only clues to the plane’s fate were automatic messages that the onboard maintenance computer transmitted by a datalink system called the Aircraft Communications Addressing and Reporting System (ACARS). The system transmits text messages via satellite to ground stations, which then forward them on land­lines to the intended destination. In just a 4-minute span, the system had broadcast 24 reports to Air France’s dispatch center in Paris, each concerning problems with subsystems onboard the aircraft.

At 11:10 pm, about 35 minutes after AF 447’s last verbal communication, the system sent a message that the autopilot had disconnected. Seconds later, it reported that the flight control system was unable to determine the aircraft’s correct speed. Subsequent messages cited a cascade of other malfunctions. At 11:14 pm, the final message reported that the airliner’s cabin either had depressurized, was moving with high vertical velocity, or both.

ACARS messages are transmitted in a dense alphanumeric code and are used for airplane maintenance, not real-time monitoring of flights by dispatch centers. When investigators realized that the plane was lost, they scrutinized the messages. The story the transmissions told was tantalizing, but inconclusive. Did the error messages suggest a fault in the sensors, or was the flight management system somehow fatally corrupted—perhaps because of a midair lightning strike?

The absence of clues causes concerns that reach beyond the AF 447 investigation. Was the crash a result of pilot error, an unexpected breakdown of vital equipment or a combination of both? Without answers, there is no way to guarantee that another airliner won’t suffer the same fate.

All the attention given to a crash like Air France 447’s can obscure an important truth: Commercial air travel is incredibly safe—and getting safer. In 2008, the U.S. fatality rate was fewer than one death per nearly 11 million passenger trips. This impressive record is the result of more than a century of incremental improvements that have been amassed through painstaking forensic analysis.

After each plane crash, investigators study the wreckage, analyze flight data and examine clues regarding flight conditions. Once they have determined a cause, they often help create recommendations that prevent the problem from recurring.

The FAA is determined to cut the already minuscule airliner fatality rate in half by 2025. With this in mind, the agency recently developed a new approach to make safety improvements. In 2007, it began working with airlines to sift through the masses of data that planes record about their normal flight operations, looking for safety improvements that could preempt accidents before they happen, instead of learning these lessons after a plane crash occurs.

The sophistication of aircraft makes this strategy possible. Modern planes are studded with environmental sensors that record flight conditions, while other sensors constantly assess the health of the airplane’s subsystems. This information is fed to a central computer, forming a network that resembles the neural system of a primitive organism. At the end of each flight, maintenance crews can easily download the data for analysis. Airlines have been using this information to improve their safety performance since the early ’90s, but two years ago the FAA began collecting these records as part of its Aviation Safety Information Analysis and Sharing (ASIAS) system.

This year, the FAA opened the Accident Investigation and Prevention Service to scrutinize the ASIAS data. “We’re having many fewer accidents, but the ones we do have are being caused by threats that are much harder to detect,” says Jay Pardee, the director of the new office. As an example of the kind of problem that ASIAS data could prevent, consider Comair Flight 5191, which was scheduled to take off from Lexington, Ky., in August 2006.

Thinking they were on 7000-foot Runway 22, the pilots failed to get their aircraft airborne before they ran out of asphalt on the runway they were actually on—3500-foot Runway 26. The airplane’s wheels clipped an airport perimeter fence and the plane plowed into a grove of trees 1800 feet from the end of the runway. All 47 passengers and two of three crew members were killed.

After the accident, the FAA reviewed 25 years of data and discovered that 80 commercial aircraft around the country had either taken off or tried to take off from incorrect runways. “Nobody connected the dots,” Pardee says. Following the AF 447 disappearance, other Airbus 330 operators studied their internal flight records to seek patterns. Delta, analyzing the data of Northwest Airlines flights that occurred before the two companies merged, found a dozen incidents in which at least one of an A330’s airspeed indicators—­4-inch-long, pressure-sensing pitot tubes located on the fuselage under the cockpit—had briefly stopped working.

Each time, the flights had been traveling through the Intertropical Convergence Zone, the same location where Air France 447 disappeared. In the case of the Northwest A330s, the pitot tube malfunctions had been brief and harmless. But what if a severe version of the problem had struck Air France 447 amid more unforgiving circumstances?

At last, on June 6, the multinational search effort began to find evidence of the crash. The Brazilian military recovered bodies and debris floating approximately 40 miles north of the last automatic Aircraft Communications transmission. Over the next two weeks, search vessels retrieved 51 corpses from a stretch of ocean 150 miles wide, along with bits of wreckage—a section of the radome, a toilet compartment, part of a galley—that collectively added up to less than 5 percent of the aircraft. The largest single piece was the tail fin, marked with the distinctive blue and red stripes of the French national carrier.

The most important piece of the wreckage, however, remained missing. More than a month after the plane went down, despite the joint efforts of the French and U.S. navies, the black box still hadn’t been found. Given the huge search area, the ruggedness of the undersea terrain and the depth of the water (up to 15,000 feet), locating the recorder, let alone retrieving it, was proving to be an enormous task. Once the unit’s acoustic pinger passed its 30-day certified life span, the chances of recovering the black box became virtually nil.

Without the box’s data, the only physical evidence of the airplane available to investigators was the mangled wreckage. From the way it had been deformed—in particular, the way the floor of the crew’s rest compartment had buckled upward—French investigators determined that the fuselage hit the water more or less intact, belly first, at a high rate of vertical speed. Added to the ACARS messages and the satellite weather data, the evidence began to conform to a possible scenario. By 10:45 pm, 10 minutes after the last radio transmission, the plane hit the first, small storm cell in the Intertropical Convergence Zone.

Fifteen minutes later, it hit a larger, fast-­growing system. And then, just before its last ACARS transmissions, the plane hit a whopper, a multicell storm whose roiling thermal energy rose more than 3 miles higher than AF 447’s altitude. Buffeted by turbulence, near the heart of a strong thunderstorm, the pitot tubes froze over. Lacking reliable speed indicators, the airplane’s computerized Flight Management System automatically disengaged the autopilot, forcing the co-pilots to fly the airplane manually.

Without autopilot, the pilots had no envelope protection restrictions, which are designed to keep the pilot from making control inputs that could overstress the aircraft. This is particularly dangerous for airliners at high altitudes. The thin air demands that airplanes fly faster to achieve lift, but they still must remain below speed limits. Flying too fast can create a phenomenon known as mach tuck, when supersonic shock waves along the wings shift the aircraft’s center of pressure aft and can make it pitch into an uncontrollable nose-dive. Flying too slow can cause a plane to stall. AF 447’s flight crew, disoriented in the storm, uncertain about their speed and buffeted by turbulence, could easily have taken the A330 outside its flight envelope.

“The fact that they didn’t transmit a mayday would seem to indicate that whatever happened to them happened quickly,” says William Waldock, a professor of safety science at Embry-Riddle Aeronautical University in Arizona. Without more data, this kind of scenario can never be verified completely. But the global aviation community has already taken steps to prevent another accident like AF 447.

Within days, Air France replaced pitot tubes on its Airbus planes with ones made by another company, and in July Airbus advised other airlines to do the same. Three months later the FAA turned the recommendation into a regulation. To be sure, the pitot tubes are not the definitive cause of the crash. Even if they had failed, that alone should not have been enough to bring down an airliner. As in virtually every fatal air crash, what doomed AF 447 was not a single malfunction or error of judgment, but rather a sequence of missteps that crash investigators call the accident chain. “There’s always a series of events,” the FAA’s Pardee says. “That means there are multiple opportunities to intervene and break that accident chain.”

In the case of AF 447, the error chain included the co-pilots’ decision to fly too close to severe thunderstorms—bad weather that several other pilots, flying similar routes that night, had chosen to give a wide berth. There were certainly other links in the accident chain that pushed AF 447 beyond its limits. But unless the black box is found, we may never identify those links. And that means safety officials might never learn the full lessons of the disaster.

To prevent a similar loss of forensic evidence, executives at Airbus say they are now studying alternatives to physical black boxes. It is feasible to create a system that could broadcast not only text messages like ACARS but comprehensive data about the status of every aircraft, in real time. The aircraft would continuously transmit data to VHF stations within a radius of 125 miles, or by satellite if the plane is farther away. Airliners in flight could one day stream all sorts of high-speed data, sharing information directly with one another. “It would be a network in the sky,” says Bob Smith, chief technology officer at Honeywell, which manufactured AF 447’s ACARS. “Aircraft could pass not only information about their location and where they’re headed,” he says, “but whole data sets. An airliner over Seattle could send its weather radar picture to a plane inbound from Dallas. And the guy from Dallas could pass it along to five other aircraft.”

Military aircraft already use a similar system; it is not clear if civil aviation will adopt it.

The disquieting truth is that we don’t really know precisely what happened to Air France 447, and perhaps never will. The same links in the accident chain could someday take down another unlucky airliner. If they do, improved technology might provide investigators with the data they need to make sure that the next time is the last time.

Post based on "How Plane Crash Forensics Lead to Safer Aviation" by Jeff Wise in Popular Mechanics December 2009

Wednesday, March 17, 2010

The Dabhol Power Plant Debacle

Corruption never has been compulsory

Continuing one week more on the Enron theme, Honestly Lay Bare has always considered Enron's investment in India in the 1990s as one of the classic case studies of poorly thought out - and even more poorly executed - management of foreign investment risk.

Welcome to the financial and political disaster that was Enron's investment in the Dabhol Power Plant - more than 300 kilometres south of Mumbai.

Once the seventh-largest company in the US, Enron in 1992 was contracted to build a US$2 billion power project on India's western coast, in what was then the largest foreign investment ever made in India.

Today, the Dabhol plant, 320 kilometers south of Mumbai, is nearly 700 hectares of rusting equipment, empty buildings and huge storage tanks bisected and surrounded by deserted roads. It had been projected as the world's largest natural gas-burning energy facility.

At Dabhol, almost everything went wrong. Dabhol Power Company (DPC), as it was named, was supposed to generate 2,100 megawatts of power, not only to meet the shortage around Mumbai and Maharashtra state, but to partially meet the demand for an increasingly power-starved country.

Even before it was built, opposition figures were charging that Enron had got the contract with the aid of bribes, which the company repeatedly denied.

The opposition campaigned in 1994 and 1995 against the then-ruling Congress Party on an anti-Enron platform, charging that the contract was unduly enriching the Texas company. The Maharashtra state government fell in 1995, with the new government appointing a team of ministers to review the project and ultimately recommending the contract be scrapped. Enron entered arbitration and demanded $300 million in compensation. The state government countered with a suit alleging fraud and misrepresentation.

In 1996, when the currently ruling Bharatiya Janata Party had only been in power for 13 days, Dabhol received the green light for construction from Finance Minister Jaswant Singh. He not only cleared the project, but also provided the government's first-ever counter-guarantee to a power project, assuring full payment to the creditors in case of project failure under the Indo-US Bilateral Investment Protection Treaty.

At its height, the power plant employed 15,000 people. Its most immediate problem was that the power Enron’s Dabhol plant was selling was twice as expensive as that of its next nearest competitor.

None of this should have however come as a surprise.

Back in 1993, when the project was just a twinkle in an executive's eye, the World Bank concluded that it was "not economically viable." The bank said that the type of plant proposed would produce too much power at too costly a price for the state.

"We knew what would happen, and they did it anyway for reasons they thought best," it was said. "You're bankrupting yourself knowingly, willingly, deliberately."

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Enron's problems extended from fraudulent accounting to an inability to execute its largest project.

Clearly they were not always the smartest guys in the room.

Wednesday, March 10, 2010

Enron | A Theatrical Interpretation


Greed is a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction.

Honestly Lay Bare has been writing these missives since 2004 but today - 6 years on - is the first time that we have written a theatre review.

But this - as you may have imagined - is no ordinary theatre review.

Friday last after a week working in the United Kingdom and Ireland, Honestly Lay Bare took themselves off to see the play "Enron" at the Noel Coward Theatre in the West End (yes Honestly Lay Bare does have a cultural side!).

Not surprisingly - although it was to the elderly couple sitted behind Honestly Lay Bare who at the end of the production accused it of being a documentary - "Enron" shows how the Texan energy giant moved from a model of the future to a bankrupt disaster with debts of $38bn.

Prime mover is Jeffrey Skilling: a classic over-reacher who boldly announces "we're not just an energy company, we're a powerhouse for ideas".

As any student of accounting will now know his basic idea was to trade in energy as well as supply it. But, as his dreams expand to include video, internet and even the weather, the gap between stockmarket perception and reality grows ever greater.

As profits failed to materialise, Skilling turned to his sidekick, Andy Fastow, to create shadow companies to conceal mounting debts. Once the market lost confidence, however, Skilling's schemes are revealed for what they are: a fraudulent fantasy.

It could all be dry as dust.

But it wasn't. It was a wonderful explanation of one of the more fascinating times in modern business history.

Not to give too much away ... but having said that we will ... there is a wonderful scence where scene where Fastow explains his system for funnelling Enron's debts into shadow companies (who will ever forget the LJMs!).

Even financially challenged auditors can follow this as Fastow shows boxes encasing ever smaller boxes lit by a flickering red light symbolising the basic investment.

This is Enron exposed as con-trick and illusion.

But the triumph of the play is that it renders Enron's rise and fall in exciting theatrical terms, and leaves you with the feeling that - even with the subsequent impact of the global financial crisis - the lessons of this vast collapse have still to be learned.

Wednesday, March 3, 2010

Tone Deaf




The best weapon of a dictatorship is secrecy, but the best weapon of a democracy should be the weapon of openness.

Today Honestly Lay Bare looks to the world of celebrity (of which it has been cruelly and unjustifiably excluded) for a process – that applied appropriately to the world of business – could seek to quantify the previously unquantifiable: the tone at the top of an organisation.

The Davie Brown Index (DBI) http://www.daviebrowncelebrityindex.com/ is an independent index for brand marketers and agencies that determines a celebrity’s ability to influence brand affinity and consumer purchaser intent.

Developed by the talent division of Davie Brown Entertainment, the DBI provides marketers with a systematic approach for quantifying the use of celebrities in their advertising and marketing campaign.

The DBI, goes a step beyond the decades old Q rating approach which is based on two factors, how many people have heard of Celebrity X and how many people name him or her as one of their favourites

The DBI surveys 1.5 million Americans to score on eight key attributes: “appeal,” “notice” (their pop ubiquity), “trendsetter” (their position as such), “influence” (do they have any?), “trust,” “endorsement” (spokespersonability), “aspiration” (do we want his or her life?), and “awareness” (expressed as a percentage).

The scores are then cross-referenced in a database that supposedly will help advertisers decide who among a list of more than 1,500 celebrities will help them hawk their wares.

Access costs $20,000 a year.

Tiger Woods - whose dalliances are of such that they are not within the family classification of Honestly Lay Bare – has recently felt the sting of the DBI.
Prior to his car crash, Woods had ranked as the sixth most valuable endorser according to the DBI. After the car crash and subsequent revelations, he has now fallen to 24th on the list.

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It is the quantification of a celebrity’s “it” factor that has really got Honestly Lay Bare thinking.

Investors, Boards, employees and a myriad of other stakeholders have often had to rely on gut instinct when it comes to determining whether to install, support or reject Chief Executive Officers and other C suite members.

We know that such key Management have an impact upon the tone of an organisation yet we have never really sought to quantify or understand how that is the case.

Imagine then if there was a corporate version of the DBI.

A C Suite member would be ranked by key stakeholders on attributes relevant to the assessment of the tone at the top – walks the talk; holds people accountable; is accountable for decisions; rewards good decisions; addresses poor decisions; is trusted by the employees; is likely to be one day involved in some form of scandal.

If this exercise was conducted within an organisation this would be invaluable information for a C suite member to review and ignore at their peril.

Perhaps, however, the greater use of a corporate DBI would be if there was a central repository of the rankings so that there was an unequivocal assessment of a C Suite member that current and future employers could reference in determining whether the person just about to be employed / considered for a new role would be good not only at the competency elements of their role (something that a corporate DBI could not measure) but the tone at the top issues.

Imagine how such transparency would impact upon the attention that the C Suite gave to the attributes upon which they were now being measured.

Food for thought.