Heated Decision-Making on Expensive Capital Projects

Posted on March 02, 2015
Written by David Albrice
Heated-Decision-Making-on-Expensive-Capital-Projects

"Anger is a wind which blows out the lamp of the mind (intelligence)" - Robert Green Ingersoll

The bigger — and more expensive — the decision, the more emotions play a role and the more explosive things can become.

I vividly remember a meeting where a group of owners were deliberating on the approval of a large capital project for their building. The discussion became heated and an owner pushed another owner’s head through the wall. The police and ambulance were called to deal with the criminal and medical ramifications of the heated emotions that had erupted in that room.

What had happened in that room? Why did things get so heated? This is the path that lead into that meeting room and to their eventual decision…

 

Stage 1 – DISBELIEF (“What…?”)

This first stage represents the stunned feeling one gets at bad news, big news, potentially expensive news. Many people report numbness where they don’t feel anything in the first few moments. The numbness is soon replaced with a jarring sense of something out of alignment. This is our brain chemistry reacting to news of the large project needed on our project and the financial hardship that may result.

Stage 2 – DENIAL (“You are wrong!”)

As the initial shock wares off, we move into the denial stage. This is where owners make a knee-jerk (uninformed) declaration that something is not true. There is a blind refusal to accept the reality of the situation. As a defence mechanism, the mind imagines a false, preferable reality. But our minds also get comfort from the cool and calm logic of a sound argument backed by empirical data – so an internal conflict arises. Our mind is caught in a tug-of-war between emotion and reason.

Stage 3 – ANGER (“Who is to blame?”)

Faced with mounting information, the owners start to recognize that denial cannot continue. People naturally becomes frustrated, especially at proximate individuals. Certain psychological responses of a person undergoing this phase would be: “It’s not fair” and “How could this happen to me?”

Some people become angry at themselves (“Why did I buy into this place?”) or the person who they feel caused the situation they are left to face (“Who is to blame for this?”). Having worked in the consulting field for 10+ years, I have witnessed the shoot-the-messenger” syndrome played out many times. The consultant delivers bad news and the owners blame the consultant. They hire another consultant hoping that the news will change.

Since ignorance and naivety are often the first domino in a chain of events leading to misunderstandings, a good consultant will educate the owners and present the necessary and sufficient data to support a compelling case for the capital project.

Stage 4 – BARGAINING (“There must be options”)

As information continues to flow and rational minds absorb the gravity of the situation, hope emerges that the impending decision or situation can be mitigated somehow. We start to seek compromises, to make concessions.

This is what I have often heard: “What if we just put a band aid on it and then can fix it later” or “I have a friend who says we can fix the problem much cheaper”. I cannot tell you how many times I have heard those words: “I know someone who _____ (fill in the blank).” Invariably, these “friends” and “somebodies” never step forward with a truly compelling and defensible solution. The owners slowly come face-to-face with the stark reality of the situation and wishful thinking is put to the side.

Stage 5 – GUILT (“If only we had…”)

As the bargaining process starts to point the owners in the direction of an appropriate fix for their building, some feelings of guilt start to arise. This is where the owners have regrets about things they did or did not do in getting themselves into their current predicament. People start to ask: “Did we fail to maintain our building properly?” There is a wish to turn back the clock and do some things differently. But there is a recognition that the clock cannot be turned back and we need to face our future.

Stage 6 – DEPRESSION (“What’s the point?”)

During this stage, the owners become saddened by the emerging certainty of the project (read: big expense). Some individuals may become silent, reluctant to communicate and sullen. Some may express the sentiment: “Why bother with anything?” It is important that the manager, consultant and other professionals help the owners move the one final step towards completion of the decision making process.

Stage 7 – ACCEPTANCE (“Let’s get on with it!”)

In this last stage, the decision-makers embrace their inevitable future, which typically comes with a calm, retrospective view and a stable condition of emotions. There is hope that life will go on. There is recognition that the capital project will be over and that there will be a return on the investment. The financial hardship in completing the capital project will be offset by other returns, such as preservation of the real estate investment, peace of mind, resale value, long-term reliability of the asset, and so on.

We have arrived at an informed decision.

Not everyone follows this prescribed order when dealing with big decisions. Some members of the board (strata council) or owner group at large may move through the stages at a different pace than others, and this makes it very difficult to make collective decisions until everyone is on the same page.

If we can recognize our evolving emotional responses to difficult situations, we can develop the necessary coping strategies to help us make it all the way from denial-to-acceptance.

What techniques have you seen used effectively to help move through these stages in reaching an informed decision on a large capital project?

*****

I wish to acknowledge Elizabeth Kübler-Ross for the development of the grief cycle, from which this blog post drew inspiration. My younger brother died a few years ago and I went through the grief cycle. This blog is devoted to your memory, Barry.

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David Albrice

David Albrice

David is a certified professional reserve analyst, and a specialist in building maintenance and planning.