I have a story from my workplace that I think encapsulates an awful lot of what is sometimes so crazy about the modern business world. It involves computers and automatic updating processes and the vast potential that exists for things to go sadly, and often hilariously, wrong.

We are all so dependent on computers and our faith in their reliability and accuracy can sometimes be sorely tested. A prime example concerns the opening salutation in a standard business letter that reads To Whom It May Concern. Keep this phrase in mind as you read what follows.

The company I work for, Reed Construction Data-CanaData, calculates a construction cost index (CCI) each month. The CCI is similar to the Consumer Price Index (CPI), except that it only applies for construction.

CanaData’s CCI is a means to monitor the percentage change in construction costs over time. One main use is in escalation contracts. This is an agreement between the two primary players in a construction project, the owner and the contractor, to adjust the price for work done based on an independent yardstick (e.g., the percentage change in the CCI) if there are extenuating circumstances, such as the work taking longer than expected. The mathematical calculation is similar to COLA or cost of living adjustments in wage agreements.

There are a number of other uses for the CCI as well. For example, insurance companies often come to us for help in estimating the replacement cost when a structure burns down. A quick and dirty approximation is to take the original cost of building and up it by the percentage increase in the CCI from the year of construction to the present.

The CCI is a composite index made up of labour and materials. CanaData follows wage rate changes (both union and non-union) in major construction trades and surveys manufacturers about the prices they are charging for building materials. This story concerns the materials side.

To obtain materials pricing, we send out a standard reporting form to respondents each month. This asks for the latest price for brick, lumber, steel, cement and concrete, according to certain dimensions. In February, we are looking for January prices; in March, for February prices; and so on, rolling forward each month. There is a certain section of the survey letter that needs filling out and the whole process of updating the form is automatic.

The nature of computer systems is to simplify tedious and/or repetitive steps. For example, the word-processing program – often Microsoft’s “Word” – included with most operating systems has a search and replace function. Therefore, in March, it is a simple matter of running “edit”, “find what” and “replace with” to change the response request from January to February in the letter that goes out to respondents.

This works perfectly for every month of the year except in July when we are looking for June prices. “Replace with” and “replace all”, if it is accidentally entered, can lead to problems in the seventh month of the year. The July update of the letter requires that the word May be replaced with June.

And that’s how it came about that we sent out hundreds of letters to manufacturers across the country addressed To Whom It June Concern.

Alex Carrick

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