Qualitative Management and Leadership	✅ Self-Management, Skills and Strengths
	✅ Decision Making
	✅ Investment Appraisal
	✅ Agile Project Management cf Traditional
	✅ Project and Team Retrospectives
	✅ Management Accounting and Finances
	✅ Activity Based Costing; Procurement
	✅ Change Management
	✅ Management and Leadership
	✅ Motivation and Reward
	✅ Production and Quality Management
Scientific & Quantitative Management	✅ Company Lifecycle
	✅ Market Analysis and Price Setting
	✅ Team Lifecycle
	✅ Product Evaluation
	✅ Projects: Introduction and Life-Cycle
	✅ Project Management and Controls
	✅ Project Closure
	✅ Quantitative Risk Management
	✅ Technological Innovation cf Business Innovation
	✅ Due Diligence, Liquidation, Administration
	✅ Corporate Social Responsibility; Conflicts of Interest, Health and Safety
Legal Topics	✅ Introduction to Law
	✅ Contract Law
	✅ Tort Law
	✅ Employment Law
	✅ Industrial Law

Qualitative Management and Leadership

Self Management, Skills and Strengths

Unwritten laws of engineering

Demonstrate the ability to get things done
Develop a “let’s go see” attitude
Strive for conciseness and clarity
A valuable personal trait is the ability to get along with all kinds of people

but don’t be too affable

Your personal integrity is one of your valuable assets
Never underestimate the extent of your professional responsibility and personal liability
Engineers shall perform services only in the area of their competence

Stereotypes:

Manager	Individual Specialist
Extrovert, cordial, affable Likes people Dominant Seeks to understand other views Likes organising things Interested in business, costs, use, practice Able to do many things Excels at communication Fast, intuitive decision making	Introvert, reserved Likes technical work Unassuming Seeks the facts of the matter Likes doing things Interested in science, maths, devices, function Able to do intricate things Excels at analysis Methodical decision making

Depth vs breadth of skills and strengths

You can change yourself, like Steve Jobs

Topchik’s 5 stages of development for personal growth:

Attention getting (lacks knowledge, makes mistakes, misses deadlines)
Flying blind (keeps busy, works late, fearful of admitting weakness)
Steadiness (completes assignments, has little interest in developing)
On the rise (high work, quality work, trustworthy, wants to learn more)
Doing (completes work early, well respected, keen to advance)

BCS (British Computer Society)’s SFIAplus:

If you have a range of strengths, you will boost your effectiveness raking.
You should develop skills that complement what you do best already

Someone with no strengths: 34th percentile
Someone with 5 strengths: 91st percentile

You can fill out this table to identify your strengths and skills:

Strength: Are you good at this skill?
Passion: Are you interested in this skill or value it?
Needed: Does this skill fall in line with the company’s values?

Mono-tasking vs multi-tasking

Mono-tasking: doing one thing at a time
Multi-tasking: doing lots of things at a time

Psychologists have a notion of “flow”
It’s when you “get in the zone” and enter a full immersion in your work.
Mono-tasking is usually good, because you can get in the flow, which you can’t do with multi-tasking.

There is an agile method called Crystal Clear (not to be confused with Crystal Methods)

Basically, a bunch of developers are in a room with whiteboards and stuff, and distractions are kept away.
It upholds this notion of “flow”.

Your phone can break your flow.
Put it away while working (unless you’re working with your phone).
There’s lots of other things that can break your flow, like a meteorite or a text from your ex.

The Eisenhower principle

Who is Eisenhower?
He was a high ranking general.
He had a principle.
The principle said this:

	Urgent	Not Urgent
Important	DO IT NOW!	SET TIME ASIDE FOR DOING IT!
Not Important	DELEGATE IT!	WHY ARE YOU DOING IT?!

Steve Wozniak said that perhaps the thing you need to run a business is to get rid of worthless things.

7 habits of highly effective people (Covey habits)

be proactive

aim to shape events and your working environment

start with the end in mind

identify what you want to achieve, avoid distractions

put first things first

prioritise activities that help you achieve your aims

sharpen the saw

take time to rest, renew, and update your skills

think win-win

seek common ground and a solution that suits all parties

first understand, then try to be understood

diagnose the problem before you prescribe the cure

synergise

when the outcome is greater than the sum of the parts

I know this looks like something out of r/GetMotivated, but here’s how to be more proactive:

Reactive Language	Proactive Language
There’s nothing I can do	Let’s look at alternatives
That’s just the way I am	I can choose a different approach
He makes me so mad	I control my own feelings
They won’t allow that	I can create an effective presentation
I have to do that	I choose to respond appropriately
I can’t	I choose
I must	I prefer
If only	I will

Here’s a picture of 3D triforces that might have something to do with the 7 habits:

Ikigai (a reason for being):

SMART goals

For a goal to be a SMART goal, it needs to follow these attributes:

Emotional intelligence

Here’s another star with some words on it:

Decision Making

You have a business.
You have a whole bunch of products you’re selling.
Which products should you invest in?
If your only goal is to become rich, you will never reach the truth. The truth that you will never achieve that goal.

Boston Consulting Group Product Portfolio Matrix

That’s a long name. Let’s just call it the Boston Matrix.
For those of you who didn’t do Business Studies GCSE, the Boston Matrix is a four-way categorisation of a business’ products and franchises.
The four categories are as follows:

Star - High market growth, high market share. Invest!
Problem child / Problem / Question Mark - High market growth, low market share. It should be booming, but it’s not. Maybe take time to nurture it.
Dog / Pet - Low market growth, low market share. It’s a dead product in a dead market. Like Hirohiko Araki, we must kill the dogs.
Cash cow - Low market growth, high market share. It’s in a dead market, but it’s still making tonnes of money, so play it safe.

Bottom line:

Invest in your stars
Keep cash cows going
Select a few of your problem children to grow
Kill the dogs

Multiple Criteria Decision Making / Evaluation

I know that title just sounded really buzz-wordy, but bear with me.

OK, so we have Boston Matrix, but it doesn’t cover all cases in business.
We can also make decisions based on a number of criteria, e.g. if A and B, then do C

Most alternatives to Boston Matrix have a range of attributes or decision criteria that it uses.

the cheapest alternative is rarely the best in all respects

comfort, durability, sustainability, attractiveness, accessibility, …

these criteria all have to be factored into the decision making process

A well known and widely studied problem in operational research

the Wikipedia article lists a large number of different approaches

A Pareto optimal solution is desirable, where possible

meaning no adjustment is possible without making some criterion worse

Note that MCDM is not a roman number (Zionts, 1979)

Evidence Based Decision Making

You can also make decisions based on existing evidence.
Major business decisions are made by a board, committee, or panel

diverse groups are known to make better decisions
they weigh up the evidence more carefully
but note the theorems of Arrow and Gibbard-Satterthwaite (which is proven based on Arrow’s impossibility theorem)
so there has to be a way to break a voting tie, for example a casting vote

As the future is unknown, however, outcomes cannot be predicted

researching more data to improve your predictions could take forever
so you have to stop at some point and make the decision

A formal record is usually made of the decision and rationale

this helps to defend against later accusations or legal action

Decision Matrix

You can also put your choices into a matrix and give them attribute scores, and then the total can tell you which decision you should take.

If you value some attributes more than others, you can give weights, too.

A decision matrix turns multiple criteria into a single one.
Kind of like an F1 score.
However, accountants prefer to use monetary metrics, because a business that doesn’t make profit will not survive.
It’s like an animal that doesn’t eat, or a non-deterministic finite automata path that has no viable edges for its input symbol.

Investment Appraisal

Which projects should the company invest in?
This is called Capital Budget Decision, or Capital Investment Appraisal.
Objective: accept all those investments where the returns are in excess of the cost of capital (basically, invest in projects that make money)
Here’s another graph:

Six stages on capital budgeting:

Identification Stage - look for opportunities to invest in
Search Stage - look for alternative opportunities to invest in
Information-Acquisition Stage - determine the costs and benefits of bringing each opportunity to fruition
Selection Stage - pick projects for implementation
Financing Stage - obtain project financing
Implementation and Control Stage - start the projects and monitor performance

A very similar, more well-explained process, can be found here.

Time value: the value of money now compared to money in the future (the present value of money now is worth more than the same value in the future. If it doesn’t make sense, watch the video on this page)
Future value: Amount to which investment will grow after earning interest (by interest we mean time value as time goes on)
Present value: Value today of future cash flow

There’s four methods to evaluate investment proposals:

Methods that ignore the time value of money:

Payback method

In the payback method, we pick the project who has the quickest payback period.
We put in an initial investment and each year the project will “earn money back”.
We pick the project that breaks us even the quickest.
With non-uniform cash flows: add cash flows period by period until the initial investment is recovered; count the number of periods included for payback period
Example:
Our company wants to invest in either project A or B. Which should we invest in?

	A	B
	£	£
Initial investment cost	12,000	10,000
Year 1	7,000 (7,000)	6,500 (6,500)
Year 2	2,000 (9,000)	3,500 (10,000)
Year 3	3,000 (12,000)	2,000 (12,000)
Year 4	8,000 (20,000)	1,000 (13,000)
Year 5	6,000 (26,000)	1,000 (14,000)

For each year, project A and B yield money. The value in the brackets is the sum of the earnings so far.
As you can see, project B earns back our initial investment in year 2, sooner than A who does it in year 3.
Therefore, according to the payback method, we pick project B.
Advantages:

Widely used
Simple to understand
Appropriate where liquidity constraints exist and a fast payback is required
Appropriate for risky investments in uncertain markets
Often used as an initial screening device

Disadvantages:

Ignores time value of money
Ignores cash flows after the payback period

Accounting Rate of Return (ARR)

Accounting Rate of Return (ARR) is a metric that tells you the project’s profitability.
Required Rate of Return (RRR) is the minimum return an investor will accept for owning a company’s stock (go here for more info). It’s also called the discount rate, hurdle rate, cost of capital or opportunity cost of capital.

Accept the project only if its ARR is equal to or greater than the RRR.
If the projects are mutually exclusive, pick the one with the highest ARR.
It’s widely used because it evaluates manager performance, but it ignores the time value of money again.
[citation, citation]

Methods that take into account the time value of money:

Discounted Cash Flows

Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its future cash flows. DCF analysis attempts to figure out the value of a company today, based on projections of how much money it will generate in the future [citation].
It uses the time value of money (interest) and RRR.

Net Present Value (NPV)

NPV calculates the expected monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time, using RRR.
Only projects with a zero or positive NPV are acceptable.
Three-step method:

Draw all the relevant cash inflows and outflows
Convert inflows and outflows into present value figures
Sum the present value figures to determine NPV.

Independent projects with a positive NPV should be accepted.
With mutually exclusive projects, the project with the biggest NPV should be accepted.
Example:
A company wants to pick between project A and B. RRR (required rate of return) is 10%. Which should we invest in?
Step 1: Draw the cash flows

	A	B
	£	£
Initial investment cost	150,000	100,000
Year 1	36,000	60,000
Year 2	48,500	80,000
Year 3	45,000	40,000
Year 4	38,000	30,000

Step 2: Convert inflows and outflows into present value figures
How do we do that?
We calculate the discount factor for each year using the formula:

	Discount factor	A	B
		£	£
Initial investment cost	1	150,000	100,000
Year 1	0.909	36,000	60,000
Year 2	0.826	48,500	80,000
Year 3	0.751	45,000	40,000
Year 4	0.683	38,000	30,000

Then, we use the present value formula and calculate the present value of each cash flow value:

	Discount factor	A (present value)	B (present value)
		£	£
Initial investment cost	1	150,000	100,000
Year 1	0.909	32,724	54,540
Year 2	0.826	40,061	66,080
Year 3	0.751	33,795	30,040
Year 4	0.683	25,954	20,490

Step 3: Calculate the NPV of A and B by summing up the cash inflows and taking away the initial investment:
NPV of A: -£17,466
NPV of B: £71,150
B’s NPV is positive, so we should go with B.

Internal Rate of Return (IRR)

IRR represents the discount rate that equates the present value of initial outlay to the present value of the expected cash inflows.
If that made no sense, think of it like this: what value of RRR would make the NPV of the project equal to zero?
That value of RRR is the IRR.

Agile Project Management cf Traditional

If you’ve done SEG, you pretty much already know what this topic is going to go over.

Agile Manifesto:

We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value:
Individuals and interactions over processes and tools
Working software over comprehensive documentation
Customer collaboration over contract negotiation
Responding to change over following a plan
That is, while there is value in the items on the right, we value the items on the left more.

Waterfall:

Death March project:

Recurring schedule slips
Negative effect on customer relationship & trust
Integration problems
Testing period is reduced

Anecdote 1:

Project managers can say that they can meet a deadline, but meeting a deadline isn’t the same as making a good product.
If you think you need a few more weeks to do a better job, make sure you speak up and tell your macho management.

Brooks law: “adding human resources to a late software project makes it later”

If one woman can make a baby in 9 months, can nine women make one in 1 month?
No, stupid. What the hell.

The logic behind that statement is the same as the logic behind this statement:
If one developer can make the project in 6 months, can three developers make it in 2 months?
If we had 180 developers, can we do it in one day?
If we had 4,320 developers, can we do it in one hour?
If we had 259,200 developers, can we do it in one minute?

This is Brooks law.

All agile methods have this in common:

Activities are not in series, but can occur in parallel
There is regular revision of product backlog & plan
Renegotiate with the customer each iteration / sprint
Developers make and track their own estimates
Regular delivery ensures high morale and mutual trust
Sustainable development pace avoids burn out
Code is tested as it is written

better for support for testing and interface definition
eg automated regression test included in build system

In agile, you sometimes have to scrap things to change the direction of the code.
Isn’t that a waste of time and a waste of your code?
Well, it’s better to do that now during development than later on where it’ll take ages.
It’s better to waste a few weeks work than throwing away years of effort down the line.
Software is flexible.

“Working software in 90 days or your money back”
That’s pretty much agile back in 1988.
You fix a set period of time to work, and a set of tasks to complete, and then complete them
This was originally called a “timebox”.
Nowadays they’re called iterations, or sprints.

User story:

As a <persona or role>
Which user
I want to <some goal or interaction>
What the feature actually is
so that <added value or benefit>
What the user wants to get out of that feature

Traditional view:

Trade-off: take two, leave one
What’s missing here is the added value for the customer.

Anecdote 2:

In a software firm that uses waterfall, they brought in project managers and asked them:
“Over the last 12 months, how have you added value?”
They all said that they haven’t released any projects yet but they will next year.
If they had used agile, they would’ve had usable releases every other week.

How do you estimate tasks?

You can use planning poker!
Don’t know what that is? Look here.

Burndown charts should go down:

Meetings:

Formal meeting at the start of each sprint
Formal meeting at the end of each sprint
At regular intervals, have sprint / project retrospectives (where you reflect on everything you’re doing)
Daily scrum (stand up and state what you accomplished yesterday, what you’ll do today and what you need help on / what obstacles stand in your way)

In agile, you can also help each other out
Someone can move a task to “blocked” when they’re stuck, and someone else can pick it up

This contrasts Brook’s law.

Weaknesses of agile:

May be misunderstood
Developers need high skill levels
Coordination across large projects is complex
Customers may not want it

Project and Team Retrospectives

If the team does not work well together, the project will fail.
Teams need to share work equitably and make the best use of everyone.
You need a good balance of time on task and social bonding activities.

If you remember SEG, you’ll also remember Tuckman’s team formation stages:

Forming (I’ve only just met them)
Storming (They’re all dickheads)
Norming (I guess they’re not that bad)
Performing (They’re alright)
Adjourning / Mourning (The final goodbye *tears*)

There’s also Belbin’s standard roles:

Resource investigator
Team-worker
Coordinator
Plant
Monitor evaluator
Specialist
Shaper
Implementer
Finisher completer

Also remember Drexler & Sibbet:

... and Lucke & Luckman:

clarity
challenge
commitment
feedback
task complexity

Keen & Digrius defines a bunch of business case development roles and steps:

Scope – who expects what (project manager)
Criteria – who cares about what (politician)
Align criteria – connect the dots (salesperson)
Calculate – show the money (detective)
Analyse – find the winner (analyst)
Prove – who says so? (investigative reporter)
Story-tell – explain it (attorney)

There’s many different ways to communicate:

Group meetings
Email
Slack
Phone calls
Texts

However, when you start a new group, face to face meetings are best

Here’s a bunch of questions that can help quantify meeting effectiveness:

Was the purpose of the meeting made clear in advance?
Did participants have enough time to prepare for the meeting?
Were the right people invited and able to attend?
Did the meeting begin on time or no more than 3 minutes late?
Was there a clear agenda?
Were the meeting objectives discussed at the start of meeting?
Were participants prepared for the meeting?
Did attendees interact and participate effectively?
Were action items and responsibilities identified and correctly noted?
Did the meeting accomplish its intended purpose(s)?
Did the meeting end on time or no more than 3 minutes late?

Lencioni’s Five Dysfunctions of a Team (2002):

For each cause in the pyramid, an effect (or dysfunction) will occur in the team.

The Ideal Team Player (2016):

Team members can be categorised in this three-way Venn diagram.
For example, if you’re humble but not hungry (motivated) or smart, people will use you and you’ll be a “doormat”.
If you’re hungry and smart, you’ll be the “skillful politician”, meaning you’re good at what you do but you’re a real twat doing it.
To be an ideal team player, you want all three traits.
Kind of like the Triforce, except instead of having a wish granted, you’re the best in your team.

The Thinking Environment (Time to Think, Kline 2006):

Everything we do begins with thinking
Thinking is good → Decisions are good → Actions are good → Outcomes are good
So how do we think good?
Ten components need to be present:

Attention
Equality
Ease
Appreciation
Encouragement
Feelings
Information
Diversity
Incisive questions
Place

We think the least well in the presence of:

Ridicule
Competition
Intimidation
Perfectionism
Cynicism
Criticism
Powerlessness
Self-doubt
Formality
Physical discomfort
Seduction
Low expectations
Addiction
Stereotyping
Pity

How do we set up meetings with a good thinking environment?

Begin with a positive reality (without being gushy)
Give everyone a turn
Let them finish
Identify assumptions and ask incisive questions
Divide into thinking pairs
Go round again
Give permission to tell the truth
Allow people’s feelings
End with a positive turn

Team Effectiveness Questionnaire:

The London Leadership Academy and NHS developed a questionnaire
You can use it to assess the effectiveness of your team
There are eight dimensions:

Purpose and goals
Roles
Team processes
Team relationships
Inter-group relations
Problem solving
Passion and commitment
Skills and learning

Management Accounting and Finances

The fundamental accounting equation:

Assets = Liabilities + Equity

Assets: the value of stuff you own
Liabilities: debts you haven’t paid yet
Equity: debts you’ve already paid

If something happens to one side, it also happens to the other side.
Changes to each side is called debits and credits.
These changes are logged by double entry bookkeeping.

For example, if you get a car worth £20,000, and you’ve already paid £15,000 towards it but still need to pay that £5,000 extra, then:

Your assets will be £20,000
Your equity will be £15,000
Your liabilities will be £5,000
£20,000 = £15,000 + £5,000, so we’re balanced!

If you then loan £300 from someone, then:

Your assets will go up by £300 and will be a debit
Your liabilities will go up by £300 and will be a credit

What? You’re still confused?
Don’t worry; I was too. Have a read of this, this and this.
Now, I’ll do what the slides don’t (but should) do: explain.
Each account can either have a "debit" or "credit", or "left balance" and "right balance", respectively.
Assets have debit (left balance) and liabilities and equity have credit (right balance).
An account can be "debited" or "credited", meaning money is being removed/added from that account.
The value of the account either increases or decreases depending on the account type. For example:

If a debit was recorded in a debit account, the debit account's value would increase
If a credit was recorded in a debit account, the debit account's value would decrease
If a debit was recorded in a credit account, the credit account's value would decrease
If a credit was recorded in a credit account, the credit account's value would increase

The rule is: if the transaction is the same as the account type, it's an increase. If not, it's a decrease.

Because the assets account has debit (left balance), on the image above it shows debits increasing and credits decreasing underneath assets because if assets was debited the value would increase and if it was credited the value would decrease. The same goes for liabilities and equity, but it's the other way around because they're credit (right balance) accounts.

So credit and debit doesn't necessarily mean add / subtract money; it totally depends on what kind of account is being credited / debited.

In double entry accounting, every debit that is recorded must be matched with a credit.
For example, if assets is credited (decreases), then some right balance account (either liabilities or equity) must be debited (also decreases)
If liabilities or equity is credited (increases), then some left balance account (assets) must be debited (also increases).
That way, the sum remains balanced.

There are two main branches of accounting:

Financial accounting

annual reports of the company’s situation
these are published to shareholders and the public
must be audited to confirm their correctness
used by investors to decide whether to buy, hold or sell shares
basically, more money oriented

Management accounting

provides additional and more up to date information
typically include data which is company confidential
used to monitor, measure and manage performance
and support management decision making
basically, more oriented towards making decisions

There’s also more, like tax accounting, forensic accounting, accounting information systems etc.

Financial Reports:

Balance sheet shows assets, liability and equity at a defined moment
Profit and loss report shows income and expenses
Equity statement shows retained earnings
Cash flow statement reports on operating costs, investing & finances
These last three relate to a stated period of time, eg the reporting year
Typically also includes a financial review or management discussion
The report assumes that the company is a “going concern”

hence can pay its debts as they fall due – but if not this should be flagged up
in case of insolvency, shareholders have lower priority than loan providers
assets usually have lower value if they have to be liquidated (sold off) in a hurry (like the Steam Controllers)

International Financial Reporting Standard (IFRS):

Standards are put in place so companies don’t make crappy financial reports (or misleading ones).
Fundamental characteristics include:

Relevance (needs to be recent and refer to relevant stuff)
Faithful representation (no lying)

Enhancing characteristics include:

Comparability
Verifiability
Timeliness
Understandability

IFRS standards are required or permitted in over 140 jurisdictions

This is the financial report for the uni:

You can also do graphs, which are easier to read but may be less precise or misleading.

Financial Analysis:

How can you tell if a company is worth investing in?
Access online financial analysis from Yahoo or MSN
You can also look at a company’s key metrics:

Market Capitalisation (market cap): share price × number of shares
Earnings Per Share (EPS): profit ÷ number of shares
Price Earnings (PE) Ratio: profit ÷ market cap
Beta: a measure of volatility cf the rest of the market

Also check how these change over time, and how they compare to those of competitors

Management Accounting: analysing information to advise business strategy and drive sustainable business success (CIMA)

Focus more on the present and future using predictive models instead of historic cases
Financial data is available on demand these days
This includes:

Analysis and control of costs
Profitability analysis and optimisation
Plus quantitative risk management
Sources of financing
Insurance

To do this, reporting at a finer grain is needed e.g. individual products, divisions

Here’s a boring cool picture:

Planning and Control:

In a company, you have objectives.
To reach those objectives, you need a strategic decision of long-term plans.
To execute those plans, you need operation decisions upon short-term plans (budgets).
These all need to be monitored and controlled.

Budgeting:

Involves different levels in an organisation
Top-down approach:

Managers tell lower levels what needs to be done with a set amount of resources
“We need those div tags vertically aligned!”

Bottom-up approach:

Lower levels tell managers what they can achieve and what resources they need
“Sir, it’s only 2008, flexboxes haven’t been invented yet”

Participatory approach:

The budget is negotiated between different levels
Could lead to compromises

Avoidable costs: costs that can be eliminated or reduced by picking one alternative over another
Unavoidable costs (or sunk costs): a cost that has already been incurred and cannot be avoided, no matter what a manager decides to do

Cost centres: an identifiable part of an organisation

Costs can be assigned and aggregated between cost centres.
In a manufacturing setting, a cost centre could be:

a single factory
a particular department or activity (e.g. assembly, foundry, inspection)
a machine or group of machines
an individual or group of individuals

Cost centres can usually be identified where

many costs can be allocated to specific parts of the organisation
someone has responsibility for that part of the organisation

Why measure cost:

Why do we do it? For fun?
To help in determining the selling price
To help in production planning
To maintain management control
To support management decision making
Costs can be aggregated by

element (material, labour, …): useful for cost control
nature (direct, indirect): useful for cost accounting
function (production, non-production): useful for financial accounting
behaviour (fixed, variable, …): useful for budgeting and decision making

Classification of Costs:

Fixed: It stays the same no matter the activity level

Variable: Cost is directly proportional to activity

Costs can also be semi-variable

... or semi-fixed (stepped cost)

Cost Accounting and Profit Model:

We can model a simple business with one product using:

- profit
- sales price
- quantity sold
- fixed costs
- variable costs per unit sold

You can use this to decide the minimum cost of a product.
If we rearrange this, we get:

So we need to make sure the sales price of our product is greater than that value on the right side, or else we won’t make a profit.

Kaplan and Norton’s Balanced Scorecard:

You can fill out these scorecards to document how people see your company:

Here’s a few examples of it filled in:

The balanced scorecard keeps companies looking, and moving forward instead of backward

Ethics and Externalities:

The balanced scorecard doesn’t include stuff like social, environmental and ethical aspects.
Stuff like:

Laying off employees will affect their families
Companies are not liable for environmental damage

How can we trust companies?
Sometimes company executives band together to protect themselves
However they can be found out if they do bad stuff

International Transfer Tax:

Normally, companies pay tax based on their profits.
However, big companies transfer profits to different countries.
That means they pay less tax.
That’s good for them, but not good for the country, and therefore not good for us!
Stuff like the IFRS tries to resolve issues like these.

Activity Based Costing; Procurement

Traditional vs Activity

The Profit Model from before is simple.
A bit too simple...
Most companies don’t have just one product; they typically have many.
Stuff like sharing overheads and investment decisions get more complicated.
Overheads need to be shared across multiple products / services, called overhead allocation, absorption or conversion.

First off, how do we value the products we make?
Well, we should start off with what costs were spent to make them.
There are two kinds of costs:

Direct costs: costs that can be directly mapped to a product or service

If you make a wooden table, you know exactly how much wood is needed to make that table.
If it costs you £1 per kg of wood, the cost of the wood would be a direct cost
This can apply to direct labour too, if the labourer charges you a fixed cost per table.

Indirect costs (overheads): costs that can’t be directly mapped, usually because it goes towards lots of other products / services

Let’s just say you had an electric saw that cost you £5 to run for 1 hour.
You have no idea how much saw time you need for each product.
You make 2 chairs and 1 table, and you used up 4 hours of the saw, resulting in £20.
What product does the £20 go to?
That £20 is an indirect cost!
Other examples include maintenance, storage and handling, wasted materials, testing and faulty items.
General business overheads include:

accounting fees
advertising
insurance
interest
legal fees
labor burden
rent
repairs
supplies
taxes
telephone bills
travel expenditures
utilities

There’s two ways to trace these costs to products:

Cost tracing: used for direct costs. Directly maps costs to the product being produced
Cost allocation: used for indirect costs (overheads). Uses estimates and models to apply costs to products

Here’s a picture to illustrate this:

Financial statements include closing inventory (the stock a company has at the end of an accounting period) as current assets using the minimum cost of production and net realisable value (estimated selling price of stock)
Notice how we use one of two systems for trying our best to pair indirect costs to objects: traditional (TCS) and activity (ABC).
If this doesn’t make a lot of sense, watch Deborah’s video. She’s good.

Traditional Cost System:

This one’s the easy one.
You simply share the overheads proportionally based on direct labour hours, or a cost driver (a single factor that determines cost).
If uptime for server A costs you £1 / hour and server B costs you £2 / hour, and the total overheads are £9, then we can use uptime as a cost driver and £3 goes to server A and £6 goes to server B.
This is quick, cheap and easy to understand but not all overheads are the same.
Sure, running server A may cost £1 / hour, but the rent for the data centre makes it way more expensive than server B, but since we’re using uptime as a cost driver, we’re allocating more overheads to B than A, even though A costs more.
Sometimes we need a more accurate costing system.

Traditional Cost System (two stage allocation rate):

You can do a variation, called the two stage allocation rate.
You still only have one cost driver, but you split up overhead costs into different production areas / departments / cost centres
These can include stores, cutting, assembly, finishing etc.
For example:

You make a wooden chair. The wood cost £20.
However, the wood didn’t just come from one place.
£5 of the wood came from Morning Wood Ltd.
£5 of the wood came from Edward Woodward and Son
£10 of the wood came from Barking Mad Co.
We’re splitting up the overhead costs to different cost centres.

We’re still applying one cost driver, but the overhead cost is now more fine-grained.

Activity Based Costing (ABC):

ABC is more fine-grained than TCS.
Instead of one cost driver, we have multiple.
We identify cost drivers by mapping activities to cost drivers.
We just calculate the proportions for each cost driver, and then add them up into a total.
For example:

Total wood costs: £9
Total cutting costs: £15

	Wood amount	Wood cost	Cutting hours	Cutting cost	Total
Chair A	2kg	£3.00	5h	£12.50	£15.50
Chair B	4kg	£6.00	1h	£2.50	£8.50

We can categorise activities like so:

How do we map activities to cost drivers?
Here’s a small guide:

#	Activity	Level of activity	Examples of cost drivers
1	Workers assemble a product	Assembly	Number of workers
2	Products are designed by engineers	Engineering design	Number of design / engineers
3	Equipment is set up	Set up machines	Number of set up hours
4	Machines are used to cut and shape materials	Machining	Number of machining hours
5	Monthly bills are sent out to regular customers	Despatch	Number of customers
6	Materials are moved from the receiving dock to production lines	Disburse materials	Number of production runs
7	All completed units are inspected for defects	Quality inspection	Number of first items inspected
8	New employees are hired by the personnel office	Recruitment	Number of employees

Management Decisions and Cost Accounting:

What we’re doing right now is cost accounting.
Cost accounting lets us make management decisions, like:

determine the minimum price of a product or service
support cost engineering
make correct decisions about outsourcing
construction of portfolios of products or services

Activity Based Costing is a part of a whole Activity Based Management Model.
As the name suggests, it’s all about which activities and processes to focus on more.

Cost engineering: ensuring manufacturing efficiency and manages costs

Cost engineers:

cut the number and variety of components required
reduce wastage of raw materials / percentage of faulty items produced
simplify production processes to reduce labour time
share common components between different products or services
buy in sub-assemblies rather than making everything “in-house”
reduce storage and handling overheads by “just-in-time” stock delivery

Cost engineering can be applied at any time, not just at the start (like annually or something)

Manufacturing Learning Curve:

Manufacturing improves with experience.
This phenomenon was first encountered in World War 2, when scientists (Curtiss-Wright) noticed that the cost for a given aircraft model declined with increased production in accordance with a fairly predictable formula (citation).
Basically, the more something is produced, the cheaper it gets.
However, after a certain point it diminishes and eventually the change in cost becomes negligible.

The formula goes like this:

The variables mean this (credit goes to Kieran Allinson):

Cn = Cumulative average cost of n units
C1 = Cost for one unit
n = Number of units produced
a = Learning exponent
More or less, the more you produce, the more you learn how to produce the item so the cheaper you’re able to produce it. So producing more will make the average cost per unit less with time.

The efficiency gain is typically in the range 10% - 25% for each doubling

Procurement and Outsourcing

The Value Chain:

There is a sequence of activities that, together, create a product or service:

Inward Logistics: receiving, storing, and distributing inputs
Operations: transforming inputs into a finished item, e.g. manufacturing
Market and Sales: advertising and sales + sales administration
Distribution: delivering finished items to customers
Follow-up Services: maintaining value of delivered item

There’s a bunch of support activities too, such as infrastructure, H/R, development and procurement

How can we add value in this chain?
We outsource to companies who do it better!
We only outsource to companies who are good, so outsourcing decisions are important

Core competency: a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace

Drucker claims businesses have only two functions: marketing and innovation
You don’t see Sony going into the mines to mine up some silicon for their next phone, do you?
No! They outsource.

Here’s where companies mainly outsource to:

Ethical Procurement and Outsourcing:

What is Sony morally responsible for?

Human rights?
Labour conditions?
Health and safety?
The environment?

Should Sony base their decisions on ethics or profit?
What about companies outside of Sony? Should they meddle with:

Parts suppliers?
Subcontractors?
Contract manufacturers?

Is it acceptable that some Sony televisions are completely manufactured by Flextronics but are branded as Sony products?
Personally, I don’t mind. But what do I know? I just write the notes.

Change Management

In 1905 and between 1907 and 1915, Albert Einstein published his theory of special and general relativity, changing the way everybody thought about the universe.
In the 1950’s, Grace Hopper pushed for a new programming language that would use entirely English words. Her ideas weren’t accepted for years, but she eventually created A-0 and an operational link-loader, laying the foundation for COBOL and changing the way people thought about programming languages.
In 1997, Steve Jobs returned to Apple Computer and changed it around, turning it into a consumer electronics company.
From 2000 to 2003, Hirohiko Araki changed Annasui’s gender from female to male on request from his publishers.
In late 2019, I changed the Notes Network document and made everything look a lot prettier.
Change is all around us, and it happens to everything.
Change can be good or bad, but one thing remains: it is a fundamental force of nature.

“Change IS nature, Dad. The part that we can influence. And it starts when we decide.”

Remy, Ratatouille

Alright, what about it? Why did I just tell you a Ratatouille quote?
Well, businesses change too, you know.
More often than you may think.
Change is necessary for a business to grow.
However, you need to be careful: some changes are bad, and some are good.
That’s why you need “change management” to make sure you make the right changes.

A company’s lifecycle usually goes like this:

They’re in a slump, then they boom, but if nothing changes, they die.
A company can change or “adapt” to survive and continue living, typically by pursuing a different business opportunity.
Google and Facebook decided to make money through advertising, but they didn’t start off like that; that was a “change”.
These “changes” are called strategic inflection points.
Like a living organism, they have to continue to shed their skin. Methods, focus and values have to change (for the better).
When companies start to decline, they may need to:

close or sell off failing divisions
sell it off to / merge with another company

Another example is ARM.
Basically, they used to make computers (like the BBC micro) but their processor supplier changed to some crappy plastic instead of the usual ceramic.
In response, Acorn (ARM before they became ARM) made their own called Acorn/Advanced RISC Machine (ARM) and became ARM.
Then they became a joint venture of Acorn, Apple and VLSI Technology.

Technologic strategic inflection points:

Grove stopped making DRAM chips and made micro-processors
Nokia started divesting in tires and TVs and globalised the company towards telecommunications technology.
Jobs returning to Apple

Here is how Jobs modelled his product line:

Some changes can be controversial, though.
There can be negative consequences:

financially
socially
in public relations

Then again, if the company fails, everyone loses their job, so sometimes compromises have to be made.

Alright, so let’s model a simple business.
Here’s our business model for ECS Incorporated:

	Gennaro’s fly-shooting rifles	Event-B machines	Monads	Total
Sales	£900	£1,000	£900	£2,800
Variable costs	-£466	-£528	-£598	-£1,592
Fixed costs	-£266	-£318	-£358	-£942
Profit/Loss	168	154	-£56	£266

Looking good!
Monads aren’t doing so great...
What if we were to get rid of monads?
Aside from destroying the functional programming paradigm, we wouldn’t get that “loss” from the monads, right? We’d be saving money, right?
Let’s calculate it by getting rid of the monads (sorry, Julian)

First, we assume that £250 of the fixed costs are avoidable, and £108 of the fixed costs are unavoidable. All of the variable costs are avoidable.
So we can earn back £250 by ditching monads, but because £108 are fixed, we need to fork that out whether or not we still have monads.
So the new business model looks like this:

	Gennaro’s fly-shooting rifles	Event-B machines	Monads	Total
Sales	£900	£1,000	£0	£1,900
Variable costs	-£466	-£528	£0	-£994
Fixed costs	-£266	-£318	-£108	-£692
Profit/Loss	168	154	-£108	£214

What?! Our profit went down?!
This means the monads shouldn’t be discontinued.
The reason why our profits didn’t go up is because we still have unavoidable costs, even after we discontinue monads.

There’s something wrong with this analysis, though.
It only focuses on the present.
But our decision is about the future!
Therefore we also need to consider:

What are the trends?
Is this year a blip?
Will monads recover or do badly next year?
What are the unavoidable fixed costs?
Can we change the contract to cover them, or can we cancel them?

Projectification:

Inflection points are more likely to happen in technology businesses

New technology creates new businesses and destroys old ones

In projectification, operations are categorised into “projects”.
Tech can be product development projects.
Marketing campaigns can be projects.
This has affected management and organisational structures.

Everything is a project. So what?
Change can also be a project.
Some people claim it’s a completely distinct area of management.
Some change projects fail.
If they’re done right, they might not.
You need to consider:

people might feel threatened by change
people might work to undermine change passively / aggressively

Successful change projects require:

trust
persuasive vision
executive sponsorship / ownership

Lewin wrote about a three step organisational change process:

Un-freezing to overcome inertia and dismantle the existing mind set
Making the change
Re-freezing to restore order and evaluate benefits

Winston Churchill said this:

“However beautiful the strategy, you should occasionally look at the results”
“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty”

Did he really say that? Who knows.
Kübler-Ross likened business change to the grieving process:

denial, anger, bargaining, depression and acceptance

Kotter has an 8 step process:

Kanter’s Change Masters:

Management and Leadership

Approaches to management

Drucker’s List of Management Functions

Set the team’s / organisations’ objectives
Provide and organise the resources to achieve the objectives
Motivate staff to achieve the objectives
Monitor staff performance against the objectives
Improve performance by continually developing yourself and your staff

Because the purpose of business is to create and keep a customer, the business enterprise has two - and only two - basic functions: marketing and innovation.

Theory X, Y and Z by McGregor and Maslow

People who are category X:

are driven by monetary concerns
will avoid work where possible
lack ambition & dislike responsibility
are indifferent to organisational needs
lack creativity and resist change

People who are category Y:

are driven by job satisfaction
actively seek work
show ambition and seek responsibility
are committed to organisational objectives
are creative and welcome change

People who are category Z:

recognise the need for self-fulfilment or transcendence

Hawthorne Experiments

Famous 1920s experiments involving manual workers at GEs Hawthorne plant, which found no correlation between productivity and working conditions
Belonging to a group creates status and belonging
Productivity was increased by treating workers with respect
rather than changing working conditions
Of course, if working conditions are very poor, productivity falls

Hawthorne effect: experiments with human test subjects are more likely to be successful because the subjects know it’s an experiment

Management by Walking About

Also known as walking the corridors, go see, or (in Japan)

gemba gembutsu genjitsu (real place, real work, real facts)
better than a weekly status report from all staff

Builds trust and understanding
Lets you listen to staff, their ideas and problems

you get to know them and their motivations better
you can answer their questions directly

You can look for examples of good practice to share

you can look for bad practices and deal with them

You can observe inter-staff working relations

Sources of power

Approaches to leadership

Leadership Grid (Blake and Mouton)

As a manager, you need a good balance of administrator and leadership.

You need to be a good administrator because, as a manager, you need to know what you’re talking about.
You need to have good leadership in times of crisis and significant change.

One approach is called “masterful inactivity”:

Argue that change is cyclical and the current crisis is only temporary
Basically, “just wait and hope it solves itself”.
Sometimes this works, and it’s used in politics (as I’m sure you know)
However, in modern business, “only the paranoid survive” and there are always changes to be made.

There are other approaches, or types of leadership.

Types of leadership:

Transactional

Reward good effort and performance with prizes, bonuses and promotions
Use coercions to correct poor performance or compliance with reduced career progression, less interesting work and dismissal
Basically, reward the good, punish the bad
The leader should be able to deliver their promises and threats, otherwise they’ll lose credibility and authority (basically, they’ll be a crap manager)

Transformational

Proactively change culture to implement new business practices
Use the four ‘I’s:

Ideals: motivate employees by acting as an ideal role model
Inspiration: use charm to inspire extraordinary effort
Individual consideration to make everyone feel special
Intellectual stimulation promotes creative and innovative solutions

Transformational boosts satisfaction with the leader...
... but transactional boosts performance more.

Charismatic

Uses good communication skills to reach employees at an emotional level
Basically, your leader is Jesus
Charismatic has a greater emphasis on a “vision” compared to transformational which is just motivating people
Can be used for politics and religion, not just business
Risks:

Tunnel vision
Excessive dependence among staff

Situational

The leader changes their style of leadership depending on the employees they are managing.
Employee type is split into two properties, which can be high or low:

Commitment - how motivated you are
Competence - how good you are at the job

Because there are two properties with two possible values, an employee can belong to one of different categories, described in the table below:

Motivation and Reward

Maslow’s Hierarchy of Needs:

If you didn’t do Media Studies GCSE, Maslow’s Hierarchy of Needs is, well, a hierarchy of needs.
The bottom layer is what’s most important, and each layer is more important than the layer above it.
It forms the basis for the McGregor’s theories.
The bottom third relates to X, the middle third relates to Y and the top third relates to Z.

Management by Objectives / Results:

Objectives are set in appraisal meetings
The employee and manager sets these together
At the end of the year, performance is reviewed and new objectives are set
It’s basically a year-long Scrum sprint
Bonuses and promotions depend on achieving / exceeding objectives
You’re not told what to do, you decide what you want to achieve

Popularised by Drucker’s Practice of Management (1954)
Now lots of companies, like HP, use this

There is a contrast in factory workers: can be paid as piece workers or fixed amount per item produced

Performance Appraisal Meetings:

Appraisal meetings are constructive opportunities to reflect

requires suitable time, space, duration and summary of previous meeting with agreed objectives

Objectives must be consistent with role / job description
If goals are not met, employee will explain and maybe targets will be adjusted
There may be negative perceptions:

tick box filling, subjective evaluations, overt criticisms / threats, defensiveness

Maybe it’s better to just have frequent discussions rather than formal high-tension performance appraisal meetings

360 Degree feedback:

To address subjective ratings, we can use multiple raters from all the areas the employee interacts with e.g. people who work for them, people they work for etc.
This could be dubious because anonymous reviewers may harbour grudges
To be honest, 360 degree feedback is basically a buzzword for asking other people what they think of you.

Scott Adam’s Company Model:

Companies with effective employees and good products do well
Minimise activities that are one level removed from people and products
Do not tinker with the process of performance appraisal meetings and stuff; be consistent with management
Have an Out At 5 (OA5) manager who:

stays out of the way
eliminates the assholes (yes, the slides say that)
make sure the employees learn something every day
create an environment that supports curiosity and learning
teach employees how to be efficient

The problem is, how can you tell if a manager satisfies all those criteria? How do you define and examine “support for curiosity and learning”?

Adam’s Equity Theory:

If rewards are not fair, staff lose motivation
Staff will eventually compare their input / reward ratios
This also applies to you lot, too: “There’s so much law stuff to learn... is it worth getting a high mark for this? Maybe I’ll just settle for a pass or something”

Reward → Inequitable reward: Employee feels they’re doing more work than they’re rewarded, so they get mad
Reward → Equitable reward: Employee feels they’re getting the right amount of reward for their work, so they work at the same rate
Reward → More than equitable reward: Employee feels they’re getting more reward than what they’re working for, so they’ll either continue at the same rate or feel guilty and work harder

Does Performance Related Pay Work?

Green & Heywood (2008) reports that performance related pay increase productivity, effort and earnings but also increases variability, lowering morale of less productive workers
Job satisfaction is highest where there’s no performance pay or bonuses. Job security also declines under such schemes. It mainly depends on the type of worker and the company.
High performance workplaces create belonging, esteem & commitment (also piece rates increase efforts more than time rats and performance related pay)
Job satisfaction declines with education level and company size (public sector workers tend to be more satisfied)

Pay and Satisfaction are Only Loosely Related

The better your pay, the less satisfied you are with your work
There is a stronger link between pay level vs pay satisfaction rather than pay level vs job satisfaction

Diener and Tay (2015) studied well-being and found higher average income countries means better well-being, social support, freedom, water quality. Income equality also matters

Team Based Rewards:

In many cases, performance depends on a team and not the individual
Are team based rewards better than individual?
DeMatteo (1998) reviewed this and found that it varied, but there are increases between 28% to 76%
It’s unclear under what conditions team rewards become effective
Employees and employers are concerned about “free riding” (basically, people in the team carrying other people)
Game Theory simulation suggests that group based systems outperform individual or mixed systems, and cooperative behaviour is better

The approaches to team-based rewards are:

Here’s what DeMatteo found about effectiveness of team based rewards:

Profit Sharing and Employee Share Scheme:

Employees may have the right to buy shares
Such schemes give workers a long term stake and motivates them to work in the company’s best interests
Tax breaks for the employer may encourage such schemes
A profit sharing scheme rewards employees for one year’s results, which is safer because the bonus can be varied up and down with profits
More incentives:

Overtime payments
Company cars or subsidized travel
Sabbatical leave (unpaid additional holidays)
Free coffee
Christmas parties
Continuing Professional Development (CPD), e.g. Conferences
T-shirts
Long service awards

Production and Quality Management

Have you ever bought something and then realised it was crap?
How about a piece of software you downloaded before you realised it’s awful?
The people who made those didn’t have good quality control.
That’s what we’re going over today!

The slides go over how to measure quality first before defining what quality actually is.
I’ll go over what quality actually is, which is probably the most interesting part of this chapter (which says a lot about this section).
Feigenbaum said: “Quality is a customer determination which is based on the customer’s actual experience with the product or service, measured against his or her requirements, stated or unstated, conscious or merely sensed, technically operational or entirely subjective, always representing a moving target in a competitive market”
What? You didn’t fully read that paragraph? I don’t blame you.
Basically, whether you can clearly point out what’s wrong with it or if they just say “idk, there’s just something about it I just like”, that all factors into the quality of a product. It is subjective to the customer. If the customer doesn’t like it, the quality suffers.
To sum it up in a sentence, it’s what the customer wants and what the company provides.
And now, I’m going to show you the tyre-on-a-tree quality assurance meme that is shown at least once on every soft-skill module slides. Are you ready?

I’d better calm down before I start talking about butter on a stick...
Although, this quote by Henry Ford is pretty cool:

At least, it says it’s Henry Ford.
You can make anyone say anything on the Internet.

Alright, he didn’t really say that, but you get my point.

Statistical quality control relies on repeatable processes and detailed measurements.
First, you need to define an:

acceptable failure rate
acceptable failure modes

Then, you measure and test to ensure failure rate is lower and that failure modes do not occur.
Six Sigma is a set of techniques and tools that strives to reduce the number of defects to 1 in a million.

Service industries may be happy with < 10-3 dissatisfied customers (image having 0.001 customers)

banking services, for example, may be relatively “sticky” (they don’t care as much)
Which rates the top 10 UK banks from 70 – 84% customer satisfaction

Techniques such as six sigma uses probability distributions, like these:

When doing quality management, your measurements need to be reliable and precise.
Drucker: “If you can’t measure it, you can’t manage it. Or not. I just write the notes.”
Ok, he didn’t say that last part, but the point is that you need to have some way of measuring something to manage it, and that includes quality.

Failures are often time dependent.
This is called the bathtub curve.

Continuous Improvement is a philosophy of continuously improving working practices, according to Kaizen (seems Kaizen isn’t great at definitions if they use the word they’re defining in their definition...)
Shewart goes on to say that it includes the stages:

Plan
Do
Check / Study
Act / Adjust (PDCA / PDSA)

Deming thought this was pretty cool and took it to Japan in the 1950’s.
Deming taught:

better design of products to improve service
higher level of uniform product quality
improvement of product testing in the workplace and in research centres
greater sales through global markets

Deming also emphasised “profound knowledge” through appreciating a system, understanding variation, psychology and epistemology

“You cannot improve what you do not understand”

Quality Control: maintain standards by testing all or a sample of items

(checking for defects)

Quality Assurance: maintain standards by providing confidence that errors will be prevented by proper processes

(establishing processes that will prevent defects)

Total Quality Management: everyone is responsible for maintaining standards

(making everyone responsible for preventing defects)

Profound Knowledge:

Focus on reducing waste (just in time, lean)
Quality is free (cost of conformance is less than cost of non-conformace, similar to “stitch in time saves nine” saying)
Trust workers to improve quality (quality circles, agile methods)
Trust workers to estimate their work (agile methods)
Any system has a natural rate (Kanban, devops, takt time)

Steps to quality, the Japanese / Toyota way:

Five G’s:

gemba: real place
genbutsu: go and see
genjitsu: data and facts
genri: principles
gensoku: standards

Root cause analysis:

The five why’s

Muda (waste, useless, futile):

transportation
inventory
motion
waiting
over-processing
over-production
defects

Root cause analysis:

For every problem you ask yourself why 5 times.
That way, you get 5 possible explanations for a problem.
You can also use an Ishikawa Fishbone diagram.

Quality Diagrams and Tables:

There’s even more ways to visualise quality.
Check sheets can count events

Control charts can check if a process is within range

Pareto Charts and Run Charts are also good:

There’s even more quality techniques in manufacturing:

Cellular Manufacturing
Standardised Work
Continuous Flow
Quick changeover (single minute exchange of dies)
Poka Yoke (mistake proofing)
Heijunka (levelling the workload)
Total productive maintenance
Five S’s

sort out
set in order
sweep
standardise
sustain

Lean Thinking in Business Processes:

Identify and avoid

Excessive reports
Multiple signatures
Re-entering data
Duplicated data
Lack of standards
Lack of visibility
Demoralisation

Process maps or flow charts
Value stream mapping
Report back on improvements (information radiators)
Labels & signs (encourage or “nudge” change)
Non-utilised talent is also a waste

suggestion (in-)boxes
quality circles / focused improvements

High level process map

Re-drawn using swim lanes

Once you have mapped a process, you can measure and control it

I have no idea what this is about. It’s anyone’s guess what this picture is trying to say.

There’s even an ISO standard for quality management, called ISO 9001-2015.
There was an old one, ISO 9000, but it was replaced.
It is categorised into:

Scope
Normative references
Terms and definitions
Context of the organisation
Leadership
Planning
Support
Operation
Performance evaluation
Continual Improvement

It is based on the seven Chaos emeralds principles:

customer focus
leadership
engagement of people
process approach
improvement
evidence-based decision making
relationship management

It’s popular, over 1M organisations use it, sector specific variants exist but some argue the paperwork is excessive.

What? There’s another quality assurance technique?
Don’t worry, this is the last one.
It’s DMAIC, Six Sigma’s version of PDCA/PDSA.

Define	Measure	Analyse	Improve	Control
What is the problem?	What data is available?	What are the root causes of the problem?	Do we have the right solutions?	What do we recommend?
What is the scope?	Is the data accurate?	Have the root causes been verified?	How will we verify the solutions work?	Is there support for our suggestions?
What key metric is important?	How should we stratify the data?	Where should we focus our efforts?	Have the solutions been piloted?	What is our plan to implement?
Who are the shareholders?	What graphs should we make?	What clues have we uncovered?	Have we reduced variation?	Are results sustainable?

Scientific & Quantitative Management

Company lifecycle

Lifecycle: a predictable sequence of stages of growth and change
Stages:

Birth
Growth
Decline
Death

You cannot predict when an organisation reaches “maturity”, because it can always grow again

How to extend company lifespan:

Growth - quicken / manage growth
Decline - avoid / reverse decline
Death - prolong life, or know when to bury

Birth

Birth of company:

Entrepreneurship - create a new company
Intrapreneurship - apply an idea to an existing company

Business ideas come from:

Finding the idea
Creating a business from the idea

Joys and sorrows at birth:

Enthusiasm
Innovative
Small and flexible
intimacy
all 4 one, one for all

uncertainty
vulnerable
credibility issues
inexperienced
limited capital

Growth

Gibrat’s Law: growth of a firm is a random process; basically, no-one knows
Patterns of growth are also random, like:

Rapid
Incremental
Episodic
Plateau

Penrose’s theory: growth is a result of managerial competence and “learning by doing”; a company doesn’t plan to grow
This also works the other way: if a company focuses too much on growth, inefficiency sets in and growth rate reduces

Growth isn’t always good, but it’s not inevitable

Marris’ Theory of ‘Managerial’ Capitalism: the optimal point of growth is naturally determined by:

managers trying to maximise growth rate
shareholders trying to maximise share prices

If managers increase the growth rate too much, the shareholders won’t get as much dividends.
If the shareholders increase the share prices too much, there won’t be enough money going back into the company.
So an optimised point of growth rate and share prices is found for a balanced growth.

The 5 stages of decline:

Market Analysis and Price Setting

Market analysis

When you have a product, you need to analyse the market that product lies in.
How are you going to sell computer parts if you know nothing about the technical market?
There are 4 stages to market analysis:

Industry overview

This is a general overview of the industry.
There are two main things to look out for:

Market Share

Total Volume

Target market

Who will buy and/or use your product?
Perhaps take a leaf out of Interaction Design and make personas and stuff?

Competition

Who are making similar products to you?
Who are you competing against?
For example, if you’re making beans, one of your competition would be Heinz.
If you’re making ketchup, one of your competition would be, uh, also Heinz.
You should also do research on how they’re doing, their sales, their values etc.

Pricing and forecast

How should you price your product and how well will it do in the future?

What? You have no idea how to price stuff, except from that profit model equation we learned in Andy’s section?
Don’t worry; in just a moment, you’ll see a few methods on how to price products.
For now, let’s talk about public sectors.

Public sector

If you’re like me and you have less general knowledge than a plank of wood, let me tell you what a public sector is.
Public sector: a part of the economy composed of both public services and public enterprises.
Basically, they’re services and goods provided by the government for the general public, including:

Military
Law enforcement (police)
Infrastructure (roads, bridges, tunnels, water supply, sewers, electrical grids, telecommunications etc.)
Public transport (trains, the tube etc.)
Schools
Health care
The government itself

Alright, that’s great, but why should we care? Why should I know about schools if I’m planning to sell a graphics card?
If you access data on current spending habits in a range of different public sector bodies, you can earn some valuable market analysis.
If schools need beefier computers to help teach kids machine learning or something, but spending has been quite scarce on public schools at the moment, you might want to consider opting for a cheaper solution as opposed to a premium high-end product.

You never know when you might hit a gap in a market that you’re able to fulfil: even if that gap belongs to a public sector.

For resources about public sector analysis, check out Statista, a statistics and reports website, or Mintel, a market reports website about market reports and industry trends.

Pricing

Gross profit = Revenue - Cost
That means all the money coming in minus all the money going out.

You also need to pay attention to price elasticity.
Price elasticity: a measure of the relationship between a change in the quantity demanded of a particular good and a change in its price [citation].
What does that even mean?
If a product has high elasticity, a small change in price will yield a big change in demand, and therefore, quantity (number of products sold to customers). That’s called price elastic.
If a product has low elasticity, a small change in price will yield a small change in demand and quantity. That’s called price inelastic.
Generally, price inelastic is better than price elastic, hence the green and red.

For example, let’s look at petrol.
Almost every car needs petrol. For a few people, driving isn’t essential, but for most, they need to drive. Since they need to drive, and most people use cars that use petrol, those people need to buy petrol.
There’s no “alternative” to petrol if you have a car that takes petrol, so even if the price of petrol fluctuates, people will still buy petrol.
That means petrol is price inelastic.

Now, let’s look at bread.
Let’s say you go to Tesco and find Tesco bread for 55p and Kingsmill for 65p.
If you’re a student, you’ll probably get the Tesco bread for 55p because it’s cheaper and is pretty much the same (unless you really love Kingsmill).
However, if Tesco were to increase the price from 55p to 65p, the Tesco bread will now be the same price as the Kingsmill bread.
Therefore, us students will be more likely to buy the Kingsmill bread for the same price.
Even though it’s just a 10p difference, that 10p was the dealbreaker because there are better alternatives.
That makes Tesco bread price elastic.

Here’s a list of examples:

Price inelastic	Price elastic
Petrol	Heinz soup
Salt	Shell petrol (if Shell is too expensive, people will buy from other stations)
A good produced by a monopoly	Tesco bread
Tap water	Daily Express
Diamonds	Kit Kat chocolate bar
Peak rail tickets	Porsche sports car
Cigarettes
Apple iPhones, iPads

[citation]
You can also visualise this with a linear graph:

There’s also psychological pricing.
That’s when people price stuff as £9.99 instead of just saying £10.
It doesn’t have to be one off a whole number; you can also have €0.88 as well.

Remember that price represents value.
Also remember that there’s a difference.
Price is how much money the buyer is giving to buy that product.
Value is how much worth the product has in the buyer’s eyes.
If your price correlates well with your value, you have a decent price.
If you have a lower price, that gives off the impression that your product is “lower value”.
If you have a higher price, that gives off the impression that your product is premium and of “higher value”.

There are a range of strategies to pricing as well:

Cost-plus pricing: adding a bit extra to your total costs to get your price
Competitive pricing: setting a price based on competition prices
Price skimming: set a high price first, lower it as market evolves
Penetration pricing: set a low price first, raise it later when we get more “popular”
Price bundling: combine products together to add value, and therefore increase price

Here’s a bunch of industrial pricing strategies:

New product pricing situation	Competitive pricing situation
Price skimming	Leader pricing We initiate a price change and expect the other firms to follow (basically, we alpha our competition)
Penetration pricing	Parity pricing We match the price set by the overall market or the price leader (basically, we beta towards firms using Leader pricing)
Experience curve pricing Set price low at first, then reduce costs through accumulated experience (similar to penetration pricing)	Low-price supplier We always strive to have the low price in the market (think Lidl or Aldi)
Product line pricing situation	Cost-based pricing situation
Complementary product pricing We price the core product low when complementary items such as accessories, supplies, spares, services etc. can be priced with a high premium (think The Sims, or any EA / Activision game)	Cost-plus pricing
Price bundling Bundle a bunch of products together that offer the customer savings as opposed to buying them all individually (think Humble Bundle)
Customer value pricing Offer different versions of the product, with varying number of features available (Lite version, Standard version, Premium version)

Here is a pricing strategy that the US healthcare company IDR Medical adopts:

The steps basically are:

Determine minimum price
Determine maximum price
Pick 5 prices between min and max price
Survey people with those 5 prices
Look at your survey results
Pick an optimised price

There’s also a research paper that says:

“selecting the correct pricing strategy for a certain product-firm situation directly impacts product profitability and return-on-investment”

Basically, pick the right pricing strategy and your product will be more profitable.
I thought that was kind of obvious, because a condition for being the “correct” pricing strategy would be the pricing strategy that maximizes profits the most.
It was on the slides. I don’t know. I just write the notes.

Want even more resources on pricing strategies?
Here. Knock yourself out.
https://en.wikipedia.org/wiki/Pricing_strategies
http://www.marketingteacher.com/pricing-strategies/
https://www.researchgate.net/profile/David_Collier12/publication/317384177_A_new_pricing_strategy_evaluation_model/links/5b4507060f7e9b1c72234084/A-new-pricing-strategy-evaluation-model.pdf

Team Lifecycle

I’m going to spoil you for this section by telling you the summary at the start:

Goal setting improves performance if goals are difficult and specific
Different team roles exist, and there are personal preferences
Teams go through different stages as they form
Interaction is important – it really does matter if you’re kind and dependable

Locke’s goal setting theory

“Do your best!”
What? My best?
How much is my best?
How do I know when I’m doing my best and when I’m not?

Edwin Locke and Gary Latham studied goal setting and established their goal setting theory, so stupid vague goals like that would be replaced with goals that are difficult and specific.
When goals are difficult and specific, people work harder to achieve them.
But how do you come up with these goals?
Follow these 5 principles that each goal should have:

Clarity: Clear, accurate, precise
Challenge: Difficult but realistic; a fun level of challenging
Commitment: Everyone must agree with these goals
Feedback: Knowing how well you are making progress towards your goal
Task complexity: Keep It Simple, Stupid! Split the goal if it’s too complex

Going back to the “do your best” goal, it was roasted in this quote:
“maximum effort is not aroused under a do best goal. This is because the ambiguity inherent in doing one’s best allows people to give themselves the benefit of the doubt in evaluating their performance.”
The moral of the story is: don’t do your best. Complete your goals instead.
Don’t believe in yourself. Believe in me! Believe in the me who believes in you!

Hmm? You want an example?
Instead of Scouts saying “do your best”, they should set goals like:

Pitch our scout tent in under 2 minutes 30 seconds
Train 90% of our members to light a fire using a flint by the 21st November
Wash 180 cars at the next fundraiser

Now you can actually see and strive for your achievements instead of a vague “do your best”.
Besides, isn’t “do your best” a bit overdone? It’s really lost its power. You hear it and it doesn’t motivate you or anything.
However, when you look at these goals, they seem impressive but doable. They make you want to achieve them, like Steam / PSN achievements or something. It gives you something to strive for, and will ultimately lead to a sense of accomplishment.
I’d better turn off this Gurren Lagann music before I get carried away...

Oh yeah, and here’s some graphs:

Commitment

Complexity

Belbin’s Team Roles

Do you know what star signs are?
What about the Myers–Briggs Type Indicator? (If you’re interested, I’m INFJ)
Belbin’s team roles are just like those.
They’re “personality / behaviour categories” that different people fit into.
Teams need all of these behaviours.
Most people will have two or three roles that they feel comfortable with.
Here are the roles. Choose your fighter:

Plant

Monitor Evaluator

Specialist

Tends to be highly creative and good at solving problems in unconventional ways.

Strengths:

Creative
Imaginative
Free-thinking
Generates ideas
Solves difficult problems

Weaknesses:

Might ignore incidentals
May be too preoccupied to communicate effectively

Don’t be surprised to find that:

They could be absent-minded or forgetful

Provides a logical eye, impartial judgements where required and weighs up the team’s options in a dispassionate way.

Strengths:

Sober
Strategic and discerning
Sees all options and judges accurately

Weaknesses:

Sometimes lacks the drive and ability to inspire others
Can be overly critical

Don’t be surprised to find that:

They could be slow to come to decisions

Brings in-depth knowledge to a key area of the team.

Strengths:

Single-minded
Self-starting
Dedicated
Provides specialised knowledge and skills

Weaknesses:

Contributes on a narrow front
Can dwell on the technicalities

Don’t be surprised to find that:

They overload you with information

Resource Investigator

Teamworker

Co-ordinator

Uses their inquisitive nature to find ideas to bring back to the team.

Strengths:

Outgoing
Enthusiastic
Explores opportunities and develops contacts

Weaknesses:

Over-optimistic
Can lose interest once the initial enthusiasm has passed

Don’t be surprised to find that:

They might forget to follow up on a lead.

Helps the team to gel, using their versatility to identify the work required and complete it on behalf of the team.

Strengths:

Co-operative
Perceptive
Diplomatic
Listens and averts friction

Weaknesses:

Indecisive in crunch situations
Tends to avoid confrontation

Don’t be surprised to find that:

They might be hesitant to make unpopular decisions

Needed to focus on the team’s objectives, draw out team members and delegate work appropriately.

Strengths:

Mature
Confident
Identifies talent
Clarifies goals

Weaknesses:

Manipulative
Offload their own share of work

Don’t be surprised to find that:

They might over-delegate, leaving themselves little work to do.

Shaper

Implementer

Completer Finisher

Provides the necessary drive to ensure that the team keeps moving and does not lose focus or momentum.

Strengths:

Challenging
Dynamic
Thrives on pressure
Has drive and courage to overcome obstacles

Weaknesses:

Prone to provocation
May offend people’s feelings

Don’t be surprised to find that:

They could risk becoming aggressive and bad-humoured in their attempts to get things done.

Needed to plan a workable strategy and carry it out as efficiently as possible.

Strengths:

Practical
Reliable
Efficient
Turns ideas into actions
Organises work that needs to be done

Weaknesses:

Inflexible
Slow to respond to new possibilities

Don’t be surprised to find that:

They might be slow to relinquish their plans in favour of positive changes

Most effectively used at the end of tasks to polish and scrutinise the work for errors, subjecting it to the highest standards of quality control.

Strengths:

Painstaking
Conscientious
Anxious
Searches out errors
Polishes and perfects

Weaknesses:

Inclined to worry unduly
Reluctant to delegate

Don’t be surprised to find that:

They could be accused of taking their perfectionism to extremes.

Which one are you?
There are tests, but you need to pay for them.
Try finding a free one online!

Tuckman’s model of group development

Remember forming, storming, norming and performing?
Yeah, it’s just that again.

If you’ve got a really bad memory (or if you just don’t care enough to remember), here’s a refresher:
When you meet a new group, you go through a couple of phases:

Forming: You’re on your best behaviour
Storming: It doesn’t go as planned and you see the bad in people
Norming: You accept that nobody is perfect and try to make things work
Performing: You’re in perfect harmony with your group
Adjourning / Mourning: Leaving your group

Drexler & Sibbet team performance

This is similar to Tuckman, but it’s more of a model you follow and less of a “repeated observation”.
There are seven stages to this model, four for creating the team and three for sustaining the team:

Orientation: Why am I here?
Trust Building: Who are you?
Goal Clarification: What are we doing?
Commitment: How will we do it?
Implementation: Who does what, when and where?
High Performance: Wow! (We’re doing well)
Renewal: Why continue?

Others

Here’s something Google uses:

Basically, who is on the team doesn’t matter as much as how well a team collaborates, structures their work and contribute.

There’s also the Barnum Effect, which states that:
“a common psychological phenomenon whereby individuals give high accuracy ratings to descriptions of their personality that supposedly are tailored specifically to them, that are in fact vague and general enough to apply to a wide range of people”
Basically people think that a description is tailored to them, when really it’s so general it could apply to anyone (like star signs).

Product Evaluation

In this section, we will be evaluating products.
When we evaluate products, we care about what the customers think.

Conventional product development process: relies on intuition throughout the product development stages
Reliable and successful products are based on the needs of the user.
Take into account all human-related design conditions:

Physiology
Psychology
Cognition
Behaviour

We don’t make products for the designer: we make them for the customer
Even if we’re not-for profit

Here’s a representation of ISO 2500 for software product quality:

Engineers change the world, but the world has to move along with them
We can make cool stuff, but how can we apply it for customers in the real world?
Solve the problem; don’t serve ideas

We have an example here called Shot Buddy.
I’d come up with a funnier example, but I can’t be bothered and these slides are awful. Sorry!
Basically, it’s a tool that brings you back the ball when you shoot it in basketball. It’s used for training.

First, we determine the target market.

Professional / Amateur?
Age range?

We figure this out by brainstorming:

Anyone team member who should know?
Family member?
Friend?
Any experience?

Then, we set out a problem statement:
“Design a basketball return device for players from about age 10 to age 18 that will automatically return the ball to the shooting player.”
Then we break it down:

Return missed shots near the hoop
Return missed shots even when they aren’t hitting the hoop or the backstop
Track where the shooter is on the court
Return the ball to the position of the shooter
Return the ball quickly
Do not block the shooter’s access to the basket
Fit any kind of hoop that a young player might have (e.g., a height adjustable hoop)
Be easily set up on a hoop and court
Fit hoops set up on home courts (eg. free standing systems, or garage or home wall-mounted hoops)
Be able to be stored in small space
Withstand the elements if left attached to a hoop for an extended period of time
Return shots taken from the wings of the baskets (not just in front of the basket)
Return balls with enough energy to reach a shooter standing as far away as the three-point line
Return the ball accurately—so the shooter doesn’t have to move to get the ball

Can we structure this better?
Yes! With affinity diagrams.
For any Xenoblade fan, affinity will be a familiar concept.
Unfortunately, this is nothing like that.
Affinity diagrams help organise large groups of information into meaningful categories.
It’s like the “output” of a brainstorming session, and helps illustrate relationships between groups:

This’ll help us focus the team’s design scope and identify areas to focus during research.

So far, is the team’s intuition reliable?
We can get more reliable information through the customer co-creation model.
The Co-Creation Model establishes levels of consumer involvement in a product or service.

We can pick one out of four of the involvement levels:

Submitting: customers send in ideas, company can either accept or reject ideas but most of the work is done by company
Tinkering: original idea is done by company, but customers can modify what has already been built (think games with level creators, like Super Mario Maker or Little Big Planet)
Co-Designing: problem has already been defined, but customers guide the selection (think Threadless, where an online community create designs but the shop is run by the company)
Collaboration: the company literally just works with the customers all the way through, in a collaboration

We can also use product design surveys.
What are they?
Product design surveys are those surveys that have a bunch of statements and you pick a number from 1-5 on how much you agree / disagree with it.
You’ve most likely done one before.

The good thing about these is that they’re quantitative.
Because they’re represented in numbers, we can collect them up and reason about them.
We can even convert the results of these into customer requirements and will form the customers’ opinion about the quality of the product.

The product needs to satisfy:

Customer needs
Organisational needs
Regulatory needs

Customer requirements can be classified into four categories:

Expecters (identifiable via benchmarking)
Spokens (identifiable via surveys)
Unspokens (identifiable via ethnography)
Exciters (identifiable via research / innovation)

It’s also important to identify and satisfy the critical success requirements of the target market.

Here’s some more customer requirements from product design surveys and classification:

Weatherproof—System should not rust from being exposed to rain and snow to give the option of leaving it in its in-use position for long periods of time.
Accurate Shot Return—An effective ball return system must be able to return the ball to the place of the shooter at the time when the ball leaves the shot return system.
Tool-less Installation—System does not require any tools to be used in order to assemble, disassemble, or install; this includes hand tools or power tools.
Five-year Lifetime—This includes the ability to handle environmental factors as well as dropping hazards from heights up to the maximum usage height of the product.
Quick Return—The Shot-Buddy must return balls quickly, even if they are missed shots. In practice, a shooter can get into a rhythm which helps with building and maintaining a particular shooting “touch.”
Ability to Store in Garage—System should fit it in a small portion of the owner's garage or a shed without having to significantly adjust the placement of other belongings.
Compatibility with Most Basket Configurations—Basketball return system must be compatible to attach to any brand of basketball hoop.
Does not Jam—The Shot-Buddy must return shots that are coming from all angles and at different velocities without letting the ball get stuck in the system and fail to return.
Ability to Catch Most Shots (Missed and Made)—The Shot-Buddy must work with a wide range of shots, both falling into the basket and missing the basket.
Non-obtrusive—The Shot-Buddy cannot limit the number of shots that can be taken by having components that block a shooter’s access to the basket on the floor or in the air.

It’s not enough to have customer requirements.
We need to convert them to testable engineering characteristics.
They need to capture:

Parameters
Design variables
Constraints identified through:

Research
Benchmarking
Reverse engineering

Here’s some examples from our basketball product:

Catch area—the volume around the basket that indicates the zone in which any basketball thrown will be returned to the shooter
Probability of jamming—the configuration (mouth size, length, number of turns) of the ball return guide will determine the likelihood of a basketball getting stuck.
Accuracy of ball return—% of time the ball returns to the lane of the shooter
Average time of ball return—length of time from shot passing the height of the basket to when it is returned to the shooter.
Sensing position of shooter—a key functionality of the Shot-Buddy is to determine where the shooter is on the court in order to accurately aim the ball’s return.
Lane change time—time it takes the ball return aiming device to rotate through a lane.
Lane span—degrees in radians that the lane traces out in rotation centered on the basket.
Energy or torque to rotate ball return subsystem—the Shot-Buddy must include a moving system to aim the ball to the lane of the shooter.
Weight
Time to install system—length of time it takes for a homeowner to assemble and mount the system and get it working

Once we’ve got the product design surveys customer requirements and created engineering characteristics from them, we can combine them to make...
... quality function deployment!
I know, I know: that doesn’t sound very interesting. Just hear me out.
Quality Function Deployment: a method of ordering engineering characteristics based on their criticality to the customer requirements.
What does that even mean? “Criticality”? What’s so “critical” about a machine that spits a ball back at you?
When I say the “criticality” of engineering characteristics, I mean how much of the customer requirements we will fulfil by satisfying that engineering characteristic.
What? It still doesn’t make sense?
Let me show you an example then:

As you can see, we have all the engineering characteristics on the top and the customer requirements on the left.
For each “cell”, a number between 1 to 10 details how much that engineering characteristic will satisfy that customer requirement.
On the top we have “improvement directions”. That shows if we want to maximise or minimise that engineering characteristic (for example, the arrow is down for “jamming probability” because we want to minimise the probability of the device jamming)
For example, look up “weatherproof” with “weather resistance”. That’s a solid 9, because increasing our weather resistance will obviously make it weather/waterproof!
If you look up “tool-less installation” and “material rigidity”, it’s a 1. I suppose making the product robust will reduce the need for using tools to fix the product? It’s not a very strong correlation, but it’s a correlation nonetheless.
For every other pairing that are not applicable, it’s left blank, meaning 0.
Make more sense now?
All of these scores are collected and ranked at the bottom.
As you can see, the “catch area” engineering characteristic is the most critical and affects the most customer requirements.

Sick of product evaluation yet?
Don’t worry; this is the last bit.
Everything above helps us to decide if the new product is a good investment.
The resulting documentation is typically called a new product marketing report.
The full report includes:

the business objectives
product details
required technology
competing products
projected sales
marketing strategy
capital requirements
development cost and time
expected profit over time
shareholder returns

The engineering design tasks are compiled into product design specifications (PDS).
The PDS forms the reference document for the design and manufacture of the product, and documents all outcomes of the product development process.

Projects: Introduction and Life-Cycle

Remember when we spoke about the life-cycle of an organisation?
Birth, Growth, Decline, Death?
If not, it’s in the Company Lifecycle section, a few headings up.
Well, projects have a life-cycle too. We’ll be going over that in this section!

Types of Projects

Innovation starts with an identified problem.
One person (or a group) comes up with a solution.
However, transforming that idea into reality is rarely one person’s effort.
Most of us here will either:

Find solutions
Work to make ideas reality
Fail this module and work at Sainsburys

When we do, we will be working on a project.

What’s a project, exactly?
Project: A temporary endeavour undertaken to produce unique product, service, or result.
This is opposed to operations, which are ongoing and repetitive (like this module).
What do we mean by “temporary”?
We don’t mean “having a short duration”. A project could be really long.
We mean that a project needs to have a projected “ending”.
A project ends when one of these conditions are true:

The project's objectives have been achieved
It becomes clear the objectives cannot be met
Funding is exhausted (or no longer available for allocation)
The need for the project no longer exists (customer no longer wants it, there is strategic change / change in priority)
Requisite resources (human / material) no longer available

Project characteristics:

Unique
Uncertain
Temporary
Defined Deliverable
Constrained

Project constraints:

Time
Budget (resources)
Quality

Project management (PM): Application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.
It integrates about 50 logically grouped project management processes, categorised into five Process Groups:

Initiating
Planning
Executing
Monitoring and Controlling
Closing

Those groups make up the project life-cycle, but we’ll get into that in a minute.

Engineers and managers have to work together to make a project work, hence Engineering Management and Law.
Did you know that there is a global demand for managers who have technical knowledge with a good understanding of business principles and corporate dynamics?
Basically, managers who actually know what they’re talking about.

Things vary based on the nature of the project, like:

Resources
Depth of planning
Areas of emphasis

Therefore, projects can be classified based on these attributes.
Projects in the same classification may share similar project management processes.
Newer projects can also “take lessons from” older projects in the same category.

So what are these categories?
Here are the categories:

Category	Examples
Aerospace / Defense Projects
Defense systems	New weapon system; major system upgrade
Space	Satellite development / launch; space station model
Military operations	Task force invasion
Business and Organisation Change Projects
Acquisition / Merger	Acquire and integrate competing company
Management process improvement	Major improvement in project management
New business venture	Form and launch new company
Organisation restructuring	Consolidate divisions and downsize company
Legal proceeding	Major litigation case
Communication Systems Projects
Network communications systems	Microwave communications network
Switching communications systems	Third-generation wireless communication system
Event Projects
International Events	Summer Olympics; World Cup
National Events	The FA Cup Final; Political Conventions
Facilities Projects
Facility decommissioning	Closure of nuclear power station
Facility demolition	Demolition of high-rise building
Facility maintenance and modification	Process plant maintenance turnaround
Facility design / procurement / construction	Conversion of plant for new products / markets
Civil	Flood control dam; highway interchange
Energy	New gas-fired power generation plant; pipeline
Environmental	Chemical waste cleanup
High rise	40 story office building
Industrial	New manufacturing plant
Commercial	New shopping center; office building
Residential	New housing subdivision
Information Systems (Software) Projects
Software	New project management information system. (Information system hardware is considered to be in the product development category)
International Development Projects
Agricultural / Rural development	People and process-intensive projects in development countries funded by The World Bank, regional development banks, US AID, UNIDO, and other UN and government agencies; and capital/civil works intensive projects - often somewhat different from facility projects.
Education
Health
Nutrition
Population
Small-scale enterprise
Infrastructure: energy (oil, gas, coal, power generation and distribution), industrial telecommunications, transportation, urbanisation, water supply and sewage, and irrigation
Media and Entertainment Projects
Motion picture	New motion picture (film or digital)
TV segment	New TV episode or opera premiere
Product and Service Development Projects
IT hardware	New desktop computer
Industrial product / process	New earth-moving machine
Consumer product / process	New automobile, new food product
Pharmaceutical product / process	New cholesterol-lowering drug
Service (financial, other)	New life insurance / annuity offering
Research and Development Projects
Environmental	Measure changes in the ozone layer
Industrial	How to reduce pollutant emission
Economic development	Determine the best crop for sub-Sahara Africa
Medical	Test new treatment for breast cancer
Scientific	Determine the possibility of life on Mars

Every project is unique, is novel and has a “transient existence” (it will end, unlike JoJolion)
However:

Some projects are more different from others.
Some are more similar to each other
Some are more complex than others
Some are more routine than others

But the categories above do not express this!
Therefore we have a further categorisation based on experience:

Runners: Virtually routine batch processing. The company is very familiar with it and what it entails. We’ve done it so many times it’s boring.
Example: Maintenance Projects

Repeaters: We have done similar things many times before. Knowledge of how to manage this project exists in the company.
Example: A video game company making another sequel to a big series

Strangers: We may have done something similar previously, but there are significant unfamiliar aspects.
Example: Apple making new computers but with their own processors

Aliens: Completely not like any project previously done.
Example: Apple making a car, Microsoft making robust software, EA making a good game (the last two are jokes)

This is kind of like a scale.
Project risk and PM effort goes up as you go from runners to aliens.

Project Life-cycle

There are four stages to a project’s life-cycle:

Concept / Initiation

Birthing the project
Includes:

Business Case (how will this affect the business)
Feasibility Study (can we do this?)

Technical (do we have the tech?)
Economic (do we have the money?)
Legal (is it legal to do this?)
Operational (do we have enough manpower?)

Project Charter (what are we actually doing)
Project Team (who will be working on this)

Most projects do not go beyond this stage.

Planning

Organising / Preparing
Includes:

Project Schedule (what are we doing)
Budget (how much money can we spend)
Quality Plan (how to upkeep quality)
Risk Plan (how to mitigate risks)
Communications Plan (how do we talk to each other)
Procurement Plan (where will we get our stuff from)

Tenders
Technical / Commercial Qualifications
Request for Proposal
Supplier Contract / Sub-contract

Execution

Carrying out the actual work
Includes:

Scheduled work packets with associated expenditure
Monitor and control

Time
Cost
Quality
Change
Risk
Procurement
Documentation

Closure

Ending the project
Includes:

Commissioning / Hand-over
Documentation (lessons learned)
Project Review
Disband / Reassign Team
Perhaps celebrate... or cry

Projects are different from products: products can be the result of a project.
This is different from the life-cycle of a company or a product, but they should still be taken into account too.

Most projects have these life-cycle stages, but the activities in these stages can vary.
Projects can either be:

Predictable: plan-driven, typically Repeaters and Runners. Outputs are pre-defined, then scope changes are carefully managed
Adaptive: change-driven, typically Strangers and Aliens. Output is developed over multiple iterations and detailed scope is defined for each iteration only as the iteration begins

Cost / Resource variation across the lifecycle

Risk and uncertainty and Cost of changes

Project Management and Controls

Project Activity Network

A project activity network can help you manage the activities within a project, their durations, their order and how much they can be delayed by.
It’s kind of like a Gantt chart, but with boxes and more emphasis on being “early” and “late”.

Each activity has a box with fields, like so:

Early Start	Identifier Number	Early Finish
Activity Float	Activity Descriptor
Late Start	Activity Duration	Late Finish

Early Start: The earliest time at which this activity can start
Early Finish: The earliest time at which this activity can end
Identifier Number: The “ID” of the activity (doesn’t have to be a number)
Activity Float: The most amount of time this activity can be delayed by
Activity Descriptor: A description of this activity
Activity Duration: How long this activity will go for
Late Start: The latest time at which this activity can start
Late Finish: The latest time at which this activity can end

For example, an activity could look like this:

What does this mean?
The earliest this activity can start is 5 minutes in. If the activity is 5 minutes long, the earliest it will finish is 10 minutes in.
However, if we wait 5 minutes to start this activity but we’re delayed by 1 minute, the latest we can start is 6 minutes in. Therefore, the latest we’ll finish this activity by is 11 minutes in.

That’s cool, but there’s no order. If there’s an activity B, how do we know to do A before B?
These boxes are supposed to be connected into a DAG.

When many activities can start after one finishes, that’s a burst point.

When one activity can start after many activities end, that’s a merge point.

That’s cool too, but how do we fill in all the fields?
If you’ve ever done Dijkstra’s algorithm by hand in Decision 1 A Level Maths, then this’ll feel familiar to you.
We need to do a forward pass from the initial activity to fill out the early fields, then do a backward pass from the last activity to fill out the late fields.
I’ll show you an example:

We start with A. A has no dependencies, so we can start working on that immediately, making Early Start = 0.
It has a duration of 5 minutes, so Early Finish = 5m.
B, however, does have a dependency: A. A’s early finish ends at 5 minutes, so B can start straight afterwards, making B’s early start 5 minutes.
B also has a duration of 5 minutes, so Early Finish = 10 minutes.
We can keep going until we’ve filled every activity in.

But wait! There’s a merge point from B and C to D. Which Early Finish does D use: B’s Early Finish of 10m or C’s Early Finish of 11m?
The rule is to always use the longer duration, so D will use C’s 11m.

Now we can start the backwards pass.
For the final activity, Late Finish = Early Finish, so D’s Late Finish is 24m.
Late Start = Late Finish - Duration (it’s like we’re working backwards)
So D’s Late Start is 24m - 13m = 11m.
For other activities, Late Finish = Late Start of the next activity.
So B and C’s Late Finish will be 11m.
We can keep going until we’ve filled everything in.

But wait again! A is a burst point between B and C. Does A pick B’s Late Start or C’s Late Start?
When we do a backwards pass, we pick the shortest duration, as opposed to a forward pass where we pick the longest duration.
Therefore, A will pick C’s 5m.

Finally, we can calculate Activity Float, or SLACK.
This one’s easy and doesn’t rely on order:

Activity Float = Late Start - Early Start

So we can just go around and apply this to all activities.
I’d do that for this example, but the one from the slides gives more insight. It’s the same example, but with just more activities:

Looking at the red numbers (Activity Float), we can’t afford to delay on activities A, C, D, F and H.
However, we can delay the other activities by varying amounts.
The path from A to C to D to F to H is the critical path and cannot be delayed.
Project duration can be reduced by:

Eliminate tasks on the critical path
Replan serial paths to be in parallel
Overlap sequential tasks
Shorten the duration of critical path tasks
Shorten early tasks
Shorten longest tasks
Shorten easiest tasks
Shorten tasks that cost the least to speed up

The effectiveness of these methods depends on:

Project constraints
Client expectations
Project manager’s own organisation

Delaying activities is useful when you need to crash the project.
What’s crashing? I’m glad you asked...

Crashing Projects

Projects are constrained on time, cost and quality.
Sometimes, we need to accelerate projects.
When we accelerate a project, we are performing project crashing.
Why do we crash projects?

Aggressive / Ambitious Scheduling
Change in the (Business) environment (perhaps rivalry)
Project is behind schedule and need to be shaped in
Avoid slippage costs (hence a trade-off)

How do we determine when we need to crash a project?

Resource availability (cost, personnel, equipment, etc.)
Cost Considerations (crashing may gain time, but will incur extra costs)
Management disposition (perhaps not enough management)

So how can we crash a project?
while (true) { }?
Not that kind of crash... here are the crashing options:

Improving efficiency of use of current resources

Cut off unnecessary bureaucracy (e.g. middle management)
Improve motivation of team members

Improving work methods / equipment

Electronic communications instead of meetings
Paying specialists for specific tasks (includes sub-contracting)

Reducing project scope

Removing “minor” aspects of a project

Compromise quality

A bit risky; there can be consequences

Fast-tracking

Rearrange schedule to have more activities in parallel
Might not be obvious at first
You can do this by scrutinizing the critical path for possibilities of shortening longer tasks

Have you ever heard of the expression “crushed time, boomed cost”?
Me neither.
When we crash a project, we don’t have to crash the entire thing in one go: we can crash the activities individually.
However, crashing usually costs more money, because we’re trying to speed things up.
So what’s the trade-off between how much money the crashing will cost and the speed increase of the crash? If we can calculate a trade-off, we can decide if crashing is a good idea.
Here’s a graph of activity cost against activity duration:

If we can find the gradient of the slope, that’ll give us a pretty good figure of a trade-off.
The equation is this:

There’s no specific “range” of a slope indicating a good crash or bad crash. It depends on the project itself and the penalties of being late.

Project Control

Cost tracking: comparing the estimates with actual costs incurred during execution
Costs include:

Labour costs
Material costs
Project support costs (admin costs, like consumables, travel etc.)

Schedule tracking: comparing scheduled work with actual work executed in relation to time

With this, you can track if a project is ahead (lead) or behind (lag)
It focuses and compares:

Scheduled Start and finish time for each scheduled.
Actual start and finish time of each
Percentage completion of the project
Estimated completion date
Milestones reached
Deliverables accomplished

Tracking these two helps track the performance of the project.

Earned value: value of planned work that has been accomplished to date.
It provides a reliable indication of the performance of the project.
It consists of three elements:

Budgeted cost of work performed (BCWP) - The value (based on the budget) of the work completed to date
Budgeted cost of work scheduled (BCWS) - The planned value of the work scheduled to have been completed to date
Actual cost of work performed (ACWP) - The value of the work performed based on the actual expenditure to date

These three are the basis for Variance Analysis.
What is Variance Analysis?
Variance Analysis: a quantitative investigation of the difference between actual and planned behavior [citation].
Well, whatever. Just memorise these:

Cost Variance (CV) represents the difference between what was expected to be spent for the work performed and what was actually spent.

Schedule Variance (SV) is the difference between the value of the work actually performed and the value of the work scheduled to be performed for a specified period.
Budget at Completion (BAC) is the estimated total cost of the project or a work package when completed; when combined with project contingency or management reserve funds, BAC equals the total project budget.
Estimate to Complete (ETC) is an estimate of how much more money the project will require to be completed.

Estimate at Completion (EAC) is the current measured (actual) cost plus the estimated cost for the remaining work.

Cost Performance Index (CPI) is a numeric representation of how effective the project has been to date in terms of cost.

Doing this performance checking in the first place might be a trigger for project crashing. Why would you be checking performance in the first place if your project didn’t need crashing?

Project Closure

Project Closure Report

A project closure report is made to determine if:

The project achieved its objectives
The business benefits stated in the business case were realised

Otherwise there’s no clear indication whether the project was a success or failure.
Takes additional time and budget to formally close a project and review its level of success.
It’s kind of like a project retrospective.
You can also decide if it’s better to:

Close the project altogether
Start a new one

You can also think of it like a formalised end of a project.

Provides confirmation that the criteria for customer acceptance have been met
Requests sign-off from the project sponsor to close the project.

The report includes:

Detailed list of project completion criteria
Confirmation that all completion criteria have been met
List of outstanding business activities, risks and issues.
Set of actions needed in order to:

Hand over project deliverables and documentation
Terminate supplier agreements
Release resources to the business and inform stakeholders of the closure
Official request for project closure approval.

Validating the project completion:

Has all completion criteria been met?

Criteria is met, but are there outstanding actions / items?

Identifying the required closure activities:

Handover of deliverables
Documentation
Sub-contractor / supplier terminations
Resources release
Communication

Post Implementation Review

Assesses the overall success of the project
Identifies lessons and makes recommendations for future projects
Conducted after official project closure is approved and all activities are completed.
Good practice is to wait a little to see how the benefits play out.
Produced by independent / unbiased person.

Review of the project’s performance against the original targets:

Scope, Budget, Schedule, Resource allocation

Checking conformance against the PM processes originally set out:

Time / Cost management, RM (risk management), Procurement, Comms, Quality

Measures deviations from forecasted benefits in the Business Case:

Operational efficiency, cost reduction, increased market share

Quantitative Risk Management

Ready for a history lesson?
Risk ‘Pooling’ or ‘diversification’:

Chinese merchants travelling on the Yellow River used to distribute all their goods across everyone’s boats, so if one boat was lost then each merchant would only lose a small proportion of their cargo.
The Babylonians used to do this too with camel trains.

Risk transference:

In insurance, a contract is drawn up where a reimbursement for financial losses caused by some specified peril is promised in return for a payment of an insurance premium.
In other words, risk of financial loss is said to be transferred from the insured to the insurer through the mechanism of the insurance contract.
So when you break your phone or something, instead of forking out a huge sum for a replacement, it’s “transferred” to the insurance company.

That’s cool, we’ve learned about risk analysis for, like, the millionth time now.
Why do we even do it?

To self insure (because insurance is expensive)
To comply with regulation
To get better credit ratings
Shareholders and markets want it
Regulators want it
To improve governance
To improve strategic decision-making
To add value across the organisation
To enhance management (the best reason, apparently)

What is risk? There are multiple meanings:

General: exposure to danger
Health and safety: probability that a person will be harmed
Project management: anything that might affect the objectives of the project

Risk also means “uncertainty that matters”

There is a difference between risk and uncertainty.
Risk is the “effect of uncertainty on objectives”
Uncertainty is “a situation in which something is not known”
... and yet “risk analysis involves a detailed consideration of uncertainties”

Risk Management (RM): The identification, assessment and prioritisation of risks

It’s an operational issue: one of the key project management competencies
... and a strategic issue: defining a level of risk that is acceptable

Risks need to be balanced with the reward. “No action” is also technically a risk.
Only 39% of executives in a 2010 survey reported a “strong risk management culture”
“Risk management is what helps you identify the potential crisis that will cause your schedule to fall apart”

There are a variety of different approaches to risk:

Portfolio

Google divide their operating budget into a ratio:

70% - core business: search optimisation, advertising
20% - next gen: gmail, maps, analytics, trends
10% - far-future: glass, cars, robots

Strategy

Gore is a US manufacturer of advanced materials, and any employee can suggest a new project.
Evaluation of projects are split into 3 metrics: Real, Win, Worth
They also adopt a “waterline” concept: if it’s below the “waterline” (would sink us), we don’t do the project.

There’s also TTP who uses the basic model of “fees for time” and won’t take any project that could kill the company.

Systematic

You define a Risk Register, where you include stuff like likely low-impact events and unlikely high-impact events
Also develop delivery schedules with large safety margins
All partners are involved in the risk management process
The Olympic Delivery Authority for the London 2012 Olympics applied this

Risk in banking:

This guy named Tom said that the key risks of banking are:

Credit, Liquidity, Interest rate, Conduct and Operational Risk

This is, uh, Tom.

Keep it simple.

What can go wrong?
What is the impact if it goes wrong?
How do you know if it has gone wrong?

Issues for managing risk in engineering:

Engineering risk management sometimes has a ‘Linnean’ character (named after the botanist Carl Linnaeus) insofar as it must be exhaustive in categorising engineering risks (for design/construction/materials etc.) in order to stave off potential litigation. In other words it’s a research job!

If that made no sense, try this explanation:
It means you need to be thorough. For example: In the UK if there's a workplace death in a factory during a process, the Health and Safety Executive will automatically sue your company.

If any are true:

You did not have Risk assessments for the process.
The victim was not violating the assessed process. (IE, they did the correct thing but your processes were flawed).
Management was not enforcing these policies if the employee didn't follow them properly.

Then the directors of the company can go to prison or the company can get a massive fine.

You need to consider and mitigate every risk as mistakes can be catastrophic (if you build a bridge from the wrong materials and it falls down then you're liable).

Risk management can involve anticipating risk and / or becoming resilient to the risk you haven’t been able to anticipate. In complex large scale contracts there are ALWAYS important risks that have not been anticipated and transferred adequately in the risk provisions of the contract. Hence mechanisms like ‘online dispute resolution’ are becoming more important as a means to solve the ‘who pays for unforeseen losses’ issues that inevitably crop up – thereby avoiding expensive litigation.

Risk Management methods:

Risk identification: Might include creation of a risk register

Brainstorming
Delphi technique
Interviewing
Root cause analysis
Checklist analysis
Assumption analysis
Diagramming techniques

Cause and effect diagrams
System or process flow charts
Influence diagrams

SWOT analysis
Expert judgement

Risk analysis: Identify likelihood and potential impact, qualitative and quantitative

Qualitative:

Risk probability and impact assessment
Probability and impact matrix
Risk categorisation
Risk urgency assessment
Expert judgement

Quantitative:

Probability distributions
Quantitative risk analysis & modeling techniques
Sensitivity analysis
Expected Monetary Value analysis (EMV)
Modeling & simulation
Cost risk analysis
Schedule risk analysis

Response planning: Plan responses (great definition, huh)

Risk reassessment
Risk audits
Variance and trend analysis
Technical performance measurement
Reserve analysis
Status meetings

Pitfalls with risk analysis:

People believe that if we have a risk register, we are managing risk
People don’t understand the risk process
Stakeholders are unclear about what risk is
Identifying risks is fine but then people run out of steam

Technological Innovation cf Business Innovation

Take a breather! If you’ve made it this far, you’re doing well.
Worry not; this section is pretty chill.

Innovation

What is innovation?
Pick a definition:

“The development and implementation of new ideas” (Van de Ven 1986)
“The successful exploitation of new ideas” (Cox, 2005)

Hmm... they’re both pretty good...
Let’s look at some products.

Product	Description
	How about these weird smartwatch things? Is this innovation? Well, they’re new, but they’re not successful. Have you ever seen someone walking around with one of these? I swear they tried to make these kind of things, but failed because the tech to make it renders it unusable.
	How about these iPads? iPads are cool and all, but are they new? We had the Linus Write-Top back in 1987. We also got the GridPad two years later.
	Ah, here we go! Successful and new. A car. Did you know it can take you from one place to another way faster than walking? I’m just kidding. There’s something new about this car, but I don’t know what. It was on the slides. It does look kind of cool, though.

Alright, we get it: innovation means successful and new products.
Huh? Products?
Just products?
We can have innovative services too, can’t we?

In all sorts of sectors, like finance (mintos, TransferWise, Atom bank) or entertainment (Netflix, EA access, Steam)
How about a combination of product and service, like Sonos + Alexa?
Services are extremely serious. Just look at all that red on this graph!

How about innovative business models?

Yeah! We can have innovative everything!

3 reasons why innovation is difficult

However, innovation is difficult.
Why?
Uber is pretty innovative, don’t you think?
How many rides happen with Uber per day?
There were 17 million a day back in May 2019.
Didi, Uber’s old competitor, had even more with 30 million.
Damn, imagine implementing a scalable service to handle that load!
Yeah, that’d be pretty tough.

Innovation can also depend on business environment, for example when Uber’s China unit merged with Didi Chuxing.

Regulations can make things difficult though. Amazon Prime Air is an example of this.
Imagine drones racing around everywhere dropping off parcels. I don’t think the government would like that.

Technology can make things difficult, too.
Watch this video about robots getting abused.
When will delivery by robot become mainstream? When the technology is there, I guess.
For now, though, robots can still be kicked around and bullied, making parcels very easy to steal from them (unless they’re Robocop or something)

A combination of these problems can be found in autonomous vehicles.

So that’s our three challenges to innovation:

Business environment might not support innovation
Regulations
Technology

TRL: A technology development model

What’s TRL (Technology Readiness Level)?
It’s a measurement system made by NASA to gauge the maturity level of a technology.
You can use it to see how far away a piece of tech is from launch.
The levels go like this:

Basic Principles Observed and Reported
Potential Application Validated
Proof-of-Concept Demonstrated, Analytically and/or Experimentally
Component and/or Breadboard Laboratory Validated
Component and/or Breadboard Validated in Simulated or Realspace Environment
System Adequacy Validated in Simulated Environment (prototype demonstration)
System Adequacy Validated in Space
Actual system completed and 'flight qualified' through test and demonstration (ground or space)
Actual system 'flight proven' through successful mission operations

Basically, a technology starts at “level 1” and goes up through levels all the way up to level 9, where it’s ready for mass production.

However, not all technologies reach level 9.
Some of them die in the “valley of death”.

The valley of death is a range of TRL levels where a technology is likely to fail most.
Funding sources also vary with TRL levels:

At the start, they’re funded by unis and stuff, and by the end they’re funded by full-on businesses.
Here’s one last image:

Due Diligence, Liquidation, Administration

Due Diligence

Insolvency: When a firm has insufficient cash inflows to meet all of its cash outflows.
It may sell assets to stay afloat, and may continue to do this until it has nothing left (like in Monopoly if you keep mortgaging until you have nothing left)
There are two kinds:

Technical insolvency: the inability of the firm to meet cash payments on contractual obligations: accounts payable, wages, taxes, interest
Legal insolvency: a firm’s recorded assets amount to less than its recorded liabilities (not enough money to pay off liabilities)

So what do we do when we have insolvency?

Do nothing, hope something will come along to save the day
Seek adjustments with creditors outside of the judicial process (called a workout)
Seek court relief in bankruptcy proceedings in the form of a reorganisation or liquidation
Assign assets to a third party for liquidation
Liquidate (sell everything)
Attempt to sell out; look for a buyer

Aha! Look for a buyer.
That’s what we’re focusing on today.

Wanna hear a shocking story?
There once was a company named Ferranti.
It was a good company; had sales of around £800m.
In 1987, it bought the company ISC.
However...

ISC had boosted its profits by creating $1 billion worth of fictitious contracts and transactions
Had little legitimate sales
Existed on illegal arms deals

The purchase of ISC eventually over-burdened and killed off Ferranti.
They declared bankruptcy in 1991, suing ISC’s CEO and its auditors for negligence.
Damn. It’s like ISC was cursed, and Ferranti fell ill and died.

How can we not end up like Ferranti?
Well, naturally, we always like to run checks on stuff before we do stuff:

In the context of business, that’s due diligence: research and analysis of a company or organisation done in preparation for a business transaction.
Or, in more verbose terms, the processes of examining and developing an understanding of a company and its business operations before entering into a business transaction with, investing in, licensing assets or services of, or purchasing all or part of a business or its assets in order to make an informed decision.

There are four cornerstones of due diligence:

The company
Its operations (products, services and assets)
Its value and value of assets
Its people

The main objective is to verify that all four of these cornerstones are, well, nothing like ISC.

Possible sources of information could be:

Materials and data provided by the company

Response to due diligence questionnaire

Developed by the enquirer
Completed by the enquiree
Specific to the transaction

Advice from professional consultants
Publicly available data / info

Typical headings of due diligence questionnaire:

Company/entity basic information
Ownership of the key assets
Financial and tax-related matters
Significant agreements, contracts, and undertakings
Legal questions common to most transactions
Information about key personnel and employees

The fundamental content would follow the four cornerstones like:

To write a story about someone we don’t know very well, we first look for facts about the person, and then verify those facts.
That’s what we do with a due diligence plan: it’s like a manual for preparing the due diligence questionnaire.
It helps us set out what needs to be confirmed and the result from the point of view of the company itself.
The plan identifies general areas to be included in the due diligence review as well as issues necessitated by the structure and terms of the deal (basically, what we need to know that we’re not buying ISC two).
The plan must be based on the four cornerstones and include things like:

What is the nature of the transaction?
What must be understood and verified about the company in light of the proposed transaction?
How are the products, services, and assets of the company essential to the success of the transaction, and what issues need to be verified about these?
What needs to be understood and verified about the business operations?
Is the valuation appropriate in light of the transaction?
Are the key personnel capable of meeting the terms of the proposed deal?

Case Study

Let’s actually try this out with a case study!
Try and pretend you’re a detective or something (bonus points if you’re an Ace Attorney or a Danganronpa fan)

We want to buy a company called AB Bacus. Here’s our conversation with them:

I am interested in purchasing AB Bacus, an Internet greeting card company. It offers customized gift cards from a variety of apparel, jewellery, electronics, appliance, and other large retailers. What raised my interest in Abacus include:

Its relationship with large retailers
Its customer list, and, most
Its web site and order processing software.

I don’t want all of ABB’s business — only certain assets: the web site, the ABB software, certain trademarks/trade names they use for the gift card business, the customer list, and the agreements with the stores.
I don’t want the ABB employees, except one to help with the transfer of the retailer relationships to my company.

From this alone, we can compile some question-answer logs:

We can also create a due diligence plan overview:

Let’s talk to ABB some more. Red is us, blue is them:

“I have tested your services by ordering various merchant gift cards. I am impressed with the ease of use of the web site and the order process.”
“Thank you”
“Now, from what I understand, you developed this software in-house, not off-the-shelf program anyone can purchase, right?”
“We created the software. No one else has it or offers it as a licensable product ABB owns it. I admit I am not a tech person, Claire my former partner created it but has now left us; I purchased all her shares”
“Great! because I wont be interested in the transaction if Claire owns the software”
“No I bought all her shares, so that should put you at ease.”
“Settled. Now let’s talk about your contracts with the major retail chains…”

HOLD IT!

There’s something fishy about the ownership of the software...
If Claire left, and this guy purchased her shares, does that transfer her intellectual property to him?
Now due diligence must focus on answering the question “who owns this software”.

Remember, the due diligence plan is like a “blueprint” for the due diligence questionnaire. Let’s not roast this guy over the software right now; we’ll give him a chance to speak in the questionnaire we make from this plan.
For now, let’s talk about something else:

“Ok, we discussed the software, can we now turn to the contracts ABB has with the big chain stores”
“You can have these contracts. As part of the deal, I will just notify the retailers that your company bought the business. That shouldn’t be any issue.”
Lawyer: “there is a problem regarding the contracts between ABB and its retailers. I have been reviewing them, it is clear that each contract requires consent from the owner before it can be assigned to your company.”
“What a hassle! There are a lot of contracts, and I was assured that the contracts are assignable during our August 31 meeting.”

We should confirm more things about the contracts, like if the contracts are actually assignable:

We can also go on to do a plan about customer transfer and so on:

You get the picture.

Due diligence helps in deciding if the deal is worth the money.
It focuses on identifying significant components of a transaction and issues arising thence.
It is not a set process in where one size fits all.
It must be tailored to the specific terms of the proposed transaction.
A due diligence plan helps in tailoring the checks based on the 4 cornerstones.

I wonder what would’ve happened if Ferranti had followed due diligence...

Corporate Social Responsibility; Conflicts of Interest, Health and Safety

CSR

CSR has tonnes of aliases:

Corporate Social Responsibility, Corporate Responsibility, Sustainability, Sustainable Development, Corporate Citizenship, Corporate Philanthropy, Venture Philanthropy, Social Entrepreneurship, Social Enterprise, Corporate Community Involvement, Ethical Business, Ethical Supply, Single Planet Economy, Green Business, Green Supply Chain Management, Environmental Purchasing, Purchasing Social Responsibility, Ethical Sourcing, Socially Responsible Purchasing, Corporate Environmental Responsibility, Corporate Altruism, Corporate Social Opportunity, Corporate Compassion, Business and Human Rights, Corporate Citizenry, Enlightened Enterprise, Business for Society and Environment, etc.

There are two main definitions:

CSR is “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”
CSR is “the responsibility of enterprises for their impacts on society”

There are common themes to CSR:

Internalising: managing externalities e.g. pollution, calculate social and economic cost of relocation or downsizing and include these in any cost-benefit analyses

Internalise costs of production
Price to recognise full costs of production:

Full cost accounting
True cost economics

This way cost-benefit calculations will reflect the true costs and benefits to all stakeholders, e.g. calculate social and economic cost of relocation or downsizing and include these in any cost-benefit analyses

CSR as a voluntary activity
Multi-stakeholder orientation
Practices and values
Transparency
Beyond philanthropy
Openness in reporting

However… CSR is an essentially contested construct

We mentioned externalities before. What is that?
Externalities: consequences of production born by society
They’re typically impacts on parties that are not directly involved in the transaction.
An example would be the world: global warming.
Here’s a scary collage:

Cultural variations:

USA - a long history of philanthropy, little state funded welfare
Europe - heavier regulation - often more defensive
France - strong social bent but anti-philanthropy
Germany - social and environmental sustainability
Scandinavia - strong on social and environmental issues
Japan - a public duty; lifetime responsibility to employees; integrated into the way of doing business
Far East - Corporate governance / transparency (corruption)
UK - government involved in many initiatives e.g. sustainable procurement

Carroll’s Pyramid of CSR:

			Philanthropic Responsibilities Be a good corporate citizen: contribute resources to the community; improve quality of life.
		Ethical Responsibilities Be ethical, obligation to do what is right, just and fair. Avoid harm
	Legal Responsibilities Obey the law: Law is society’s codification of right and wrong. Play by the rules of the game.
Economic Responsibilities Be profitable

It’s a bit debatable, because it says being profitable is more important than obeying the law.
Baden thought it sucked, so he changed it a bit:

Economic Responsibilities

Be profitable

Legal Responsibilities

Obey the law: Law is society’s codification of right and wrong. Play by the rules of the game.

Ethical Responsibilities

Be ethical, obligation to do what is right, just and fair. Avoid harm

Corporate Social Performance Model:

Stakeholders

Stakeholders aren’t just people who pour money into the company.
Stakeholder: any group or individual who can affect or is affected by the achievement of the organization’s objectives
There’s many different kinds of stakeholders:

Stakeholder	Stakeholder description
S1: Project proponent	A public agency who initiates and funds the proposed reclamation works
S2: Resident engineer	A private engineering consultancy (appointed by S1) who undertakes site investigation and Environmental Impact Assessment; designs the reclamation method and supervises the works of S3
S3: Contractor	A private contractor company (employed by S1) to construct an artificial island by reclamation
S4: Subcontractor and supplier	Subcontractor and supplier companies including backfilling; supplying and manufacturing of steel for seawall construction
S5: Independent environmental checker	An independent unit (employed by S2 under statutory requirements) to review the environmental monitoring and auditing works done by S6; and to report to S11
S6: Environmental team	An independent unit (hired by S3 under statutory requirements) to undertake environmental monitoring and auditing on the works of S3; and to report to S5
S7: Maritime engineering consultant	A private consultancy (hired by S3) to assist S3 in developing marine traffic schedules; and addressing marine safety and regulatory issues
S8: Environmental specialists in marine ecology	Independent and qualified specialists (hired by S6) to conduct impact monitoring on ecology in the nearby waters, in particular Chinese White Dolphins
S9: Marine Bureau	A government bureau in charge of port control; shipping register and licensing; navigational issues
S10: Civil Aviation Bureau	A government bureau in charge of air traffic flow control; managing aviation safety; setting and implementing relevant statutory regulations
S11: Environmental Protection Bureau	A government bureau in charge of environmental protection and environmental
S12: District Board	Local authority to advise the government on district administration and affairs
S13: Green groups	Stakeholders that care about environmental stuff
S14: Transport trades	Transport operators who provide public transport services in the water or air near the construction site
S15: Contractors of interfacing projects	Contractor companies of interfacing construction projects undertaken concurrently with the case project in or nearby the construction site
Local residents, fishermen groups, general public

Stakeholder management is a key tool for ethical management.
The first step of stakeholder analysis is to assess the influence and importance of each individual stakeholder:

Influence: the extent to which a stakeholder is able to affect the organisation; a measure of power
Importance: the extent to which a stakeholder’s problems, needs and interests are affected by the organisation’s activities.

Low influence, low importance: no power and doesn’t care
High influence, low importance: has lots of power, but doesn’t really care
Low influence, high importance: cares about it deeply but can’t do anything about it
High influence, high importance: has the power to act upon which they care deeply
Primary stakeholders are important and influential
Secondary stakeholders are either important or influential

This ladder of participation gauges how much influence stakeholders have over company operations. If the text is too small, check out the slides:

Let’s look at two examples:

Construction of two tunnels under the city of Malmo: through surveys construction company identified six critical stakeholder groups that could influence the project.
They had focus groups and meetings to identify needs of these stakeholders and proactively address their needs.
Met with public, had open communication, involved media.
They did their stakeholder analysis and incorporated CSR and now they’re all good!
Expansion of track in the city of Lund: no stakeholder management process, company ignored public opposition, and politicians and the media started to side with public.
Company did not respond to media thus increasing their opposition.
6-year project delay.
They didn’t do stakeholder analysis and now they’re suffering!

... and now, to conclude the quantitative section of Engineering Management and Law, get ready for pictures of Apple getting roasted!

Legal Topics

Introduction to Law

Constitution: collective term for the established laws in a country
It can be written as either:

One document
Discoverable from different sources

The UK has a written but uncodified constitution.
When it’s uncodified, you can make incremental changes.
Flexibility can be an advantage, but it’s also an uncertainty.
As opposed to the one in America, where it is written and it’s a lot harder to change it (usually).

Common features of Constitutions

The rule of law:

Everyone is equal before the law
You can’t be punished except if you break the law

The Separation of Powers:

Three branches of government are separate: Executive, Legislature and Judiciary
It’s so that nobody can abuse power

No Retrospective Laws:

A law must be fully in effect before people can officially break them (before criminal sanctions are imposed)

Sources of Law

National Law - Statutory Legislation - the main, overarching laws
Case Law - Interpretation of law - what do the laws actually mean? Interpreting the law itself
International Treaty law - how we interact with other countries, like trading goods, data protection, internet etc.
EU Law - Laws passed by the European Union
ECHR - European Court of Human Rights (separate from EU law)
Conventions / Customs - ‘soft’ law, historic rights, usually through the crown, it’s just “the way we’ve always done things”, not really enforceable

Purpose of Law

Includes rules that:

Command
Regulate
Facilitate
Guide

Also provides remedies and sanctions to transgressions (an act that goes against a law, rule, or code of conduct; an offence)

Criminal law - regulates actions contrary to established laws
Often used to protect public
Basically, stuff like theft and murder

Civil law - used to right a civil wrong
Claimant must prove their case on the balance of probabilities
One party must show they have the “greater right” than the other party
Two parties: Claimant vs Defendant
“he said” “she said”
For example, claiming stuff after a divorce, like houses or children

Legislation

Primary legislation (a.k.a statutes): made by parliament themselves (House of Commons, House of Lords, monarch). Cannot be challenged
Delegated legislation: not made by parliament, but is delegated by them. Can be challenged.

Three types:

Statutory instruments
Orders in council
By-laws (lower authority, like collecting rubbish in a town)

Judge stuff

A judge uses previous cases to judge a later case

Statutory interpretation:

literal - how it’s written
golden
mischief - if a statue is contradictory
purposive - came from EU

Judicial reasoning terms
Stare Decisis - standing by previous decisions

Ground rules of ‘binding precedent’

Ratio decidendi - a binding precedent
Obiter Dicta - a persuasive precedent

A judge may (ROD):

reverse decision of a lower court
overrule principle of law from earlier case
distinguish facts in an earlier case

Alternatives to the court system to solving disputes (ADR - Alternative Dispute Resolution):

Arbitration - bring in a specialist to resolve it, called an arbitrator (who is independent and fair)
Mediation - third party acts as a messenger between two parties, called a mediator
Conciliation - like mediation, but the messenger offers solutions
Tribunals - extension of the court system that deal with public relations. Usually faster and cheaper

If you don’t need a court to resolve a dispute, use ADR (alternative dispute resolution)

Contract Law

A contract is a bargain between 2 or more people.
Buying a sandwich is technically a contract.
It’s intended to be legally binding and enforceable by law.
Agreements:

Written
Oral
Inferred by conduct

There are six criteria for a contract to be enforceable:

An offer made by the promisor
An acceptance of the offer by the promisee
Consideration in the form of money or a promise to do or not do something
Mutuality between parties to carry out the promises of the contract
Capacity of both parties in mind and age
Legality of terms and conditions

If this doesn’t make sense now, don’t worry; we’ll go over this.

Freedom to contract: parties are free to make their own contracts

Courts and statutes may imply terms into contracts
Businesses use standard forms of contracts

Contracts are everywhere

Bilateral contract: a promise made in return for a promise; each party must perform some action

Think of the “and” operator.
Example:

A person offers their home for sale, and a buyer agrees to pay $150,000 to purchase the home
(Buyer pays $150,000) && (A person gives away their home)

At first, they can seem unilateral, and they are, but as soon as one party starts performing their respective action, it becomes bilateral.

Unilateral contract: one party promises to perform some action.

Think of the “implies” operator.
Example:

“I will give £10 to the first person who buys me a cup of coffee”
(Buys a cup of coffee) → (Give £10)

Invitation to treat: asking for a negotiation

This phase includes all the pre-contractual stuff like asking about the product / service and all that.
Adverts and products on shelves usually fall under this category
Invitation to treat can become an offer.
Requesting information is not an offer (e.g. “how much is it?”)
However, if it’s now an offer, requesting information is capable of acceptance

Offer: asking to enter some kind of contract

This is the “yes” or “no” phase, where the contract will either terminate or accept.
Offer must be certain and not vague
Acceptance means accepting an offer and a contract is formed.
Acceptance must be a mirror image of the offer
A contract is formed immediately after an accepted offer
Carlill vs Carbolic Smoke Ball Co. (1893):

D advertised that they would pay £100 to anyone who caught the flu after using one of their smoke balls.
They deposited £1000 into the bank as evidence of their sincerity.
Mrs Carlill bought the smoke ball and caught the flu.
Decision: Advert was an offer to the whole world, and was a unilateral contract of “buy our ball and get flu” → “we give you £100”

Fisher vs Bell (1961):

A flick knife was on display by the shop window, being offered for sale.
Is this an offer or invitation to treat?
Decision: Invitation to treat, because pre-contractual discussions can still happen after the customer walks in.
However, because of the Restrictions of Offensive Weapons Act 1959 it was an offence to offer that flick knife for sale anyway.

Pharmaceutical Society of GB vs Boots Cash Chemist (1953):

A display on supermarket shelves is an invitation to treat
Customer makes an offer to buy the goods at the cash desk
The contract is completed when the cashier accepts the offer
Very similar to my existing example below

Partridge vs Crittenden (1965):

Advert for sale of a wild bird was not contrary to the Protection of Wild Birds Act - offering a wild bird for sale because:
Advert = invitation to treat

Harris vs Nickerson (1873):

A man saw an advert about a product being sold at an auction.
The man travelled all the way there to buy it.
The product was withdrawn from the auction, so the man got mad and sued, claiming the advert was an offer and that the product should’ve been sold.
Decision: Advert is an invitation to treat, not offer, so the man loses [citation]

Lefkowitz vs Great Minneapolis Surplus Stores (1957):

The defendant was selling coats. He put up an advert saying “first come first served”. A guy came in wishing to buy it, but the defendant refused and said it was only for women.
Decision: An advert can be considered an offer if it leaves absolutely no room for negotiation. If not, it’s an invitation to treat.

Harvey vs Facey (1893):

H to F: ‘Will you sell us Bumper Hall Pen? Telegraph lowest cash price’
F to H: ‘Lowest price for Bumper Hall Pen, £900’
H to F: ‘We agree to buy Bumper Hall Pen for £900 asked by you’

Message #2 was a statement of price, not an offer to sell.

Termination of offer: when the transaction is no longer an offer

“An offer may be accepted at any point until it is terminated or revoked Dickinson v Dodds (1876)”
You can use words: “I don’t want to buy this Jotaro Kujo PVC figure anymore”
You can also use actions, for example, dying
Acceptance is also a termination of offer, but only acceptance leads to a complete contract.
A reliable third-party can be used to convey this message (like the post office).

The offeror can also terminate an offer, called a revocation.
It needs to be communicated to the offeree
To revoke a unilateral offer, the revocation information must be given the same prominence as the original offer
Hyde vs Wrench (1840):

W offered his farm for £1000
H negotiated and wanted £950
W refused
H said he would pay the full £1000
Decision: no contract; W had already rejected

Routledge vs Grant (1828):

G offered to buy R’s house and gave him 6 weeks to accept
G withdrew offer before 6 weeks up
Decision: G entitled to do so – he can withdraw his offer at any time until it has been accepted

Acceptance: both parties agree to the contract

Acceptance can only be made by the offeree (the shop owner can’t just say “you’re buying this” and force the contract)
There must be a positive action to trigger acceptance, like a “yes, I want to buy that”
Silence will usually not constitute a valid acceptance
Like termination of offer, a reliable third-party can be used to convey this message.
Acceptance is the second criteria required for a contract to be enforceable.
Battle of the forms:

A “battle of the forms” commences when two parties want to make a contract, each party wanting to form it on their own terms.
Usually this arises from A trying to buy goods from B, and A offering to buy them under A’s terms and B wanting to sell them under B’s terms.
Who wins? Do they duke it out in an epic battle?
No; the “one who shoots last” wins.
What does that mean? It means that each party suggests a terms and conditions until the last party suggests a terms and conditions such that no party objects to it.
Basically, they go back and forth suggesting terms and conditions until all parties are OK with it. So nobody really “loses”.
[citation, citation]

Bloom vs American Swiss Watch Co (1915):

Reward for information leading to arrest of jewel thief
Claimant gave information before he knew of reward
Claimant was not entitled to reward
Moral of the story: the offeree must know of the offer because they can accept it. You can’t just go “I didn’t know that; I did that already so I deserve the reward!”

Entores vs Miles Far Eastern Corp (1955):

C in London made offer to D in Amsterdam by telex
D in Amsterdam accepted offer and telexed C in London
With instantaneous forms of communication, the standard rule of acceptance being effective is when the recipient receives the acceptance message.
Basically, acceptance can be done remotely.

Adams vs Lindsell (1818):

D makes an offer to C on the 2nd but arrives at the 5th.
C posts acceptance on the 5th but doesn’t arrive until the 9th.
D sells goods to another party on the 8th, before C’s acceptance arrives.
Decision: acceptance happens upon posting the letter, not when the letter is received

Byrne vs Van Tienoven (1880):

1st: D posts letter offering to sell goods
8th: D posts letter withdrawing offer
11th: C telegraphs accepting offer
15th: C confirms acceptance by letter
20th: C receives letter of revocation from D
Decision: Revocation can only take effect before acceptance, and since C received revocation after they accepted (even though it was posted before), the contract stands

The offeree must know of the offer before they can accept it

Example:

Invitation to treat: Seeing the tin of beans on the shelf with a price tag of £1. Customer asks staff “excuse me, how much is this tin of beans?”, staff says “uh... the price tag is right here, sir”, customer says “Oh! 😅 Thanks”
Offer: Customer goes to the checkout with the tin
Acceptance: Customer takes out cash to pay (that action can trigger an acceptance)
Contract complete: The cashier accepts the offer and the customer walks away with beans

Termination of offer : The customer dies, or the customer tells the cashier that they don’t want to pay for it

What about electronic contracts?
Is an advert on a website an offer or an invitation to treat?
If an e-commerce site has a bug and accidentally set their prices a bit too low and people start bulk-buying everything, they can’t go back on their word; even after fixing the bug they have to go on with the contract. Does not apply if buyer knows this is a mistake or if the price is clearly wrong (see case below).

Chwee Kin Keong v Digilandmall.com (2004):

Six friends placed orders for 1,606 HP printers on a website.
The website had a bug: it was selling them for $66 each instead of $3,854 each
They basically earned a profit of $6,083,528
The friends argued that they were not aware that the price was a mistake, and the company argued that the friends took advantage of the mistake (which is a bit obvious; what group of friends buys 1,606 printers?).
Decision: the contract was void. They decided the friends should’ve known that the price was absurdly low [citation].

Agreement:

The vast majority of contract agreements are not and do not need to be in writing
Contracts are formed at the moment of reaching agreement – offer met with an acceptance - (assuming all other requirements are met)
Commercial organisations need to make sure that they do not become bound before they intend to

Include the words ‘subject to contract’ in correspondence (a legally recognised technique to avoid being bound too soon)
The purpose is to indicate that agreement has not been reached and any contract will not be concluded until a final written document is produced (and signed)
HOWEVER, starting action in the performance of the contract may lead to the conclusion that the ‘subject to contract’ stipulation has been waived

For a contract to be an enforceable legal relation, it needs to be stated as such
If not, we’ll assume it’s not

Simpkins vs Pays (1955):

Mrs Pays, her granddaughter and lodger enter into a competition each week.
They agree to share any prizes.
Entries are sent in Mrs P’s name.
One week they win £750. But Mrs P refuses to share money.
Decision: From facts there was an intention to enter into legal relations - Lodger entitled to 1/3rd of winnings.

People who are unable to enter certain types of contracts:

Minors
People with mental disabilities; incapacitated
Intoxicated people (usually not an excuse)

You can make contracts with minors, but there’s some extra ground rules:

Some contracts are illegal and are made void due to public policy or that they involve criminal actions

For a contract to be enforceable, there must be an exchange of consideration.
What is consideration?
Consideration: the exchange of one thing of value for another.
Consideration is the third criteria required for a contract to be enforceable.
Consideration can be used in both unilateral and bilateral contracts.
The law only cares that both considerations (things of value to be exchanged) are of some value; it doesn’t care if they’re of equal value. Basically, the law won’t protect you from being ripped off.
Even disposed items can be a legal consideration.

Past consideration: Consideration before a contract is completed is not adequate for a binding contract
Have you ever watched the film Aladdin?
Do you remember the scene where Genie takes Aladdin and Abu out of the Cave of Wonders before he actually wishes it? (It’s the first 20 seconds)
That’s an example of past consideration: Genie’s action was performed before the contract was made (before Aladdin accepted the contract by wishing).
Therefore, Genie cannot deduct a wish from Aladdin.

A party to a contract cannot use what they are required to do as a public duty as consideration in a contract.
However, if they do more than their public duty, that would be good consideration.

Contract variation (agreement to accept less): Part-payment of a debt will never be valid consideration. You can’t buy something for £1 with a 50p coin.
However, there are two exceptions:

If your part-payment is accompanied by another form of consideration, such as goods or services (you balance out what you can’t pay with something else)
If the payment had been given in a different form, time or place (be careful, this exception is subject to heavy scrutiny)

Contract variation (agreement to accept more):

Under the rule of the past case just below, an existing duty is good consideration in a contract variation if:

the variance is an offer to pay more
the offeror gains a practical benefit or obviates a “dis-benefit” by paying more
there is a lack of duress

Williams vs Roffey Bros (1990):

Building contractors were hired to work on flats
There was a penalty clause in the contract if the workers took too long doing the job
The initial contract price was too low and the customer didn’t want to hit the penalty clause so the customer agreed to pay them extra for each flat.
The customer only gave part-payments for each flat, claiming the contractors didn’t give “consideration” because they were already under a contractual duty to complete the work.
Decision: Consideration was provided, so customer needs to pay the rest.
The worker was working on the rooms so that was his existing "duty", and they were getting paid for it, then the contractor decided to pay more (to avoid some penalty clause), and the contractor's argument was that the workers didn't have consideration to make them dish out the full payments, in other words the contractors were basically saying that the workers need to do extra because they're paying them extra (which is a bit bs because the whole point of paying extra was so that the workers could finish their initial job)
Then after that case it was decided that if you're already doing a job (a duty) and the contract is undergoing variations, the existing job (duty) you're doing is good enough consideration (meaning you don't need to do anything extra) given that:

you're getting paid more (the variation is extra payments)
the payer gets some benefit or avoids some kind of trouble by paying more
there's no duress (no blackmail or anything like that)

Doctrine of Promissory Estoppel: The concept that a promise can be legally upheld after a promisee has suffered a loss as a result of relying on that promise.
I found an example, but it’s kind of long; check it out here if it’s still unclear.

Privity of Contract: only the parties within a contract may be sued / sue.
Exceptions:

Contract is made by agent in collateral contracts
Property is transferred in trust to another party
Contract has been made under an insurance agreement for the benefit of another
Restrictive covenants are imposed on property

Contracts (Rights Of Third Parties) Act 1999: if you’re not a party to a contract, you can still sue for your rights under the contract as long as:

the contract explicitly states your rights
the purpose of the contract is to benefit you

Terms and Representations:

Term: a “fact” within a contract
Includes:

Conditions
Warranties
Innominates (or intermediates)

Representation: an exaggeration or something that isn’t meant to be taken at face-value
For example, “Red Bull gives you wings” doesn’t mean it’ll actually give you wings; it’s a representation.
How can we tell the difference between term and representation?
We can distinguish them by looking at:

Terms that are meaningless and cannot be enforced
Importance of the statement
Special knowledge
Statement made in an assuring or promissory way
Verification

Two ways to make a contract:

Oral
Written

Making the contract is the first criteria required for a contract to be enforceable.
Methods of incorporating express terms into a contract:

Signature

Limitations:

Misrepresentation of document effect / extent
Document must be “contractual”
Doctrine of Non Est Factum (“Not my deed”) (basically someone who can’t read signing a contract)

Notice

First rule: Terms must be contained in “contractual” document
Second rule: Reasonable notice of the terms must be given at or before the time the contract is made

Custom - a consistent course of dealing

Sometimes, we can’t explicitly state every single term in a contract.
Therefore some terms need to be implied.
Implied terms are usually ones aimed at protecting the party with the weaker bargaining power.
Terms are implied into contracts by statutes (e.g. the Sale of Goods Act (SoGA) 1979, Unfair Contract Terms Act (UCTA) 1977 etc.)

Exclusion (exemption) & Limitation clauses: clauses that seek to limit or exclude (exempt) a liability that would otherwise exist.

Basically, it’s like a “patch” that prevents some unwanted hacky back-door situation that basically breaks the contract.
It must:

clearly express cover of the situation it seeks to exclude
not be ambiguous
be reasonable
not break any other existing statutes

They may also be implied

Photo Production v Securicor Transport (1980)

Securicor entered contract to guard Photo Productions Factory
There was an exclusion clause that exempted Securicor from any damages by one of its employees (so if Securicor knocked over a vase or something, they wouldn’t get in trouble).
However, one of Securicor's guards deliberately set fire to the factory!
Because of that exclusion clause, Securicor didn’t get in trouble.
The guard probably did, though.

Unfair Contracts Terms Act 1977

This Act governs the use of exclusion clauses
It stops exclusion clauses from excluding liability for death or personal injury due to the other party’s negligence
So, basically, Securicor can burn down factories but they can’t kill or hurt anyone.
In other words, if a company kills someone or really hurts them, they can’t get away scott free using an exclusion clause.
To test if an exclusion clause is reasonable, it undergoes the “Reasonableness Test”.

Restraint clauses

Contracts of employment: Employees cannot reveal employer trade secrets and cannot work for a competing firm when they leave.
Contracts for the sale of business: A seller cannot set up competition with their buyer.
Solus agreements: A seller with a supplier can only get products solely from that supplier (no cheating on them)

Only valid if a person seeking to enforce it can show if the restraint is reasonable
e.g. if you were working for a government defence agency, they could stop you from working globally
Points to reasonableness:

Whether the business interest is one that can be protected
Length of time restraint lasts
Width of the geographical area the restraint covers

Factors that can invalidate contracts:

Misrepresentation
Duress (threats, blackmail etc.)
Mistakes
Illegality
Undue influence (one party is under the influence of the other, like parent and child)

Misrepresentation

A misrepresentation is where:

there is a false statement of material fact
it is known to the representee
it must be intended to be acted upon...
... or it must have been acted upon already

It’s not enough to find something that’s false; the statement needs to have been acted on too (or intended to be acted upon)

Did the person making the statement have special knowledge or simply pass on false information?
Was the statement important to the innocent party?
Did the person making the statement invite the innocent party to verify the truth of the statement?
Was statement one of fact or opinion?
Did the statement induce the innocent party to enter the contract?
Was the statement one of genuine intentions?
Did the statement become untrue before the contract is concluded?

Half truths: when you only say half of the truth and neglect to say the other, very important, half
Statement of law cannot give rise to misrepresentation
Silence and Non Disclosure: you’re not making a representation, however a gesture could be representation

Bisset vs Wilkinson (1927)

Buyer wanted to buy some land for a sheep farm
Buyer: How much sheep can I hold?
The seller never used it as a sheep farm, so they guessed.
Seller: I don’t know, about 2000?
The buyer buys it and finds out it can’t hold 2000 sheep.
The buyer sues the seller for misrepresentation, but since it was a statement of opinion and not fact, it wasn’t misrepresentation.

Aprilia World Service vs Spice Girls Ltd:

Spice Girls Ltd promised to promote Aprilia World Service in return for a sponsorship on a world tour.
Before the contract was signed, Geri Halliwel told everyone she was leaving.
They didn’t tell Aprilia World Service.
Geri left 3 weeks after the contract was signed.
Aprilia World Service would not have entered the contract if they knew Geri was leaving.
Turns out the participation in the promotion amounted to a misrepresentation by conduct: they should’ve told Aprilia World Service that Geri was leaving.

Contract terminology:

VOID: a contract is void if it no longer has any legal effect and is not recognised as a contract anymore
VOIDABLE: the contract is still valid, but the injured party can choose whether to:

enforce the contract (and will continue to be legally enforceable)
or avoid the contract (then it will be void)

UNENFORCEABLE: it may be a legal contract, but it’s not legally recognised until the other party carries out their side of the bargain

Types of misrepresentation:

Fraudulent: you know the statement is false, but you make the false statement anyway
Negligent: if you make a statement you believe to be true, but have no actual proof of it
Innocent: you are mistaken; you make a false statement in the mistaken belief that it was true

Remedies & Damages for misrepresentation:

So you have misrepresentation. What happens?
If fraudulent or negligent, the contract could be made voidable (not void straight away)

Misrepresentation Act 1967:

Where a person has entered into a contract, after a misrepresentation and
as a result they have suffered a loss...
... they can claim damages even though the misrepresentation had not been made fraudulently...
... unless the party making the statement proves that the misrepresentation was made innocently (thought it was true upon making the contract)

Mistakes:

Common: both parties make the same mistake

e.g. the subject matter perishes, and both parties still think the subject matter hasn’t perished (relevant to fresh goods like fish or meat)
For non-perishable goods, it could be a common mistake that the goods actually exist

Mutual: the two parties are at cross-purposes with each other (they do not understand each other because the parties are talking about different things without realising it)

Example:

Seller: Wanna buy product A?
Buyer: Ooh, product B looks like
Seller: So, how about it? Wanna buy it?
Buyer: Sure!

Mutual mistake: seller thinks buyer wants to buy A, buyer thinks they’re buying B. Purchase contract is voidable.

Unilateral: one party is mistaken and the other party knows they’re mistaken

If the mistake relates to the fundamental core of the contract, it can be voided

Mistake as to identity:

Mutual mistake as to identity: a mistake on the identity of the subject matter
Common mistake as to identity: a mistake on the identity of the other party
Not really a problem if parties meet face-to-face, but can be a problem if they meet at a distance (online, post etc.)

Duress and Undue Influence:

If one party is forced or “subject to undue influence” into a contract, it is voidable.
Duress refers to the actions that force a party into a contract, including:

Violence
Economic pressure (e.g. debt, or any kind of contract agreement after extortion)

Undue influence: one party is under the influence of another

Child - Parent
Client - Solicitor
Patient - Doctor
Husband - Wife (any sort of intimate relationship cuts both ways)

Illegality:

Types of contracts that are immediately void (and illegal):

Contracts to commit a crime or tort (e.g. assassination)
Contracts damaging to foreign relations
Contracts to promote corruption in public life
Contracts to defraud the treasury (e.g. tax fraud)

Bringing a contractual agreement to an end:

Discharge of Contract

Four ways to discharge a contract:

Agreement: both parties agree to discharge the contract
Performance: both parties have “completed their job”

Exceptions:

Substantial performance (not done a good enough job)
Divisible contracts (if only part of the contract is complete, you can split the contract into smaller contracts, e.g. something being delivered on a regular basis)
Acceptance of partial completion by the other party (if part of the contract is completed by one side, and that side expects something in return for that partial completion)
Prevention of completion by the other party (if one party wants to stop the other party half-way through their “job”, they are still entitled to full payment)

Frustration: contract becomes impossible or illegal to perform, by no fault of either party (because that would be a breach)

Frustrating events:

Destruction of subject matter (e.g. you order hardware parts, but then they are destroyed)
Personal service not possible (e.g. commission music artists to play guitar, but then they break their arm)
Common purpose of contract does not happen (Krell vs Henry is a good example)
Subsequent illegality (if something happens that makes the contract illegal to perform, e.g. trading with countries in war)
Government intervention (government basically stops you)

Breach: one party has failed to comply, even with obligation under the contract

It’s possible to continue with the contract if the innocent party drops charges
If the innocent party can prove their case, they will always be able to claim damages.
The party who failed to comply is liable for damages
If it’s severe, the contract will be repudiated (come to an end) + damages
Repudiation: where one party makes it clear they don’t want to be a part of the contract anymore

Remedies for Breach (what can you sue for)

Damages (most common remedy, and must be quantified to reflect the losses)

Types of damages:

Compensatory
Nominal
Restitutionary
Punitive (Exemplary, related to public policy)

Damages may be based on expectation/performance losses or reliance losses
Remoteness of damage:

Damages must not be too remote
Losses must be critical enough to naturally arise as a normal consequence of the breach
Losses must be a reasonable contemplation of the parties at the time when the contract was formed as being a probable consequence of a breach of contract (if you knew the party was going to do that when you formed the contract and you would’ve seen that as a breach, it’s severe enough to be damages)

Action for agreed contract price
Quantum meruit (as much as they have earned)
Specific performance (do something in return)
Injunction (enforces that they do what they didn’t want to do)
Repudiation (end the contract)
Hadley vs Baxendale (1854):

Crankshaft of mill broke
C got D to go and fix it and bring it back
D was neglectful and brought it back 7 days late
C couldn’t use the mill for those 7 days so C sued for loss of profit
Decision: loss of profit is too remote, D had no idea the mill wouldn’t be running while the crankshaft was gone

Equitable Remedies

Equitable remedies are discretionary, granted by the court if it is fair in all the circumstances to do so.
Basically, it’s when the court does something to ease a dispute if legal remedies or monetary compensation won’t cut it.
Equitable remedies may be awarded when damages would not adequately compensate the innocent party.
Injunctions: courts may direct a party not to take actions in breach of their contractual obligations.
Rectification: courts may order rectification of the contract so that the written contract is changed to accurately reflect the parties' intentions.
Specific performance: courts may order the party in breach of contract to perform their obligations under the contract (Moutford v Scott). They are generally used in contracts involving unique items.

Time Limits

Under the Limitation Act 1980, an action under a simple contract must be made within six years from the date when the right to the action arose.
There is no statutory provision for time limits to claim under the equitable remedies – however, being equitable, they must be sought within a reasonable time.

Tort Law

Criminal Law: Laws promulgated through institutions of (national) governance and primarily about punishing people who have committed recognised wrongs in that governed sphere (basically catching bad guys).
Civil Law: The law applied by the civil courts in the UK. Laws that regulate the dealings between private citizens that are not subject to interference by the state (divisions include the law of contract, torts, and trusts) (basically like the Mediators from Xenoblade X).
Tort: a civil wrong other than relating to a contract, e.g. personal injury, damage to property resulting from negligence, protecting against defamation of character, preserving personal freedom, enjoyment of property, commercial interests

Tort law is about protecting claimant’s rights and interests
Courts are also concerned about balancing the proactive risk analysis and practical reactive defences to risk management
Main remedy: compensatory damages

Claimant: the person bringing the claim
Defendant: the person against whom the claim is brought
Tortfeasor: the person who actually committed the tort (not always the defendant)

Ideally a tort case would go as follows:

C receives damages from D
C is the injured (wronged) claimant
D is the injurer (wrongdoer) defendant
Damages are paid corresponding to C’s loss

Tort of negligence: a tort in which a breach of a duty of care results in damage to the person to whom the duty is owed
Four elements of negligence claim:

A duty of care is owed by tortfeasor
That duty of care is breached
The breach was the cause of the damage
The damage is not too remote from the breach

A negligence claim will only be actionable if all four elements are present!

Element #1: A duty of care is owed by tortfeasor

Duty: some kind of responsibility that the tortfeasor owes the claimant
Duty of care: the level of care that the tortfeasor owes the claimant over some duty
That’s cool and all, but how do we actually know if someone owes someone else a duty of care?
Donoghue vs Stevenson (1932):

C’s friend bought her a bottle of ginger beer manufactured by D.
C drank part of it and as she topped up the glass the remains of a decomposed snail came out.
C became ill and sued D.
Decision: C was a customer to D’s product, so a customer like C was foreseeable to D, meaning D had a duty of care to C which was breached. D was liable to C.

Lord Atkin’s principle: people must take reasonable care not to injure others who could foreseeably be affected by their action or inaction

“Who, in law, is my neighbour?”
Those so closely and directly affected that I ought to have them in contemplation

Basically, your “neighbours” are people whom you can recall and contemplate before doing any sort of legal hoo-hah.
You don’t owe a duty of care to someone who is so distant you’d never even think of them.
It relates to close and direct relations.
Every person owes a duty of care to their neighbour.

If a duty has been established, then it’s assumed that there’s a duty of care too.
It’s fun to roast and sue someone for negligence, but remember that no liability for negligence is recognised unless there is a pre-existing duty to take care.
Basically, there has to be some kind of duty to be negligent of.
Carelessness is a part of ordinary life: humans aren’t perfect. We can’t sue someone for being human.
Human Rights Act 1998 - the court must consider the ECHR when determining whether to extend the duty of care in new situations concerning public bodies.

The 3-stage test of Duty of Care originated from Caparo vs Dickman (1990):

Home Office vs Dorset Yacht Co (1970):

Boys from a borstal (youth custody centre) were taken on a trip to Brownsea Island. They escaped one night and in the process damaged a yacht belonging to Dorset Yacht Co.
The Home Office owed a duty of care to the claimants.
Due to the custodial nature of the boys confinement, their supervising officers were under a (proximate) public duty ensure the boys did not escape.
The damage caused to the claimants’ property was reasonably foreseeable if the boys did escape
To be honest, this one’s a bit debatable because how would the Home Office know that the boys would smash up a yacht if they were to escape? Anyway, that’s what the slides say.

There’s more past cases about proximity:

Donoghue vs Stevenson (1932)
Evans vs Triplex Safety Glass Co Ltd (1936)

... and ‘fair, just and reasonable’:

Hill vs Chief Constable of West Yorkshire (1989)
CBS Songs Ltd vs Amstrad Consumer Electronics (1988)

Element #2: Duty of care is breached

Did the defendant act with the degree of care and skill expected from the reasonable person or competent professional?
Basically, were they being stupid enough to breach their duty of care?
There is an objective standard of care test used in these cases:

Nettleship v Weston [1971] 2 QB 691
Mansfield v Weetabix [1997] EWCA Civ 1352 Court of Appeal
Mullin v Richards [1998] 1 WLR 1304
Orchard v. Lee (1932) EWCA 295
Evans v Triplex Safety Glass Co Ltd (1936)

There’s also a test of experience, skill and judgement test:

Philips v Whitely Ltd (1938)
Condon v Basi [1985] 1 WLR 866 Court of Appeal
West Bromwich Albion Football Club Ltd v. El Safty (2006)
Wilsher v Essex Area Health Authority [1988] 1 AC 1074

How do you judge professionals?
Bolam vs Friern Hospital (1957):

Basically, the doctor was not in breach of duty.
However, from this case the House of Lords created the Bolam test:
"a medical professional is not guilty of negligence if he has acted in accordance with a practice accepted as proper by a responsible body of medical men skilled in that particular art . . . Putting it the other way round, a man is not negligent, if he is acting in accordance with such a practice, merely because there is a body of opinion who would take a contrary view."
Basically, you’re not negligent if you’re doing everything you’re supposed to and a board of nerds tell you you’re doing fine.

What if the method used by the “board of nerds” actually came from the defendant themselves?
In that case, it must be demonstrated that the method was based on logic and was defensible. This was done in Bolitho vs City & Hackney Health Authority (1997).

The balance of reasonable risk taking:

How can you tell if a taken risk was reasonable?
There’s some attributes you can use to help make a decision:

Probability of harm being caused to claimant

Bolton vs Stone (1951):

C injured by cricket ball - hit 100 yards over fence.
Happened 6 times in 30 years.
D not liable because 17 foot fence reasonable in circumstances.

Potential magnitude of harm likely to be caused to the claimant

Paris v Stepney [1951] AC 367
Haley v London Electricity Board (1965)
Wagon Mound No.2 1967 1 AC 617

The reasonableness and cost of taking precautions to prevent the harm

Latimer v AEC [1953] AC 643

The social utility of what the defendant was attempting to achieve

Watt v Hertfordshire [1954] 1 WLR 835

Element #3: Breach was the cause of the damage

To test if damage was caused by the breach, we do the “but for” test.
It’s a bit flawed, but it’s still used.
It goes like this: “But for the existence of X, would Y have occurred?” If the answer is yes, then X is an actual cause of Y.
Barnett vs Chelsea & Kensington HMC (1968):

C went to hospital complaining of vomiting but was sent home by the hospital doctor.
Later that night C died (someone had put arsenic in his tea).
Hospital was not liable for negligence.
2 elements were satisfied - Doctor owed a duty of care & breached that duty.
BUT final element was not present: C’s death was not as a result of breach as C would have died anyway – there was no antidote.

Element #4: Damage is not too remote from breach

The egg shell skull rule: the defendant must take the claimant as they find them.
Essentially, the frailty of the person who was injured cannot be used as a defense to limit the liability of the at-fault party [citation].
It was used in the following past cases:

Smith vs Leech Brain (1962)
Page vs Smith (1996)
Lagden vs O’Connor (2003)

It’s not all doom and gloom for the defendant; there are a variety of defences they can use too:

Illegality (the other person was doing something illegal when they were injured)
Consent (the other person acknowledged risk, either explicitly or implicitly)
Contributory negligence (claims that both parties are at fault, and the defendant will have their damages reduced)
Necessity (their actions prevented a greater harm, so their actions were reasonable under the circumstances)

Other Tort Law stuff

Remedies:

Remedies include damages and injunctions.
Damages awarded for personal injury include compensation for direct and indirect losses.
The aim is to place the injured party in the position he/she was before the tort had been committed.

Injunctions are orders from the court to prevent a party from performing a certain action.

Injunctions are used to prevent the commission of a tort (and is available at the discretion of the courts).
Injunctions are issued on the basis of the particular tort and the injunction may be prohibitory; mandatory; or interim.

It’s not only physical injury: this can apply to economic loss, too, in these cases:

Weller v. Foot and Mouth Research Institute (1966)
Spartan Steel v Martin & Co Contractors Ltd (1973)

Psychiatric injury, too, such as nervous shock:

Primary Victims:

Dulieu v White (1901)
Page v Smith (1995)

Rescuers:

Chadwick v British Rail (1967)
White v Chief Constable of South Yorkshire (1999)

Here’s a cool flow chart:

What are the requirements for being a secondary victim of a psychiatric injury?

A close tie of love and affection
Geographic proximity to the accident or its aftermath
Medically recognised psychiatric illness

This was applied in the cases:

McLoughlin v O’Brian (1982)
Alcock v Chief Constable of South Yorkshire (1991)

Let’s talk more about economic loss.
How do you recover from an economic loss?
When the loss is linked to physical damage / loss, then it’s recoverable.
However, actions will be allowed where a special relationship of proximity exists between the parties.

Hedley Byrne & Co Ltd vs Heller & Partners Ltd (1964):

Hedley Byrne (a firm) were considering whether to extend credit to a customer, Easipower. Hedley Byrne approached Easipower’s bank Heller & Partners for reassurance as to the credit worthiness of Easipower. Heller & Partners described Easipower’s financial position as they have enough resources for ordinary business proceedings, but stated that the report was given "without responsibility." On the basis of this information Hedley Byrne extended credit to Easipower. Easipower went out of business and Hedley Byrne sued Heller & Partners.
Did Heller & Partners owe Hedley Byrne a duty of care?
Basically, the events went like this:

Hedley: Is Easipower worth extending credit to?
Heller: Yeah, they’re good, I think.
*Hedley extends credit to Easipower*
*Easipower goes out of business*
Hedley: wtf you told me they were good
Heller: 🤷‍♂️

Well? Are you dying to hear the answer?
What? No? You’re not on the edge of your seat to know the conclusion to this epic, thrilling case study?
The answer is no, Heller did not owe Hedley a duty of care.
This is because the report specifically stated that it was given “without responsibility”.
However, they recognised that a duty of care could exist:

A “special relationship” must exist between the parties (duty).
The (mis)statement was untrue, inaccurate, or misleading.
The person making the (mis)statement acted negligently in making the statement. (breach)
The other party relied on (mis)statement and it was reasonable for them to do so. (causation)
The reliance must have been detrimental to the other party in the sense that damages resulted. (reasonable foreseeability)

Caparo Industries PLC vs Dickman (1990):

Caparo Industries purchased shares in Fidelity Plc, a company. In doing so they relied on the accounts prepared for Fidelity, which stated that the company had made a pre-tax profit of £1.3M.
In fact Fidelity had made a loss of over £400,000.
Caparo Industries brought an action against the auditors Dickman claiming they were negligent in certifying the accounts.
Did Dickman owe Caparo Industries a duty of care?
Summary:

Caparo: *buys shares in Fidelity*
Caparo: How much did you make?
Fidelity (Dickman): £1.3M
Caparo: oooh goody
*Caparo loses money*
Caparo: wtf

How about this time? Surely yes, right?
No! There was not sufficient proximity between Caparo and the auditors since the auditors were not aware of the existence of Caparo nor the purpose for which the accounts were being used by them.
Basically, there’s too much distance between Caparo and the auditors. They had no idea Caparo even existed, let alone use their accounts to gauge their profit.
But from this they did make the Caparo test to determine duty of care in negligence:

The harm or loss must be reasonably foreseeability
there a relationship of "proximity" or "neighbourhood"
and it must be fair, just and reasonable

For pure economic loss, the Unfair Contract Terms Act 1977 comes into play too, in these cases:

Smith v Eric Bush (1989)
James McNaughton Paper Group Ltd -v- Hicks Anderson & Co [1991] 1 All ER 134,
Yorkshire Enterprise Ltd v Robson Rhodes, unreported (1998) (QBD).

Here’s another cool chart:

Employment Law

The structure of the court system as it relates to employment law:

Supreme court
→ Court of Appeal
→ Employment appeal tribunal
→ employment tribunal

Employees and independent contractors:

Contracts of service: employees / employee shareholders
Contracts for services: independent contractors

Tests to determine status:

Control test: is a person subject to the orders of the employer?
Integration test: is the work done as an integral part of the business?
Economic reality test: how far is a person in business on his own account?
Mutuality of obligations test: is the employer obligated to provide work and the employee obligated to accept it?
Multiple test

The multiple test:

Does the person have to turn up to work when expected?

If YES...

Do they have to do what the organisation tells them to?

If YES...

Are they expected to do it personally?

If YES...

Can they send someone else to do the work?

If NO...

Then they are an employee

Dismissal from employment:

Summary Dismissal: the employee is fired immediately with no warning or notice. Usually because employee performed an act of gross misconduct (did something really wrong).
Wrongful Dismissal: the employee was fired, where the termination was a breach of the contract of employment or some law (basically, you were fired illegally).
Constructive Dismissal: employer commits a fundamental breach of contract of employment, so the employee must resign because of the breach
Unfair Dismissal: The reasons for the dismissal, or the way that it was handled by the employer, was unfair

Potentially fair reasons for dismissal:

Capability
Conduct
Redundancy
Statutory bar
Some other substantial reason

Polkey v Dayton (1932):

An employer wanted to make an employee redundant, but did not consult him as was required
The employee claimed unfair dismissal
The employer argued that consultation would have made no difference to his dismissal
Decision: the employer’s argument was irrelevant, and the dismissal was unfair purely because of a lack of procedure. It doesn’t matter if the consultation wouldn’t have made a difference or not; they should’ve told them.

Equality Act 2010: protected characteristics:

age
disability
gender reassignment
marriage and civil partnership
pregnancy and maternity
race
religion or belief
sex
sexual orientation

Conduct seen as discriminatory by law:

Direct discrimination: discriminated against under one of the protected characteristics
Combined / Dual discrimination: discriminated against under two or more of the protected characteristics
Indirect discrimination: having a policy or practice which is applied equally to everyone, but with which it is more difficult for people of a particular protected characteristic to comply, and which cannot be justified.
Harassment: unwanted conduct related to a protected characteristic (other than marriage and civil partnership, and pregnancy and maternity) that has the purpose of violating a person's dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for that person [citation]
Associative discrimination: discriminated against because of someone else that he is associated with (e.g. discriminating against you because you have a gay friend)
Victimisation: Treating someone badly because they have done a ‘protected act’ (or because you believe that a person has done or is going to do a protected act) [citation]

Protected acts:

Making a claim or complaint of discrimination (under the Equality Act).
Helping someone else to make a claim by giving evidence or information.
Making an allegation that you or someone else has breached the Act.
Doing anything else in connection with the Act.

Perceptive discrimination: discriminated against because people perceive, or believe that he has the protected characteristic (but they don’t actually have to have it, e.g. if you look gay but aren’t but are still discriminated).

Occupational requirements:

Where being of aparticular sex, race, disability, religion or belief, sexual orientation, or age, or not being a trans, married, or a civil partner is an essential requirement for the work that is to be done

The requirement must be crucial to the post
It must not be a sham or pretext
Applying the requirement must be proportionate so as to achieve a legitimate aim

Examples:

An actor fulfiling a role with a certain age / sex / race
A penis model
A, uh... test subject for a new wheelchair for paraplegics (I don’t know, these are hard to come up with)

London Underground vs Edwards (1995):

E was a single parent with a young child. She worked as an underground train driver. Her employer announced a new shift system, which made it very difficult for her because of her child.
This was indirect discrimination. The ‘pool’ of comparison was all the other underground drivers to whom the new rota applied.
100% of men could comply, but only 95% of women could.
This impacted more on women, and so the new rota was discriminatory.

Disability in law:

acceptable to treat a disabled person more favourable
impairment has a substantial and long-term effect on ability to carry out tasks
disability can be mental or physical and last longer than 12 months
Discrimination airising from disability: treated not favourably, not because of the disability itself, but because of an effect of it; a consequence of the disability.

Health and safety at work:

Health and Safety at Work Act 1974
Employers have to provide a safe and healthy place for their employees, workers and self-employed people
Safety regulations are enforced by the Health and Safety Executive and local authorities.

Civil law:

People who are injured or who have become ill because of their working environment or practices, may bring court action
Law of Negligence: Employers owe all employees a general duty of care in respect of their health and safety at work.

Industrial Law

I’m assuming Company Law and Directors Responsibilities, GDPR and Intellectual Property and Equality and Diversity Law; International cf UK Law are all encompassed in Industrial law because I can’t find slides for it.

Legal Personality

Under English Law every natural person has a legal personality from birth until death.
Individuals have complex rights and duties under the legal system determined by their actions and their current status in life.
Some artificial persons can also have a legal personality.

Business Organisations

Sole trader: one person unincorporated business
Ordinary (general) partnership: the partners have unlimited legal liability for debts. Partners share losses and profits
Limited Liability Partnership (LLP): has a separate legal personality and legal liability of partners is limited (basically the company is separate from the persons involved)
A limited company (Ltd): has a separate legal personality. Legal liability of shareholders is limited to a paid up value of their shares

Partnerships

Partnership Act 1890:

Section 1 - Definition of Partnership:

(1) Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.
(2) But the relation between members of any company or association which is—

[(a) registered under the Companies Act 2006, or]
(b) Formed or incorporated by or in pursuance of any other Act of Parliament or letters patent, or Royal Charter...

... is not a partnership within the meaning of this Act.

What does this even mean?
It means two entities in business can “partner up” and aspire for more profits, as long as the partnership wasn’t formed by any other act (such as the Companies Act 2006).

Companies

Company: a succession or collection of persons having at law an existence, right and duties, separate and distinct from those persons who are from time to time, its members.
A company incorporated under English law can normally be recognised from the suffix Limited, Ltd. or PLC, Plc.
Other countries / jurisdictions have different suffices, e.g. Inc., Corp., AG, S.A., N.V., B.V., etc.
An incorporated company:

Is a persona at law – an artificial, not a natural, person;
It has a separate legal entity – it can sue at law and be sued in its own right;
It has perpetual succession – its existence is maintained by the constant succession of new persons who replace those who die or are in some other way removed.

Limited company: A company is limited if the liability of its members is limited by its constitution.
There are two ways a company can be limited:

Limited by shares: Members liability is limited to the amount, if any, unpaid on the shares held by them (the owners are legally responsible for the debts, but only to the extent of the amount they invested in the company itself)
Limited by guarantee: Members liability is limited to such amount as the members undertake to contribute to the assets of the company in the event of its being wound up (usually used for non-profit organisations, the members agree to contribute an amount specified in the articles in the event of the company winding up, or being brought to an end)

If there is no limit on the liability of its members, the company is an “unlimited company”

Public company: a company limited by shares or by guarantee and having a share capital, whose certificate of incorporation states that it is a public company, which has complied with the requirements of the Act as to registration as a public company (stocks and stuff can be bought freely on the stock exchange)
Private company: a company that is not a public company (yes, the slides really say that)

A public company may be listed, i.e. listed by the UK Listing Authority which is part of the Financial Services Authority and admitted to trading on a regulated market such as the main market of the London Stock Exchange, or it may be an unlisted public company.
Basically, a “listed company” is on the stock exchange and stuff. An “unlisted company” isn’t.

Intellectual Property

Intellectual Property (IP) refers to things that are creations of the mind.
It provides ownership rights to the creators of works, and inventions.
IP can be owned in a similar way to physical property.
IP gives the creators the right to control the use of their work/mark/invention/design and use it to gain financial reward.
An IP doesn’t have to be a product; it could be a series or a franchise or something.

Types of IP:

Copyright law is governed by the Copyright, Designs and Patents Act (CDPA) 1988 (as amended) that protects original materials including literary, dramatic, musical, artistic works, and typographical arrangements, produced by its owner.
Copyright is an automatic right and need not be applied for (but proof may be needed to establish ownership).
If you get it automatically, how do you know if you have copyright or not?
A copyright holder is entitled to protection where the work:

Is of a type protected by the CDPA 1988;
Has been produced in some tangible form;
Satisfies the requirement of originality; and
The owner/creator is a British citizen and/or the work
was first published in the UK.

The copyright must be expressed and fixed (such as written down), therefore ideas and thoughts are not copyright protected.
Creations in which copyright will exist:

Literary works – books, computer software programmes
etc;
Music and broadcasts – films, videos etc;
Artistic works – drawings, diagrams, logos etc.
Typological arrangements of published editions.

The owner’s legal rights enable him/her to:

Copy and distribute copies of the work to the public
Perform, show or play the work in public
Broadcast the work or include it in a cable programme service;
Make an adaptation of the work
Under the Artist’s Resale Rights Regulations 2006, an artist has the right (resale right) to a percentage of the selling price (resale royalty).

Moral rights:

Protection against the distortion of the owner’s work;
In relation to literary, dramatic, artistic or musical works, he/she has the right to be recognised as the author of the work whenever it is performed commercially or in public;
Literary, dramatic, artistic or musical works may not be falsely attributed to an author;
Where an undertaking has been made to make a film or take photographs for private consumption, he/she may not show or broadcast this to the public.

Depending on the form, copyright can exist for various periods of time.
Enforcement takes place when a case is brought to civil court.
Primary Infringement:

A substantial part of the work is copied.
It doesn’t consider the perpetrator’s motive or knowledge of the copyright’s existence
Infringement occurs when one or more of the exclusive ‘legal’ rights of the owner has been breached.

Secondary Infringement:

The defendant didn’t directly infringe the copyright, but they knowingly contributed to it.
For example, if the defendant provided another party with copyrighted material and they performed direct infringement [citation].

Criminal offences:

Offering copyrighted stuff for sale or hire
Imports copyrighted stuff for their own private or domestic use
Possess copyrighted stuff in business with intent to infringe
If found guilty, the defendant may be liable, on summary conviction, to imprisonment for a period not exceeding six months.
Where goods are imported into the UK, the owner may give notice in writing to the Commissioners of Customs and Excise that he/she is the owner of the copyright in published literary, dramatic or musical work; or the owner of copyright in a sound recording or film, and requests that the Commissioners treat the copies as prohibited goods.

Copyright is an automatic right, but it must be in permanent form (written, recorded etc.)
Duration:

Literary, dramatic, musical and artistic works: life plus 70 years (‘Sir Cliff’s law’).
Sound recordings and broadcasts: 50 years from first broadcast.
Typographical editions: 25 years from first publication.

Patents: an exclusive right given to an owner of an invention to make use of and exploit their invention for a maximum of 20 years.

Protection is granted to a patentable invention which can be:

a new product or way of making a product
a process that gives a new technical solution to a problem.

A patent must be registered
An example would be Dyson or Vienetta
Components of a patent:

Sharing innovation
Public interest
Monopoly
Encouraging innovation
Rights do not arise automatically - formal procedure

Properties of a patent:

A patented invention must be proven as novel and of industrial application.
The patent must be registered.
Registration prevents others from using or selling the product without permission.
The protection lasts for an initial four-year period (after which it can be renewed annually to a maximum of 20 years).
The owner of a patent is provided with a monopoly right to control the item.
Mechanisms exist where a person may request from the Comptroller-General to license a patented invention (after three years following the grant of the patent).
Licences, which may attract payment of royalties, can be sold to transfer exclusive or non-exclusive rights.

Essential elements for a patent:

Be capable of industrial application
Involve an inventive step
Be new

Trade Marks: protects the owner of any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of another.

must be registered to gain protection under Trade Marks Act 1994 (unregistered trade marks may be protected by the tort of passing-off)
Trade marks may consist of words, designs, numerals or the shape of goods / packaging.
A registered trade mark provides its owner with exclusive use of the mark.
Enforcement may take place through the civil and criminal jurisdictions.
Since 1st October 2007 it is possible to register a mark that is similar or the same as an existing mark (unless there is an objection).
How do you apply for one?
You can do it online or by post to the Trade Marks Registry.
Once you’ve registered, you can put the ® symbol next to the brand.
It’s valid for 10 years, but can be renewed every 10 years indefinitely.
Registration can also be made to the Community Trade Mark giving protection throughout the EU.

Design Rights: protects the visual look / appearance / shapes of products (such as the Coca-Cola bottles)

It covers the entire outward appearance of a product, including decoration, lines, contours, colours, shape, texture and materials.
A registered design may be 3D or 2D designs (unregistered design must be 3D).
It can be registered or unregistered
There is an automatic right to an unregistered design right for 15 years
This is a shorter period than registered designs and the owner has to demonstrate the transgressor deliberately copied the design (which can be difficult).
Designs may be registered at the Patent Office (Designs Registry) under the Registered Designs Act 1949.

For a registered design, the design must be:

new and have individual character
be fixed and original (not commonplace)

The registered design allows the owner exclusive rights and use of the product in the UK.
Exclusivity in a registered design lasts for 5 years and can be renewed up to a maximum period of 25 years.

To claim for infringement of the registered design right, the owner merely has to show the transgressor’s design is similar. He/she does not have to demonstrate intention to infringe the owner’s rights or direct copying of the design.
Registration may be made to the Office of Harmonization in the Internal Market to give protection to the design throughout the EU. The protection only lasts for three years.

Acquisition of IP rights:

Automatic right on creation

Must be registered

Unregistered Design Right

Registered Design Right

Patent

Trade Mark

Duration of protection:

Copyright	Patents	Trade Marks	Design Right
70 years from death of author	20 years	10 years renewable indefinitely	Registered Design 25 years
50 years for sound recordings			Unregistered Design 15 years

Passing-Off:

A common law action exists where a business / individual attempts to pass him/herself or a product off as that of another business. Its aim must be to confuse / mislead the public.
Basically, a party releases a product or good (deliberately or unintentionally) to deceive the public into thinking it’s from another business they’re familiar with.
This is especially common with cheap booze (as a student, you may know)

Confidential Information:

Trade or technological secrets
Recipes
Processes
Procedures
Politically sensitive information
Examples:

KFC
Seager v. Copydex (1967)
Fraser v. Thames Television (1983)

Employees and Independent Contractors:

Generally, IP created by an employee in the course of employment will belong to the employer (although the employee may possess moral rights).
For example, Shigeru Miyamoto created Mario, Zelda and Donkey Kong, but the IP belongs to Nintendo because he’s a part of that company.

IP created by an independent contractor / freelance worker is more complicated.
The employer should establish an agreement with the contractor as to the ownership and exploitation of the IP.

TL;DR

Hi! Welcome back to the TL;DR section of my notes, made from concentrate.
If you’re new, TL;DR is the highly concentrated version of the notes above.
This is meant to be a reference only. Please read the above notes at least once before relying on this!
Or not. What do I care? I just write the notes.

Qualitative Management and Leadership

Self Management, Skills and Strengths

Topchik has 5 stages of development for personal growth

Attention-getting
Flying blind
Steadiness
On the rise
Doing

Mono-tasking: doing one thing at a time
Multi-tasking: doing lots of things at a time

Flow: entering full immersion in a task. A notion by psychologists.
Crystal Clear: agile method; devs in a room with whiteboards; no distractions; keeps “flow”

Eisenhower principle:

	Urgent	Not urgent
Important	Do it now	Schedule for later
Not important	Delegate	Don’t do it

7 habits of highly effective people (Covey habits)

Be proactive
Start with the end in mind
Put first things first
Sharpen the saw
Think win-win
First, understand then try to be understood
Synergise

SMART goals: goals with the attributes:

Specific
Measurable
Achievable/Assignable
Realistic/Relevant
Timely

Emotional intelligence:

Motivation
Self-management
Self-awareness
Empathy
Social skills

Decision Making

Boston Consulting Group Product Portfolio Matrix:

		Market Share
		High	Low
Market Growth	High	Star: Prioritise	Problem / Question mark: Divest
Market Growth	Low	Cash Cow: Invest	Dog: Kill

Multiple Criteria Decision Making / Evaluation: uses other decision criteria such as comfort, durability, sustainability, attractiveness, accessibility etc.
Pareto optimal solution is desirable.

Evidence-Based Decision Making: making decisions by weighing evidence with a diverse group
Arrow and Gibbard-Satterthwaite => there must be a way to break a voting tie

Decision Matrix: put choices in a matrix and calculate scores and totals to dictate what decision to make

Investment Appraisal

Capital Budget Decision / Capital Investment Appraisal: a decision-making process to decide which project to invest in
Objective: accept investments where returns outweigh capital

Six stages on capital budgeting:

Identification Stage
Search Stage
Information-Acquisition Stage
Selection Stage
Financing Stage
Implementation and Control Stage

Time value: value of money now compared to future

Future value: amount of investment growth after interest
Present value: value today of future cash flow

Methods that ignore time value of money:

Payback method: pick project with quickest payback period
Accounting Rate of Return (ARR): accept project if ARR is >= RRR

Methods that incorporate time value of money:

Discounted Cash Flows: estimates value of investment based on future cash flows
Net Present Value (NPV): calculates monetary gain by discounting cash flows to present point in time

Internal Rate of Return (IRR): discount rate that makes the NPV equal to zero

Agile Project Management cf Traditional

Agile manifesto:

Individuals and interactions over processes and tools
Working software over comprehensive documentation
Customer collaboration over contract negotiation
Responding to change over following a plan
Software is flexible

Waterfall:

Requirements → Design → Implementation → Verification → Maintenance

Death March project: a project with recurring schedule slips, negative effect on customer relationship, integration problems and testing period is reduced

Brooks Law: adding human resources to a late software project makes it later

Traditional trade-off: take two, leave one: Quality, Cost, Time
Missing: added value for the customer

Planning Poker: used to estimate tasks

Meetings:

Formal meeting at the start of sprint
Formal meeting at the end of sprint
At regular intervals
Daily scrum

Agile weaknesses:

May be misunderstood
Developers need high skill levels
Coordination across large projects is complex
Customers may not want it

Project and Team Retrospectives

Tuckman’s team formation stage - The stages of how the team works

Forming
Storming
Norming
Performing
Adjourning / Mourning

Belbin’s standard roles - The types of different roles

Resource investigator
Team-worker
Coordinator
Plant
Monitor evaluator
Specialist
Shaper
Implementer
Finisher completer

Drexler & Sibbet -

Lucke & Luckman -

Clarity
Challenge
Commitment
Feedback

Keen & Digrius - Defines a bunch of business case development roles and steps

Scope – who expects what (project manager)
Criteria – who cares about what (politician)
Align criteria – connect the dots (salesperson)
Calculate – show the money (detective)
Analyse – find the winner (analyst)
Prove – who says so? (investigative reporter)
Story-tell – explain it (attorney)

Lencioni’s Five Dysfunctions of a Team - For each cause in the pyramid, an effect (or dysfunction) will occur in the team.

The Ideal Team Player is a way of categorising team members in a three-way venn diagrams.

The Thinking environment - Everything we do begins with thinking with ten component that generates fine thinking.

Attention
Equality
Ease
Appreciation
Encouragement
Feelings
Information
Diversity
Incisive questions
Place

Team effectiveness questionnaire - The London Leadership Academy and NHS developed a questionnaire to assess the effectiveness of your team.

Purpose and goals
Roles
Team processes
Team relationships
Inter-group relations
Problem-solving
Passion and commitment
Skills and learning

Management of Accounting and Finance

The fundamental accounting equation: Assets = Liabilities + Equity
Double entry bookkeeping: For every debit, there is an opposite and equal credit (and vice versa)

Branches of accounting:

Financial accounting
Management accounting

Financial reports:

Balance sheet: assets, liabilities, equity at defined moment
Profit and loss report: income and expenses

International Financial Reporting Standard (IFRS): a standard for financial reports.
Helps prevent companies doing tax evasion by transferring profits to other countries.
Fundamental and enhancing characteristics:

Relevance
Faithful representation
Comparability
Verifiability
Timeliness
Understandability

Key metrics in financial analysis:

Market Capitalisation (market cap): share price × number of shares
Earnings Per Share (EPS): profit ÷ number of shares
Price Earnings (PE) Ratio: profit ÷ market cap
Beta: a measure of volatility cf the rest of the market

Management Accounting: analysing information to advise business strategy and drive sustainable business success (CIMA)

Budgeting:

Top-down approach: managers tell lower levels objectives
Bottom-up approach: lower levels tell managers achievables
Participatory approach: budget is negotiated between levels

Avoidable costs: can be eliminated or reduced by picking alternatives
Unavoidable (sunk) costs: already incurred and cannot be avoided
Cost centre: an identifiable part of an organisation where costs can be assigned / aggregated

Reasons to measure cost:

Determine selling price
Help with production planning
Maintain management control
Support management decision making

Costs can be aggregated by:

Element
Nature
Function
Behaviour

Cost classification:

Fixed: horizontal line
Variable: line with non-zero gradient
Semi-variable: variable with non-zero y intercept
Semi-fixed (stepped cost): staircase

Cost accounting and Profit Model:

- profit
- sales price
- quantity sold
- fixed costs
- variable costs per unit sold
Can determine minimum cost of product with:

Kaplan and Norton’s Balanced Scorecard: scorecards to document how people see your company. Doesn’t include social, environmental or ethical aspects

Activity-Based Costing; Procurement

Overhead allocation / absorption / conversion: sharing overheads between products / services

Types of costs:

Direct costs: can be directly mapped to a product or service
Indirect costs (overheads): can’t be directly mapped; must be distributed

Tracing methods:

Cost tracing: map direct costs to products / services
Cost allocation: use estimates and models to apply costs

Financial statement includes:

Closing inventory: the stock a company has at the end of an accounting period
Net realisable value: estimated selling price of stock

Traditional Cost System (TCS): share overheads proportionally using a cost driver.
Traditional Cost System (two-stage allocation rate): share overheads over different cost centres
Activity-Based Costing (ABC): use multiple cost drivers and assign overheads via proportions of cost drivers

Cost accounting helps us make decisions like:

minimum price of a product or service
support cost engineering
make correct decisions about outsourcing
construction of portfolios of products or services

Cost engineering: manufacturing efficiency and manages costs

Manufacturing Learning Curve: the more something is produced, the cheaper it gets. Efficiency gain is in the range 10% - 25% for each doubling.

The Value Chain:

Inward Logistics
Operations
Market and Sales
Distribution
Follow-up Services

Core competency: harmonized combination of resources that distinguish a firm in the marketplace. Ethical values are important for outsourcing.

Change Management

Strategic inflection points: points of change within a company’s lifecycle that determine whether it lives or dies

Negative consequences of change:

Financial
Social
Public relations

Projectification: operations are categorised into projects
Successful change projects need trust, persuasive vision and executive sponsorship / ownership.
Lewin’s three-step organisational change process:

Un-freeze to overcome inertia
Make change
Re-freeze to restore order

Kotter’s 8-step process:

Kanter’s Change Masters:

Management and Leadership

Drunker’s List of Management Functions

Set the team’s/organisation’s objectives
Provide and organise the resources to achieve the objectives
Motivate staff to achieve the objectives
Monitor staff performance against the objectives
Improve performance by continually developing people

Theory X, Y and Z by McGregor and Maslow

Category X: driven by money, avoids work, lacks ambition
Category Y: driven by job satisfaction, seeks work, shows ambition
Category Z: recognise the need for self-fulfilment or transcendence

Hawthorne Experiments: no correlation between productivity and working conditions
Hawthorne Effect: human subjects are more successful because they know it’s an experiment

Management by Walking About: manager goes around, looking, talking to people. It builds trust and understanding.

Sources of power:

Legitimate
Reward
Coercive
Expert
Charismatic

Leadership Grid (Blake and Mouton):

	Low concern for tasks	High concern for tasks
High concern for staff	Country club management	Team management
Low concern for staff	Impoverished management	Task compliance management

Masterful inactivity: do nothing and hope problem solves itself

Types of leadership:

Transactional: reward the good, punish the bad
Transformational: change culture to implement new practices.

Ideals
Inspiration
Individual
Intellectual

Charismatic: good communication skills reach employees at emotional level
Situational: changes leadership style depending on employees

Employee properties:

Commitment: how motivated you are
Competence: how good you are

	Low commitment	High commitment
High competence	Coaching (foster a more positive attitude and confidence to succeed)	Delegating (trust staff to complete the task successfully)
Low competence	Directing (clear instructions, regular checks, direct feedback)	Supporting (monitor and advise on better working practices)

Motivation and Reward

Maslow’s Hierarchy of Needs

Management by Objectives / Results: Objectives are set in appraisal meetings by employees and managers, and are aimed for.
Performance Appraisal Meetings: reviews performance and sets new objectives per annum.

360 Degree feedback: management asks other people what they think of you

Scott Adam’s Company Model: minimise activities that are one level removed from people and products.
Out At 5 (OA5) manager:

stays out of the way
eliminates assholes
make sure the employees learn something every day
create an environment that supports curiosity and learning
teach employees how to be efficient

Adam’s Equity Theory:

Reward → Inequitable reward: doing more work than they’re rewarded, so they get mad
Reward → Equitable reward: getting the right amount of reward for their work, so they work at the same rate
Reward → More than equitable reward: getting more reward than what they’re working for, so they’ll either continue at the same rate or feel guilty and work harder

Performance related pay lowers morale of less productive workers
No performance pay or bonuses → High job satisfaction
Higher education level / company size → Job satisfaction declines
Better pay → Less satisfied with work
Link between pay level vs pay satisfaction > Link between pay level vs job satisfaction
Higher average income → better well-being, social support, freedom, water quality

Team-based rewards:

Incentive pay
Recognition
Profit-sharing
Gainsharing

Profit Sharing and Employee Share Scheme: employees can buy shares and motivate them, along with bonuses such as:

Overtime payments
Company cars or subsidised travel
Sabbatical leave

Production and Quality Management

Quality: the level of customer satisfaction of a product or service.
What the customer wants and what the company provides.

Statistical quality control: quantitative techniques to manage quality
You need to define an:

acceptable failure rate
acceptable failure modes

Six Sigma: a set of techniques and tools that strives to reduce the number of defects to 1 in a million. Uses probability distributions
Quality management needs to be reliable and precise.
Continuous Improvement: A philosophy of continuously improving working practices with the stages: Plan, Do, Check/Study and Act/Adjust.
Quality Control: Maintain standards by testing all or a sample of items
Quality Assurance: Maintain standards by providing confidence that errors will be prevented by proper processes
Total Quality Management: Everyone is responsible for maintaining standards

Steps to quality (the Japanese/Toyota way)

Real place (gemba)
Go and see (genbutsu)
Data and facts (genjitsu)
Principles (genri)
Standards (gensoku)

Root cause analysis: For every problem, ask ‘why’ 5 times in order to get 5 possible explanations for a problem.
Quality Diagrams and Tables: In order to visualise quality, a table can be generated with the types of failures and number.

Lean Thinking in Business Processes: It is important to identify and avoid excess documentation, complex product lines, not utilising talents.

ISO standard for quality management (ISO 9001-2015) that is categorised into:

Scope
Normative references
Terms and definitions
The context of the organisation
Leadership
Planning
Support
Operation
Performance evaluation
Continual improvement.

DMAIC is another quality assurance technique with less documentation than the ISO standard. There are only six stages:

Define - What is the problem?
Measure - What data is available?
Analyse - What are the root causes of the problem?
Improve - Do we have the right solutions?
Control - What do we recommend?

Scientific & Quantitative Management

Company lifecycle

Lifecycle of a company:

Birth
Growth
Decline
Death

Entrepreneurship: create a new company
Intrapreneurship: apply an idea to an existing company

Joys and sorrows at birth:

Enthusiasm
Innovative
Small and flexible
Intimacy

Gibrat’s Law: growth of a firm is random and unpredictable
Penrose’s theory: growth is a result of managerial competence and “learning by doing”

Marris’ Theory of ‘Managerial’ Capitalism: the optimal point of growth is naturally determined by:

managers trying to maximise growth rate
shareholders trying to maximise share prices

5 stages of decline:

Hubris Born of Success
Undisciplined Pursuit of More
Denial of Risk and Peril
Grasping for Salvation
Capitulation to Irrelevance or Death

Market Analysis and Price Settings

4 stages of market analysis:

Industry overview
Target market
Competition
Pricing and forecast

Public sector: part of economy composed of public services and enterprises

Gross profit = Revenue - Cost
Price elasticity: a measure of a relationship between a change in the quantity and a change in price
Psychological pricing: setting prices at £0.99 or $0.88
Price represents value.

Pricing strategies:

Cost-plus pricing
Competitive pricing
Price skimming
Penetration pricing
Price bundling

US Healthcare pricing strategy:

Determine minimum price
Determine maximum price
Pick 5 prices between min and max price
Survey people with those 5 prices
Look at your survey results
Pick an optimised price

Team Lifecycle

Locke’s goal setting theory: set goals that are difficult and specific.
Follow 5 principles of goal creation:

Clarity
Challenge
Commitment
Feedback
Task complexity

Belbin’s Team Roles:

Plant: creative and problem-solving
Monitor Evaluator: logical and impartial
Specialist: in-depth knowledge
Resource Investigator: inquisitive and finds ideas
Teamworker: gels team together
Co-ordinator: focuses on team objectives
Shaper: drives team to work
Implementer: plans out strategy
Completer Finisher: polishes and scrutinises for errors

Tuckman’s model of group development: forming, storming, norming, performing, adjourning / mourning

Drexler & Sibbet team performance: four for creating the team and three for sustaining the team:

Orientation: Why am I here?
Trust Building: Who are you?
Goal Clarification: What are we doing?
Commitment: How will we do it?
Implementation: Who does what, when and where?
High Performance: Wow! (We’re doing well)
Renewal: Why continue?

Barnum Effect: people think a description is tailored for them, when really it’s general enough to apply to anyone

Product Evaluation

Conventional product development process: relies on intuition throughout the product development stages

Steps to evaluation:

Determine target market via brainstorming
Set out a problem statement and break it down
Create affinity diagrams
Create Co-Creation Model: establishes levels of consumer involvement

Submitting: customers send in ideas
Tinkering: original idea by company, customers can modify
Co-Designing: problem has been defined, customers guide selection
Collaboration: company works with customers all the way through

Fill out product design surveys
Create customer requirements, sort into categories:

Expecters
Spokens
Unspokens
Exciters

Convert them to testable engineering characteristics
Create quality function deployment: a method of ordering engineering characteristics based on their criticality to customer requirements
Create new product marketing report and product design specifications (PDS)

Projects: Introduction and Life-Cycle

Project: A temporary endeavour undertaken to produce unique product, service, or result.
Project characteristics:

Unique
Uncertain
Temporary
Defined Deliverable
Constrained

Project constraints:

Time
Budget (resources)
Quality

Project management (PM): Application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.
Process groups:

Initiating
Planning
Executing
Monitoring and Controlling
Closing

Project category categories:

Aerospace / Defense Projects
Business and Organisation Change Projects
Communication systems Projects
Event Projects
Facilities Projects
Information Systems (Software) Projects)
International Development Projects
Media and Entertainment Projects
Product and Service Development Projects
Research and Development Projects

Experience-based categorisation:

Runners: routine batch processing
Repeaters: we know how to do it
Strangers: significant unfamiliar aspects
Aliens: completely new

Project Life-cycle:

Concept / Initiation: Birthing the project
Planning: Organising / Preparing
Execution: Carrying out the work
Closure: Ending the project

Predictable project: plan-driven, typically Repeaters and Runners
Adaptive projects: change-driven, typically Strangers and Aliens

Project Management and Controls

Project activity network: a diagram that helps manage activities in a project.
Early Start: The earliest time at which this activity can start
Early Finish: The earliest time at which this activity can end
Identifier Number: The “ID” of the activity (doesn’t have to be a number)
Activity Float: The most amount of time this activity can be delayed by
Activity Descriptor: A description of this activity
Activity Duration: How long this activity will go for
Late Start: The latest time at which this activity can start
Late Finish: The latest time at which this activity can end
Critical path: the path that cannot be delayed

Forward pass: filling out from initial activities to final activities

Early Start for initial activities = 0
Early Start = Longest early finish of dependencies
Early Finish = Early Start + Duration

Backward pass: filling out from final activities to initial activities

Late Finish for final activities = Early Finish
Late Finish = Shortest Late Start of next activity
Late Start = Late Finish - Duration

Project crashing: accelerating a project
Crashing options:

Improving efficiency of use of current resources
Improving work methods / equipment
Reducing project scope
Compromise quality
Fast-tracking

Cost tracking: comparing estimates with actual costs
Includes:

Labour costs
Material costs
Project support costs

Schedule tracking: comparing scheduled work with actual work

Project Closure

Project closure report: made to determine if objectives are met and if business benefits are realised
Includes:

Detailed list of completion criteria
Confirmation that all criteria have been met
List of outstanding activities, risks and issues
Set of actions needed to hand over deliverables, terminate agreements, release resources and officially request closure.

Identifying the required closure activities:

Handover of deliverables
Documentation
Sub-contractor / supplier terminations
Resources release
Communication

Post implementation review: reviews project performance against original targets and checks conformance against PM processes

Quantitative Risk Management

Risk transference: financial loss is transferred to an insurer
Risk: effect of uncertainty on objectives
Uncertainty: a situation in which something is not known

Risk Management (RM): The identification, assessment and prioritisation of risks

Approaches to risk:

Portfolio: split operating budget by ratio
Strategy: split into Real, Win, Worth
Systematic: define a Risk Register

Issues for managing risk in engineering:

You need to mitigate every risk
There are always risks you will not anticipate

Risk Management methods:

Risk identification
Risk analysis
Response planning

Technological Innovation cf Business Innovation

Innovation: new and successful ideas
Anything can be innovative

Difficulties with innovation:

Business environment may not support innovation
Regulations
Technology

TRL: measurement system to gauge maturity level of tech. Goes from 1 to 9.
Valley of death: where most projects “die”
Funding sources vary depending on TRL level

Due Diligence, Liquidation, Administration

Insolvency: when a firm can’t meet their cash outflows with their inflows
Two kinds:

Technical: can’t meet cash payments
Legal: assets < liabilities

What to do with insolvency:

Do nothing
Seek adjustments with creditors
Seek court relief in bankruptcy
Assign assets to a third party
Liquidate
Attempt to sell out

Due diligence: research and analysis of a company before buying them out
Four cornerstones:

The company
Its operations
Its value and value of assets
Its people

Typical headings of due diligence questionnaire:

Company/entity basic information
Ownership of the key assets
Financial and tax-related matters
Significant agreements, contracts, and undertakings
Legal questions common to most transactions
Information about key personnel and employees

Due diligence plan: a manual for preparing the due diligence questionnaire

Corporate Social Responsibility; Conflicts of Interest, Health and Safety

Corporate Social Responsibility (CSR): companies integrate social and environmental concerns in their business
Themes to CSR:

Internalising
Voluntary activities
Multi-stakeholder orientation
Practices and values
Transparency
Beyond philanthropy
Openness in reporting

Externalities: consequences of production born by society
There exists cultural variations too.

Carroll’s Pyramid of CSR:

Philanthropic
Ethical
Legal
Economic

Baden’s revision:

Economic
Legal
Ethical

Corporate Social Performance Model:

Stakeholder: any group or individual who can affect or is affected by organisation achievements
Types:

Project proponent
Resident engineer
Contractor
Subcontractor and supplier
Independent environmental checker
Environmental team
Maritime engineering consultant
Environmental specialists in marine ecology
Marine Bureau
Civil Aviation Bureau
Environmental Protection Bureau
District Board
Green Groups
Transport trades
Contractors of interfacing projects
Local residents

Stakeholder management is a key tool for ethical management.

Influence: measure of power
Importance: measure of will

Primary stakeholders: influence and importance
Secondary stakeholders: either influence or importance

Legal Topics

Introduction to Law

Constitution: collective term for the established laws in a country
Types:

Codified: harder to make changes
Uncodified: can make incremental changes

The rule of law: everyone is equal before the law
The Separation of Powers: Executive, Legislature and Judiciary are separate
No Retrospective Laws: A law must be fully in effect before people can officially break them

Sources of law:

National Law - Statutory Legislation: the main, overarching laws
Case Law - Interpretation of law: Interpreting the law itself
International Treaty law: how we interact with other countries
EU Law: Laws passed by the European Union
ECHR: European Court of Human Rights
Conventions / Customs: ‘soft’ law, historic rights

Law includes rules that command, regulate, facilitate and guide
Criminal Law: regulates actions contrary to established laws
Civil Law: used to right a civil wrong. Must be proved on balance of probabilities.

Primary legislation (statutes): made by parliament themselves. Cannot be challenged
Delegated legislation: delegated by parliament. Can be challenged.
Types of delegated legislation:

Statutory instruments
Orders in council
By-laws

Statutory interpretation:

Literal
Golden
Mischief
Purposive

Judicial reasoning terms:

Stare Decisis - standing by previous decisions
Ratio decidendi - a binding precedent
Obiter Dicta - a persuasive precedent

ROD: Reverse, Overrule, Distinguish

Alternative Dispute Resolution (ADR):

Arbitration
Mediation
Conciliation
Tribunals

Contract Law

Contract: a bargain between 2 or more people that is normally legally binding and enforceable by law.
Agreements can be written, oral or inferred by conduct.

Criteria for a contract to be enforceable:

An offer made by the promisor
Acceptance of the offer by the promisee
Consideration (money or promise)
Mutuality between parties
The capacity of both parties in mind and age
The legality of terms and conditions

Freedom to contract: parties can make their own contracts

Types of contracts

Bilateral contract: Both parties promise to do something (&&)
Unilateral contract: After one action, other party promises to perform another action (→)

Invitation to treat: An expression of willingness to negotiate.
Offer: Asking to enter a contract that has a “yes” or “no” answer.
Termination of offer: The transaction is no longer an offer
Acceptance: Both parties agree to a contract

Battle of the forms: both parties want to make a contract each party wanting to form it on their own terms.

People who are unable to enter certain types of contracts:

Minors
People with mental disabilities
Incapacitated and intoxicated people (usually not an excuse)

Contracts made with minors are voidable, valid and unenforceable.

Consideration: the exchange of one thing of value for another.
Past considerations: Consideration before a contract is completed is not adequate for a binding contract

Contract variation

Agreement to accept less - Part-payment is never valid consideration unless:

Part-payment is accompanied by another consideration
Payment had been given in another form, time or place

Agreement to accept more - An existing duty is good consideration in a contract variation if:

the variance is an offer to pay more
the offeror gains a practical benefit or obviates a “dis-benefit” by paying more
there is a lack of duress

Doctrine of Promissory Estoppel: A promise can be legally upheld after a promisee has suffered a loss as a result of relying on that promise.

Privity of Contract: Only the parties within a contract may be sued except

If the contract is made by agents in collateral contracts
The property is transferred in trust to another party
A contract has been made under an insurance agreement for the benefit of another
Restrictive covenants are imposed on property

Contracts (Rights of Third Parties) Act 1999: If someone is not a party to a contract, they can still sue for another person’s rights under the contract as long as

The contract explicitly states another person right
The purpose of the contract is to benefit another person

Terms: A “fact” within a contract. Includes Conditions, Warranties, Innominates (or intermediates)
Representation: an exaggeration that isn’t meant to be taken at face value. It can be distinguished by looking at:

Terms that are meaningless and cannot be enforced
Importance of the statement
Special knowledge
The statement made in an assuring or promissory way
Verification

Incorporating express terms:

Signature
Notice

First rule: Terms must be contained in “contractual” documents
Second rule: Reasonable notice of the terms must be given at or before the time the contract is made

Custom
Implied

Exclusion (exemption) & Limitation clauses: Clauses that seek to limit or exclude (exempt) a liability that would otherwise exist. It must:

clearly express cover of the situation it seeks to exclude
not be ambiguous
be reasonable
not break any other existing statutes

Unfair Contracts Terms Act 1977: stops exclusion clauses from exclusind death or personal injury

Restraint Clauses:

Contracts of employment: Employees cannot reveal employer trade secrets and cannot work for a competing firm when they leave
Contracts for the sale of business: A seller cannot set up another business in competition with their buyer
Solus Agreements: A seller with a supplier can only get products solely from that supplier

Factors that can invalidate contract:

Misrepresentation
Duress (threats, blackmail, etc)
Mistakes
Illegality
Undue influence (like parents and children)

Misrepresentation:

a false statement of material fact
it is known to the representee
it must be intended to be acted upon...
... or it must have been acted upon already

Half-truths: when someone says only half of the truth
Silence and Non-Disclosure: Silence is not a representation however a gesture could be.
Statements of law cannot give rise to a misrepresentation.

Contract terminology

VOID: no longer has legal effect
VOIDABLE: injured party can void contract

UNENFORCEABLE: not recognised until the other party carries out their side of the bargain

Types of misrepresentations

Fraudulent: The statement is false but makes the statement anyway
Negligent: The statement is believed to be true but has no proof
Innocent: Mistakenly makes a false statement

Fraudulent or Negligent → Can make contract voidable

Misrepresentation Act 1967: party can sue for misrepresentation (if they suffered a loss from it) until the other party proves it was made innocently

Types of mistakes:

Common - Both parties make the same mistake
Mutual - The two parties are at cross-purposes with each other
Unilateral - One party is mistaken and other party knows it
Mistakes by identity

Mutual mistake as to identity - A mistake on the identity of the subject matter
Common mistake as to identity - A mistake on the identity of the other party

Duress and Undue influence: If one party is forced or “subject to undue influence” into a contract, it is voidable.

Duress: forcing a party into a contract with violence or pressure
Undue influence: one party is under the influence of another (e.g. child-parents, client-solicitor, patient-doctor or husband-wife)

Illegality - Types of contracts that are immediately void (and illegal)

Contracts to commit a crime or tort
Contracts damaging to foreign relations
Contracts to promote corruption in public life
Contracts to defraud the treasury (e.g. tax fraud)

Discharge of Contract: bringing a contractual agreement to an end
Requirements:

Agreement
Performance
Frustration
Breach

Remedies for breach (what you can sue for):

Damages

Compensatory
Nominal
Restitutionary
Punitive

Action for the agreed contract price
Quantum meruit
Specific performance
Injunction
Repudiation

Equitable Remedies: courts do something to ease a dispute if legal remedies or monetary compensation won’t cut it

Injunction - Courts direct a party not to breach
Rectification - Contract is changed
Specific performance - Courts order party to perform obligations

Time Limits: an action under a contract must be made within six years
No time limit for equitable remedies.

Tort Law

Tort: a civil wrong resulting from negligence, protection and preservation
Claimant: the one bringing the claim
Defendant: the one against whom the claim is brought
Tortfeasor: the one who committed the tort

Four elements of negligence:

A duty of care is owed by tortfeasor
That duty of care is breached
The breach was the cause of the damage
The damage is not too remote from the breach

Duty: a responsibility the tortfeasor owers the claimant
Duty of care: the level of care the tortfeasor owes the claimant
Lord Atkin’s principle: people have a duty of care to others who are foreseeably affected by their actions (also called neighbour)
3-stage test of duty of care:

Foreseeability: harm or loss must be foreseeable
Proximity: must be relationship between parties (neighbours)
‘fair, just and reasonable’

Bolam test: a medical professional is not negligent if their practice was accepted by a responsible body

“But for” test: “But for the existence of X, would Y have occurred?”

Egg shell skull rule: frailty of a person cannot be used as a defense

Defendant defences:

Illegality: the other person was doing something illegal
Consent: the other person acknowledged risk
Contributory negligence: both parties are at fault
Necessity: it was necessary to prevent greater harm

Remedies:

Damages: compensation for personal injury
Injunctions: orders from the court to prevent a party from performing a certain action

Employment Law

The structure of the court system:

Supreme court
→ Court of Appeal
→ Employment appeal tribunal
→ employment tribunal

Employees and independent contractors:

Contracts of service: employees / employee shareholders
Contracts for services: independent contractors

Tests to determine status:

Control test: is a person subject to the orders of the employer?
Integration test: is the work done as an integral part of the business?
Economic reality test: how far is a person in business on his own account?
Mutuality of obligations test: is the employer obligated to provide work and the employee obligated to accept it?
Multiple test

The multiple test:

Does the person have to turn up to work when expected?

If YES...

Do they have to do what the organisation tells them to?

If YES...

Are they expected to do it personally?

If YES...

Can they send someone else to do the work?

If NO...

Then they are an employee

Dismissal from employment:

Summary Dismissal: the employee is fired immediately
Wrongful Dismissal: the employee was fired: breach of the contract
Constructive Dismissal: employer commits breach of contract
Unfair Dismissal: The reasons for the dismissal was unfair

Potentially fair reasons for dismissal:

Capability
Conduct
Redundancy
Statutory bar
Some other substantial reason

Equality Act 2010: protected characteristics:

age
disability
gender reassignment
marriage and civil partnership
pregnancy and maternity
race
religion or belief
sex
sexual orientation

Conduct seen as discriminatory by law:

Direct discrimination: discriminated under one characteristic
Combined / Dual discrimination: discriminated under multiple characteristics
Indirect discrimination: policy applied to everyone, difficult for people of a characteristic
Harassment: violating a person's dignity or creating a bad environment for that person
Associative discrimination: discriminated because of someone else
Victimisation: Treating someone badly because ‘protected act’
Perceptive discrimination: discriminated against because people perceive that you have a characteristic

Occupational requirement: being of aparticular sex, race, disability, religion or belief, sexual orientation, or age, or not being a trans, married, or a civil partner is an essential requirement for work

Acceptable to treat a disabled person more favourable
Discrimination airising from disability: treated unfavourably because of disability effect
Employers owe employees a general duty of care in respect of their health and safety at work.

Industrial Law

Sole trader: one person unincorporated business
Ordinary (general) partnership: partners share losses and profits
Limited Liability Partnership (LLP): the company is separate from the persons involved
A limited company (Ltd): legal liability of shareholders is limited to a paid up value of their shares

Partnership Act 1890: two entities can partner up for profits as long as the partnership wasn’t formed by another act

Company: collection of persons having an existence, right and duties, separate from its persons
Incorporated company:

A persona at law
Has a separate legal entity
Has perpetual succession

Limited company: A company is limited if the liability of its members is limited by its constitution. Types:

Limited by shares: member liability is limited to account
Limited by guarantee: member liability is limited to undertaken assets

Public company: limited by shares or guarantee and having a share capital, has a certificate that complies with registration of public company. May be listed.
Private company: not a public company

Intellectual Property (IP): things that are creations of the mind

Copyright: an automatic right for creations
Patent: exclusive right for an invention idea
Trade Mark: protection for a graphically represented brand
Design Right: protects visual look / appearance of products

Automatic right on creation

Must be registered

Unregistered Design Right

Registered Design Right

Patent

Trade Mark

Copyright	Patents	Trade Marks	Design Right
70 years from death of author	20 years	10 years renewable indefinitely	Registered Design 25 years
50 years for sound recordings			Unregistered Design 15 years

Passing-Off: business attempts to pass a product off as another business to mislead the public
Confidential Information:

Trade or technological secrets
Recipes
Processes
Procedures
Politically sensitive information

Generally, IP created by an employee in the course of employment will belong to the employer (although the employee may possess moral rights)

Past Cases

This is a store of all the past cases we need to know, what happened in them, what the end results were and what we can learn from them.

Claimant vs Defendant

What happened

What we learn from it

Carlill vs

Carbolic Smoke Ball Co.

(1893)

D advertised that they would pay £100 to anyone who caught the flu after using one of their smoke balls.

They deposited £1000 into the bank as evidence of their sincerity.

C bought the smoke ball and caught the flu.

Decision: Advert was an offer to the whole world, and was a unilateral contract of “buy our ball and get flu” → “we give you £100”

An advertisement for a “if you can do this, we’ll give you this” counts as an offer to the whole world

Fisher vs

Bell

(1961)

A flick knife was on display by the shop window, being offered for sale.

Is this an offer or invitation to treat?

Decision: Invitation to treat, because pre-contractual discussions can still happen after the customer walks in.

However, because of the Restrictions of Offensive Weapons Act 1959 it was an offence to offer that flick knife for sale anyway.

A simple advert for a product for sale counts as an invitation to treat

Pharmaceutical Society of GB vs

Boots Cash Chemist

(1953)

D introduces a new check-out system (like the ones in Sainsburys and Asda)

C calls into question the legality of this, since pharmaceutical products need a pharmacist by law.

Decision: The shop assistant (who is a pharmacist) chooses whether to accept or reject the offer anyway, so D is safe.

Goods on a shelf are an invitation to treat.

When the customer takes the goods to the till, that’s an offer to purchase.

Partridge vs

Crittenden

(1965)

D placed an advert in the classified section of a magazine for a rare bird for sale.

S.6 of the Protection of Birds Act 1954 made it an offence to offer those birds for sale.

D was charged and convicted.

Decision: D is not guilty; the advert was an invitation to treat, not an offer

Adverts in magazines are invitations to treat.

Harris vs

Nickerson

(1873)

D advertised some stuff for sale in the London papers about products in an auction.

C went to the auction on the last day, but the products were withdrawn.

C claimed that the advert was an offer.

Decision: The advert was an invitation to treat, not an offer.

Adverts in a newspaper are invitations to treat.

There is no obligation to sustain your consideration if there is no offer.

Conversely, you cannot expect an offeree to make a contract, or still have their consideration, if there is only an invitation to treat.

Lefkowitz vs

Great Minneapolis Surplus Stores

(1957)

D placed an advert for a fur coat on a “first come, first served” basis.

C came to buy it, but D said it was a “house rule” to only sell to women.

C’s argument was that it’s “first come, first served”, and since C was the first, their gender shouldn't matter.

Decision: Because it was “first come first served”, the advert is an offer, so D must uphold his end of the deal and serve C.

An advert with extra details like “first come first served” is an offer and not an invitation to treat.

Harvey vs

Facey

(1893)

Communication on the telegram:

C: "What is lowest price for Bumper Hall Pen"

D: "Lowest price is £900."

C: "We agree to buy"

C feels D has a contractual obligation to sell C the pen

Decision: There is no contract; simply stating the price is not an offer

Stating information about the product is not an offer.

Hyde vs

Wrench

(1840)

D offered to sell farm for £1k

C offered £950 and D refused.

C sought the original offer of £1k, but D still declined.

Decision: No contract. When C offered £950, that new offer destroyed the original offer, so the original offer can no longer be accepted.

Making a new offer after an existing one destroys that first offer, terminating it.

Routledge vs

Grant

(1828)

D offered to buy C’s house and gave him 6 weeks to accept

D withdrew offer before 6 weeks up

Decision: D had the right to do that because it wasn’t a proper offer

An offer can be withdrawn while it is still one-sided.

In contract law, one party cannot be bound whilst the other is not. That doesn’t make a proper offer.

Bloom vs

American Swiss Watch Co

(1915)

D held a reward for information about a jewel thief

C gave the information before they knew of the reward

C was not entitled to the reward.

Decision: C didn’t get the reward

You can’t enter and complete a contract if you didn’t even know it existed

Entores vs

Miles Far Eastern Corp

(1955)

C in London made an offer to D in Amsterdam by telex

D accepted the offer via telex as well.

Did acceptance happen when D sent it or when C saw the message?

Decision: When C saw the message

Over instantaneous forms of communication, acceptance happens as soon as the recipient sees the message.

Adams vs

Lindsell

(1818)

D makes an offer to C on the 2nd but arrives at the 5th.

C posts acceptance on the 5th but doesn’t arrive until the 9th.

D sells goods to another party on the 8th, before C’s acceptance arrives.

Decision: acceptance happens upon posting the letter, not when the letter is received

With mail, acceptance happens upon posting the letter, not when the letter is received

Byrne vs

Van Tienoven

(1880)

1st: D posts letter offering to sell goods

8th: D posts letter withdrawing offer

11th: C telegraphs accepting offer

15th: C confirms acceptance by letter

20th: C receives letter of revocation from D

Was the contract accepted or withdrawn?

Decision: The offer was already accepted on the 11th, so it was not withdrawn.

Revocation can only take effect before acceptance

Chwee Kin Keong vs

Digilandmall.com

(2004)

Six friends placed orders for 1,606 HP printers on a website.

The website had a bug: it was selling them for $66 each instead of $3,854 each

The friends argued that they were not aware of the mistake.

Decision: contract is void. The friends should’ve known it was absurdly low.

If a price mistake on an e-commerce site is absurd, you can’t exploit it.

Simpkins vs

Pays

(1955)

A grandmother, granddaughter and lodger entered a weekly competition.

They agreed that if any of them won, they would share the winnings.

D, the grandma, won money and refused to share.

C, the lodger, sued her.

Decision: There was a binding contract because of mutual agreement, so D should pay.

An informal legally-binding contract can be formed if there is a mutual agreement.

Williams vs

Roffey Bros

(1990)

D were hired to work on flats

There was a penalty clause in the contract if the workers took too long doing the job

C decided to pay D more to avoid penalty clause

C only gave part-payments for each flat.

They claimed D didn’t give good consideration for that pay.

Decision: D’s existing duty was good consideration, so C should pay in full

Existing duty is good consideration in contract variation if:

you’re getting paid more
the payer gets benefit or avoids some kind of trouble
there’s no duress

Photo Production vs

Securicor Transport

(1980)

C contracted D to guard the factory.

There was an exclusion clause that exempted D from damages.

D deliberately set fire to the factory.

Decision: Because of the exclusion clause, D got away with it

Exclusion clauses can exempt negligent damages.

Bisset vs

Wilkinson

(1927)

C purchased farm land to use as a sheep farm.

D estimated it would carry 2,000 sheep.

The estimate turned out to be wrong, so C sued D.

Decision: the statement was only opinion and not fact, so it’s not misrepresentation.

Opinions, such as estimates, cannot be misinformation.

Aprilia World Service vs

Spice Girls Ltd

(2000)

D promised to promote C in return for a sponsorship on a world tour.

Before the contract was signed, Geri Halliwel told everyone she was leaving.

D didn’t tell C.

Geri left 3 weeks after the contract was signed.

C would not have entered the contract if they knew Geri was leaving.

Decision: It is misrepresentation: they should’ve told Geri was leaving.

Not disclosing information that is critical to a contract counts as misinformation.

Hadley vs

Baxendale

(1854)

Crankshaft of mill broke

C got D to go and fix it and bring it back

D brought it back 7 days late

C couldn’t use the mill for those 7 days so C sued for loss of profit

Decision: loss of profit is too remote, D had no idea the mill wouldn’t be running while the crankshaft was gone

If the remoteness of damage is too remote (the other party wouldn’t even know it would be a problem), it does not count as a remedy for breach.

Donoghue vs

Stevenson

(1932)

C’s friend bought her a bottle of ginger beer manufactured by D.

C drank part of it and as she topped up the glass the remains of a decomposed snail came out.

C became ill and sued D.

Decision: C was a customer to D’s product, so a customer like C was foreseeable to D, meaning D had a duty of care to C which was breached. D was liable to C.

If a person is foreseeable, you have a duty of care to them.

Home Office vs

Dorset Yacht Co

(1915)

Boys from C escaped and broke a yacht from D.

Are they liable for damages?

Decision: Yes, because C should’ve foreseen this.

A duty of care is owed if a preventable action is foreseeable.

Bolam vs

Friern Hospital

(1957)

C was not given relaxant drugs by D before treatment.

C suffered fractures and sued D.

Decision: D is innocent because D was just following protocol.

Bolam test:

A medical professional is not guilty of negligence if he has acted in accordance with a practice accepted as proper by a responsible body of medical men skilled in that particular art...

Putting it the other way round, a man is not negligent, if he is acting in accordance with such a practice, merely because there is a body of opinion who would take a contrary view

Bolton vs

Stone

(1951)

D was injured by cricket balls from a club.

The field was surrounded by a 7 foot fence, the pitch was sunk 10 feet and the distance was just under 100 yards from C.

Was duty of care from C to D breached?

Decision: No, because they took all necessary precautions. Chance of harm is very slim; it’s just a coincidence.

If necessary precautions are in place, duty of care is not breached.

Barnett vs

Chelsea & Kensington HMC

(1968)

C went to hospital complaining of vomiting but was sent home by the hospital doctor.

C died (someone had put arsenic in his tea).

Decision: Hospital was not liable for negligence because C would’ve died anyway.

If the breach is not the direct cause of the damage, the negligence claim is void.

Hedley Byrne & Co Ltd vs

Heller & Partners Ltd

(1964)

C asked D about Easipower.

D gave C a report but said it was given “without responsibility”.

C extends credit to Easipower and they go out of business.

Did D owe C a duty of care?

Decision: No, because D gave it “without responsibility”

Duty of care is not owed if a statement exempts the party from it, such as “without responsibility”.

Caparo Industries PLC vs

Dickman

(1990)

C bought shares in Fidelity Plc.

From D’s report, they thought they’d make a profit.

In fact, they made a loss.

C sues D for negligence in certifying the accounts.

Decision: D did not owe C a duty of care because D and C are not neighbours; they are too remote. D didn’t even know C existed.

If there is too much distance between two parties, one cannot expect to be held liable for the other’s misfortunes, even if the cause was them.

Polkey vs

Dayton

(1932)

C was fired by D on the spot without being consulted beforehand.

C claimed unfair dismissal.

D claimed that it wouldn’t have made a difference.

Decision: D’s argument is irrelevant. The dismissal was unfair due to lack of procedure.

Dismissal must be preceded by a consultation (unless it’s gross misconduct).

London Underground vs

Edwards

(1995)

C introduced a rota which was harsher on women than on men.

D is a woman who sued.

Decision: a new rota needed to be made.

Changes in which categories of a particular sex, race, disability etc. are handicapped are not allowed to be passed through.