The following appeared in a memo from a vice president of a large, highly diversified company.

“Ten years ago our company had two new office buildings constructed as regional headquarters for two different regions. The buildings were erected by two different construction companies — Alpha and Zeta. Even though the two buildings had identical floor plans, the building constructed by Zeta cost 30 percent more to build, and its expenses for maintenance last year were twice those of the building constructed by Alpha. Furthermore, the energy consumption of the Zeta building has been higher than that of the Alpha building every year since its construction. Such data, plus the fact that Alpha has a stable workforce with little employee turnover, indicate that we should use Alpha rather than Zeta for our contemplated new building project.”

Write a response in which you examine the stated and/or unstated assumptions of the argument. Be sure to explain how the argument depends on these assumptions and what the implications are for the argument if the assumptions prove unwarranted.

The vice president of the company seems highly confident in his decision to take the project to Alpha, because the building appears to be structurally sound. However, there is evidence pointing to problems with both companies. The Zeta building was constructed using a cheaper material, and its construction required more maintenance. In addition to this, the energy consumption per unit of area was higher for the Zeta building. Because the building broke more ground, the Zeta building is more susceptible to weather-related damage. In addition, the construction company’s workforce is unstable and seems to be more prone to turnover, leading to higher labor costs. These facts should be taken into consideration before the project is completed.

The information presented in the memo is correct, but may not provide all of the information that the manager needs. The memo assumes that people, materials, and equipment are fungible, and that, therefore, cost, maintenance, and energy consumption are irrelevant to the decision to which company should be used. However, the first two assumptions are not correct. People, materials, and equipment are very likely to be unique, and the manager must consider these differences in his decision. In the example above, both construction companies were building new offices, but each had a unique labor force, equipment, and materials. The workforces were different, as was the equipment. Furthermore, the construction company’s building materials were likely to be unique. Therefore, the cost and energy consumption of the buildings had to be taken into consideration.

The manager should also consider the fact that the people who construct the building may not be the same people who maintain it. It is certainly true that the construction company is not likely to hire people who are inclined to leave the company soon after its construction. However, it is possible that the construction company’s labor force is unstable, and that new employees leave the company before the project is completed. In that case, the construction company will be paying a premium for labor, and, because it will not have the benefit of having trained the personnel, it will have to hire more people to complete the project. Furthermore, the construction company’s workforce is not necessarily the best at building or maintaining the building. A construction company that uses temporary workers may not have workers who are as skilled in construction as those who are employed by the construction company.

If construction workers are hired on a temporary basis, a construction company must pay a premium for the workers. However, if the construction company is using its own employees, it can hire people that it knows are skilled at both construction and the maintenance of buildings. In other words, the construction company can use workers who are familiar with its corporate culture and with the requirements of the project. However, if the construction company is hiring temporary workers, it will have to rely on the workers’ skills, and this may lead to a higher turnover rate. This high turnover rate will increase the labor costs. Consequently, the construction company will have to increase its budget to maintain the same number of workers, and this will increase the overall cost of the project.

The manager should consider the turnover rates of the construction companies before making a decision about the type of company to use. If the company has a stable workforce, it is likely that its building will be less susceptible to damage, and, consequently, it will be less expensive to maintain. On the other hand, if the construction workers are temporary workers, the company will have to pay higher wages, and this will increase the overall cost of the project.

If the construction company’s workforce is unstable or its building materials are inferior, it is likely that the building will be less durable, and it will cost more to maintain. Consequently, the manager will be faced with some difficult decisions, and he will have to balance the desires to save costs with the desire to build a safe, durable building.

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