Less money in -> EU makes do with what it has -> this proves they never needed the money they were asking for in the first place (see Turambar's diary).
What's important here is that parts of the organization have their budget allocated from above, based on specific plans, and are not free to save part of it for unspecified future use. So if you don't spent your budget, you lose it, and the hierarchy might decide to give you less next time.
My pint is that this isn't some strange EU quirk, it's a standard phenomenon all over the world. If the output of a part of the organization is hard to measure, it's almost unavoidable.
In such a situation you will have to convince others that they should give you more budget for a new activity. You can't discuss every activity again every time it is done, so the next time you get the same budget for it. If you find a way to do it cheaper, you can give the money back, and you will get less next time. Or you keep the money so you have to struggle less to finance other projects.
BTW I'm just reading 'Wikinomics' and came across a quote from a Boeing exec that described their latest aircraft as "parts flying in close formation" i.e. some 60% of the entire aircraft is sub-developed, sub-specced and sub-assembled. The Dreamliner will take only 3 days to assemble in a Boeing plant.
A description of the motorcycle industry in S. China in the book was also an example of what happens when you dispose of top-down metrics and bureaucracy. You can't be me, I'm taken
Maybe not totally brand new - the agriculture/food processing model is similar decentralized production. What is new is that Boeing doesn't specify the innovative parts. You can't be me, I'm taken
The Dreamliner will take only 3 days to assemble in a Boeing plant.
Ans is also several years behind target. Breaking things up into definable small parts (and related outsourced contracts) also creates huge inflexibilities in design, development, continuous improvement, and even production,. I hear Boeing are reconsidering their outsourcing model... notes from no w here
A lot of companies outsourced IT on the basis that a specialist firm could do it better and cheaper. This may be true in a steady state situation where the IT required is well known, defined, and stable over time.
The reality is, however, that IT requirements and technologies change all the time and every time you try to change the slightest thing your IT supplier charges you through the nose for it because it is a change request from the previous contract. notes from no w here
e.g. When I edited a photo-book, sure, the formats and printing were negotiated in advance, but truthfully if you really needed to change it, you could, quite close up to the moment of final production.
So out of 2 months work, things are malleable right up to 5 days from the end. It sucks for everyone who has to adjust to the adjustments, but it just takes time and effort.
Mechanical things aren't always so flexible. Machining large important parts is 10 step process, spread over 2 months. If you change anything at the 1 month point, you're going to have to throw away a large chunk of aluminium and start again. You might even have to rearrange your whole machine setup as well. And everyone else whose parts fit on your part might have to do the same.
This is not to say it cannot work at all, but that (contra the wikinomics and other boosters) a lot of these models are a lot less impressive once you get out of producing software, media or other "knowledge products" which are mutable all the time.
Of course, if you're engaged in bespoke/small scale industrial mechanical production, things can be more flexible, but that model is energy intensive and costly.
As a related point, I recall a discussion from a random economist about how Chrysler could reinvent itself as the "Apple of car companies." I had to point out that while it is theoretically possible a lot of the conditions present in the computer hardware market (massive standardised production chain, open standards for a large number of components) just aren't present in the car market. And they aren't present in part because bending metal is slower and more expensive and less flexible than stamping out silicon.
Point being the whole thing is a spectrum and the transaction costs in production of physical goods just don't fall like the ones in software do.
Ag/Food processing is likewise all about creating very standard raw materials, then combining them in very simple ways, industrially speaking.
But doesn't Magna build Chrysler's cars? ;-
Some more distant stuff.
The Fab Lab (Fabrication Laboratory) being developed by MIT is an advanced small-scale workshop for turning out all sorts of one-off parts, using, among other things, advanced laser cutting technology, rapid prototypers, CNC and PC board milling. You can't be me, I'm taken
i.e. Production of parts is so integrated into the final product that it's cheaper to buy a broken company than change the parts in production.
I worked with the people who set up the Fab Lab some years ago. No, it doesn't change what I wrote above. Producing one off parts is horrifically energy intensive. The same spectrum is at work.
But don't you think it also happens that funds may be lacking? And that necessary or useful investments are not made because of that? Must we assume there's always a spend-to-keep-next-budget-up drive?
