ARG-045

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 regions. The buildings were erected by different construction companies—Alpha and Zeta. Although the two buildings had identical floor plans, the building constructed by Zeta cost 30 percent more to build. However, that building's expenses for maintenance last year were only half those of Alpha's. In addition, the energy consumption of the Zeta building has been lower than that of the Alpha building every year since its construction. Given these data, plus the fact that Zeta has a stable workforce with little employee turnover, we recommend using Zeta rather than Alpha for our new building project, even though Alpha's bid promises lower construction costs."


Write a response in which you discuss what questions would need to be answered in order to decide whether the recommendation and the argument on which it is based are reasonable. Be sure to explain how the answers to these questions would help to evaluate the recommendation.


In this letter, the vice president of a large company recommends using Zeta instead of Alpha for their newly proposed building project. The vice president insists that Zeta is a better choice despite Alpha’s more competitive bid because of buildings Alpha and Zeta constructed ten years previously. Although Zeta’s construction costs were higher than Alpha’s, its building’s maintenance costs and energy consumption have been lower than those of the Alpha-constructed building. Moreover, the vice president cites Zeta’s stable workforce and low turnover rate in hopes of proving Zeta’s competency. Although this argument may seem quite convincing at first glance, the vice president does not conclusively justify his/her endorsement of Zeta. More evidence is needed in order to fully assess the vice president’s recommendation.

To begin with, more information about maintenance costs and energy consumption of the two buildings is needed. This is because the vice president implies that the difference in maintenance costs and energy consumption is due to Zeta and Alpha’s work quality. This could be wrong, however, because environmental factors can also affect both maintenance costs and energy consumption. For example, the building Alpha erected may be located in a region with a cold, harsh climate and frequent extreme weather, which would result in higher maintenance costs due to weather damage and more expensive energy bills due to higher heating demands. If the evidence suggests this, the vice president’s argument will be considerably weakened. On the other hand, if evidence indicates a close similarity between the two regions in terms of natural conditions, the vice president’s comparison is more reasonable.

Even if higher maintenance costs and energy consumption are the direct result of Alpha’s construction, it is unclear whether the Alpha-constructed building’s total costs are higher than the building erected by Zeta. By the total cost, I refer to the sum of construction costs and subsequent operation costs. The vice president mentions that the Zeta building’s construction costs were higher so it is possible that Zeta’s building was more expensive in terms of total cost. However, a lack of quantified information prevents detailed evaluation. We certainly need the exact construction costs and operation figures over the past ten years to determine which company actually offers a better economical solution.

What is more, even if the Zeta building’s overall cost is lower than the Alpha building’s, whether or not Zeta should win the contract remains questionable because cost should not be the only factor considered. Besides cost, factors such as building quality, safety standards and speediness of construction ought to be taken into consideration. If Zeta’s building, though cheaper, is very shabby or contains high levels of toxic materials which pose a serious health threat to its inhabitants, it would be dangerous to give Zeta the project. On the contrary, a report from a certified independent quality-control agency endorsing the Zeta building’s overall quality would certainly boost the vice president’s recommendation.

Additionally, the author mentions that Zeta has low employee turnover and thus has a more stable workforce. However, it is not clear whether a company’s workforce stability is equivalent to its service quality. Alpha’s allegedly higher turnover rate (though this has not yet been established) could result from strong intra-company competition which results in the dismissal of underperforming employees. In this case, Zeta’s superiority over Alpha is hardly proven. Feedback from the two company’s previous clients regarding employee performance would allow for a more comprehensive assessment of the true quality of each company’s employees.

In conclusion, although the vice president provides some information to support his/her argument, there are still some problems with his/her lines of reasoning. Zeta may indeed be a good candidate, but we cannot logically draw this conclusion based solely on the information provided by the vice president. More evidence is needed to determine whether Alpha or Zeta should be selected as the new project’s contractor. (641 words)



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