Tuesday, October 07, 2008

Financial value of Vaasthu

There is a quote I chanced upon at Wikiquotes - "Software and cathedrals are much the same - first we build them, then we pray." But in civil construction, we seem to follow the opposite - we first think about the pray and then build.

There was this rage around five years back. I thought it was a craze that would die down. But, probably because it doesn't have any rationale, it has continued to be a craze. Only hard-nosed business calculations and mis-application of NPV (net present value) has stopped me from falling into this quagmire ... it is called Vaasthu.

Everybody acts as a free consultant these days for Vaasthu ... as long as you foot the bill. It is supposed to bring auspiciousness for the constructed building, but it only increases suspiciousness. Mind you, it is not that I disagree with this Vaasthu, but given that I don't know anything about it, and can't seem to understand the principle on which it operates, I'd rather not believe it.

In our plans for renovating our home, the fundamental thought was to reduce demolishing and keep the existing structure intact. So far so good. It was actually taken to a different level by a very close and elderly relative of mine, who pointed out that by doing so, I'd be sleeping facing the south direction and that was "not good".
That wasn't all. Even the carpenter considered himself an expert and suggested that rainwater drain out from the terrace to the right side and not to the left side, as otherwise it was "not good" and against Vaasthu.
The contractor himself didn't want the overhead water-tank to be on the left side of the house as it was against this mysterious Vaasthu.
Then, there was this friend of my mother, who tried to explain that following Vaasthu meant that "good things" happened to me.

Now, in all this, the trick that people use is, they never explicitly define the value of "good" and "not good". As a business grad, I'm interested not just in the value, but also in the net present value of the investment of following or not following Vaasthu. I'm even ok with "not good" as long as NPV of "not good" and "against Vaasthu" is still positive. Or maybe we should have a system of "co-pay" (like in insurance) where the consultant also foots a part of the Vaasthu bill.

Let me take an example: as quoted in the first anecdote, to renovate my room, so that I sleep "east-west", it would cost say INR 1 lakh extra versus nothing if I did not bother with Vaasthu. Over an investment period of 20 years (assuming that is the time horizon of next renovation to my house), and a very conservative return of investment of 15% if I invested the same money in (say) mutual funds, the future value of not following Vaasthu is INR 16.36L (=1L * (1.15^20)). Therefore, to follow Vaasthu, I must have a requirement that the "good" that is going to happen to me in the next 20 years purely by Vaasthu must exceed INR 16L. Even investing in risk-free securities at 6% annual returns, the future value turns out to be INR 3.2 L.

Now, can you prove that this Vaasthu can give me a positive net present value or future value so that I can choose to follow it ?

Btw, I was talking about business plan in my last post. Here is one more ... if you got any brains, you'd invent Vaasthu for software and become a consultant. You'll easily rake in millions per assignment :D

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At Saturday 15 August 2009 at 11:33:00 AM IST, Anonymous Anonymous said...

“Software and cathedrals are much the same – first we build them, then we pray,” is a quote from Samuel T. Redwine, Jr. made at 4th International Software Process Workshop and published in Proceedings of the 4th International Software Process Workshop, Moretonhampstead, Devon, U.K., 11-13 May 1988, IEEE Computer Society.


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