Original Post Date: Monday, August 1, 2011

After many years of working with systems engineers and design engineers it became apparent to me that the cost of the system they were designing / building mostly seemed to be an after thought. Maybe not by the Lead Systems Engineer or Program Manager but certainly down in the trenches. The engineers working at the subsystem, component, and element levels always expressed frustration with having too much to think about to add one more variable, such as cost estimation, to their work load. I posit that this can no longer be the case.

In September of 2009 the United States Government Accountability Office (GAO) submitted a report [1] discussing the lack of robust Analysis of Alternatives for weapons systems. The report indicated that …
“Cost, schedule, and performance problems in the Department of Defense’s (DOD) weapon system programs are serious. One key cause is that DOD allows programs to begin without a sound match between requirements and the resources needed to achieve them. That is, program cost and schedule estimates are based on optimistic assumptions, and a lack of sufficient knowledge about technology, design, and manufacturing.  Why do DOD weapons programs experience simultaneous cost growth and decline in program performance? The answer ultimately is found in four sources [2]:

1.     Programs start with poor foundations for developing realistic cost estimates

2.     Programs move forward with artificially low cost estimates

3.     Excessive requirements change

4.    Imbalance between wants, needs, and means

These four sources are outcomes of failing to meet the affordability challenge. What is the challenge? It is the ability of programs to balance requirements, cost, and budget. Programs which do not invest up front in affordability analysis will likely result in cost overruns.

This initial blog posting will be the first in a, probably disjointed, set of musing to raise the awareness of a need to think cost early and often during the development process. I hope you will find this interesting and useful enough to join in the conversation. And to that end stay tuned ....

[1] GAO Report, Defense Acquisitions: Many Analyses of Alternatives Have Not Provided a Robust Assessment of Weapon System Options, GAO-09-665 (Washington, D.C.: Sep 24, 2009

[2] GAO Report, Assessments of Selected Weapon Programs, GAO-09-326SP (Washington, D.C.: March 30 2009