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The EVM Tango |
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| In February, CNN's Barbara Starr and Mike Mount reported that the cost of the US Navy's new littoral combat ships had more than doubled, having reached more than $500 billion per ship (Starr). This and similar cost-overruns, according to the authors, prompted Sen. John McCain (R-Arizona) and Sen. Carl Levin (D-Michigan, chairman of the Senate Armed Services Committee) to speak out jointly not only against the cost-overruns of the Navy's new ships but against cost-overruns and schedule-overruns in general, for the military's acquisition-programs. | |
| Further, according to the authors, Robert Gates (President Obama's Secretary of Defense) is re-evaluating a number of the military's bigger acquisition programs, such as the $960 billion (for now) joint strike fighter program, the Army's $200 billion Future Combat System, and the Navy's Virginia-class attack subs (Starr). | |
| In short, the defense-pie is about to implode to the size of a cupcake. Given all the high-level attention, the coming implosion can't help but trigger countless EVM inquisitions throughout the defense industry. This is most unfortunate, because greater effort in the application of an already malfunctioning system only increases the degree of malfunction. | |
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Defense-contractors do not operate in a
vacuum. The inefficiency, which
the honorable Senators John McCain and
Carl Levin cite, is not the result of
unilateral actions by the contractors.
It is the result of interactions,
between the government's policies and
the contractors' practices.
The government's contract-offices are tasked with protecting the interests of the government by managing the acquisition-contracts. The good people who work for the contract-offices design the contracts in accordance with legislation passed by Congress; they award the contracts per legislation passed by Congress; and they manage the contracts using EVM, again, as mandated by Congress. If they really want to see acquisition-programs completed with significantly greater speed and efficiency, the honorable Senators will do well to draft legislation that empowers the government's contract-offices, to manage the contractors more effectively as well as to improve the current implementation of EVM. |
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The Department of Defense recently took a giant step, toward these two objectives. In January, the Department adopted the Work Breakdown Structure (WBS) Handbook (MIL-HDBK-881A) as a standard, rather than continuing to treat it merely as a guideline, making the WBS described in 881A mandatory (Young). |
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The newly adopted standard defines a WBS strictly in terms of products, i.e. in terms of things to be delivered by a contractor and accepted by the government. This makes the measurement of progress straight-forward. Items in the product-oriented WBS of a contract either are a delivered and accepted by the government, or they are not. Although some bemoan this change, the product-oriented WBS, as defined in the newly adopted 881A standard, enables the improved management of contracts. With empowering legislation, the product-oriented WBS also could enable the improved management of contractors. Specifically, progress-payments could be mapped entirely to the product-oriented WBS. This would motivate contractors to focus available capacity on delivering the items of the product-oriented WBS, rather than being content merely to keep their people charging time against programs, without focus or prioritization. |
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However, the greater focus, created by
linking progress-payments to the items
of a product-oriented WBS, can go only
so far. One additional step is
needed, to bring the efficiency of the
development-operations of
defense-contractors to as yet unseen but
entirely achievable levels.
The additional step is this: The government's contract-offices must coordinate among each other, so that they might manage more effectively all the work that is required not of each contractor, for multiple programs, but of each contractor's geographical facility or plant. By properly coordinating the work required of each facility, i.e. by prioritizing and properly timing the release of the requisite programs, the contract-offices could prevent the over-commitment of each facility's finite capacity to perform development-projects. This is a pivotal step, because it is precisely the over-commitment of capacity, which causes the widespread multitasking and the gross inefficiencies and waste that the honorable Senators cite. The good Senators can play a strategic role, in the movement toward greater speed and efficiency in the fulfillment of acquisition-programs. They can sponsor legislation at the earliest practicable time, which empowers the government's contract-offices and enables them to make precisely two changes:
The result will be an extended period of previously unimaginable efficiency, in the fulfillment of acquisition-programs. |
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| References: | |
| 1 |
Starr, Barbara. Mike Mount. "Cost overruns have military facing 'train wreck' McCain says" Atlanta: CNN, 2009. http://www.cnn.com/2009/POLITICS/02/24/congress.pentagon/index.html (accessed May 2009). ↑ |
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| 2 |
Young, John J. Jr. "Standardization of Work Breakdown Structure to Support Acquisition Program Management" Washington: DOD, January 2009. http://www.acq.osd.mil/pm/documents/wbs_memo_signed_9jan09.pdf (accessed May 2009). ↑ |
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