MONETIZING TIME? WEIGHING COST AND SCHEDULE TRADEOFFS IN MDAPS
Abstract
Cost and schedule estimates are critical strategic planning tools for acquisition, if not equally weighted ones. Cost estimates should act as a limiter on an organization’s appetite for starting new programs, a reality check on ambitious requirements, and a forcing function for the cancellation of foundering programs. Schedule estimates can serve similar ends but are also particularly vital for the life-cycle management of systems. Much like an individual will hesitate to pay for major repairs at the mechanic if they expect to have a new car in a year, the choice to buy more of an existing system or to undertake major upgrades is dependent on when the replacements are anticipated. Schedule estimates also have an important risk management role for organizations like DoD that want to ensure that they have the right mix of assets on hand when a crisis occurs. In recent years, containing cost growth has been a top priority for DoD and early results seem to show progress. However, the Government Accountability Office (GAO) has reported that schedule delays continue to grow. Reinforcing this concern, Congressional reform efforts are presently attempting to boost the agility of the acquisition system, implying a greater emphasis on schedule. Unfortunately, current schedule estimate provides a poor foundation for such efforts. As David Tate has argued, “[n]ot infrequently, the initial schedule estimate for an MDAP is not an estimate at all, but a constraint set externally with little regard to program content or historical precedent.” The interplay of budget and schedule add further complications. Once a program has started, money is often prioritized over timeliness. Programs may be accelerated but a far more likely change is that a reduction in funding stretches the program into the future. The study team would address this challenge by creating a linear regression model of the extent of scheduling delays that builds on prior efforts by adding three new variables. First, the ‘median cycle time by platform type’ from David Tate’s research would be incorporated to compensate for schedule estimates with little grounding in past results. Second, the overall fiscal environment during MDAP development would be considered. This approach would draw from past CSIS research on the acquisition bow wave and research by David McNicols and Linda Wu that captures the extent to which any given period was a highly competitive tradeoff space. Third, the study team would look at fiscal shortfalls within individual programs, looking at how much year-to-year expenditure fell short of prior plans. With this model, the study team intends to test hypotheses regarding the drivers of schedule delays and provide recommendations for commercial, civil, and defense organizations seeking to improve their schedule estimation.
Document Details
- Document Type
- DoD Grant Award
- Publication Date
- Nov 01, 2021
- Source ID
- HQ00341910011
Entities
People
- Andrew Hunter
Organizations
- Center for Strategic and International Studies
- Office of the Secretary of Defense
- Washington Headquarters Services