Guest Blog-- Part 1
By: Michael Gallo
There is mere ‘opinion’ in this market and then there is ‘qualified opinion’. In the case of the former, everybody has at least one. Just ask someone what small businesses can do (in the intelligence and defense markets) to become as competitive or more competitive than large businesses, and you’d get a mixed bag of answers. Below--and in the next blog entry, are the comments of Michael Gallo, owner and principal consultant of Valerisys Consulting. (www.valerisys.com) He has a qualified opinion to address several core issues that many services firms (in this market) deal with on a weekly basis: capital investment decision making in the federal sector including cost and price forecasting, modeling, assessment and review, proposal support, and training. Michael’s 20+ years of experience has given him insights that many of us may miss. What is so valuable here is that (in my opinion) if you take his advice, you’ll better understand how to solve real challenges, and with a higher quality of service. And being better at what you do will cause you to win more business as a direct result.
- Too much time and energy are being spent arguing over the precision of a budget estimate when in fact the inputs into the budget estimate can be highly suspect. Software development estimates are notorious for this. We'll argue and worry about a 20% variance in cost, but accept the fact the sizing inputs that drive the cost can be off by more than 100%. Advice: work harder at understand the key drivers your labor efforts, and margins will take care of themselves.
- A lot of time and energy is spent by contractors preparing painfully detailed estimates for development programs. In many cases, this detail is inappropriate given the maturity of the program, yet the acquisition system insists on this detail. We let detail lull us into a false sense of confidence. Advice: Educate the client agency so that they’ll permit top-down planning and forecasting approaches when programs are immature. Provide an appropriate level of detail that solves the stated challenge.
- In general, in the defense and IC communities, we prepare budgets based on an examination and understanding of past experiences. We focus on understanding what's known. We do a poor job articulating and addressing what we don't know when planning, budgeting, and managing new development projects. Specifically, in air transportation and civil engineering industries, accidents and structural failures are formally and rigorously investigated to determine root causes and improve process and increase knowledge of engineering principles. Unfortunately, in acquisition, a project failure is not subjected to the same type of objective methodical inquiry to uncover what we didn't know. In many cases, project failure is not a failure in execution of process, it's a failure due to lack of knowledge about something. Advice: realize that risk is tied to that which we do not yet know. Work hard to know all that can be known. As uncertainty increases, your plan should break up efforts into smaller alternative pieces to help you find the most successful path. Fail on small efforts so you can win on the overall project effort.
- If you look at large project failures (or projects that were delivered, but with huge overruns), they all contain some common traits:
- They are development projects or projects that have a unique implementation requiring a novel solution (Navy A-12, Denver Airport Baggage system, Boston's 'Big Dig' Tunnel, NRO FIA program, Air Force AEHF satellite program, Marine Corps Advanced Amphibious Assault Vehicle, Army's Future Combat System, IRS Tax System Modernization, FAA Radar System, DHS SBInet, DOE's massive nuclear waste cleanup programs).
- They contain one or more key problems that must be overcome. Some of these problems are known, others are unknown and are later discovered.
- They contain one or more unproven technologies that must be developed or matured.
- They have an unrealistic scheduled delivery mandate.
- They over-emphasize concurrency (i.e. design-build, design-production) which leads to significant and premature initiation of many parallel efforts that will later be discarded or will require significant re-design and re-work.
- They have no 'escape hatch' to allow for orderly termination and avoidance of unnecessary investment
- The budget and schedule is almost always lower than the non-advocate's assessment of the program
- Development program plans and budgets are planned and executed with a lot of parallel tracks of effort
- They could have been terminated earlier in execution, but could not overcome inertia ('sunk cost' syndrome).
Discussion: The above list does not reflect forecast failures. There are of a lot of smart people informing decision makers that these programs were underfunded or were risky. Decision makers seem to have a problem accepting the fact that we live with uncertainty. Unfortunately, we can't will our way to program success with positive thinking. Additional oversight and adherence to program documentation processes aren't going to improve plans.
Advice: Small business owners can out maneuver the competition by asking better questions to uncover and address and manage what they don't know. This is hard, but worth every moment you spend doing it.
Stay tuned for part 2 of this deep dive on getting better at out maneuvering the competition.