NASA Continues To Have Big Problems With Cost And Schedule
NASA: Assessments of Major Projects, GAO
“The cost and schedule performance of the National Aeronautics and Space Administration’s (NASA) portfolio of major projects has deteriorated, but the extent of cost performance deterioration is unknown. NASA expects cost growth for the Orion crew capsuleone of the largest projects in the portfoliobut does not have a current cost estimate. In addition, the average launch delay for the portfolio was 12 months, the highest delay GAO has reported in its 10 years of assessing major NASA projects.
The deterioration in portfolio performance was the result of 9 of the 17 projects in development experiencing cost or schedule growth. Four projects encountered technical issues that were compounded by risky program management decisions. For example, the Space Launch System and Exploration Ground Systems programs are large-scale, technically complex human spaceflight programs, and NASA managed them to aggressive schedules and with insufficient levels of cost and schedule reserves. This made it more difficult for the programs to operate within their committed baseline cost and schedule estimates.”
“… Technical challenges such as these are not unusual for large-scale programs, especially human exploration programs that are inherently complex and difficult. However, we have found that NASA has made programmatic decisions–including establishing low cost and schedule reserves, managing to aggressive schedules, and not following best practices for earned value management or creating reliable cost and schedule baselines–that have compounded the technical challenges. As a result, the three human spaceflight programs have been at risk of cost and schedule growth since NASA approved their baselines.
“… The SLS and EGS programs continue to face cost, schedule, and technical risks as they move through the integration and test phase into at least 2019. … NASA currently has no schedule reserve to its target December 2019 launch readiness date for two key areas in the core stage schedule.
“… The JWST project delayed its launch readiness date by at least 19 months from October 2018 to May 2020. … the JWST project is at risk of exceeding its congressional cost cap, and faces schedule risks as it completes its remaining integration and test work.
Considering how abysmal NASA’s accounting is, this isn’t at all surprising. It’s hard to control costs when you don’t even know what your total costs are.
Given the lack of any basic financial skills of the last CFO who had only science degrees it is not surprising. How could you appreciate the importance of good cost accounting if you have never had a course in accounting?
I think it’s part of what you mean, but “good” needs more definition. I see too many things (“earned value” accounting, for example) that make me think someone is confusing “detailed” with “good.” It’s not a matter of being able to document where every last cent went and who approved of it going there.
The function of cost accounting is to provide accurate and reliable financial information for decision makers to use. Both historical and predictive. And documenting every last cent is part of it, that is what auditors are for and its their job to show that every last cent has been properly accounted for.
The Earned Value Management (EVM) you refer to didn’t come from the private sector or is even part of accounting strictly speaking, but was developed by DOD as part its Project Management approach to acquisition in the 1960’s and requires accurate estimates of cost and value to work. The costs of course requires accurate information from cost accounting. But the key problem with EVM is that value in government projects is difficult to measure. Just what is the value of a F-35? Or the value of delaying its first flight a year./ This is one of the major limitations of it.
It is probably not well suited to most of the science missions at NASA because it is really impossible to determine the value of their scientific output with any accuracy. But unfortunately this is one problems when organizations seek to apply the “fad” of the day to their work to look like they are up to date. If I recall EVM was part of the acquisition reform pushed by the Clinton Administration when they were “reinventing” government in the 1990’s.
This is why when I teach my classes in quantitative management, which project management falls under, I actually teach the history of a technique and the specific problem it was develop to solve, so they recognize its limitations when trying to apply it to other very different problems.
“quantitative management”
That’s a thing? 🙂
That’s not quite what I meant by accounting for every last cent. I was thinking of institutions which require, for travel expenses, receipts for everything. All the way down to a few dollars for a cup of coffee. Or where people are encouraged to fill out time sheets at ten or fifteen minute granularity. At some point, that sort of thing isn’t too valuable when it comes to informing decision making and the overhead costs of the accounting exceed any benefits.
From the way you describe Earned Value Management, I suspect the problems I’ve seen are how NASA has implemented it (which isn’t a tremendous shock.) To establish the value, the practice seems to be going down to a level of detail where specific, necessary tasks can be identified (e.g. performing a series of specified tests on a spacecraft system before delivery) and the “value” is the estimated cost of performing that task. That requires additional accounting work (since the tasks are down at a lower level than when EVM is not required) and makes it harder for a project manager to shift resources from tasks which are easier than expected to those which are harder than expected. As implemented by NASA, I’ve yet to hear anything beneficial about it.
My grad school required Accounting for Graduate Students. I remember two things about the course:
1. It was difficult;
2. It was stunningly eye-opening.
In fact some of the study in school that affected me most memorably were outside my field of study, now that I think about it: Accounting, Statistics, Calculus, among others.
Accounting gave me insight into how real estate projects are financed, something very handy in my field. But it also teaches the differences (for example) among Balance Sheets, PE Statements, and the like.
Oh. And I forgot one more thing.
3. Oh god was it boring.
Which area of the federal government is not having problems with cost and schedule?
This is particularly embarrassing because there are so many other organizations engaged in building and operating complex space systems which have no problems whatsoever with cost and schedule.
Hmm. Which organizations aren’t seeing schedules move to the right?
precisely