The unfortunate results of imposing management control systems on contractors was that they then felt obligated to operate two systems in parallel. The contractors used their own internal systems to manage the work and another “façade” system required by the defense contract but used only nominally…
Thus, the imposition of management systems on contractors resulted in two primary problems for the government: additional expense and inadequate cost and schedule data…
[Implementation of the Cost/Schedule Control System Criteria was] long and emotionally trying, and most definitely had a negative impact on contractor attitude and acceptance of the criteria.
Managers at one contractor stated that the Air Force’s insistence on imposing the criteria on an ongoing complex, multi-million-dollar missile production program was short-sighted, disruptive, and counter-productive.
Only two of the eight contractors in the survey felt that DOD program managers or their staffs fully understood and fully utilized the performance measurement data… Two of these contractors were convinced that the government managers did not even read the Cost Performance Reports.
That was from a dissertation by Leonard Marrella in 1973. Ernest Fitzgerald and Harvey Sapolsky confirmed that both government and industry managers did not use the cost accounting and performance management data. However, Fitzgerald did use it to expose a $2 billion cost overrun on the C-5A program.
The C/SCSC, which is now called Earned Value Management System (EVMS), forced one contractor to create 3,300 cost accounts and 21 million work packages to be controlled. And this was in the day on punch card computers. Today, not much has changed in the official DOD management systems. There is still EVMS (formerly C/SCSC), the CFSR (no name change), the CCDR (formerly CIR, PIR, and EIS), and the SAR (no name change).
By the way, the double-set of accounting books firms used to satisfy government requirements is still the norm today. Cost assignment to Work Breakdown Structure and other management information is only held in the EVMS system, which is separate but ultimately auditable through the firm’s Enterprise Resource Planning (ERP) system.
Here’s another bit, about the inapplicability (or even danger) of EVMS techniques on R&D and other intangible investments (like software):
… it was discovered that detailed and discrete planning had to be force on the contractors conducting R&D programs because uncertainty and instability were inherent in these programs. Instability often undermined the planning process, which in turn could undermine control. However, when complete, detailed, and discrete planning was accomplished on R&D programs, cost problems could then be detected and corrected in a greatly improved manner.
Source:
“The Effect of the Cost/Schedule Control Systems Criteria (C/SCSC) on Contractor Planning and Control” by Leonard S. Marrella, Dissertation for the George Washington University, Feb. 1973, Business Administration.
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