It is possible to argue that theses savings in material costs were a large extent mere matters of bookkeeping. They were reductions only in a certain sense — the sense in which you have made a “reduction” in the height of a man when, having guess that he is six feet two inches tall, you take a tape measure and find that he is actually only five feet eight. From this point of view, a true reduction in material costs would imply that the arsenal got more output per dollar’s worth of raw material input. There is no evidence that this happened. The later estimates of material costs were lower than the earlier simply because the earlier were bad estimates.
That was from Scientific Management in Action: Taylorism at Watertown Arsenal, 1908-1915.
Frederick Winslow Taylor himself went to Watertown arsenal to help install his system of scientific management. The historian finds it hard to conclude whether the arsenal actually ran better with the changes, or caused lower overall costs. However, he did find that overhead costs grew by at least 10% due to the additional management burden, perhaps offset by lower direct costs.
The arsenal’s estimates of the marginal cost of products like an artillery piece regularly needed to be increased by 100-300% as the basis of pricing in order to recover costs. Indeed, the author found numerous reasons that prices at the arsenal and from private manufacturers were non-comparable. I believe that situation exists today when comparing organic and contractor costs
But one of the major points about scientific management that still exists in the DoD is reliance on performance to estimates. Highly accurate predictions are a measure of a mature science, but I wouldn’t say the same of a rapidly progressing science. When DoD reports that a program is 20% under its cost estimate or 50% over, that doesn’t mean they performed well or poorly. If I estimated a Toyota Camry would cost me $100,000 and I actually buy it for $75,000, no one should be patting me on the back.
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