I’ve been involved and associated with a number of astronomical projects now that have depended on some level of external funding. One almost universal feature of these projects has been a pitched price tag that is known to be too low by those pitching it. The justification is usually something along the lines of “they’ll never fund us for the whole amount at once, so we have to ask for less now, then more later.” Sometimes there’s a competition involved and people feel a low bid is their best chance to get the project. This sort of behavior has never made sense to me. It seems wrong and ultimately ineffective for a number or reasons.
First off, the people with the funding have seen this all before. They’ve seen lots of projects, bigger and smaller than yours and usually know what’s going on. They didn’t get to positions of power and high finance by being duped by used car salesmen. Wouldn’t a much more impressive approach be something like:
Yes, our project price is a bit more than we originally expected. And we could stand here and tell you it will cost only X, pretending that it was true and that we met our budget goal. But if we do that, we all know that we would inevitably be back later, after you’ve already invested heavily in this project, and we’ll explain what unexpected things have happened to our project beyond our control and how we now need Y more to actually finish the project. We could do that, and you’d likely end up spending more that way than if we just presented our risk tree, explained our contingency, reviewed our functional de-scope options, and you funded us for our real cost of X now, confident that we’ll stay on budget.
As a project manager, which approach would you feel better about? As a funder, which pitch would you rather hear?
Secondly, I think astronomy has suffered as an institution at the national levels for unrealistic price tags. National funding agencies don’t want to have to keep going back to the coffers for more money to finish a project they’ve already committed to. They want to allocate the money once, then see the project complete within that allotment. Going back with additional requests for finding is like setting yourself up for double jeopardy. As administrations and bureaucracies change, the commitment to your project may have also changed. Burned once, twice, three times by project overruns, they are less likely to fund the next when there are so many other things out there asking for money. What’s happened to the particle physics community experimental support in the US since the collapse of the SSC, for example?
Third, this same situation as at the national level occurs at all levels of projects and funders. To make a hypothetical example: Gemini is less likely to get money to build new instruments if most of what they build goes over budget. Similarly, Gemini’s contractors are less likely to get the next contract if they were found to underbid a previous project. (Remember, astronomy is a business.)
Besides a thorough and honest evaluation of costs at the start, I think contingency planning is the key to making a project successful and on budget. There are three kinds of critical contingency for a typical project. The most obvious of which is cost contingency. What if something ends up costing more than expected? What if something breaks? What if something you thought would work doesn’t? One traditional way to deal with this kind of contingency is to apply some factor to the overall project cost and budget that amount for cost contingency. Yes, that’s better than nothing, but there are always some parts of the project that are more risky than others. Project aspects that rely on new, un-proven technology should carry a higher risk factor than aspects that are replicas of something that has been done before, for example. The one contingency fits all rule of thumb is nice, but not really very realistic.
Then there is schedule contingency. Ordered parts take longer to get delivered than expected. Design work or assembly and integration tasks take longer than expected. Here again, time must be added to the project schedule (hopefully following a similar rigorous analysis as for the cost contingency above) to account for these risks. And since time is money in terms of paying people’s time and efforts, this schedule contingency carries a cost burden as well.
Finally, there is functional contingency. Functional contingency refers to certain aspects/requirements of a project that can be de-scoped or eliminated in order to stay on time or on budget. This type of contingency is perhaps the hardest one to use because in order to have a beneficial cost and schedule effect, it must be used early in the project – at a time when the inevitable down-stream consequences of a late, or over budget component of the project seem distant and fuzzy. The natural temptation is often to use cost or schedule contingency first, but doing so potentially leaves you at the end of a project having spent your cost and schedule contingency, with all the functional contingency unable to be used because the design decisions have already been cast in stone and integrated into the project design. Your only choice at this point is to go back and ask for more money. Just what we’re trying to avoid.
If astronomy and astronomy institutions are going to be able to continue to grow and pursue new projects and new opportunities,we must take project budget and schedule management more seriously. We can not rely on the “we’re this close to completion; you can’t stop the tap now” arguments to carry us through to the next level.
Scot fondly remembered a departed colleague while assembling these thoughts. He was a very accomplished project manager and provided many valuable and interesting insights to pursue. Alas, he left this world too early. As one colleague put it: Steve completed his life on budget and ahead of schedule. Steve Varlese- you are missed.
