Risk, cost, and project management with Christian Smart

Christian Smart joined me on the Acquisition Talk podcast to discuss his new book, Solving for Project Risk Management. He is the chief scientist at Galorath Federal, and before that he was the cost chief at the Missile Defense Agency. We touch on a number of important issues, including: - Whether Augustine's Laws still have relevance - The track record of NASA's better, faster, cheaper program - How to do cost estimates on data projects like AI/ML - Whether the DoD is trying to jam too many programs into the budget - The effect of MDA's matrixed organizational design In his book, Christian talked about a prevailing belief in the 2000s that the Department of Defense could benefit from a "free lunch" when it funded to portfolios of projects. Similar to how diversification between uncorrelated assets gives investors the chance to get the same return with lower risk (or a higher return for the same risk), funding a group of projects at the 60th percentile cost estimate could achieve an 80 percent confidence level for the portfolio overall. Christian argues that projects have asymmetric probability distributions for cost and schedule. You are more likely to see black swans in the cost growth direction than you are in cost savings. When more projects are put under a portfolio, the likelihood that one of them will have relatively extreme cost growth increases. We discuss the implications of this result, and what procedures managers can take to mitigate or even remedy the effects. This podcast was produced by Eric Lofgren. Soundtrack by urmymuse: "reflections of u". You can follow us on Twitter @AcqTalk and find more information at AcquisitionTalk.com.