Based in Fort Worth, Texas, the JSF F-35 program provides several important lessons about financial management:
- Begin with the end in mind
- Measurement inversion happens—manage it
- Don’t set arbitrary targets and then manage to them
- Develop adequate information before making decisions
- Use interval rather than point estimates
The November/December 2015 issue of the Journal of Corporate Accounting & Finance breaks down these lessons and sheds light on the world’s largest project to date, the trillion dollar to develop the F-35 Lightning II family of single-seat, single-engine, multirole fighter aircraft.
Here’s a closer look at the third lesson: Don’t set arbitrary targets and then manage to them
In his 1986 book, “Out of the Crisis”, W. Edwards Deming laid out 14 key principles for managing. Deming’s eleventh point: Eliminate arbitrary numerical targets…Substitute aids and helpful leadership….
Deming based this point on the idea that it is useless to specify a goal without developing a method for achieving it. The U.S. Government Accountability Office has been critical of Department of Defense (DOD) affordability efforts:
When the DOD established affordability targets for the F-35 program in 2012, the methodology…was not informed by actual resource constraints….Specifically, DOD officials stated that targets were determined by arbitrarily lowering…estimated F-35 Cost per Flight Hour by 10 percent….
The JSF F-35 program is massive—unprecedented in size. It has scored many successes.