#134 from R&D Innovator Volume 3, Number 12          December 1994

FORUM—from our readers

Who Should Add the Fudge Factor?

I'm vice president of R&D at a small high-tech company.  When I propose a project plan, I include a schedule with milestones and a running approximation of costs.  Although we usually come up with a workable solution to our projects, we never meet the milestones or the cost limits--we always need more time and spend more money.  My chief executive, who's experienced this pattern many times, wonders why I can't follow my own projections, then invariably makes a crack about "Over-optimistic scientists; when will they finally learn to deal with reality?"

Fortunately, the company is doing well.  But what to do with this scheduling snafu?  Should I add "fudge factors" to allow us to finally meet a schedule and budget?  To be honest, for many of our projects I can’t find a good rationale to add 20% to one and 50% to another.  Surprises (both good and bad) seem to be the norm for our work.

What's going on here is more important than meeting deadlines prepared a year ago, and it has to do with our attitude.  Researchers usually are optimistic.  We must be--since we're trying to do things no one else has ever done.  Our optimistic attitude allows us to believe we can make a difference, that our products will be useful and make the company more profitable.

This attitude flies in the face of the reality that most futuristic projects fail and most small companies disappear.  Yet, because we cannot operate without the optimism that’s reflected in our insanely short schedules and ridiculously low cost estimates, I think that it should be the CEO, not the vice president of R&D, who adds the fudge factor.  This allows us to maintain our optimism--hoping that our best guesses will pan out, but knowing that we'll face unexpected (and therefore unplannable) problems.

Thus it's infinitely important for our scientists to continue feeling optimistic.  The management committee accepts and encourages our optimism.  Therefore, they should carry the responsibility of adding fudge factors to my schedules and budgets (prepared after discussions with the entire R&D team).

Something else: although we scientists know these hitches will place added burdens on the company, should we therefore work on projects with a greater chance of fulfilling the initial schedules--the safe, lower-tech projects, which many other companies are likely pursuing?  They're safe, but also boring and counterproductive, since they would eliminate our company's competitive advantage—having a first-class crew of dynamic scientists who can keep abreast of a rapidly moving field. 

So I guess I don't mind listening to the carping of my CEO about our unrealistic optimism and starry-eyed schedules.  If someday (I'm not holding my breath) we finish a project on schedule,  think what heroes we'd be!

By writing about this problem for R&D Innovator, I'm "thinking out loud" in preparation for an upcoming discussion about project scheduling with the CEO.  I'm interested to hear his response to my analysis of the relation between optimism and schedules.  I'm also interested in hearing your thoughts--do you have R&D management problems that could benefit from similar ruminations?

Anonymous