GAO Recommends FAA Improve Cost and Schedule Risk Analysis

Next Generation, or NextGen, is the Federal Aviation Administration’s new air traffic control system. Approved by Congress in 2003, the overhaul has proven to be one of the government’s most ambitious and technologically complex projects. NextGen is meant to accommodate increased air traffic, reduce fuel consumption, improve safety, and be interoperable with other international air traffic systems in Europe and elsewhere.

However, the Government Accountability Office has recently criticized the FAA for failing to adequately address the risks associated with the interoperability function of NextGen. In an August 28 report, the GAO said that the FAA took steps to achieve global interoperability, but that “FAA lacks a mechanism for comprehensively identifying and assessing risks and for prioritizing resources to manage NextGen’s interoperability risks.”

The GAO went on to say: “We recommended that FAA should, among other things, require cost and schedule risk analysis, independent cost estimates, and integrated master schedules to better estimate the cost and completion dates for major acquisitions.”

FAA officials have noted that they do identify and assess potential risks to NextGen’s interoperability through working groups, but GAO said the agency hasn’t conducted a comprehensive risk analysis of threats and vulnerabilities to that end. Without such an approach, the agency may not be in a good position to address risks effectively or prioritize resources.

This kind of megaproject risk management is something we see all the time at Palisade. Huge infrastructure and technology projects costing billions of dollars over decades can be incredible complex and difficult to manage. The most successful implementations establish a strategic framework that is strictly adhere to throughout the process – even if that means over the course of many years with multiple stakeholders.

Within that framework, leading project managers and program directors bring in Monte Carlo simulation, such as found in @RISK, to properly quantify the “big unknowns.” Costs can balloon, schedules can be delayed, and you can’t always rely on what happened the last time. For these reasons it is critical that managers account for what they don’t know using @RISK. @RISK enables them to define realistic parameters around uncertainty, examine thousands of outcomes, intelligently rank risk factors, set up contingencies, and allocate resources efficiently.

In one similar case, Lockheed Martin has been using @RISK to plan the next mission to Mars, while in another, @RISK helped the Canadian government estimate costs and budget for the maintenance of its naval fleet facilities.

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