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The myth of the $600 hammer (1998)

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Re: The myth of the $600 hammer (1998)

#11

Post by unreal37 »

ekidd wrote: post #9
unreal37 wrote: post #4

The so-called "real" explanation of the $600 hammer doesn't make the story any better. The hammer did indeed cost $435. If the government wanted to buy another one, the contractor would have charged them an extra $435. Just because the extra $420 was "R&D expense" for something else, doesn't make the hammer any cheaper. Even in the most charitable explanation, this makes it impossible to know the real cost of anythin…

> If the government wanted to buy another one, the contractor would have charged them an extra $435. This claim appears to contradict what the story says, as far as I can tell? He's the original: > The military bought the hammer, Kelman explained, bundled into one bulk purchase of many different spare parts. But when the contractors allocated their engineering expenses among the individual spare parts on the list-a b…

I acknowledged in my comment that even if the most charitable explanation was assumed, the method of accounting is misleading and makes determining the cost of anything impossible.

Re: The myth of the $600 hammer (1998)

#12

Post by stonemetal12 »

bryanlarsen wrote: post #8
unreal37 wrote: post #4

The so-called "real" explanation of the $600 hammer doesn't make the story any better. The hammer did indeed cost $435. If the government wanted to buy another one, the contractor would have charged them an extra $435. Just because the extra $420 was "R&D expense" for something else, doesn't make the hammer any cheaper. Even in the most charitable explanation, this makes it impossible to know the real cost of anythin…

> the contractor would have charged them an extra $435. R&D expenses are one time costs, they're not charged multiple times. An extra hammer would have cost $15.

The article even points out that an additional B2 Bomber would cost an additional 700 million not the reported cost of 2 billion. Including R&D costs makes sense in some situations, but not when buying one more.

Re: The myth of the $600 hammer (1998)

#14

Post by Carioca »

NotYourLawyer wrote: post #2

Not surprised. So many stories about an organization doing something that’s evidently crazy turn out to be bullshit. The truth is always more nuanced than what gets reported. People are (almost) never as incompetent/crazy/malicious as it might seem on a cursory review.

Reminds me a lot of the million-dollar space pen vs pencil story

Re: The myth of the $600 hammer (1998)

#15

Post by woooooo »

unreal37 wrote: post #10
bryanlarsen wrote: post #8

Earlier quoted context omitted.

> the contractor would have charged them an extra $435. R&D expenses are one time costs, they're not charged multiple times. An extra hammer would have cost $15.

"when the contractors allocated their engineering expenses among the individual spare parts on the list... they simply treated every item the same" Sounds like an extra hammer would have cost an $15+$420=$435. Anyways, we'll never know. I will say, the one thing I believe, is that the government had a bucket of money to spend on the project. Let's say it was $1 million. And the contractor was going to get all of it,…

They would have amortized the 420/item across one more item. No additional research cost.

Re: The myth of the $600 hammer (1998)

#17

Post by JoeAltmaier »

unreal37 wrote: post #4

The so-called "real" explanation of the $600 hammer doesn't make the story any better. The hammer did indeed cost $435. If the government wanted to buy another one, the contractor would have charged them an extra $435. Just because the extra $420 was "R&D expense" for something else, doesn't make the hammer any cheaper. Even in the most charitable explanation, this makes it impossible to know the real cost of anythin…

I was playing poker with an old High School classmate who worked in Washington. I mentioned my consulting company chared 15% - 25% overhead for project management over what our Engineers got hourly.

He laughed, said "In DC that would be 200%"

I guess I believe it, from all this.

Re: The myth of the $600 hammer (1998)

#18

Post by OrvalWintermute »

arh68 wrote: post #16

The "myth" is quite real, e.g. the $1,000+ coffee cup [1] https://www.airforcetimes.com/news/your-air-force/2018/10/22...

This is not a conventional coffee cup.

It is a cup that plugs into the electrical outputs on a military airplane.

The more that the DoD stands up 3d printing, the less these kind of things will be an issue, particularly once they start doing more 3d printing in metal.

Re: The myth of the $600 hammer (1998)

#19

Post by steveklabnik »

NotYourLawyer wrote: post #2

Not surprised. So many stories about an organization doing something that’s evidently crazy turn out to be bullshit. The truth is always more nuanced than what gets reported. People are (almost) never as incompetent/crazy/malicious as it might seem on a cursory review.

The hot coffee lawsuit is the first thing I think of here. Heck even the name is like… whew.

Re: The myth of the $600 hammer (1998)

#20

Post by flavius29663 »

unreal37 wrote: post #11
ekidd wrote: post #9

Earlier quoted context omitted.

> If the government wanted to buy another one, the contractor would have charged them an extra $435. This claim appears to contradict what the story says, as far as I can tell? He's the original: > The military bought the hammer, Kelman explained, bundled into one bulk purchase of many different spare parts. But when the contractors allocated their engineering expenses among the individual spare parts on the list-a b…

I acknowledged in my comment that even if the most charitable explanation was assumed, the method of accounting is misleading and makes determining the cost of anything impossible.

How is that? If you buy an engine, do you itemize by: engine block, alternator, water pump and starter? You might include in the requirements that the engine must come with all 4 extra elements, but you will pay for the whole engine. Now, if someone wants to be misleading, they could say the water pump was 1/4 of the price...
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