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The myth of the $600 hammer (1998)

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

#21

Post by wmf »

JoeAltmaier wrote: post #17
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.

That's not unique to the public sector. Business and IT consulting charges similar markups for all customers.

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

#22

Post by NikolaNovak »

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…

That last paragraph, is that unusual?

As a kind of sysadmin, I was fairly ready to go week 1 on most my projects. But in my erp space, developers and testers have to understand business, processes, functional aspects, etc. Whether specifics of clients payroll process or their finances or whatever. So "spend a week reading manuals" is normal. We call it "onboarding". And of course they're getting paid - they're not doing it for fun.

Have I had a weird career? :-)

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

#23

Post by emodendroket »

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 point of the piece would seem to be not "all is well" but that the real problem is the accounting practices used to direct programs. You've posed this like a counterpoint to the piece but there's significant overlap between what you're saying and the arguments it makes.

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

#24

Post by Retric »

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,…

You’re ignoring the underlying math.

If they needed 2 hammers then both hammers would have cost less. Thus rather than 2 * 435$ hammers + other junk you get 2 * 430$ hammers + other junk which is also 5$ cheaper (or whatever the actual number works out to.) Net result a total that’s 15$ higher and a different set of otherwise meaningless numbers.

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

#25

Post by emodendroket »

steveklabnik wrote: post #19
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.

I guess "the dangerously hot coffee that fused a customer's labia" does not have the same punch when trying to argue for tort reform.

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

#26

Post by logdap »

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 don't know man, custom bespoke anythings probably need to cost a few hundred dollars to make it worth the time of the company, who needs to pay the workers and all the useful and useless management alike, and still turn a profit as well. The fault really lies with whoever in the government decided that a COTS hammer just couldn't work.

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

#27

Post by gumby »

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've worked for companies where they took money meant for one thing, and used it for something else. "Can you record your hours on this project under this different expense code?" This stops them from going over budget and having to explain to the client, but takes the money from another project of that client instead.

Seems like a whistleblower could put a stop to this, and get a hefty reward as well. It's a felony.

The same thing happens in the private sector (law firms, management consultants, etc) but there's little control over that.

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

#28

Post by sam_goody »

Carioca wrote: post #14
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

I understood that anecdote to be true.

Fisher spent $1M (of "then" money) creating a "space pen", capitalized on the unique opportunity and publicity, and went from a startup to a $60M company. They knew that the astronauts could use a pencil, but that wouldn't be very profitable for them.

For Fisher, it was a capitalist triumph, and symbolized American values. For the U.S.S.R. it symbolized U.S. wastefulness, and was portrayed in a negative light.

For the media, if they can portray something as terrible, they will. It sells papers. So that is kind of a capitalist triumph as well.

In the end, it turned out to be dangerous to use pencils in space (graphite turns into a floating flammable dust while writing), so eventually both the Soviets and the Americans bought space pens.

Which was great, as Fisher recouped about $1K just from NASA! More importantly, that marketing ploy may have saved the entire spacecraft - the law of unintended consequences!

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

#29

Post by bytheirfruit »

NikolaNovak wrote: post #22
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…

That last paragraph, is that unusual? As a kind of sysadmin, I was fairly ready to go week 1 on most my projects. But in my erp space, developers and testers have to understand business, processes, functional aspects, etc. Whether specifics of clients payroll process or their finances or whatever. So "spend a week reading manuals" is normal. We call it "onboarding". And of course they're getting paid - they're not do…

Definitely weird. ;) You should let clients know when it's time to 'put up or shut up'. After all, talk is cheap?

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

#30

Post by meetingthrower »

gumby wrote: post #27
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've worked for companies where they took money meant for one thing, and used it for something else. "Can you record your hours on this project under this different expense code?" This stops them from going over budget and having to explain to the client, but takes the money from another project of that client instead. Seems like a whistleblower could put a stop to this, and get a hefty reward as well. It's a felon…

Yes but most of the time in these things the hours billed are internal cost controls, not billed straight through to client. Eg, it's a fixed price contract. But sometimes you have to work more or less so you horsetrade between projects. Agree with you if billing time through, but usually this is pretty strictly tracked.

(source: was a consulting partner)

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