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The myth of the $600 hammer (1998)

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

#41

Post by RajT88 »

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…

When I was a consultant, I had private companies do that at a cost to them of $2200 a day.

I had one project where this went on for 5 months. This was a private company with massive ill-gotten gains, which wasn't shy in spending that money frivolously. Whatever man, I guess.

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

#42

Post by tourgen »

OrvalWintermute wrote: post #18
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.

[dead]

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

#43

Post by systems_glitch »

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.

They don't call them "beltway bandits" for nothing!

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

#44

Post by systems_glitch »

sam_goody wrote: post #36

A plumber once showed me his $805 wrench. It cost him $5 on AliExpress, and in the middle of his tightening a bolt with all his weight, it split into two and one half hit him in his tooth. The co-pay for the tooth implant was $800, hence his "$805 wrench" and a moral not be cheap on your tools.

The first time you get to drill and extract a stripped fastener on-site because you had a cheap tool in your box really ought to be the last day you spend on cheap tools! I'd imagine a personal injury would really reinforce that sentiment.

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

#45

Post by hgsgm »

karaterobot wrote: post #31
flavius29663 wrote: post #20

Earlier quoted context omitted.

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...

If the total R&D cost for all items is split across every single product equally, there's no way to tell how much of the $435 hammer is R&D for the hammer. It's a really weird way to do accounting, almost like they just didn't keep track of how much R&D they did for each item. And that makes you wonder if the amount they are charging is even real in the first place. In general it lowers confidence and makes you think…

You know what you are paying for the bundle you get.

You can also get multiple bids for different bundles. The problem here, if any, is not getting competitive bids for the bundles.

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

#46

Post by nerdponx »

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.

Isn't this somewhat inevitable in any complicated engineering project?

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

#47

Post by zhobbs »

OrvalWintermute wrote: post #18
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.

The manufacturing process isn’t the issue, it’s the layers of contractors, subcontractors, and lack of accountability.

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

#48

Post by sverhagen »

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.

Sorry, I really couldn't tell what side you're arguing for here. But the hot coffee lawsuit was a good example of something that seemed crazy on first look, when on further examination... it still seemed crazy?

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

#50

Post by juhanima »

karaterobot wrote: post #31
flavius29663 wrote: post #20

Earlier quoted context omitted.

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...

If the total R&D cost for all items is split across every single product equally, there's no way to tell how much of the $435 hammer is R&D for the hammer. It's a really weird way to do accounting, almost like they just didn't keep track of how much R&D they did for each item. And that makes you wonder if the amount they are charging is even real in the first place. In general it lowers confidence and makes you think…

The article is not quite clear why the contractor had to split the intangible goods cost to the tangible ones, but it does give a hint. Federal accounting is meant to prevent possibly corrupted overspending and that's why charging for intangible services is not allowed or made more difficult than charging for something tangible that can be measured and counted afterwards and compared to market prices.

So to me it sounds like this: you hired me to make a wall of bricks around your garden. I did it and presented you a bill: bricks 100$, mortar 20$, work 300$. Then you say I cannot charge for work as that's intangible and I have to restructure the bill by allocating the cost of work to the tangible objects. So instead of charging for work I split the cost of it by two and charge a bricklaying fee of 150$ divided by the number of bricks for each brick and another 150$ for mixing the mortar. Because I'm pissed off by your awkward and unpractical accounting requirements and not going to start figuring out more complex ways of dividing the cost between the materials, when everybody knows that it's the bricklaying that counts and not the bricks or mortar.

And that's how you get very expensive mortar or 600$ hammers.

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