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The government funding mechanism doesn’t incentivize cost optimization, and in my experience, does the opposite. Money is allocated to be spent and if not spent

The government funding mechanism doesn’t incentivize cost optimization, and in my experience, does the opposite. Money is allocated to be spent and if not spent is “lost” and may be cut from subsequent budget years. This leads to massive end of year purchases to use remaining funds or starting unnecessary projects just because money was allocated, regardless of whether needs have changed. It’s a really broken system that no one seems interested in fixing.

Lightbody 4y ago
That problem isn’t unique to government. most sufficiently large public companies do the same thing.
- wcfields 4y ago
  Sharepoint is similarly entrenched at DOE when I worked with them in 2009. Any project that gets a bid contract can't say specifically that it must use Sharepoint, but the requirements will be written in such a way that Sharepoint is literally the only system that fits all of them.
  - wildzzz 4y ago
    While SharePoint is not the best choice for many applications, it has enough features to make it work. Since there are plenty of SharePoint experts already in the organization, it could be cheaper to just leverage them to build some SharePoint site that just barely works well enough for whatever application. It would cost a lot more to bring in some consultant that knows how to setup the proper software to do whatever new thing the project needs to do along with whatever new service contracts that need to be signed and paid for to cover the software for years. Do you jump into the new software that might be better or do you just use the same old SharePoint that you've already invested heavily in? The efficiencies of both solutions are probably intangible and it would be difficult to price either of them. Eventually someone out there will be the evangelist to convince program management that the new software really is the best choice (Jira, Confluence, Teams, Salesforce, Trello, etc).
    - owenm 4y ago
      Of course, Teams uses SharePoint for file storage, so it’s basically the same thing for Microsoft, build on the things you have already.
derefr 4y ago
Seems to me that the actual "lower the budget if nobody uses it" part works just fine — the problem is that the people affected by it are aware of it and form a feedback loop with it (i.e. "the measure becomes the target.") If you could hide the budgeting effects from anyone with the ability to 1. start projects or 2. add scope to projects, then it seems like it'd work out just fine. (Of course, actually doing that would require splitting "planning" roles into separate, almost-adversarial "defining projects + increasing scopes for projects" and "feasibility-analyzing + cost-optimizing + decreasing scope for projects" roles. But that seems like exactly the sort of thing the DHS would be fond of. War-games for the project managers; and separate levers for both kinds of sitting presidents to pull on to satisfy their bases, where building up one capability doesn't tear down the other.)
- DubiousPusher 4y ago
  This is a trust problem. Trust problems don't usually get better when you start hiding more shit. Isn't the real solution to make organizations feel confident that they can let unused funding go because they can get it back in the future if they need it?
  - endtime 4y ago
    It seems more like an incentive problem. I'd be interested to see what happens if you give the deciders X% of any unused budget as an EOY bonus.
    - DubiousPusher 4y ago
      That sounds like a great way to get "deciders" to override good uses of money from the people below who actually have an understanding of when it needs to be spent. It is a trust problem because organizations generally aren't worried about losing money they don't spend that year or the next. They're worried about never getting it back. When you use a ratchet approach to budgets it doesn't allow organizations to respond to responsibilities which may be cyclical in nature. This leads to permanent worst case thinking which leads to hording.
    - 4y ago
FpUser 4y ago
When I lived in the USSR we had the this system where money must be spent no matter what or the next year budget will be cut. I thought it is insane and borderline crime and thing like these are impossible in free Western world. Boy was I in for a surprise when I emigrated.
- somat 4y ago
  I suspect it happens wherever you have a centralized economy, the government sector, internal corporate divisions, and if your corporations are run by the government, as found in the ussr. A market economy does not really help, that just means you don't have a budget to cut in the first place.
antonvs 4y ago
> … no one seems interested in fixing. It’s more the opposite, that many people have a strong financial interest in maintaining the system.
aprdm 4y ago
That's not very different from big corporations also.

Lightbody 4y ago

That problem isn’t unique to government. most sufficiently large public companies do the same thing.

wcfields 4y ago
Sharepoint is similarly entrenched at DOE when I worked with them in 2009. Any project that gets a bid contract can't say specifically that it must use Sharepoint, but the requirements will be written in such a way that Sharepoint is literally the only system that fits all of them.
- wildzzz 4y ago
  While SharePoint is not the best choice for many applications, it has enough features to make it work. Since there are plenty of SharePoint experts already in the organization, it could be cheaper to just leverage them to build some SharePoint site that just barely works well enough for whatever application. It would cost a lot more to bring in some consultant that knows how to setup the proper software to do whatever new thing the project needs to do along with whatever new service contracts that need to be signed and paid for to cover the software for years. Do you jump into the new software that might be better or do you just use the same old SharePoint that you've already invested heavily in? The efficiencies of both solutions are probably intangible and it would be difficult to price either of them. Eventually someone out there will be the evangelist to convince program management that the new software really is the best choice (Jira, Confluence, Teams, Salesforce, Trello, etc).
  - owenm 4y ago
    Of course, Teams uses SharePoint for file storage, so it’s basically the same thing for Microsoft, build on the things you have already.

derefr 4y ago

Seems to me that the actual "lower the budget if nobody uses it" part works just fine — the problem is that the people affected by it are aware of it and form a feedback loop with it (i.e. "the measure becomes the target.") If you could hide the budgeting effects from anyone with the ability to 1. start projects or 2. add scope to projects, then it seems like it'd work out just fine. (Of course, actually doing that would require splitting "planning" roles into separate, almost-adversarial "defining projects + increasing scopes for projects" and "feasibility-analyzing + cost-optimizing + decreasing scope for projects" roles. But that seems like exactly the sort of thing the DHS would be fond of. War-games for the project managers; and separate levers for both kinds of sitting presidents to pull on to satisfy their bases, where building up one capability doesn't tear down the other.)

DubiousPusher 4y ago
This is a trust problem. Trust problems don't usually get better when you start hiding more shit. Isn't the real solution to make organizations feel confident that they can let unused funding go because they can get it back in the future if they need it?
- endtime 4y ago
  It seems more like an incentive problem. I'd be interested to see what happens if you give the deciders X% of any unused budget as an EOY bonus.
  - DubiousPusher 4y ago
    That sounds like a great way to get "deciders" to override good uses of money from the people below who actually have an understanding of when it needs to be spent. It is a trust problem because organizations generally aren't worried about losing money they don't spend that year or the next. They're worried about never getting it back. When you use a ratchet approach to budgets it doesn't allow organizations to respond to responsibilities which may be cyclical in nature. This leads to permanent worst case thinking which leads to hording.
  - 4y ago

FpUser 4y ago

When I lived in the USSR we had the this system where money must be spent no matter what or the next year budget will be cut. I thought it is insane and borderline crime and thing like these are impossible in free Western world. Boy was I in for a surprise when I emigrated.

somat 4y ago
I suspect it happens wherever you have a centralized economy, the government sector, internal corporate divisions, and if your corporations are run by the government, as found in the ussr. A market economy does not really help, that just means you don't have a budget to cut in the first place.

antonvs 4y ago

> … no one seems interested in fixing. It’s more the opposite, that many people have a strong financial interest in maintaining the system.

aprdm 4y ago

That's not very different from big corporations also.