a reply to: FredT
From here on out, you have to take a risk and build and develop a new program or buy something existing. There is zero chance of developing something
new for less future cost than buying a F-35 off the line at under $80M. Or you can buy an existing legacy aircraft that will have similar cost and
drastically less capability. Those are the TacAir options for the USMC. And the least expensive and most effective way going forward is to buy more
Only budget factors relevant to decision-making toda are the future costs in budget years 2020, 2021, 20- ... You can't unspend money. You can only
limit cost going forward.
If I plan to drill a well on my property, and one contractor, Larry Mills says, "we expect to hit water at 160 feet at this location and it will cost
$10k. Afterwards it'll be $27 a month amortized in maintenance to keep the well maintained." Another contractor, Ned Grubberman, says, " I can drill
one for there for $12k, $25 amortized monthly cost for maintenance ". A third, Bob Dunder, says, "I'll do it for $13k, $25" . Your brother in law
who has never drilled in his life says, "Hell, we can do it ourselves for $5k".
You pick the cheapest option from someone that you think is qualified to give an accurate estimate: you take the $10k bid. Now let's say two months
later whether because of unforeseen problems (bedrock, water table is lower than expected subcontractors, gross mismanagement, some combination of the
above), you've spent 7k so far, and the well isn't producing water. They want another eight grand to keep digging.
Your choice then is to give that company more money and hope they can get back on track without spending a lot over budget, or say, "I'm going with
someone else". So an estimated $8k in future cost for sticking with the first contractor, or $12k to hire the second guy. Maybe you decide to
stick it out, or maybe you have no confidence in contractor Larry Mills, any longer and hand it to Ned Grubberman or Bob Dunder. Depending on the
circumstances, either of the three might be a good choice going forward.
Projected future development cost would be $8K Larry, $12K Ned, $13K Bob. Depends on your confidence level in Larry. Maybe another week goes by, and
Larry now wants another $5K. You reluctantly agree. Maybe you shouldn't. Again depends on your confidence in Larry. Then he wants another $2k.
If you do stay with Larry and six months late, and $12k over budget, his well is finally done, and you've got water for $27 a month here on out --
you spent $22K on the project total so far. You can artificially inflate your monthly cost on paper by amoritising that total cost along with
maintenance cost per gallon over the next forty years of the well's lifespan. And you'd see that (if all went well) Ned or Bob would have been a much
better choice and gotten you cheaper water at per gallon prices over the lifetime of the well. You made a bad choice to stick with Larry. Earlier.
But deciding now to hire someone else to dig a different well because Larry Mills is a #-up and you spent too much past money, is the absolute most
foolhardy way to spend future money.
Because your future budget cost for water is only $27 a month for 40 yrs. Your future cost by digging a new well would be at least $12k upfront and
then at least $25 a month the next 40 years...
The time to fire Larry Mills was weeks ago when he asked for more money. Firing him after he spent $7k and was behind would have saved you total
money, even if you had to pay Ned or Bob 12-13k and they went over budget by $1k. They might have even gotten you water sooner. But the closer you
got to the water, the less sense it made to switch. And now it makes no sense, because you're done and your only future cost is monthly with this
well. Digging a new well does include
project future dig total costs. Maintaining the dug well does not.
edit on 22-9-2019 by RadioRobert because: (no reason given)