An Experiment of the Risk Behavior of the DoD Workforce

Abstract

This research project examines the behavior of the Department of Defense (DoD) workforce hypothesis regarding risk management in weapon system development. Two experiments were conducted to understand how the workforce approaches risk management. Many DoD programs fall behind and suffer a cost increase and schedule delay. A recent Government Accountability Office report stated, the total cost of DoD's 2011 portfolio of major defense acquisition programs has grown by 5 percent, in the last year. (GAO, 2012, p. 6) In addition, when compared to a program initial plans, the cost increase is much larger when measured from their first full estimates, the growth in total acquisition cost for these programs is 40 percent. (GAO, 2012, p. 6) Risk management is an important engineering tool for minimizing the impact of technical problems of a program. More effective risk management will lead to better managed programs. The purpose of this study is to better understand the DoD workforce's attitude towards risk management and risk mitigation. Findings of the study will aid in improving training on risk management in order to improve the overall performance of weapon system programs. Two research experiments were run to assess the DoD workforce attitude to risk management. Experiments were selected to measure the participants decision-making. These experiments provide an objective measure of the workforce attitude toward risk management. In both experiments, the participants were trying to achieve a cost target and could elect to take a risk-free approach with a fixed cost or a risk approach with a 50-50 chance of a cost increase or decrease. The first experiment showed that the DoD workforce members were risk takers and found that 42 percent of the time, the workforce members took risks even when they were on track to complete the project on budget. Also, the DoD acquisition workforce took risks 75 precent of the time when their program was over budget and took risks 70% of the time even when their program was under budget. The experiment also showed that there is no statistically significant relationship between years of experience and risk taking. The second experiment introduced a reward for the participants who came in under budget. The introduction of the reward had a very large impact on risk taking. The experiment found that 64 percent of the time, workforce members took risks even when they were on track to complete the project on time. In this case, the introduction of the reward increased risk taking by 50 percent. When over budget, participants took risks 95 percent of the time, a 27 percent increase due to the reward. When under budget, the participants took risks 89 percent of the time, a 27 percent increase due to the reward. The experiments were not designed to identify the reasons for the risk-taking behavior exhibited by the acquisition workforce. Postulated reasons include the following: trying to get a project over-cost back on budget; being under budget and thus able to withstand a cost increase; and taking risks because of a past positive experience taking risks.