Roy Weisert, Ph.D., Strategic Operations Officer, Naval Surface Warfare Center, Dam Neck, U.S. Navy

The Naval Surface Warfare Center provides engineering and support to the U.S. Navy. It bills for employee and contractor services and aims to break even every year, with revenues from those services just covering its direct and overhead expenses. That's why it's critical for NSWC managers to be able to quickly and easily see where actuals are meeting budget — and where variances demand immediate corrective action.

BPM Magazine: Could you describe what the Naval Surface Warfare Center does?

Roy Weisert, Ph.D.: Our mission is to support the war fighter. We're the infrastructure for the operational forces, the forces that are actually doing the fighting on the front. At Dam Neck, we support the war fighter by delivering force-level, integrated, interoperable engineering solutions and other mission-critical control systems and tasks.

BPM: How does budgeting and planning play into what you do?

Weisert: We're a little bit unique here in that we're a Navy Working Capital Fund organization, which means that we're run primarily like a business. We don't get a budget from the Navy that we just have to execute. We bill out for our services, our direct hours, and we make a certain amount of “profit” per dollar that we bill out; the profit covers our indirect expenses, which are staff, utilities, things like that. So we have to make sure that our revenues and direct hours that we have planned for the year match up with our infrastructure and overhead cost.

BPM: How do you keep everything in balance?

Weisert: On the budgeting side, we use Excel to get an overall baseline into where we are going. It's an iterative process between our comptroller, which would be comparable to the chief financial officer, and the different department heads that we have within the command. They use historical data and upcoming-work demand signals by technical capability to project how much revenue they expect to be able to bill out for the year. We then go back and forth using this information and our tacit knowledge to try to figure out what would be the appropriate budget for the upcoming year.

BPM: Do you budget once a year, or is it ongoing?

Weisert: We pretty much budget once a year, and we try to stay within that. What we've found is that having consistency and the right people in the right spots really helps out.

BPM: What do you mean by “consistency”?

Weisert: There's not a lot of churn. We have people who are well-established in their positions, who have a few years under their belts. I would say the majority of people on our senior management team have between 20 and 30 years of government experience — either in military duty or in civil service.

BPM: And that makes them better able to project accurately what revenues and expenses will be?

Weisert: I won't say that just because of their experience they're able to budget more accurately. But they know what they need to do. They know the constraints they have to live by.

BPM: What is the process, then, to keep everything within the budget? How do you monitor that?

Weisert: On the finance side, we track and monitor our indirect expenses and direct hour performance in pbviews. Indirect and direct actuals are entered on a weekly basis, and since the amount of data required to be entered is not that much, we typically enter it manually. At a higher level within the Navy, we also have other databases that are Oracle-based that we utilize to track things.

Every Monday morning, we have a senior leadership meeting. As part of that review, the comptroller will go over the metrics that we have in pbviews. We pretty much look at previous years, our plan for the current fiscal year, and then how we're tracking actually. It really works out well because pbviews graphically illustrates how well we are performing using an andon system, or color-coded signal light to indicate variance. For instance, if we have variances between our actuals and the planned budget of more than X percent, the stoplight will change from green to yellow. We monitor that on a weekly basis. Once the root cause of the variance is determined, we can then make adjustments within our overall budget and improve our processes. If some of the areas for process improvements are more complex, a Lean event might be chartered to improve overall performance and get us back on plan.