For Aerospace and Defense (A&D) contractors, there is an increasing importance to keep track of project costs and profits on a regular basis. In this fast-changing environment, it is not sufficient to give a rough estimate of the Return on Investment (ROI) at the end of a project. In fact, in larger aerospace contracts, ROI often never gets calculated.
IT organizations for these companies are expected to be more than just guardians of systems. They are now being faced with the challenge of integrating costing, contract management, and project management solutions with their traditional manufacturing/supply chain systems in order to streamline project management and grow ROI.
Direct costs are expenses that can be traced to a single contract such as the material and labor to assemble an aircraft. On the other hand, indirect costs cannot be traced to a single contract because they are associated with multiple contracts – electricity for the company’s facilities and maintenance of capital equipment are examples.
For A&D contractors still operating on legacy pricing systems and have integrated contract-management systems through acquisition, knowing the financial performance of a project while it is occurring might seem like a daunting task.
Using spreadsheets to manage project costing and the project management of large, complex projects can slow down project completion by weeks. The time spent synchronizing and summarizing spreadsheets for executive project performance reviews is often wasted because by the time they are finished, the information is outdated due to cost and other changes.
So, what is the solution?
Enterprise Project Management (EPM) systems plan and track projects to provide the ability to gather and analyze information at any point during the project. By creating and tracking plans with consistency and accuracy, your organization can monitor progress and performance more closely, and respond with greater agility to changing demands.
EPM also focuses on integrating project costing and scheduling to alleviate the need for excessive manual effort. It is important for IT to own the project management process from beginning to end to lessen unnecessary time spent on quality management, production andsynchronization of cost information and project plans.
CIOs and their IT organizations must keep up with the demand for integrating costing, contract management, and project management systems. Using EPM, project-oriented organizations can ensure they are not wasting time and money on unforeseen costs that often change during the manufacturing/service delivery process. By employing a more automated, synchronized approach, A&D contractors can help ensure their competitiveness over the long-term.