U.S. A&D programs have never been more lucrative, productive and important than they are now—and they have never been more of a dismal failure, either. This paradox—climaxing amidst the global downturn, two overseas wars and a change in Washington’s agenda—is now coming to a head, literally, in the form of program management.
According to a yearlong industry review of the issue, hosted by Aviation Week and culminating in a conference this month, industry leaders believe they have made real progress in implementing best practices—but getting people and programs to follow them thoroughly and consistently remains the greatest shortfall.
“One of the key challenges in our industry is program management,” says Tom Captain, the leader of Deloitte’s global aerospace and defense practice.
According to Aerospace Industries Assn. data, the industry has logged record sales annually in recent years and boasts the largest trade surplus of any U.S. manufacturing sector. A Deloitte analysis, meanwhile, says there has been a 305% jump in productivity since 1993, as measured by profits per employee in inflation-adjusted dollars.
But congressional auditors say the Defense Dept.’s top acquisition programs also have lagged behind schedule by a total of almost two years, and are nearly $300 billion over budget this decade (see AW&ST Mar. 2, p. 18). Now the Pentagon is overhauling or shelving dozens of programs, with statements already by top officials indicating more will come in Fiscal 2011. PricewaterhouseCoopers (PwC) says the situation is so dire that competitive advantage and market capitalization are at stake, and the risk for penalties, cutbacks or even program terminations is higher than ever.
The splintering of the effects, many say, starts at the top. “It’s caused by people and by leadership,” notes Ron Hornish, vice president and general manager of precision strike systems at Rockwell Collins. “What has served us leading and managing our companies is not necessarily what will serve us going forward.”
To be sure, program managers face a swath of challenges, some of which they cannot overcome themselves. Unethical behavior, risks in the global supply chain, breakdowns in worldwide communication, unreliable government budgets and growing program complexity can combine to dog the most successful projects. Others are doomed from conception by unrealistic or unsupportable bid proposals. But any gathering of industry participants will quickly elicit standardized processes and practices to address these issues—as well as myriad software or method “solutions” offered by consultants and academics.
In turn, according to the AvWeek Phoenix conference, the one overriding recommendation is formation of some kind of industry-wide apprenticeship for developing leaders, one based on both education and experience. Participants recommended the formation of a working group to develop the apprenticeship and gain buy-in across the industry so that the title of program leader represents a defined set of experiences, and not just course work.
Says Hornish, "We’re going to have to prioritize and make hard decisions like we never have."