Creating competitive advantage*

October 2007
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Creating competitive advantage: How to transform program management

At a glance

This whitepaper shares PwC point of view on the aerospace and defense (A&D) industry's challenges and our framework for program management effectiveness. It draws on the knowledge and experience of our network of A&D industry professionals, including senior-level A&D industry experts with backgrounds in government contracting, program management, risk management, supplier management, and Lean and Six Sigma methodologies.

How to transform program management

This whitepaper shares PwC point of view on the A&D industry's challenges and our framework for program management effectiveness. It draws on the knowledge and experience of our network of A&D industry professionals, who have extensive backgrounds in government contracting, program management, risk management, supplier management, and Lean and Six Sigma methodologies.

Both government and private customers in the aerospace and defense industry are demanding greater innovation and program execution from their contractors. As supply chains are becoming more global and outsourced, program management has become increasingly complex. This complexity has contributed to the well-publicized cost overruns, schedule delays, and quality issues currently plaguing the industry.

The US Congress is now mandating higher standards of program management from the Department of Defense and its contractors; fixed-price development contracts have elevated contractor risk; and the public sector is more than ever holding companies and program managers accountable for failing to meet schedules, budgets, and performance specifications. Competitive advantage and market capitalization are at stake, and the risk for penalties, cutbacks, or even program termination has never been higher.

We believe that the aerospace and defense industry must be proactive in elevating its program management effectiveness, adopting a balanced framework to mitigate or control risks and to cushion the impact when customer requirements change. Superior program execution requires management discipline throughout the extended enterprise, from internal contractor operations to suppliers, customers, and end users. To create the proper management structure to support program execution, companies should ensure that the program team is working with shared goals and open lines of communication; that program facets such as strategy, risk, cost budgets, planning, task schedules, and technical milestones are integrated; that program managers are taking a proactive approach to managing change; and that program knowledge is being managed effectively.

The first step in improving performance involves building an objective and honest assessment of the current state of program management, based on a framework of five key management areas. In this paper, we provide example questions within each area, designed to explore organizational, cultural, process, and technological attributes. Companies that can evaluate their existing programs honestly and make the necessary course corrections will be better positioned to capture major programs, improve fiscal outcomes, improve employee morale, and enhance their reputation in the marketplace.

We look forward to discussing with you how PwC might be of help in addressing the issues highlighted in the report.

If you have any questions relating to this paper, please do not hesitate to contact Glenn Brady, Partner, program management effectiveness, +1 (314) 206 8118.