“Cost Really Does Matter” – Chris Boardman, BAE SYSTEMS … Really Does Matter... · • Joined BAE SYSTEMS (then British Aerospace) as an apprentice in 1979. • Early part

Military Air & Information

© BAE SYSTEMS 2013, all rights reserved – Unclassified

“Cost Really Does Matter” – Chris Boardman, BAE SYSTEMS

SCAF Annual Conference – 17th September 2013

© BAE SYSTEMS PLC 2013 All Rights Reserved

The copyright in this document which contains information of a proprietary nature, is vested in BAE SYSTEMS Public Limited Company. The contents of

this document may not be used for purposes other than that for which it has been supplied and may not be reproduced either wholly or in part, in any way

whatsoever, nor may it be used by, or its contents divulged to, any person whatsoever without the prior written permission of BAE SYSTEMS Public Limited

Company.

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HALL OF FAME (Video)

LINK TO VIDEO “Hall of Fame - behind the scenes at our military aircraft business” - YouTube

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http://www.youtube.com/watch?v=e69sB7nK0Mo








Military Air & Information


“Cost Really Does Matter” – Chris Boardman, BAE SYSTEMS

SCAF Annual Conference – 17th September 2013

© BAE SYSTEMS PLC 2013 All Rights Reserved

The copyright in this document which contains information of a proprietary nature, is vested in BAE SYSTEMS Public Limited Company. The contents of

this document may not be used for purposes other than that for which it has been supplied and may not be reproduced either wholly or in part, in any way

whatsoever, nor may it be used by, or its contents divulged to, any person whatsoever without the prior written permission of BAE SYSTEMS Public Limited

Company.

3


• Chris Boardman, Managing Director – BAE SYSTEMS, Military Air & Information

(MAI) & member of Programmes & Support Board.

• Joined BAE SYSTEMS (then British Aerospace) as an apprentice in 1979.

• Early part of career was spent in the Commercial Estimating Department and

progressed to Head of Estimating.

• Undertaken a wide range of senior management positions across the business

covering most aircraft platforms and customers.

• Appointed as Managing Director MAI in May 2011.

• Through current role, always maintains a very keen and vested interest on all cost

matters.

INTRODUCTION & BACKGROUND

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MILITARY AIR & INFORMATION (MAI)

• Approx. 13,000 people.

• 2012 Turnover of c.£3.2bn.

• Organised as 3 “lines of business”

• Combat Air

• Defence Information, Training & Services

• F-35

Our Mission: Working as an integral part of the team

delivering information superiority and effective air power, our

aim is to give real advantage to our customers worldwide.

Trusted to deliver – always.

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STRATEGIC EVENTS - THE PAST 12 MONTHS

STRATEGIC EVENTS OVER THE PAST TWELVE MONTHS

THE WORLD IS UNCERTAIN AND CHANGING

AUGUST: ARMACO

CYBER ATTACK

SEPT: PROTESTS IN

MIDDLE EAST

NOV: ISRAEL ATTACKS

HAMAS TARGETS

JAN: FRENCH

INTERVENE IN MALI

JAN: UK IN EUROPE

SPEECH

MARCH: US BEGINS

SEQUESTRATION

MAY: UN ARMS TRADE

TREATY AGREED

JULY: ARMY DEPOSES

EGYPTIAN PRESIDENT MAY: SNOWDEN REVEALS

US SPYING NETWORK

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DECLINE IN UK MoD WORKLOAD

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NEED TO EXPLORE ADDITIONAL WORKSTREAMS TO MITIGATE DECLINE


CHANGING MIX OF THE MAI BUSINESS

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INTERNATIONAL BUSINESS INCREASING TO 80%

2008 2012 2021

SINGLE SOURCE <=> COMPETITION


SUSTAIN THE EUROPEAN BUSINESS

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WE NEED TO SUSTAIN KEY SKILLS AND DELIVER COMMITMENTS


CHALLENGES IN THE UNITED STATES

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BUDGET CUTS, SEQUESTRATION MEAN UNCERTAINTY ON F-35

AFFORDABILITY IS THE FOCUS


INTERNATIONAL OPPORTUNITIES

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SIGNIFICANT REWARDS IF WE GET IT RIGHT – BUT IT’S A HUGE CHALLENGE


EXPORTS – A WEALTH OF OPPORTUNITIES

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EXPORT OPPORTUNITIES IN EUROPE, THE GULF AND THE FAR EAST


COMPETITIVE ENVIRONMENT

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FIERCE COMPETITION FROM OTHER PLATFORMS

GRIPEN


COMPETITIVE ENVIRONMENT

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SIGNS OF EMERGING COMPETITORS FOR THE FUTURE


LEARNING LESSONS FROM HISTORY

LEARN FROM PAST

EXPERIENCES.

USE AS AN

ENABLER AND NOT

AN OBSTACLE.

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© BAE SYSTEMS 2013, all rights reserved – Unclassified 16

Legacy environment :-

Current environment :-

Same equation. However, the variable has changed. Understanding the

cost is fundamental. PRICE COST

BASIC BUSINESS MATHEMATICS


THE PRICE IS RIGHT ?

GETTING OUR PRICING RIGHT IS KEY TO OUR FUTURE SUCCESS

Price = (Affordability, Competition)

focus must be on

understanding & controlling our costs

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“COST MATTERS !”


ESTIMATING ENVIRONMENT INCREASINGLY DEMANDING

• Complex customer requirements.

• High levels of new technology, engineering risk and

novel contracting approaches.

• More demanding assurance frameworks and scrutiny.

• Forecasts required much earlier / expectations of

increased accuracy.

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WHAT ARE WE DOING WITHIN BAE SYSTEMS ?

• Strong estimating framework and governance embedded as part of Life Cycle

Management (LCM) & Request For Bid Approval (RBA).

• Recognition of cost estimating as a ‘profession’ rather than an ‘activity’ with focus on

professional development and up-skilling.

• Development and promotion of different (but complementary) estimating methods and

techniques e.g. parametric capability.

• Recognising the value of capturing and exploiting programme historical data and

contextual information.

• Closer customer engagement on cost.

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REAL PERFORMANCE. REAL ADVANTAGE.

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LINK TO VIDEO “Hall of Fame - Behind the scenes at our Military Aircraft Business” - YouTube









Documents

“Cost Really Does Matter” – Chris Boardman, BAE SYSTEMS … Really Does Matter... · • Joined BAE SYSTEMS (then British Aerospace) as an apprentice in 1979. • Early part