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Can We Afford Our Own Future?

Why Aerospace and Defense programs are often late and overbudget – and what can be done to fix the problem


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Program management and execution in the Aerospace and Defense (A&D) industry have always been an important critical success factor, but the stakes are getting higher. In March 2008, the Government Accountability Office issued a study of 95 weapons systems programs that showed an average schedule delay of 21 months and average budget overrun of 26 percent for 2007. In dollar terms, the combined cost overrun for all studied programs was $295 billion, up from $42 billion for a similar study conducted seven years earlier.

To gain a deeper understanding of the problem, Deloitte conducted an extensive analysis of Major Defense Acquisition Programs (MDAPs), using cost and unit data published in the Department of Defense’s Selected Acquisition Reports going back to the early 1990s. The data shows that, over the past 15 years, the problem has steadily gotten worse. At the current pace, unless game-changing mitigations are implemented to address the root causes, the analysis forecasts that in 10 years the average cost overrun may exceed 46 percent, up from 26 percent today.

What is behind this troubling pattern of cost overruns and schedule delays – and what can be done to address it?

This study examines five root causes:

  • Program management challenges
  • Technical complexity
  • Talent shortage
  • Supply chain challenges
  • Politics

It also offers specific solutions and practices that can help tackle the problem caused by these root causes.

As used in this document, 'Deloitte' means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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