Ramon Lopez/FLORIDA
Boeing estimates that it can generate $25 million in annual cost savings through consolidation of International Space Station (ISS) activities.
The efficiencies are made possible by Boeing's acquisitions of McDonnell Douglas and Rockwell International's space unit, which were major subcontractors, says John McLuckey, president of Being Space Systems.
Boeing may need the cost savings to rescue the ISS project. NASA recently acknowledged that work on the ISS in 1998 could cost $600 million more than the $2.1 billion proposed in the 1998 budget. Boeing lost $40 million in award fees for its role in producing the cost overrun. The additional cash will have to be taken from other programmes. NASA is committed to spending no more than $17 billion on the ISS up to its completion in 2002.
McLuckey says that the new structure brings ISS management under one roof. "By aligning into one integrated organisation, we are going to be able to get some economies of scale which will benefit the programme."
He says that the cost overruns were caused by late engineering definition, delays in parts delivery and programme changes. McLuckey adds: "$350 million of the cost overrun is already behind us." He says that Boeing has taken steps to protect against additional overruns, claiming that software is receiving more attention and that suppliers are better managed.
The company has also invested $30 million in a software-integration laboratory.
Source: Flight International
