Control of Development Costs The LV 100 Engine Program 932548
The cost of development, qualification and certification of new engines has become an extremely high financial burden, both for Governments and private companies at a time when reducing expenditures, cutting research and development budgets, and restructuring organizations are the norm in aerospace industry.
The Government acquisition strategy has encouraged contractors to form joint ventures or teaming arrangements in an attempt to glean the best expertise from two companies and then allow the two companies to compete for the production contracts. This concept was palatable and accepted by the industry in the past when they knew a production contract was in the offing. In today's declining defense budget (Figure 1) there is no certainty of production contracts. When the Government does fund a development program, funds are extremely limited. Similarly companies are selectively funding private development efforts. In both cases tight control of costs is a high priority.