Having kept the nation on pins and needles last spring over whether to raise the national debt limit, Congress is barreling towards another standoff that has serious implications for federal contractors of all sizes.
House leaders are crafting domestic budgets at lower levels than the agreed debt ceiling deal, while Senate leadership is adhering to the higher levels. If all 12 appropriations bills are not signed into law by midnight on December 31, the debt ceiling deal would automatically trigger a one percent reduction in discretionary spending for defense and nondefense budget items.
One troublesome outcome for federal contractors might be what is known as a “continuing resolution” (CR) where Congress simply freezes and extends current spending levels without making any major policy changes. CRs can run for as little as a few weeks to a year.
“Any contractor should be worried. A short-term CR is likely and the possibility for a year-long CR is real,” said Jim Meltsner, an independent lobbyist who formerly led Congressional affairs for Northrop Grumman. “A yearlong CR is a disaster for the contracting community as no new starts are allowed and a CR is also disruptive to long-term planning.”
The current fiscal outlook is a good time for federal contractors to consider their Project Portfolio Management (PPM) tools. PPM solutions can help enterprises supercharge their journey from strategy to execution while delivering huge financial savings and better utilization of taxpayer dollars. PPM solutions are a mission-critical tool in today’s volatile budget environment.
NHS Digital: Aggregating data, faster reporting and smarter decision making
Across the pond, there are similar challenges facing the National Health Services (NHS) Digital in England. The National Health Service is the publicly funded healthcare system in England.
NHS Digital, the national provider of information, data, and IT systems for commissioners, analysts and clinicians in health and social care, is a crucial link between patients and the health system. It supports nearly all NHS staff, and in 2022 alone, it facilitated the dispensing of 1 billion prescriptions.
However, managing its 50 different organizational units, called “Trusts,” has presented significant budgetary challenges. Each Trust previously used diverse systems and templates for reporting data, making it time-consuming to consolidate information and gain a comprehensive organizational view. This issue directly affected annual funding, as Trusts must meet specific criteria and provide evidence of target achievement to secure funding, rather than receiving upfront allocations.
NHS Digital implemented Cora Systems’ PPM solution to help track what money a trust has spent; how it has spent it; and where it is in terms of milestone delivery to ascertain if the Trust has truly delivered everything that has been promised. Being able to quickly aggregate this data on a Cora dashboard is invaluable to project managers and senior management given the scale of managing their Global Digital Exemplar (GDE) or digital transformation program.
In two years, NHS Digital estimates it has already saved more than $750,000 by helping to reduce the staff time needed to shoehorn information from different templates into spreadsheets. Reporting time was slashed from as long as 10 hours to seconds with their new PPM solution. “We’re allowing our trusts to concentrate on delivering their programs rather than wasting time filling in reports every couple of months,” said Mark Cain, GDE Program Manager for NHS Digital.
For the first time, the organization also has consistent data categories across the Trusts, allowing for smarter decision-making. With more than two decades of PPM experience, Cora Systems powers projects worth more than $100 billion worldwide, focusing on five key areas: manufacturing, aerospace, life sciences, healthcare and government.
Honeywell: Consolidating systems, saving money and faster decision making
A Fortune 100 company with approximately 110,000 employees worldwide, including more than 19,000 engineers and scientists, Honeywell’s footprint is significant, and its products are ubiquitous, with a presence in some 150 million homes and 10 million commercial buildings worldwide.
With a range of projects with budgets from $25,000 to half a billion dollars that could last a weekend or multiple years, Honeywell is exactly the kind of organization that needed a stronger PPM solution.
“We didn’t have good visibility of what was going on with our projects, there was no standard, therefore early warnings were not being seen,” said Phil Howe, project management excellence leader, Europe at Honeywell Building Solutions.
With Cora PPM, Honeywell has reduced their project management systems from 22 to 10. Visibility has increased across all projects with specific dashboards and reports displaying key project and financial data, giving Honeywell’s team instant, accurate project status updates. Early warning signs are now available through a number of compliance indicators which is helping to reduce project and budget deviation.
Honeywell has been using Cora for eight months now, and in one business alone, they have reduced their cost overruns by about $200 million. They also identified $250 million of change orders that they hadn’t gone after because they were undetected. Simple changes can have a huge impact on the projects.
Conclusion: PPM systems hedge against federal budget uncertainty
While it’s unclear how the congressional appropriations process will unfold or what the final budget figures will be, contractors should seek to gain greater enterprise visibility with a PPM system and leverage these insights to scenario plan.
PPM systems are a proven way to strengthen project management, speed decision-making, and importantly save money and protect margins, especially with government-funded projects. There’s no better time to start thinking about a PPM solution for your organization.