PMB 440 case study #2 Aviation Electronics Company

Aviation Electronics Company (AEC) specializes in designing and installing air traffic control systems at airports. AEC has the capability to manufacture most of the hardware for the systems that they install. The company was recently awarded a contract to design and install a new air traffic control system for a major airport. Since the existing air traffic control system has malfunctioned twice in the last month raising serious safety concerns, the airport authority is interested in having a new system installed as soon as possible. There is a $200,000 penalty if the system is not completed in less than four months after contract award.

Since the Manufacturing Department for AEC has most of its resources committed to existing contracts, it is not certain of its capabilities to supply the hardware for the new contract in accordance with contract schedule requirements. The Manufacturing Department has suggested that certain key hardware components be purchased from an outside supplier. The Vice President and the Program Manager for the new product must decide whether or not to accept the recommendation from the Manufacturing Department.

Answer the following questions as if you are the Program and Project Manager.

1. What will you want to know about the technical capabilities of potential suppliers of these components prior to reaching a decision?

2. What schedule information will you want from the Procurement Department prior to reaching a decision?

3. What actions might be taken with the Manufacturing Department to allow them to produce the needed components?

4. Is the cost of the needed components likely to more or less if they are procured from suppliers? Why?

5. What factors would favor manufacturing the components with your Manufacturing Department?

Management of Project Procurement, C. L. Huston, The McGraw-Hill Companies, Inc. CS 4-2