How we helped
Working with AlixPartners to tackle cost overruns and fragmented data across hundreds of global programs, a defense contractor transformed its approach to tracking risk and protecting profitability, reducing negative EAC exposure across billions in annual spend.
The Challenge
Defense technology, program development, and manufacturing have historically operated under a cost-plus model: A government client pays a project cost, plus an agreed-upon percentage profit margin to the contractor; if the project overruns, costs are adjusted accordingly, along with the margin.
As the industry has increasingly moved towards fixed-price models in recent years, it has shifted the risk directly onto contractors, while turning a project’s EAC (Estimate at Completion) into a crucial metric of profitability (or loss).
For one global defense company with tens of thousands of employees worldwide and hundreds of projects underway, this shift exposed deep structural challenges. The company had dozens of disconnected systems tracking finance, materials, scheduling, and risk, with hundreds of staff members manually compiling retrospective reports across all of their programs. Critical insights into risk and profitability were generally outdated and often buried in separate spreadsheets and PowerPoint decks.
These inefficiencies translated into an estimated negative EAC exposure of around $1 billion per year.
Our Approach
AlixPartners deployed Data Activation Solutions (DAS) to cut through this complexity and turn the tide on negative EACs throughout the business. DAS is a next-generation data and AI platform that rapidly connects critical systems, unifying key datasets and integrating decision-making across finance, operations, and supply chain functions.
The team pulled together a universe of disparate reports—fees, costs, schedules, timesheets, materials, risk and opportunity logs, financials, and more, from dozens of business units worldwide—and combined it into one model that provides a standardized view across hundreds of projects in near real-time.
DAS then overlaid an AI layer to scan variables and dependencies, flagging emerging project and profit risks and routing them for early intervention if necessary. For example, if a parts shortage appears, the system automatically evaluates whether it’s a short-term blip or a systemic issue, using historical context to classify the level of risk and flag potential solutions. These flags can then be triaged by human experts, far faster than ever before.
Results
Standardized workflows and AI-driven recommendations brought about a fundamental shift, from reactive reporting to predictive program management and EAC optimization. The new DAS-enabled system allows the client to:
- Detect and address risks in near real-time, rather than weeks later.
- Reduce negative EAC exposure, directly protecting profitability and improving financial forecasting.
- Standardize performance tracking across global programs and teams.
- Cut manual reporting efforts dramatically, freeing up valuable time for hundreds of staff members.
The client’s resulting mastery of fixed-price contracting and accurate risk insights has allowed them to exercise greater discipline in bidding, and to choose not to pursue certain high-risk project bids—enabling a more proactive stance toward risk management.
Senior leadership now has a single, consistent view of program health, both holistic and granular, and an early warning system to head off issues that could affect delivery, cost, and performance. What was once a chaotic patchwork of systems and manual reports has become an integrated program command center, driven by DAS and powered by AI.
