Costing Sheet R6S

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Costing Sheet Assignment ProcessCosting Sheet Assignment Process

Raytheon Six Sigma Specialist Project:Raytheon Six Sigma Specialist Project:

Costing Sheet Assignment Process Costing Sheet Assignment Process

MARCH 2005MARCH 2005

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Sponsor: Robert J Given

Mentor: Robert P Tamilio

Team Members: James J Wright (Specialist Candidate)

Thomas Chase (Specialist)

Carol Prescott (Specialist)

Janet McCue (Specialist)

Karen Campo (Specialist)

Cathy Kurpiel (Specialist)

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Visualize Phase

Problem Statement – It has been identified that some

IDS/NCS projects have been assigned an incorrect costing sheet, which is a mechanism used to apply overhead rates to booked actuals.

Vision Statement– We will improve and standardize the

assignment of costing sheets with the creation of a spreadsheet that will assist in the completion of the Project Definition Request Form (PDRF).

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• IDS projects should not have a NCS costing sheet assigned to it.

• Capital costing sheets should only be assigned to capital projects.

• Incorrect rates will continue to be applied on Project bases

• OH and G&A rates will be calculated improperly

• Incorrect costs on Projects will lead to errors in the fee rate calculations

• Incorrect calculations could cause errors on the Balance Sheet and Income Statement

Examplesof the

Problem

UndesirableEffects(UDE)

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Commit Phase Sponsor: Robert Given

Team: Members from a variety of expertise NESS Finance – Controlling & Burden Rates NESS Finance – Contracts (Project Definitions) IDS Budgets & Planning – Costing Sheet expertise Managed Programs – Project Structure expertise

Metrics for Tracking Improvement: Reduced amount of Projects with incorrect assignment Eliminate the possibility of future errors Reducing the number of man hours worked to correct problems

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1. Current Process Flow

2. Selection of Costing Sheets

3. Criteria on how Costing Sheets are selected

Areas WhichCan Use

Improvement

PrioritizedFocus

1. Develop guidelines on how to assign Costing Sheets

2. Correct the Projects with more obvious assignment errors

Prioritize Phase

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Characterize Phase

Current Process Project Definition Request Form (PDRF)

• Submitted electronically via E-mail to Contracts group

• Supporting documentation required depending on type of project– Customer, IOT, Capital, Internal, or General Ledger

Costing Sheet is indicated on the PDRF• If left blank, the request is sent back to be resubmitted with all

required fields including respective authorization (Bottleneck) Managed Programs and Contracts open up projects based

on the PDRF using transaction CJ20N in APEX

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PDRF (Top Half)

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PDRF (Bottom Half)

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Uneducated requestors

Costing Sheets assigned incorrectly to Projects?

No Guidelines set forth to aid in the

selection process

Not easily identified

Numerous Costing Sheet

choices

Why?

Why?

Why?

Why?

Why?Why?

Why? Chosen mistakenlyon PDRF

Erroneously entered into

APEX

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Brainstorming

• Assist spreadsheet can be obtained through a link on the website where the PDRF is located

• Send out a mass e-mail to notify persons responsible for filling out the PDRF that there is a Tool to assist in the selection of Costing Sheets

• Indicate that the Costing Sheet field is required to submit the PDRF to eliminate this bottleneck in the process

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• Root Causes– No Guidelines set forth to aid in the selection process– Numerous Costing Sheet choices

• Proposed Solution: Desired Option– Create a spreadsheet to assist accounting and managed programs in

the selection process.

• Alternative Solution: Advanced option considered and not suggested– Develop the PDRF form using filters that will allow the user to narrow

down the choices as more and more criteria have been selected.

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PreliminaryApproach • Create a Costing Sheet Tool that will be used to

assist in assigning a correct CS to a project.

• The Tool will be placed out on the Web for easy access as well as possibly incorporating it into the Web Based PDRF Form.

• We only took into consideration the Generic, IDS, and NCS Costing Sheets when developing this Tool.

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Generic Costing Sheet Tool (Partial)Generic Costing Sheet Tool (Partial)

Costing Sheet

Costing Sheet Description Bus Unit Functionality Project Types Customer

ZNCAP GENERIC CAPITAL ALL

Full Fringe and Overhead burdens on all Labor and Material. Prime and Performing Organizations burden their costs with their Domestic/DoD Full G&A (SAS), Special Material G&A (RMS), or Major Sub G&A (NCS & IDS). Prime Organization (Corp) does NOT burden ANY cost with G&A.

Capital Corporate

ZNDODA GENERIC DOD ASSIST WORK ALL

Full Fringe and Overhead burdens on all Labor and Material. Prime and Performing Organizations burden their costs with their Domestic/DoD Full G&A. Prime Organization does NOT burden Performing Organization's cost with Domestic/DoD IOT G&A.

IOT Other Business or CAS G&A Pool

ZNNOGA GENERIC NO G&A ALLFull Fringe and Overhead burdens on all Labor and Material. Prime and Performing Organizations do NOT apply ANY G&A burdens. IOT or Internal

Corporate Enterprise Campaigns or Business COE

ZNSEL GENERIC FRINGE ONLY ALL

Full Fringe burden on all Labor. NO Overhead burdens on Labor or Material. Prime and Performing Organizations do NOT apply ANY G&A burdens.

Internal Any

ZRLI GENERIC BLANK - NO LINES ALL Prime and Performing Organizations do NOT apply ANY burdens. GL - Raw Mat'l

Inv Any

• Can be used by any Business Unit

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IDS Costing Sheet Tool (Partial)IDS Costing Sheet Tool (Partial)

Costing Sheet


ZACAP IDS CAPITAL IDS

Full Fringe and Overhead burdens on all Labor and Material. Prime and Performing Organizations burden their costs with their Domestic/DoD Full G&A (SAS), Special Material G&A (RMS), or Major Sub G&A (NCS & IDS). Prime Organization (IDS) also burdens Performing Organization's cost with Domestic/DoD Major Sub G&A.

Capital IDS

ZADFS IDS DFS IDS

Full Fringe and Overhead burdens on all Labor and Material. Prime and Performing Organizations burden their costs with their Direct Foreign G&A. Prime Organization (IDS) also burdens Performing Organization's cost with Domestic/DoD Major Sub G&A.

Customer Foreign

ZADOD IDS DOD IDS

Full Fringe and Overhead burdens on all Labor and Material. Prime and Performing Organizations burden their costs with their Domestic/DoD Full G&A. Prime Organization (IDS) also burdens Performing Organization's cost with Domestic/DoD IOT G&A.

Customer Domestic

ZADODD IDS DOD NO G&A IDS

Full Fringe and Overhead burdens on all Labor and Material. Performing Organizations burden their costs with their Domestic/DoD Full G&A. Prime Organization (IDS) does NOT apply ANY G&A burdens.

IOT IDS - Within CAS G&A Pool

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NCS Costing Sheet Tool (Partial)NCS Costing Sheet Tool (Partial)

Costing Sheet


ZCCAP NCS CAPITAL NCS

Full Fringe and Overhead burdens on all Labor and Material. Prime and Performing Organizations burden their costs with their Domestic/DoD Full G&A (SAS), Special Material G&A (RMS), or Major Sub G&A (NCS & IDS). Prime Organization (NCS) also burdens Performing Organization's cost with Domestic/DoD Major Sub G&A.

Capital IDS

ZCDFS NCS DFS NCS

Full Fringe and Overhead burdens on all Labor and Material. Prime and Performing Organizations burden their costs with their Direct Foreign G&A. Prime Organization (NCS) also burdens Performing Organization's cost with Direct Foreign IOT G&A.

Customer Foreign

ZCDOD NCS DOD NCS

Full Fringe and Overhead burdens on all Labor and Material. Prime and Performing Organizations burden their costs with their Domestic/DoD Full G&A. Prime Organization (NCS) also burdens Performing Organization's cost with Domestic/DoD IOT G&A.

Customer Domestic

ZCDODD NCS NO G&A NCS

Full Fringe and Overhead burdens on all Labor and Material. Performing Organizations burden their costs with their Domestic/DoD Full G&A. Prime Organization (NCS) does NOT apply ANY G&A burdens.

IOT NCS - Within CAS G&A Pool

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Summaryof

ToolsUsed

• Brainstorming– This tool was used to come up with ideas on how to

notify people whom use the PDRF that there are updated versions and a new tool is available that will assist them in assigning Costing Sheets to their respective projects.

• Process Flow– This tool was used to show the Bottleneck in the current

process that requires using more man hours to correct the problem.

• 5-Whys– This tool was used to indicate the root cause of incorrect

assignment of Costing Sheets, which realized the need of a tool to assist in the selection process.

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ProjectedBenefits

andSavings

• Benefits– Reduced potential bottleneck in process where

PDRF’s would have to be sent back because of CS field left blank

– Reduced number of man hours and number of projects assigned incorrect Costing Sheets

– Increase in Quality Control where FP&A estimating will be done more accurately

• Savings– Estimate of 80 man-hours of effort saved per month

• Based on 160 projects set-up per month

• Other possible benefits– Costing Sheets have a potential impact on the

Balance Sheet and therefore the Income Statement, which could affect P&L positively or negatively.

– There are other prospective cost savings not identified

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RecommendedFollow-on

Activity

• Use the Tool to correct projects that have previously been set-up and assigned incorrect Costing Sheets

• Conduct random checks to make sure that new projects are being assigned the correct Costing Sheets– This will ensure people are using the Tool

• To set-up a filter on the PDRF that will be used to assign Costing Sheets by selection criteria that have been identified on the CS Tool

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Costing Sheet R6S

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