Rising military budgets are contributing to aerospace and defence manufacturing and maintenance projects to overrun according to new analysis from global management consultancy Bain & Company.

A report released ahead of next week’s Paris Air Show says global demand for defence and aerospace capabilities is rising and outpacing supply.

Bain & Co says this is being fuelled by geopolitical uncertainty, rising military budgets, and demand for air travel.

But the new analysis says, at the same time, programmes continue to struggle to meet schedule and cost commitments.

In the report Bain & Company sets out a different approach to aerospace and defence programme performance it says could “dramatically reduce cost overruns and delivery times, driving upside to companies’ bottom lines and delivering much needed capability to the user”.

Erich Fischer, a partner in Bain & Company’s aerospace and defence sector, said: “We are not talking about traditional performance improvement efforts that tend to optimise existing inefficient processes and rarely remove unnecessary work – those usually produce single-digit, short-lived gains.

“The biggest constraints to improving performance lie within the seams between functions, suppliers, and programs. Addressing these issues could reduce unit costs by up to 30% and cut delivery times by up to 50%.”

With countries around the world increasing their defense budgets, US defense contractors’ foreign military sales surpassed $115 billion in 2024, more than triple the level of 2021.

At the same time, major US defense program cost overruns have surged to almost $46 billion while delivery timelines have grown from eight years to 11 years.

With a new executive order now requiring the US Department of Defense to scrutinise major programs that are 15% or more behind schedule or over budget, defence Bain says contractors must now act quickly to improve their efficiency.

The report sets out the four principles by which aerospace and defence firms should operate to become more efficient.

• Lead with the program instead of the function. They take a system-level view (cross-function, cross-site) to resolve constraints at the seams, and address the root causes of costs and inefficiency.
• Use a zero-base strategy to achieve breakthrough improvements. Winning companies apply a clean-sheet strategy based on what processes or work are truly needed vs optimising current, inefficient processes and procedures that create unnecessary work delays and costs.
• Use rigorous analytics to distinguish the root causes of problems from the symptoms. Hard data and deep analytics are vital to arming the leadership team with irrefutable data and analysis to overcome entrenched resistance to change from the C-suite to the shop floor.
• Work shoulder-to-shoulder with the front line to build trust, buy-in, and quick wins for confidence. Working deep within the organization with the teams responsible for execution helps changes stick. Top-down mandates for improvement are rarely effective.

The Bain analysis concludes: “Widespread adoption of these principles across the defense industrial base could dramatically improve deployed capabilities, accelerate time-to-mission by years, free up tens of billions of dollars to reinvest in capacity, or repurpose to more urgent needs while at the same time improving company win rates and increasing margins significantly.”