Designing a Framework for Bidding and Estimating Life Cycle Cost in Indian Defence Sector: A Systematic Approach

Abstract

Lifecycle Management (LCM) is the process of managing the entire lifecycle of products or services right from the inception (design, manufacture, supply) stage to the maintenance and disposal oSf products. It integrates the people, data, processes and business systems and provides product information backbone for enterprises and their extended units. LCM in the defence sector is a very critical and complex process. This is specifically mandated in the operational framework defined by the Government of India at the proposal stage itself. The main objective of the current study is to identify the various challenges being experienced by the companies in executing LMC, especially in the defence sector and critically examine various methods and practices of the bidding system. Crafting a strategy for participating companies, in defence projects in India and winning them, is considered a difficult task. This study evaluates the international best management practices and applies the maturity model for contract management as being practised in the Netherlands. This maturity model consists of a model for the identified tactical level and operational level in contract management. These two models can help an organisation to determine their ‘as is’ situation and structured review system, identify key factors those having influence on the optimal level found in this process, and their ‘to be’ situation. The current research also proposes a review gates system to enable organisations to facilitate a systematic approach in analysing any project opportunity in the context of the procurement life cycle as per guidelines and policies defined by Defence Procurement Procedures (DPP), Government of India. Additionally, a detailed framework has been suggested to generate and maintain agreed cost estimates within the wider business context.