Space industry production companies budgeting

Аuthors

Smirnov M. P.^*, Utolin K. S.^**

*e-mail: mikhail.smirnov@rsce.ru
**e-mail: utlin@rambler.ru

Abstract

Russian production companies engaged in space industry are controlled by the Government through a special federal authority, ROSKOSMOS (Federal Space Agency), and another authorized organization, joint-stock company “ORKK”, as stated in Decree of the President № 874 of 2nd December, 2013. The revenue secured by the state-guaranteed order in the total income of such companies exceeds 80%. Strong governmental support gives the companies significant advantages in terms of stable guaranteed orders and loan capital. However, in these circumstances they become exposed to regional and country risks.
The situation in the international market of space services has considerably changed over the last 20 years towards co-operation and commercialization of businesses. The Russian companies face increased competition which may have a negative effect on their financial and economic operation results.
Under the current conditions management of the companies face the necessity to adopt new operational methods and introduce an up-to-date manufacturing resources control and financial management system in order to ensure sensible allocation of the resources to the company units. The system to be implemented should encourage cooperation between companies within the industry on the technological grounds.
During the analysis performed and identification of the features specific to space production (ex., single-item production, state-order orientation) provisions for the introduction of a budgeting system to space companies have been determined highlighting industry technology centers.
Such a system is being tested at Machine-building Plant of Rocket&Space Corporation "Energia". In the course of its implementation main steps were determined for research and development of industry technology center functional model. This conversion is only possible with a control system properly organized which would enable keeping records in the context of required analytical procedures. Development of the budgeting system suggests the following steps:
1. Linear-functional budgeting;
2. Matrix budgeting system;
3. Establishment of branch technology centers (divisional management system).
The last mentioned step shall include the essential market research and technology attractiveness expertise in addition to the traditional feasibility study.
Any innovation should be implemented gradually step by step, otherwise the introduction of any unproven production solution in the business practice of a company can result in failure to meet principal production deadlines.

Keywords:

management cost, mechanism of budgeting

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