ERP Transformation For Shipbuilding

The following discussion illustrates a project that is well suited to the capabilities of an independent consultant in the Umbrex Shipbuilding & marine systems Practice. This is an illustrative example. Umbrex consultants adapt their methodology, timeline, and deliverables to the specific needs of each client.

1) Client Situation

The client operated a complex engineer-to-order (ETO) shipyard serving naval and commercial programs. The yard executed multi-year contracts with stringent program controls requirements and progress payment clauses. Leadership required support to plan and execute an ERP Transformation For Shipbuilding: Select and implement project-centric ERP for engineer-to-order shipyards; harmonize WBS, cost structures, progress payments, and EAC integration to improve control, cash, and auditability. The context in Shipbuilding & marine systems included distributed design and production, a heavy subcontractor footprint, and a legacy IT estate with bespoke integrations.

Key pain points included:

• Fragmented Work Breakdown Structures (WBS): Program teams maintained contract WBS, planning WBS, and manufacturing WBS variants that diverged by hull and contract modification. Mappings were maintained in spreadsheets, creating reconciliation gaps between design, production control, and finance. WBS dictionary definitions lacked a single source of truth and were not version-controlled against change notices.
• Cost Structure Inconsistency: Cost element hierarchies and cost pools (direct labor, material, subcontract, overhead, G&A, material burden) varied by business unit. The chart of accounts and project cost structures were misaligned, complicating rolled-up visibility to Budget at Completion (BAC), Estimate to Complete (ETC), and Estimate at Completion (EAC). Cost capture at the work package level missed standard work codes and rework causes, limiting variance analysis.
• Progress Payment Delays: Progress claim preparation was manual and slow. The ERP did not natively support FAR 32 progress payments, milestone billing for naval contracts, or commercial stage payments linked to classification milestones (e.g., keel laying, launching, sea trials). The Accounts Receivable (AR) team experienced high rejection rates on progress payment submissions due to traceability gaps to approved physical progress.
• Weak EAC Integration: Project controls calculated EAC in standalone tools, disconnected from ERP actuals and Integrated Master Schedule (IMS). Earned Value (EV), Cost Performance Index (CPI), and Schedule Performance Index (SPI) trends were not reconciled to financial forecasts. EAC updates lagged month-end close, and risk-adjusted forecasts were not reflected in revenue recognition.
• Revenue Recognition and Compliance Risks: ASC 606/IFRS 15 policies for over-time revenue (input vs. output methods) were inconsistently applied. Billings in Excess of Costs (BIEC) and Costs in Excess of Billings (CIEB) balances lacked robust substantiation. DCAA/DCMA auditability was compromised by control gaps in timekeeping, change order traceability, and material cost provenance.
• Master Data Quality: Engineering BOMs from ShipConstructor/SSI and Teamcenter did not reconcile cleanly with ERP manufacturing BOMs. Part master, work center, routing, and resource master data were inconsistent across programs. Long-lead item codes, make/buy rules, and serialization requirements were not governed centrally, causing MRP exceptions and shortages.
• Integration Debt: The legacy ERP lacked modern APIs. Interfaces to PLM, MES, and Primavera P6 relied on flat-file transfers with limited validation. Interface failures caused missed shop order releases, late purchase orders, and misaligned progress curves for outfitting and test/commissioning.
• Operational Reporting Gaps: KPIs such as on-time work package completion, shop floor first-pass yield, rework hours, and supplier on-time delivery (OTD) were available only at aggregate levels. Program managers lacked reliable drill-down from control accounts to work package costs and physical progress, increasing decision-cycle times.
• Capacity and Scheduling Disconnects: Berth/drydock capacity, crane windows, and zone/sequence constraints were not integrated into ERP planning. IMS dates drifted from production schedules, impacting critical path visibility and risk mitigation.
• Cybersecurity and Export Controls: The environment faced growing CMMC and ITAR obligations. The ERP did not support attribute-based access control for controlled technical information, and audit trails were insufficient for segregation of duties and SOX testing.

Plausible KPIs underperformed relative to governance thresholds: month-end close cycle time exceeded target; EAC variance to prior month triggered frequent management overrides; CPI/SPI control limits were regularly breached without timely corrective actions; progress claim cycle time exceeded contract expectations; ECO/DCN cycle time created release delays; DSO remained elevated due to rejected or resubmitted progress invoices; WIP aging trended outside tolerance; supplier OTD and lead time variance challenged build sequence adherence.

2) Project Objective

Primary objective: Select and implement a project-centric ERP platform for an ETO shipyard, harmonizing WBS, cost structures, progress payments, and EAC integration to enhance program control, improve working capital through timely progress payments, and strengthen auditability across contracts.

Secondary objectives:

• Performance: Establish integrated EVM within ERP to enable timely monitoring of CPI, SPI, EV, PV, and AC at the control account and work package levels.
• Economics: Reduce cash conversion frictions by standardizing revenue recognition and automating progress payment substantiation tied to physical progress and contract milestones.
• Compliance: Embed CAS, FAR/DFARS, CMMC, ITAR, ASC 606/IFRS 15, and classification society documentation requirements into business processes and system controls.
• Customer impact: Improve on-time contract deliverables through integrated IMS-to-ERP planning and capacity-aware shop floor scheduling.
• Digital/data enablement: Define a canonical data model and data governance for WBS, cost elements, BOMs, routings, and progress curves; deploy robust API-based integrations across PLM, MES, ERP, and scheduling tools.
• Capability-building: Train program controls, finance, supply chain, and production planning teams on standardized processes, EAC/EVM methods, and ERP usage aligned to the new operating model.
• Risk management: Implement a program controls framework linking risk registers to EAC and contingency governance within the ERP and analytics layer.
• Scalability: Create a reusable template that could be rolled out across hulls, yards, and future programs while accommodating contract-specific WBS tailoring.

3) Methodology and Approach

Workstream 1: Current-State Diagnostic and Value Case

We conducted a structured diagnostic to characterize process, data, and systems maturity for project-centric shipyard operations. Activities included:

• Process mapping: We documented end-to-end processes for order-to-cash (including progress payments), design-to-release, plan-to-produce, procure-to-pay, time capture, month-end close, EAC update, and revenue recognition. Swimlanes highlighted cross-functional handoffs and control points.
• Controls assessment: We reviewed timekeeping controls, segregation of duties, approval workflows, audit trails, and evidence retention for DCAA/DCMA and SOX testing.
• Data lineage and quality scan: We traced key data objects (WBS, cost elements, BOMs, routings, progress curves, resource calendars) through PLM, MES, ERP, and EVM tools. We profiled data for completeness, consistency, timeliness, and referential integrity.
• Systems inventory: We cataloged ERP modules, customizations, bolt-ons, and interfaces. We assessed technical debt, vendor support status, and upgrade paths.
• KPI baseline: We pulled KPI histories for CPI/SPI stability, forecast accuracy (EAC vs BAC trending), DSO, progress claim rejection rates, ECO cycle time, supplier OTD, and month-end close duration.
• Value hypothesis: We synthesized quantified pain drivers and mapped them to ERP capability levers, establishing a prioritized value case anchored in cash acceleration, compliance risk reduction, and decision-cycle time improvement.

Tools and frameworks utilized included SIPOC, RACI, process maturity models for ETO, data quality scorecards, and a controls catalog aligned to FAR/DFARS and CAS. Stakeholders engaged included Program Management, Project Controls, Finance/Controllership, Contracts/Legal, Supply Chain, Engineering/PLM, Production Planning, Quality, IT, and Cybersecurity. The diagnostic framed where an ERP transformation was designed to reduce risk, standardize processes, and enable KPI uplift without presupposing realized results.

Workstream 2: WBS and Cost Structure Harmonization

We harmonized WBS and cost structures to establish a consistent backbone for project accounting and EVM. Activities included:

• WBS design: We convened cross-functional design sessions to define a tiered WBS standard that linked contract WBS (CWBS) to planning/manufacturing WBS, with a WBS dictionary and coding standards. We incorporated block/zone, system, and stage-based breakdowns suitable for hull construction and outfitting.
• WBS mapping: We developed mapping rules between engineering zones, ShipConstructor assemblies, and ERP manufacturing work packages. We captured mapping logic in machine-readable formats to support automated reconciliation.
• Cost element schema: We defined cost element categories, cost pools, and burdening rules. We aligned the chart of accounts to support project cost collection at the desired granularity (labor categories, material types, subcontract, overhead, G&A, material handling).
• Rates and policies: We documented overhead and G&A rate application, provisional to final rate handling, and burden splits for shop vs. field, ensuring CAS-consistent treatment.
• Work authorization: We designed the Work Authorization Document (WAD) template, control account plans, and change control protocols to maintain traceability from baseline to current plan.

We used a reference model for A&D project accounting, incorporating EVMS guidelines and government cost accounting. The harmonization work enabled consistent cost capture and performance measurement, providing the structure required for reliable EAC integration and progress payment substantiation.

Workstream 3: ERP Vendor Selection and Solution Fit

We executed a rigorous selection process to identify a project-centric ERP fit for ETO shipbuilding. Activities included:

• Requirements elicitation: We built a hierarchical requirements catalog covering project accounting and EVM, progress payments, revenue recognition, PLM/MES integration, MRP and long-lead management, shop floor control, quality, serialization and traceability, procurement, subcontract management, and service/warranty.
• Use-case scripts: We drafted scenario-based scripts for conference room pilots (CRPs), including WBS setup, control account planning, budget upload, change orders, time capture, purchase requisition for long-leads, progress capture (by block/zone), EAC update, revenue run, and progress billing generation.
• Market scan: We assessed vendors with strong A&D and shipyard footprints (e.g., IFS Cloud, SAP S/4HANA, Oracle Cloud ERP, Infor LN, Microsoft Dynamics 365 augmented with project modules, Deltek for EV/control). We evaluated cloud vs. on-premise deployment considering cybersecurity, OT/IT separation, and data residency.
• Solution architecture: We outlined target architecture, integration patterns, and module boundaries including PLM (Teamcenter, 3DEXPERIENCE, or SSI), MES (iBASEt Solumina, Siemens Opcenter), scheduling (Primavera P6), and EVM tooling (Deltek Cobra or native ERP EVM, as appropriate).
• Scoring and TCO: We scored vendors against functional fit, extensibility, security, implementation risk, ecosystem maturity, and total cost of ownership. We modeled licensing, infrastructure, implementation, data migration, and sustainment costs.
• Reference validation: We conducted reference calls with shipyards and A&D peers to validate vendor claims on ETO complexity, WBS/EAC capabilities, and progress payments support.

Commercial, IT security, and legal stakeholders participated in due diligence. We issued a recommendation for executive decision, noting critical assumptions, configuration dependencies, and change management implications designed to accelerate time-to-value and reduce program risk.

Workstream 4: Data Architecture and Integration Design

We designed the digital thread connecting PLM, ERP, MES, scheduling, and analytics. Activities included:

• Canonical data model: We defined entity models for Project, WBS, Control Account, Work Package, Part, BOM, Routing, Work Center, Resource, Supplier, Purchase Order, Shop Order, Time Entry, Progress Event, Cost Element, and Forecast (ETC/EAC). We specified key attributes, versioning rules, and master data ownership.
• Integration patterns: We selected API-based integrations for high-frequency events (time capture, progress, shop order completions) and ETL for batch data (BOM/routing releases, cost rates). We designed near-real-time data flows where needed for EVM and progress claims, with message queues to decouple systems.
• Data governance: We set up data stewardship roles, data quality controls, and reference data management (e.g., WBS code lists, cost element codes, unit measures, commodity codes). We established golden sources and survivorship rules.
• Analytics layer: We designed a data lakehouse with curated marts for Program Controls, Finance, Supply Chain, and Production. We defined KPI definitions, lineage, and calculation logic to ensure consistency between operational reports and executive dashboards.
• Security and compliance: We embedded attribute-based access controls to protect controlled technical information; we designed logging, audit trails, and data retention aligned to CMMC and ITAR.

Enterprise Architecture, IT Security, PLM/MES product owners, and Data & Analytics teams co-authored the design. The data architecture supported reliable EAC integration and auditable progress billing, while enabling governance to address known data quality pitfalls.

Workstream 5: Progress Payments and Revenue Recognition Design

We operationalized progress payments and revenue recognition policies in the ERP. Activities included:

• Contract analysis: We segmented contracts by payment terms (FAR 32 progress payments, milestone billing, commercial stage payments) and identified calculation bases (cost-based, physical progress, deliverables achieved).
• Rule configuration: We defined progress curves by block/zone/outfitting stage, linked progress evidence (e.g., inspection certificates, weld maps, NDE test results), and configured approval workflows. We designed billing event triggers tied to IMS milestones and work package completions.
• Evidence management: We specified document controls for billing substantiation, including classification society certificates, QA/FAT reports, and change order approvals, with ERP-linked document repositories.
• Revenue policies: We documented revenue recognition methods by contract, aligning input (cost-to-cost) vs. output (milestone) approaches, BIEC/CIEB handling, and impairment tests for loss-making contracts. We configured accounting rules in the ERP subledger and GL.
• Claim validations: We designed pre-submission validations (e.g., allowable cost types, rate applications, withholds/retentions, progress cap thresholds) to reduce claim rejections.

Finance, Contracts, Program Controls, and Quality teams collaborated to embed policy into process and system configuration, improving control and audit readiness without asserting realized cash impacts.

Workstream 6: EAC, EVM, and Project Controls Integration

We integrated planning, actuals, and forecasts to support disciplined EAC. Activities included:

• Baseline setup: We implemented baseline and re-baseline processes linking approved budgets to WBS and control accounts, with a change control workflow tied to contract mods and engineering changes.
• Performance measurement: We defined performance measurement techniques (e.g., 0-100, 50-50, physical percent complete, weighted milestones) per work package type. We established EV accumulation rules and progress capture methods.
• Forecasting model: We designed ETC/EAC methods (e.g., bottoms-up ETC, CPI/SPI-informed forecasts, risk-adjusted Monte Carlo) and mapped these to ERP forecasting functions or integrated EVM tools.
• Schedule integration: We aligned IMS from Primavera P6 to ERP WBS and work packages, enabling schedule-to-cost integration for SPI and critical path awareness in financial forecasts.
• Risk integration: We connected risk registers to EAC, defining contingency consumption and management reserve governance.
• Month-end cadence: We established a monthly close and EAC update calendar, lock and snapshot procedures, reconciliation steps (actuals to EV to GL), and variance analysis templates.

Project Controls, Scheduling, Finance, and Production Planning were involved to ensure EAC updates reflected actual performance and realistic remaining work, enabling timely decisions and governance.

Workstream 7: Implementation Planning, Change Management, and Training

We structured implementation to manage risk and adoption. Activities included:

• Release planning: We defined waves by program/hull and by process domain (project accounting, procurement, production, quality), with dependencies and cutover strategies.
• Configuration blueprint: We produced a fit-to-standard design, highlighting necessary extensions and integrations. We prioritized configuration driven by the harmonized WBS and cost model.
• Change impact analysis: We assessed role-based changes for planners, buyers, timekeepers, cost analysts, and program managers. We planned communications, stakeholder engagement, and resistance mitigation.
• Training: We built role-based curricula and simulations using CRP scripts, emphasizing WBS setup, time capture accuracy, progress entry, EAC updates, and progress billing.
• Testing and cutover: We planned unit, SIT, E2E, performance, and UAT cycles with entry/exit criteria. We defined cutover runbooks including data migration mock loads, reconciliation steps, and business continuity plans.

HR, Communications, Learning & Development, and functional leads co-owned adoption planning to accelerate time-to-value and reduce productivity dips during transition.

Workstream 8: Governance, Risk, Compliance, and Cybersecurity

We established program governance and embedded compliance throughout. Activities included:

• Steering governance: We set decision rights, design authority, and escalation paths. We defined design control for WBS/cost models and enforced change control across projects.
• Risk & issue management: We maintained a RAID log with mitigations for data quality, integration readiness, and vendor lead times.
• Compliance controls: We designed key controls for timekeeping, labor distribution, progress evidence, rate application, revenue recognition, and segregation of duties. We mapped controls to audit requirements and test plans.
• Cyber posture: We aligned solution architecture to CMMC requirements, implemented least-privilege and MFA, and segmented OT networks where ERP/MES interfaces touched shop-floor systems.

Internal Audit, Compliance, Cybersecurity, and Program Management collaborated to ensure the ERP transformation was governed effectively and designed to withstand external audits.

4) Data Request

To execute the project, we requested the following data extracts and documentation, with typical horizons, granularity, and known pitfalls noted:

• Commercial and Contract Data
  • Contract master records (all active and recent closed contracts), including payment terms, milestones, progress payment clauses, withholds/retentions, LDs, and mods; horizon: last 5–7 years.
  • Statement of Work (SOW), CWBS, WBS dictionary versions, and change logs; granularity: control account and work package levels.
  • Pricing proposals, BOE/ROM assumptions, and negotiated settlement documents; pitfall: misalignment between BOE assumptions and production routings.
• Operational and Production Data
  • Engineering BOMs and change histories from PLM/SSI; manufacturing BOMs and routings from ERP; horizon: active programs and last 24–36 months; pitfall: part equivalency and supersession not maintained.
  • Shop orders, work packages, and work center calendars with start/finish dates and progress snapshots; granularity: daily; pitfall: backflushing masking true labor variances.
  • Timekeeping and labor distribution by employee, craft, and WBS; horizon: 24 months; pitfall: miscoded time to generic work orders.
  • IMS (Primavera P6) schedules with activity codes linked to WBS; baseline and updates; pitfall: inconsistent coding schemas across programs.
• Financial and Project Controls Data
  • Actuals by WBS/cost element, budget baselines, re-baseline records, and variance analyses; horizon: life-to-date; pitfall: reclassifications without WBS-level notes.
  • ETC/EAC snapshots, methods used, and risk adjustments; monthly for last 12–24 months; pitfall: offline spreadsheets not version controlled.
  • Revenue recognition runs, BIEC/CIEB balances, and reconciliations to GL; pitfall: manual journals obscuring policy application.
  • Overhead/G&A rates (provisional and final) and true-up journals; pitfall: late final rate adjustments affecting project margins.
• Supply Chain and Quality Data
  • POs, receipts, invoices, and three-way match status; supplier lead times and OTD metrics; horizon: last 24 months; pitfall: blanket PO releases not coded to WBS.
  • Long-lead item registers and expediting logs; pitfall: spreadsheet-only tracking with no ERP visibility.
  • Nonconformance reports (NCRs), rework codes, and quality inspection results; pitfall: defect coding not standardized across yards.
• Regulatory/ESG and Compliance
  • Audit findings (DCAA/DCMA, Internal Audit), remediation plans, and control testing documentation; horizon: last 3 years.
  • CMMC readiness assessments, POA&Ms, and system security plans; pitfall: incomplete scope covering only IT, not ERP-MES integrations.
  • Classification society documentation (ABS, DNV, Lloyd’s), inspection certificates, and trial records; pitfall: documents stored off-system.
• People and Governance
  • RACI charts, organizational charts, and role descriptions for Program Controls, Finance, Supply Chain, Engineering, Production Planning, and IT; pitfall: unclear ownership of WBS dictionary.
  • Training materials and SOPs for ERP, PLM, MES, and EVM processes; pitfall: outdated revisions.
• Systems and Architecture
  • ERP, PLM, MES, P6, and EVM system inventories, module usage, customizations, and interface catalogs; pitfall: undocumented scripts and reports.
  • Data model documentation, integration specs, and historical interface error logs; pitfall: missing data lineage for financial fields.
  • Infrastructure topology, identity/access management, and audit log configurations; pitfall: shared service accounts without traceability.

5) Questions for Client

• What is the executive ambition for the ERP transformation: selection and blueprint only, or selection plus initial wave implementation through go-live?
• Which contracts and hulls constitute the initial scope, and what are the must-have go-live capabilities for progress payments and EAC integration?
• What risk posture is acceptable regarding cloud deployment vs. on-premise, given CMMC, ITAR, and OT network constraints?
• How standardized should the WBS be across programs, and where is tailoring essential due to customer or classification requirements?
• What are the governance thresholds for CPI/SPI, EAC variance, month-end close timing, and progress claim cycle time that leadership expects?
• What capital envelope and OPEX capacity are available for software, implementation partners, internal backfill, and training over the next 12–18 months?
• Which integrations are non-negotiable at go-live (PLM, MES, P6, EVM tools), and which can be staged?
• How will contracts, finance, and program controls align on revenue recognition policies (input vs. output), and who is the decision owner?
• What legacy customizations must be preserved due to union rules, customer mandates, or unique production methods?
• What is the current audit posture with DCAA/DCMA and Internal Audit, and which control deficiencies require early remediation?
• How much SME bandwidth is available for CRPs, testing, data cleansing, and training, and where will backfill be needed?
• What change management approach has historically worked in the yard, and which stakeholder groups are likely to resist WBS/cost structure standardization?
• Which KPIs will be used as decision gates during the program, and what are the acceptable ranges for pilot exit and go/no-go?
• What is the plan for long-lead procurement visibility and progress substantiation to enable timely billing during the transition?
• How will cybersecurity accreditation and Authority to Operate be sequenced relative to ERP go-live?

6) Interview Guide for Subject Matter Experts

Program Manager (Naval and Commercial Programs)

• How did you establish the baseline WBS and control accounts, and what tailoring did the customer or classification society require?
• Where do you see the largest disconnects between schedule progress, physical progress, and financial actuals?
• How do change orders flow from engineering through production and finance, and where do approvals bottleneck?
• What information do you need weekly to manage risk and critical path, and how quickly can you obtain it today?
• How are subcontractor progress and quality acceptance integrated into your earned value and billing?
• Which reports are mandatory for customer reviews, and where does the current system fall short?
• What is your tolerance for WBS standardization across programs, and which exceptions are truly critical?

Project Controls Lead / EVMS Manager

• What performance measurement techniques do you use across work package types, and how are they enforced?
• How do you calculate ETC/EAC today, and how are risk and opportunity registers reflected in forecasts?
• How do you reconcile EV to actuals and GL, and what are the recurring reconciliation issues?
• What is the cadence for baseline changes, and how do you maintain traceability from baseline to current plan?
• How is schedule (P6) linked to WBS and cost collection, and what coding standards are in place?
• What tooling gaps exist in producing monthly performance reports, and which manual steps are most error-prone?
• What are your control limits for CPI/SPI by control account, and how are corrective actions triggered and tracked?

Finance Controller / Revenue and Compliance

• What accounting policies govern revenue recognition for each contract type, and where are judgments frequently applied?
• How are provisional vs. final overhead and G&A rates handled, and what is the impact on project margins?
• Which controls fail most often during audits (timekeeping, progress evidence, rate application, approvals)?
• How do you substantiate BIEC/CIEB balances, and where does documentation fall short?
• What are the month-end close dependencies on upstream systems, and what causes late journals or reclasses?
• How do you manage retentions, withholds, and LDs in the subledger and GL, and how visible are they to program teams?
• What is your plan for SOX testing as processes and systems change, and what evidence is required from ERP?

Supply Chain and Subcontracts Lead

• How do you identify and release long-lead items, and what visibility do you maintain to supplier progress?
• How are POs coded to WBS/control accounts, and how is subcontractor progress validated for payment?
• What are the persistent causes of supplier OTD misses and lead time variances, and how are they mitigated?
• How do you manage make/buy rules, supplier qualification, and ITAR/flowdown requirements in the system?
• Where do you see BOM and routing inaccuracies driving shortages or expediting, and how is master data corrected?
• How do you track warranties, FAT/SAT results, and quality escapes impacting suppliers and subs?

Engineering/PLM Lead (Ship Design and Configuration)

• How are EBOMs structured (by system/zone), and how do you manage variants across hulls and mods?
• What is the process for EBOM-to-MBOM transformation, and where do handoffs to production planning fail?
• How do you manage engineering change (ECO/DCN) and ensure downstream impact is recognized and costed?
• What CAD/PLM tools are used (e.g., SSI, Teamcenter, 3DEXPERIENCE), and how do they integrate today with ERP/MES?
• What data standards and naming conventions govern part masters, unit measures, and drawing references?
• How are configuration baselines maintained and audited through trials and delivery?

Production Planning and Operations

• How do you translate WBS and MBOM into work packages, routings, and shop orders, and what is the release cadence?
• How do berth/drydock capacity, crane availability, and zone sequencing drive your schedule and constraints?
• What is your approach to time capture (by operation, activity, or allocation), and how accurate is coding?
• How do you capture physical progress (e.g., weld inches, pipe spool completions, cable pulling) and reconcile it to work packages?
• What are the main causes of rework, and how are rework costs and lessons learned fed back into planning?
• How is nonconformance dispositioned, and how does it flow into cost, schedule, and quality reporting?

IT/Enterprise Architecture and Cybersecurity

• What are the current ERP, PLM, MES, and scheduling platforms, versions, and customizations, and what is the upgrade posture?
• What integration patterns are supported (APIs, message queues, ETL), and where are resilience and monitoring gaps?
• How are identities and roles managed (SSO, MFA), and how do you enforce attribute-based access for controlled data?
• What logging and audit capabilities exist, and how are they used in incident response and compliance testing?
• What is the approach to segregating OT and IT networks, and what controls apply to ERP-MES interfaces?
• What constraints exist for cloud adoption (data residency, connectivity, accreditation) and vendor choices?

7) Timeline

We executed a 12-week plan to select and mobilize implementation of a project-centric ERP tailored to ETO shipbuilding, with phases designed to de-risk downstream configuration and adoption.

• Weeks 1–2: Discovery and Diagnostic
  • Outcomes: Current-state process maps; controls and data quality assessment; systems inventory; KPI baseline; documented pain points prioritized by value and risk.
  • Critical path: SME access; data extracts; audit findings review.
  • Decision gate: Agreement on problem statement and value levers.
• Weeks 3–4: Design Principles and Harmonization Blueprint
  • Outcomes: WBS standard and dictionary; cost element schema; chart of accounts alignment; work authorization model; initial revenue recognition and progress payment policy mapping.
  • Critical path: Cross-functional alignment on WBS design; policy decisions for ASC 606/IFRS 15.
  • Decision gate: Sign-off on WBS/cost structure blueprint and design guardrails.
• Weeks 5–6: ERP Market Scan and Shortlisting
  • Outcomes: Requirements catalog; CRP scenarios; vendor shortlist; preliminary solution architecture; TCO model.
  • Critical path: Security/compliance constraints; integration requirements; reference availability.
  • Decision gate: Approval of 2–3 vendors for scripted demos and diligence.
• Weeks 7–8: Scripted Demos and Solution Fit Assessment
  • Outcomes: Demo scoring; fit/gap analysis; extension/integration needs identified; implementation risk profile; refined TCO.
  • Critical path: Vendor responsiveness; SME participation in CRPs; data samples for demos.
  • Decision gate: Preferred vendor selection with conditions and negotiation objectives.
• Weeks 9–10: Target Architecture and Implementation Plan
  • Outcomes: Integration design (APIs, ETL); data governance framework; security model; wave plan and cutover strategy; testing approach; change management plan; investment case.
  • Critical path: Agreement on deployment model (cloud/on-prem); data ownership; resource plan.
  • Decision gate: Steering approval to proceed to contracting and mobilization.
• Weeks 11–12: Mobilization and Pilot Readiness
  • Outcomes: Draft configuration workbooks (WBS, cost elements, revenue rules, progress billing setup); data migration plan with mock load scope; pilot scope (program/hull) and entry/exit criteria; governance cadence defined.
  • Critical path: Access to vendor sandboxes; data cleansing sprint kickoff; pilot resources identified.
  • Decision gate: Go/no-go for pilot build and detailed implementation plan.

Subsequent phases (beyond week 12) were planned for pilot build, SIT/UAT, and controlled go-live, with decision gates tied to pilot KPI ranges (e.g., close cadence, EAC reconciliation accuracy, progress claim readiness), cybersecurity accreditation, and training completion.

8) Deliverables

• Current-State Diagnostic Report
  • Content: Process maps, controls assessment, data quality profile, KPI baseline, pain point heatmap.
  • Use: Grounded case for change and prioritization of ERP capabilities to address risk and value.
• WBS and Cost Structure Harmonization Blueprint
  • Content: Standard WBS levels and dictionary, mapping rules, cost element hierarchy, chart of accounts alignment, work authorization model.
  • Use: Foundation for ERP configuration, EVM setup, and consistent cost collection.
• Requirements and CRP Script Pack
  • Content: Hierarchical requirements list with must/should/could; scenario scripts covering WBS, EAC, progress billing, procurement, and production; test data specification.
  • Use: Objective basis for vendor evaluation and later UAT scripts.
• Vendor Shortlist and Fit/Gap Assessment
  • Content: Comparative scoring, solution architecture fit, gaps and required extensions, ecosystem considerations, implementation risk profile.
  • Use: Executive decision support for vendor selection.
• Total Cost of Ownership and Investment Case
  • Content: Licensing/subscription, infrastructure, implementation services, internal costs, contingency; sensitivity analysis and phasing options.
  • Use: Budget approval and capital allocation planning.
• Target Architecture and Integration Design
  • Content: Canonical data model, interface catalog, API/ETL patterns, security model, logging and monitoring approach.
  • Use: Technical blueprint for build, integration, and cybersecurity accreditation.
• Revenue Recognition and Progress Payments Configuration Guide
  • Content: Policy-to-configuration mappings, progress curves setup, evidence requirements, billing workflows, exception handling.
  • Use: Finance and contracts teams’ reference for consistent, auditable billing and revenue runs.
• EAC/EVM Operating Model and Playbook
  • Content: Baseline/re-baseline procedures, performance measurement techniques, forecast methods, reconciliation steps, month-end cadence, variance management.
  • Use: Program controls governance embedded in ERP/EVM tools to strengthen decision support.
• Data Migration Strategy and Quality Plan
  • Content: Scope of masters/transactions, mapping rules, cleansing plan, mock load schedule, reconciliation checks, cutover runbook.
  • Use: Risk-managed path to go-live with traceable data lineage.
• Change Management and Training Plan
  • Content: Stakeholder segmentation, change impacts, communications calendar, training curricula and materials, adoption KPIs.
  • Use: Structured adoption to accelerate productivity and reduce transformation risk.
• Implementation Roadmap and Governance Pack
  • Content: Wave plan, resource model, RACI, decision rights, risk log template, meeting cadence, success metrics.
  • Use: Execution governance and transparency for steering committee oversight.
• Testing Strategy and UAT Scripts
  • Content: Test scope by phase, entry/exit criteria, defect management process, traceability matrix to requirements, UAT scripts aligned to CRP scenarios.
  • Use: Quality assurance and readiness validation for pilot and go-live decisions.

9) Industry Insights

Shipbuilding & marine systems organizations operating in Aerospace & Defense and commercial markets face increasing complexity in program execution, compliance, and supply chains. The ERP transformation capability for ETO shipyards is shaped by several forces:

• Market dynamics
  • Backlogs and capacity: Multi-year naval and offshore programs drive long backlogs and stretch yard capacity. Effective integration of IMS, ERP, and MES becomes essential to manage critical path, work sequencing, and resource constraints (berths, cranes, skilled trades).
  • Supply chain volatility: Long-lead equipment (propulsion, switchboards, LNG systems) faces volatile lead times and expediting costs. ERP-enabled long-lead planning, supplier progress tracking, and milestone-based subcontracts are increasingly critical.
  • Customer oversight: Defense customers and classification societies require robust documentation and traceability, increasing the importance of integrated controls and audit-ready processes.
• Technology shifts
  • Project-centric ERP maturity: Modern platforms have deepened project accounting, EVM, and revenue capabilities. Vendors with A&D heritage demonstrate stronger support for progress payments, WBS management, and compliance.
  • Digital thread integration: PLM-MES-ERP integration is becoming baseline, connecting EBOM/MBOM, routings, and shop floor execution. API-first architectures, event streaming, and standardized data models reduce reconciliation latency.
  • Advanced analytics: Embedded analytics and data lakehouses enable faster EAC updates, predictive risk insights, and automated variance detection. Linking risk registers to forecasts supports more resilient program controls.
  • Cloud and cybersecurity: Cloud ERP adoption rises, tempered by CMMC/ITAR concerns. Zero-trust architectures, attribute-based access control, and secure integration hubs are differentiating features.
• Ecosystem and partnering patterns
  • Best-of-breed integrations: Shipyards increasingly combine strong PLM (Teamcenter/3DEXPERIENCE/SSI), MES (iBASEt/Solumina/Opcenter), and project-centric ERP. Integration accelerators and prebuilt connectors reduce implementation risk.
  • Systems integrators and domain specialists: Partners with shipyard ETO experience and EVMS credentials add substantial value in WBS/cost structure harmonization and progress billing design.
• Regulations and standards
  • Government compliance: FAR/DFARS, CAS, DCAA/DCMA oversight, and EVMS guidelines necessitate robust timekeeping, cost collection, and EAC discipline within ERP.
  • Revenue standards: ASC 606/IFRS 15 drive consistent policies for over-time revenue recognition, BIEC/CIEB handling, and impairment recognition for onerous contracts.
  • Cybersecurity: CMMC 2.0, NIST 800-171, and ITAR increase requirements for data protection, access controls, and audit logging across ERP and integrated systems.
  • Classification and safety: ABS, DNV, and other societies require certification documentation and traceability, influencing progress substantiation and quality workflows.
• Buyer behavior and priorities
  • Cash visibility: Progress payments and milestone billing capabilities are prioritized to support working capital. CFOs scrutinize audit trails and evidence management in ERP.
  • Risk reduction: Executives emphasize time-to-value and de-risked deployments, favoring standardization and phased rollouts with early pilots.
  • Talent constraints: Scarce program controls, planning, and IT integration talent drive demand for templates, automation, and robust training programs.
• What “good” looks like
  • Harmonized WBS: A standard WBS dictionary linked to contract, planning, and manufacturing structures, with automated mappings and version control.
  • EVM embedded: Timely CPI/SPI monitoring at control account level, with monthly EAC updates reconciled to actuals and schedule, and auditable variance narratives.
  • Progress billing readiness: Evidence-backed progress calculations aligned to milestones/curves, automated validations against allowable cost, and low rejection rates for claims.
  • Revenue discipline: Consistent ASC 606/IFRS 15 application with clear policy-to-configuration mapping and transparent BIEC/CIEB balances.
  • Digital thread: PLM, ERP, MES, and P6 synchronized via APIs and governed data, enabling reliable release-to-execute flows and reduced rework.
  • Close cadence: Month-end close structured to feed EAC updates, with lock/snapshot discipline and minimal manual journals.
• Near-term disruptions and implications
  • CMMC accreditation: ERP and integration patterns will be scrutinized; early alignment with cybersecurity controls avoids rework and deployment delays.
  • Supply chain reshoring and decarbonization: New suppliers and technologies (alternative fuels, hybrid propulsion) increase configuration complexity, requiring more rigorous BOM and change control.
  • Advanced outfitting and modularization: Greater reliance on zone/block methods intensifies the need for WBS alignment between design, planning, and production.
  • AI-enabled planning: Predictive analytics for schedule risk and labor productivity will pressure data quality; ERP must provide clean, structured signals.

For shipyards pursuing ERP Transformation For Shipbuilding in the Information Technology domain, discipline in WBS and cost structures, integrated EAC/EVM, and progress payment enablement remain the core levers. The combination of a project-centric ERP, robust integrations, and embedded governance equips leadership to manage complex programs with improved control, cash visibility, and audit readiness.