THE NEW COST MANAGEMENT FRAMEWORK

The new parametric Costs Estimate Model: internal implementation and support to the strategic project of the Italian Ministry of Defence

Mr. Gian Carlo Anselmino SVP Industrial Performance and Competitiveness

Rome, October 24th 2013

1 Agenda . Finmeccanica Group Overview

. Industrial Performance and Competitiveness in FNM . Support to IT MoD and Price® Pilot in Finmeccanica . Way ahead: collaboration with Creasys

2 FINMECCANICA TODAY

Finmeccanica is a leader in the high technology sector and ranks among the top ten global players in , Defence and Security.

With about 67,000 employees worldwide, Finmeccanica generated in 2012 revenues of approximately EUR 17.2 billion. We operate in:

HELICOPTERS DEFENCE AND SECURITY AERONAUTICS SPACE ELECTRONICS AgustaWestland DRS Technologies NHIndustries Selex ES ATR Eurofighter GmbH SuperJet International

Revenues Workforce Revenues Workforce Revenues Workforce Revenues Workforce EUR 4,243 mil. 13,050 EUR 5,754 mil. 25,183 EUR 2,974 mil. 11,708 EUR 1,053 mil. 4,131

DEFENCE SYSTEMS ENERGY TRANSPORTATION Revenues and Workforce for business sector at 31 December 2012 Oto Melara Ansaldo Energia AnsaldoBreda WASS Ansaldo STS MBDA BredaMenarinibus

Revenues Workforce Revenues Workforce Revenues Workforce EUR 1,256 mil. 3,963 EUR 715 mil. 1,830 EUR 1,719 mil. 6,568

3 FINMECCANICA TODAY

Finmeccanica operates in high-technology sectors. Innovation is therefore one of the strategic drivers for the continuous development of customer focussed products and services able to competitively satisfy the current demand, as well as anticipate future requirements including those emerging for integrated security and sustainability solutions.

VISION MISSION To consolidate and build on our To deliver innovation through position as a global high-tech cutting-edge and competitive leader deeply rooted in the products and services defence sector and able generating value for our to succeed in the civil sector Customers and Shareholders. through the development of dual-use technologies and platforms.

4 A WORLWIDE PRESENCE

We operate globally and respect the culture of every country.

149 Industrial and Technical Sites DOMESTIC MARKET 210 Commercial and Marketing Offices

3 Industrial and Technical Sites 19 Industrial and Technical Sites Europe 3 Commercial and Marketing Offices 25 Commercial and Marketing Offices

PL U 6 Industrial and Technical Sites USA K Asia 57 Industrial and Technical Sites North IT 20 Commercial and Marketing Offices 52 Commercial and Marketing Offices America Middle East 5 Industrial and Technical Sites 54 Industrial and Technical Sites 17 Commercial and Marketing Offices 50 Commercial and Marketing Offices Africa South Australia/ 5 Industrial and Technical Sites 1 Industrial and Technical Sites America Oceania 12 Commercial and Marketing Offices 3 Commercial and Marketing Offices

552 Total 105 Industrial and Technical Sites 6 Industrial and Technical Sites 230 Industrial Sites

118 Commercial and Marketing Offices 9 Commercial and Marketing Offices 322 Commercial and Representative Offices

Finmeccanica employs about 67,000 people in over 50 countries around the world; nearly 150 nations use our products.

5 INTERNATIONAL PARTNERSHIPS, JV AND COLLABORATIONS

Finmeccanica has a widespread global presence with more than 500 companies, joint ventures, partnerships and industrial collaborations around the world. Some of the most successful are:

AERONAUTICS Alenia Aermacchi SPACE Telespazio

Joint Strike Fighter: agreement between Lockheed Martin and Alenia Aermacchi, who is in charge of Spaceopal Gmbh: JV between Telespazio the Italian assembly line and integrated logistic support centre. (50%) and DLR (50%) for Galileo operations nEUROn program: originated by the French MoD and supported by , Sweden, Spain, Greece, Cosmo Sky-Med: agreement between Italian Switzerland for the development, manufacturing of a EU unmanned aerial vehicle. Alenia Aermacchi ‘s and Poland MoD for the development of 2nd share is 22% generation systems for earth observation SCAC - Sukhoi Civil Aircraft: JV between Sukhoi (75%) and Alenia Aermacchi (25%)

HELICOPTERS AgustaWestland DEFENCE AND SECURITY ATAK Program: partnership with TAI and Aselsan for T129 production in Turkey and export ELECTRONICS Selex ES Helivert - “equal” joint venture with Russian Helicopters, an Oboronprom company, to set up and run a ADSI - Abu Dhabi Systems Integration: JV final assembly for AW139 civil helicopter in Russia and plan to develop a new 2.5 ton class single engine between Abu Dhabi Ship Building (57%) helicopter. and Selex ES (43%) Indian Rotocraft: JV between AgustaWestland (26%) and Tata Sons (74%) for AW119Ke production Advanced Air Traffic System: JV between Tirai Variasi (50%), Selex ES (30%), Tahap LIATEC - Libyan Italian Advanced Technology Company: JV between Lybian Company for Harmoni (20%) for ATC systems in Malaysia Aviation Industry (50%) AgustaWestland (25%) and Finmeccanica (25%)

6 Agenda . Finmeccanica Group Overview

. Industrial Performance and Competitiveness in FNM . Support to IT MoD and Price® Pilot in Finmeccanica . Way ahead: collaboration with Creasys

7 INDUSTRIAL PERFORMANCE AND COMPETITIVENESS

- Program management capabilities - Synergies in multinational program - Should Cost , Re-use, Modularity

- Industrial Competitiveness Plans - Customer Services Solutions - KPI Dashboard - Obsolescence Management - Peer Groups - TFOC - Configuration Management

MISSION Contribute to the competitiveness of the Group by promoting the improvement of industrial performance through the definition and implementation of appropriate methodologies and tools, the exploitation of synergies and the adoption of "Best Practices” 8 FINMECCANICA ORGANIZATION Industrial Performance and Competitiveness

CEO Value for Customers Market driven strategies Continuous industrial improvement CFO Group financial goals

Industrial Planning, Control Administration Group Tax Group Finance Performance and and Reporting & Accounting Planning Competitiveness

Global Market

Quality KEY DRIVERS FOR Time COMPETITIVENESS Costs

Customer Satisfaction 9 PRIMARY OBJECTIVES

INDUSTRIAL IMPROVEMENT

Program Opportunities

PRICE Optimized Product Cost Pilot Cases

Industrial Processes “Business Excellence”

10 Agenda . Finmeccanica Group Overview

. Industrial Performance and Competitiveness in FNM . Support to IT MoD and Price® Pilot in Finmeccanica . Way ahead: collaboration with Creasys

11 THE PILOT CASES

. JSF WING WHAT . ATOS ATR42 CdP . MARTE MK2-S

WHY . Support the Italian Defence Administration in their project for the implementation of a parametric evaluation of the costs based on PRICE . Verify the applicability of PRICE system within the programs developed and managed by Finmeccanica Group companies and as an internal tool for product competitiveness

HOW . Agreement between Creasys and Finmeccanica for the provision of a temporary license of SW Price True Planning and consulting services for the execution of the three Pilot Projects

WHEN . February 2013 – June 2013

12 GOALS AND RESULTS

SYSTEM PURPOSE RESULT

ATOS ATR-42 CdP . Cost estimation for the PHASE COST development and Development € …… production of 1 ATOS Production € …… system for ATR-42 CdP Total € …… Through the results it was possible to have

PHASE COST a first look to the F-35 WING functionalities of the . Cost estimation for the Production € …… production of 135 Wings Project Management € …… system and the Average cost for unit € …… degree of reliability and completeness of MARTE MK2/S the estimates PHASE COST . Cost estimation for the produced production 8 missiles Production € …… Average cost for unit € ……

Test Case Results collected in three different documents provided to Italian MoD representatives (DAA) 13 SOME LESSONS LEARNED

. Valuable tool for cost structure definition, performance analysis and preliminary estimates

. Sensitivity vs parameters

. Parallel use with current cost estimation systems at the initial stage recommended

Knowledge, training and extended use of the tool

14 Agenda . Finmeccanica Group Overview

. Industrial Performance and Competitiveness in FNM . Support to IT MoD and Price® Pilot in Finmeccanica . Way ahead: collaboration with Creasys

15 WHAT’S NEXT

 Strong liason and support to Italian MoD to foster competitive advantage in domestic and export agile offering and contracting

 Finmeccanica Group Companies joint initiative to exploit Parametric Costs Estimate Models (Group Policies/Guidelines, Knowledge sharing, ….)

 Collaboration with Creasys for the deployment of a Training Path on the new parametric approach with Price System

16 THANK YOU