Written by: Sean Roach
My second week is ending and I’m finally grasping my role at Boeing. I essentially am rescuing the much delayed, overbudget, and problem-ridden 787 program, one penny at a time. When a customer wants to change a standard feature on thier 787, I tell them how much to pay.
And how do I decide how much to charge them? Net Present Value. If you’ve taken corporate finance or accounting, you know NPV. This is perhaps the first time I have used practical information from a Fisher course in “real life”. The basics of NPV calculations are Future Benefits minus Future Costs. If the NPV is positive for a particular project, it adds value to the company. If it is negative, the costs outweigh the benefits so the project should not be undertaken.
So far I’ve calculate the NPV for provisions such as installing a 3-ounce key lock on a cabinet near the cockpit, sewing a sign that says “Crew Only” to a curtain in the cabin, and adding 2 LED lights behind a wall to make an airline logo light up. Sounds like pretty insignificant changes right? Well when you consider the charge for the lock installation was $12,000, the “Crew Only” placard was $38,000, and the LED light install was over $780,000, those costs add up.
Life outside of work is fast and fun. I feel like I could do something different every day and I still wouldn’t make it through my list of things I want to do. In my next post I’ll talk about life in Seattle.