Cost Growth in Warships Brian K Tanner BAE Systems: Surface Fleet Solutions.

Transcription

1 Cost Growth in Warships Brian K Tanner BAE Systems:. Date/reference/classification

2 Disclaimer Opinions expressed in this presentation are those of Brian Tanner based on experiences and data collected while part of DPA and latterly, BAE Systems.

3 Background 61 years young; Marine Engineer; C Eng. MI Mech E, FIMarEST, RCNC; 45 years around naval vessels 15+ years in ship costing! On the Job trained.

4 Agenda Information sources Causes of Cost Growth Productivity Assumptions Learning curves & GDP Deflator Cost breakdown Estimating uncertainty Real Cost Growth

5 Information Source GAO Report GAO : Improved Management Practices Could Help Minimise Cost Growth in Navy Shipbuilding Programs. Plus LPD[R], AO & LSDA data Plus internet data, USDoDCAS, etc.

6 Cost Growth GAO Report: Estimates and Assumptions Optimism - Productivity, Workload, & Real Cost Growth Causes Ordinary Uncertainty Causes Extraordinary - Risks

7 Productivity Assumptions: Type 45 Ratio to T23-01 BC Manhours Type 23 Learning for Scotstoun built ships. 89% Learning Curve taking as Ship 1 Actuals T23 Learn: as Ship 1 T45 Learn T23 Learn: as Ship 1 T % CGT Analysis Actual Performance PFG 1995 Analysis Type 45 Learning. Repeat of Type 23 using T23-15 as Base Vessel

8 Productivity Assumptions: Learning Curves. Learner Assumptions Compared Constant Base Productivity Learner T45 Performance Type 23 Learner Ship Class Number

9 Productivity Assumptions: French Warships Horizon. Senat 2003 PL Cost 2.5B. 1.9B Design & Build 2 ships; 1.1B Build 2 Ships; $0.65B for 2 PAAMS systems inc missiles. FLD of 6635/7050 Te gives cost of 78-83/ Kg. DCN figure for average European build 75/ Kg. FREMM FLD 5,800 Te. 435M cf published figure of $290M, a one third reduction. How??? Look at mer et marine website to understand difficulties. [FLD Full Load Displacement].

10 Uncertainty & Risks: GAO Report Analysis & Assumptions GAO Report analysis: Ordinary causes inc design changes: a distribution of 12½%, 15%, 22½% Extraordinary causes: design difficulties a distribution of 20%, 37½%, 50%.

11 Uncertainty & Risks: Design Difficulties LSD(A) Costs Hansard data: LSDA Total Total Original Price 79.9M 68.3M 148.2M 65.0M 57.0M 122M Lead Yard Services 19M M 04/05 PL 83.0M 71.0M 154.0M From RFA Model inc 24% Production 108.5M 87.2M 195.7M Additional Payment 87.0M Additional Payment 40M Total Cost 235M 216M Cost Growth: Based on original Prices Based on realistic prices 87M (58.7%) 40M (22.7%) (44.4%) Get your Estimate Bill of Materials Right. Deliver a Mature Design on Time

12 Uncertainty & Risk: Immature Design. MOD Contract Record Good Bad T23-01 Y N T23-02 Y N T23-04 & 05 Y N T23-06 to 08 Y N T23-09 to 11 N Y T23-12 to 14 Y N T23-15 to 17 Y N LPD01 & 02 N Y AO 01 & 02 N Y LSDA 01 & 02 N Y LSDA 03 & 04 Y N AOR01 N Y AOR02 Y N Echo Class N Y HMS Scott Y N SRMH01 Y N SRMH 02 to 05 Y N SRMH 06 to 12 Y N LPH Y N Point Class RoRo Y N Poor estimates: 2 of 20 Design Difficulties 4 0f 20 20% Risk! Sub Totals 14 6 Total 20 % age 30.0%

13 Real Cost Growth RAND Report: Why Has the Cost of Navy Ships Risen? 2006 ISBN

14 Real Cost Growth RAND Findings for US Programmes Typical data span 1960s to 2000 Factor Surface Combatants Amphibious Ships Economy Driven 4.5% 4.8% Factors Customer Driven 4.4% 4.2% Factors Productivity 0% 0%` Improvement Total 9.1% 8.2%

15 Real Cost Growth RAND Findings for US Programmes Recent 15 years Factor Surface Combatants Economy Driven 2.4% Factors Customer Driven 2.3% Factors Cost Improvement -0.9% Total 3.8%/ 3.5% Amphibious Ships

16 Daring to Daring & Beyond Daring T82 DD?FF Cost 2006 PL S/B Cost - exc CS Costs. Devonshire T42B T42B2 & B3 Pre T45 T Oct Jun Feb Oct Jul Mar Nov Tribal Leander T21 Type 22 T23 All Frigates Through Average T23 Cost FOC Only Thro T23-01 Linear (Leander) Linear (T21) Power (T23) Linear (Type 22) 0 24/01/ /10/ /06/ /02/ /10/ /07/ /03/2023

17 Type 45 Unit Production Cost from MPRs (S0me Costs are believed to include COC which is not part of UPC) MPR Ship Cost PAAMS cost Other Item Reprofiling six ship programme Reprofiling twelve ship programme Reduced PAAMS missile buy Shipbuilders' premium Sub Total Risk differential PAAMS Production equipment Skynet4 to Skynet PAAMS Increases Delay & Dislocation monies sub total- PAAMS and D&D Monies IAP Upgrade deleted exchange rate Warship cost correction corrections to forecast costs Understatement of PAAMS in MPR Increased Batch 2 costs 52 Revised approval figures Reprofiling ships 05 & 06 2 PAAMS Longbow Mooring CS Risk provision Support Sol'n Study WR21 assessment IAP savings Batch 2 cost increase PAAMS missiles reinstated Costs wrongly attributed to 07 & PAAMS exchange rate Transfer to MTS Increase in ship build cost omitted ship build costs From MPRs T45 & PAAMS cost growth is similar Approval exceeded by 262M 90% Confidence but 50% Confidence. Impact on Defence Budget? Total Main Gate MPR figures MPR04 revision?

18 DD/FF Procurement History History: Type 23 Frigates: From 23 to 13 then 16 NFR90/TFF/AFFF/Horizon/Type 45: From 12 to 6 (or 8?). LPD/ AO/ LSDA Significant cost growth Franco Italian Horizon: From 4 to 2. Franco Italian FREMM: 17 France, 10 Italy budget realism?

19 UK Future Escort Force a Force Anti-Submarine Warfare (ASW) Combatant (known as C1) (10 off) a Stabilisation Combatant (C2) (8 off) an Ocean-Capable Patrol Vessel (C3) (8 off). 26 in total or less??

20 QUESTIONS?

21 Get The Estimate Right! (DD/FF Cable Length) DD/FF/FSG Characteristics DD/FF/FSG Characteristics Type 45 GT Gross Tonnage Type 45 GT Type 45 Cable Type Cable Length Km Type 45 Cable 560 Gross Tonnage Cable Length: Km Lekiu Type 23 Type 23 y = 169.4Ln(x) R 2 = US DDG US DDG Electical Cable: Km Brunei OPV Brunei OPV Lekiu Gross Tonnage Complement