Estimation of Ship Construction Costs
by
Aristides Miroyannis
Naval Architecture and Marine Engineering
B.S.,
(2005)
Webb Institute, NY
Submitted to the Department of Mechanical Engineering in
Partial Fulfillment of the Requirements for the Degree of
Master of Science in Mechanical Engineering at the
MA SS OCH US
Massachusetts Institute of Technology
ETTSNsTrr TE
June 2006
LIBRARIES
@
2006 Massachusetts Institute of Technology
OARKER
All rights reserved
.............
Signature of Author ...........
I
Certified by ..........
Ar Isides Miroyannis
May 12, 2006
. . . . . . . ...--Henry S. Marcus
Profes or of Marine Systems
Thesis Supervisor
Accepted by ........
Professor Lallit Anand
Chairman
Department Committee on Graduate Students
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OUTLINE
Outline.................................................................................................................................
2
List of Figures.....................................................................................................................
3
A cknow ledgem ents:.......................................................................................................
5
Abstract ...............................................................................................................................
6
Introduction.........................................................................................................................
7
Chapter 1 - Overview of U S N avy:.....................................................................................
9
Reasons for Cost Overruns: ..........................................................................................
11
Chapter 2 - Cost Estimation:...........................................................................................
20
Chapter 3 - Design To Build Improvements/ build strategy:.........................................
34
Product W ork Breakdown Structure...........................................................................
34
Modular Construction:...............................................................................................
36
Learning Curves:...........................................................................................................
41
Benefits of Reduced Construction Time:..................................................................
46
M ulti- Purpose V essels .............................................................................................
51
Cost Estim ating Relationships:..................................................................................
53
CHAPTER 4 - NAVSEA 017 Ship Cost Estimating System:...................
55
NAV SEA 's use of CER 's .........................................................................................
64
Limitations of W eight Based System : ......................................................................
68
CH APTER 5 - PODA C: ................................................................................................
73
Use of Empirical CERs in the PODA C M odel.........................................................
76
Improving Empirical CERs: ......................................................................................
81
Sam ple Representations of Empirical CERs: ...........................................................
83
Interim Products (IP).....................................................................................................86
Design Trade off Capabilities....................................................................................
89
Risk Analysis................................................................................................................93
Life Cycle Costs............................................................................................................95
Problems......................................................................................................................97
CHA PTER 6 - M IT M ath Model..................................................................................
98
CHA PTER 7 - Ship Cost Reduction Suggestions: .........................................................
100
2
Conclusion ......................................................................................................................
103
B ibliography ...................................................................................................................
105
LIST OF FIGURES
Figure 1. Growth in Program Budget (4)......................................................................
11
Figure 2. Shipyard Cost and Productivity (24).............................................................
12
Figure 3. Typical Weapons Systems Production Times (4) ..........................................
13
Figure 4. Components of US Navy Cost Growth (4)....................................................
15
Figure 5. Reasons for Shipyard Labor Hours Growth (4) .............................................
16
Figure 6. Growth in Material Costs (4).........................................................................
18
Figure 7. Typical Project Timeline (1) ..........................................................................
20
Figure 8. Cost of Scope of Various Cost Estimations (1).............................................
22
Figure 9. Cost of Design Change (1).............................................................................
23
Figure 10. Comparison of Cost Estimates (25).............................................................
27
Figure 12. Addition of Risk in CER's (1).......................................................................
30
Figure 13. One Digit SWBS Breakdown (1)...............................................................
31
Figure 14. DDG-51 Design Issues (26) ........................................................................
33
Figure 15. Efficiency of Group Technology (21)........................................................
35
Figure 16. Modular and Zonal Construction (26).........................................................
36
Figure 17. Converting to Re-Use Modules (25) ..........................................................
37
Figure 18. Using Modular Architecture in the Navy (26) .............................................
39
Figure 19. Modular Construction of UK Destroyer (12)...............................................
40
Figure 20. Predicted Cost Savings (26) ........................................................................
40
Figure 21. Effect of Learning on Cost (14)....................................................................
42
Figure 22. Typical Learning Rates (20).........................................................................
43
Figure 23. Effect of Break in Production (1)...............................................................
45
Figure 24. Construction using PWBS (21)....................................................................
50
Figure 25. A Single or Multi Purpose Navy (19)...........................................................
53
Figure 26. Asset Model Output (20).............................................................................
59
3
TABLE 1. NAVSEA SHIP COST ESTIMATE CLASSIFICATION SYSTEM.......... 60
Figure 27. Total Ship Cost Categories (18)...................................................................
63
Figure 28. Index of Estimated Shipbuilding Costs (16) ...............................................
71
Figure 29. System vs. Product WBS (16).........................................................................
74
Figure 30. PODAC PWBS Sections (PODAC).............................................................
75
Figure 31. CER Change with PWBS Hierarchy (14) ...................................................
76
Table 2. Sample Ship Type Factors for Empirical CERs ............................................
78
Table 3. Empirical Preliminary CER Derivation...........................................................
79
Table 4. Empirical Contract Level CER Examples ......................................................
80
Figure 32. Complexity Factor by Work Stage (15) ......................................................
85
Figure 33. Complexity Factor by Work Area (23) ........................................................
86
Figure 34. Examples of Work Packages (14)...............................................................
87
Figure 35. Example of Re-Useable Work Package (16)...............................................
88
Figure 36. Possible Outfitting Cost Savings (15) ..........................................................
89
Figure 37. Material Options with PODAC (16).............................................................
90
Figure 38. Material Trade-off Analysis (16)..................................................................
91
Figure 39. Construction Cost Material Trade-off (16)..................................................
92
Figure 40. Cumulative Cost Distribution (14)...............................................................
94
Figure 41. Probability Cost does not Exceed Estimate (14)..........................................
95
4
ACKNOWLEDGEMENTS:
I would
thanks
like
my
to
to
thesis
continued help,
MIT
from
my
express
sincere
advisor,
to
acceptance
Professor
Henry
Marcus.
His
throughout my tenure at
and trust
guidance,
and many
appreciation
will
graduation
stay
me
with
forever.
I
also
would
patiently
and
detailed
inner
benefits
also
that
necessary
associates
to
like
Laurent
thank
helped
painstakingly
workings
it
presents
to
who
me
of
the
PODAC
to
ship
cost
mention
from NAVSEA
Deschamps
John
so
ever
gave
and
the
and
estimating.
his
their
so
the
understand
system
Hootman
readily
who
It
is
other
time
and
effort to explain the ship procurement process of the Navy.
Lastly
the
I
would
University
like
to
thank
of Michigan
for
Professor
his
Howard
information
Bunch
about
from
PODAC
and Professor Patrick Keenan from MIT for his help with the
MIT Math Model.
To Lindsey...
5
ABSTRACT
Since
the end of
the
Cold War naval procurement
for
the US
Navy has seen a dramatic decrease. This decrease in defense
spending has placed existing programs under more scrutiny
than previous
years.
the
taxpayers
part
of
As a
result there is
and
Congress
for
less tolerance on
procurement
cost
growth. This Thesis attempts to examine the current method
that the Navy conducts ship cost estimates and suggests
the
confidence
level
and
changes
in
order
to
improve
accuracy of the forecasts. An examination of how industry
is conducting cost estimates was used as a comparison to
the current Navy practices. Finally using only a weight
based approach to ship cost estimating is insufficient. It
is necessary to develop and use a model that incorporates
other cost driving factors in order to develop estimates of
sufficient quality at the preliminary design level.
6
INTRODUCTION
Since
the end of
Navy has
seen a dramatic decrease.
spending
has
of
part
and
taxpayers
tolerance on
is less
cost
procurement
for
Congress
scrutiny
more
under
As a result there
than previous years.
the
This decrease in defense
programs
existing
placed
the US
for
the Cold War naval procurement
growth.
and especially the Navy have
Government
steps when determining whether they need a
conservative
their
of
evaluation
to take
known
been
practices.
has
estimating
cost
Ship
re-
evolved in industry to include new production processes and
since
developments
the
estimating the
is
Navy
of the
that are part
being
80's.
the
at
built
a
The
higher
not.
ships
of
cost
past during
much
Navy has
As
using
a
result
processes
were
an era where vessels
rate
less
with
for
need
transparency and cost cutting.
An
ability
ship cost
to
perform
estimating
effective,
could finally
detailed,
create
and
a change
way the Navy is able to negotiate its contracts.
understanding
lead to
a
of the
decrease
factors that drive
in cost
overruns
for
reliable
costs
two
in
the
A greater
can hopefully
reasons:
First
7
will be
designers
off
trade
with an
and
studies
understanding
of
how
designs
affect
better
cost.
Second,
cost estimates
the Navy will be
level,
preliminary
their
a
develop
therefore
to perform reliable
ability
to quickly perform
a better position
in
negotiate more
to
able
at the
favorable contract terms that could decrease costs.
In
past
the
estimate
and
the
It
costs.
the
has
method
reliable
not
Navy
a
used
been
shown
driving
based
weight
that
this
costs
estimating
for
factor
only
has
not
is
a
this
to
good
weight
since
Thus
costs.
model
is
thesis
attempts to examine how the Navy conducts its estimates
and
Furthermore
an
the
of
examination
practices
could
ship
has
improve
cost
determine
and
of
limitations
life
the
current
been
its
current
included suggesting
current
capabilities
cycle
ship
industry
estimating model
its
method.
costs.
models
has
and
been
ways
that
practices.
examined
in estimating
Finally
estimating
cost
some
in
the
Navy
The
order
MIT
to
ship construction
suggestions
for
decreasing ship construction costs have been included.
8
CHAPTER 1 -
OVERVIEW OF US NAVY:
The
which
US
Navy,
is
comprised
currently
283 vessels,
of
is the most technologically advanced Navy in the world. The
US
assigns
government
year
to
The
superiority.
this
maintain
of
amount
a sizable
its budget
billion.
projects
Class
of
was
96%
which
the Arleigh Burke Class
four classes:
the
carrier,
aircraft
2007 will
in
the budget
billion.
be
$4.4
the Navy devoted $7.6 billion to new ship
In 2005,
construction
for
increase
The projected
budget
president's
for the US Navy for the year 2006 amounted to $133
each
allocated
destroyer,
the Nimitz
Class
amphibious
Antonio
San
between
transport dock ship, and the Virginia Class submarine.
Procurement
growth in
cost
construction programs
naval
has
been a longstanding problem that has plagued Navy officials
and
Members
Naval
not
Congress.
of
Operations
outright
(CNO),
has
expressed
budgetary
constraints
on
ship
The 2006 defense authorization bill
by
the
House
Armed
contains provisions
Services
Chief
concern,
strong
(7).
of
if
Combined
the Navy is also facing
with the rising procurement costs,
reduced
Clark,
matter
the
about
frustration
Vernon
Admiral
procurement
(H.R. 1815)
Committee
as reported
(H.Rept.
that establish procurement
funding.
109-89)
cost caps on
9
Navy
several
begin
a
developing
lower
in
aimed
part
and create
a
Navy
the
order
This
funding.
completion"
appropriations
had
is
$3
surpass
the
milestones.
12%
to
the
Over
billion
by
all
time
the
estimates
cost
year
"prior
additional
Congress
in ship
more
currently
vessels
that
assume
efficiencies
current
maintain
of
construction
contract.
are
and
(7).
billion increase
that
US
complete. The total appropriations are expected to
than 30%
since
vessels
for
to
essentially
already under
for vessels
requirements
ship
resort
to
appropriated funds to cover a $2.1
budget
its
in
overruns
has
Navy
the
programs,
cost
fund
to
for
efficiency
cost effectiveness of the construction of Navy ships
In
to
cost
lower
new program
a
improving
at
the
direct
destroyer,
cost
submarine,
nuclear-powered
shipyards
programs,
shipbuilding
complete
will
shipyards
meet
and
are
all
their
This would correspond to a cost increase range
17%
of
past
5
the
initial
years,
contract
about
10%
of
price
the
1).
(Figure
Navy's
ship
construction budget of $52 billion has paid for cost growth
for
cost
ships
funded in prior years.
overruns
budget
for
is
that
current
it
reduces
construction
The
implication of these
the
buying power
and
reduces
the
of
rate
the
of
modernization of the Navy.
10
Table 3: Growth in Program Budgets for Case Study Ships
Dollars in millions
Initial and fiscal year 2005 President's
budget
Case study ship
DDG 91
DDG 92
CVN 76
CVN 77
LPD 17
LPD 18
SSN 774
SSN 775
Total
Initial'
FY2005
$917
$997
925
4.476
4.975
954
762
3.260
2.192
18.461
979
4,600
Difference in budgets
Difference due to Difference due to
construction
Navy-furnished
costs
equipment
Total difference
$37
$43
S80
62
(7)
55
252
(128:'
124
(51:
100
49
734
21
804
246
3
249
327
95
422
294
18
312
1.951
145
2.095
5,024
1,758
1,011
3,682
2,504
20.556
O ,prfrafildcsi.
Gdai,
S,:uron: New
tudget submission for year of ship authorization.
fiscal year 2005.
through
'Includes all prior year requests
in the scop of tie contract.
to
changes
due
Is
'Part of increased cost
'Negative reflects savings resulting from th. use of a more economical warfare system than was
initially budgeted on the DDG 92.
'Negatlve reflects savings garnered from Navy-furnished reactor plant equipment.
'Negative reflects shifting of funds f rom the construction contract to Navy-fumished equipnent.
'Estimated
cost from the President's
Growth in Program Budget
Figure 1.
(4)
Reasons for Cost Overruns:
New production technologies
in
shipyards
manhours/tonne
have
resulted
over
time.
and
in
If
organizational improvements
a
continuous
time
spent
decreasing, then why is cost continuing to rise
reduction
in
dock
in
is
(Figure 2)?
11
MfianU
Thms in
per
doddrhh
tXOnn suma
A
reee~e
n aswre
WI-nk i ovd U69anig2
tea
i
m
tes
tw
te
tenies
te
s
w
e
-yar
Sa"flaC-
Figure 2. Shipyard Cost and Productivity (24)
1.
Types of Shipbuilding Contracts
The nature of the shipping business in general lends itself
to
situations
that
place
an
difficulty
excessive
to
effective cost estimation even to the most experienced ship
cost estimator.
it takes
to be
Ship contracting is
9-14 years
for a new class
developed from concept
design
still at a time where
of surface combatants
to delivery,
when at
the same time new technologies have a 3-5 year life cycle.
It is therefore
on
technological
production times
imperative to design vessels with a focus
convertibility.
Figure
3
shows
typical
for various weapon systems.
12
Figure 1: Typical Production Tlmes for Various Weapon
Sysrna
AlrcnMt ow vIm
GUbrneskM
4- -hun-
-w, Ta*
1
2
5
4
*
I
0
Vamminprocaiedn
Figure 3.
In
most cases
is
this
for
ship
without the
upon
estimate are
formalize
designs.
ship
buyer
who
construction
being agreed
are
contracts
cost
detailed
a
with
designs
detailed
reason
The
of detailed design.
completion
that
very expensive and excessively time consuming.
Shipyard work in
to
(4)
Typical Weapons Systems Production Times
and
predict
This
might
work
of
terms
directly
presents
end
very
to
detailed
intricate
from
overpaying
up
seller who might have
a
difficult
specification is
for
to
both
the
vessel
and
the
to
the
risk
large
a
incur exorbitant
costs
due
lack of clear definition of the work at hand.
Two
the
types
of
contracts
difficulty
parties
involved
that
in
have
naval
the
emerged
that
acquisitions
transaction.
The
try
to
deal
with
to
all
present
first
is
fixed
13
agreed
the
The
additional
costs of completing a vessel
prove
are used
cost reimbursement contracts
the
class due to
vessels in the
if
pay
all
Generally
for the lead ship
and
following
the
for
used
are
contracts
price
fixed
that
if the shipyard can
unavoidable.
were
costs
incurred
the
that
to
government
the
forces
contract
contracts.
in
reimbursement
cost
is
method
is
second
The
costs.
made
additional
all
pay
to
agrees
it
surpasses,
shipyard
price
ceiling
a definite
is
there
but
cases
some
be
can
Adjustments
parties.
both
by
upon
is pre-arranged and
case the price
In this
contracts.
price
of uncertainty
the large amount
present in a lead ship acquisition.
The
defined.
cost
provisions
They both have
profit.
and
and
shipbuilder
These
the
are
Navy
called
share
attempt
that
the
incentive
savings
when
the
price
exceeds
the
if
to
control
The
fees.
the
final
and they share the
cost is less than the estimated target,
cost
clearly
so
not
are
however
themselves
contracts
target.
This
process
attempts to provide incentives for both parties to do their
jobs
efficiently.
Either
way,
both
contracts
place
an
absolute emphasis on the need for a reliable cost estimate.
Due
to
the
methodology,
absence
the
of
contracts
an
effective
that are
being
cost
used
estimating
inherently
14
create
case
this
(in
buyer
the
force
to
ways
Navy)
the
to
incur the major cost of overruns.
2.
Labor and Materials Cost
is
apparently
which
account
It
growth.
surcharges
breakdown
the
shows
4
Figure
of
clear
78%
for
the
that
overruns
cost
of
leading cost burden that the US Navy has
material
and
labor
cost
of
components
are
the
to manage.
Figure 2: Components of Cost Growth
7< 5%
17%
40%
Overhead rate and labor rate increases
38 .
-e
Material increases
Labor hour increases
Otu
Percentage of cveral lot
grwth due
Percentage of ontraiccet
r
to shipbuilde construction costs
th due bo cost of Navy-turnished equipment
ct pcriudor ana~ dflS a; '.. 'anotonto.
growth in constructic -costs is $3.2 billion. based on shipbuilders' esimte at
Note: Tutal
Figure
For
growth
due
billion.
in
4. Components of US Navy Cost Growth
vessels
the
to
The
Figure
5.
completion.
that
were
increased
main
The
determined to be
examined by GAO,
labor hours
reasons
for
repeated
the
the
issue
the
totaled more
cost growth
causing
the
(4)
total
cost
than
$1.3
be
seen
can
delays
lack of maturity of the design
was
which
directly led to rework. Examples of such issues include the
LPD 17 where
construction began as
the design of the vessel
15
continued to
increases
and 92
the
all
of
due
vessels
largest
faced the
has
vessel
The
evolve.
DDG
The
fact.
this
to
suffered from severe reworking and delays due
the
of
installation
remote
which
system
minehunting
cost
91
to the
was
a
technology not fully developed at the time.
Table 6: Reasons Given by Shipbuilder for Labor Hours Cost Growth
Reasons for increase
. Inesperienced laborers
- Design upgrades that reed Iin reowcrk
. Intrcduclion of a new construction facelity, setfng workers
back on the learning curve
*karunds
. Design upgrades that read tin reswk and -.
* Strike increased number of hours needed to constfuct ship
. Less-skilled workers due to demands ltr le;r on other
Case study ship
DD& 91
DDG 92
CV N 76
prcqraim at shipyard
. Extensive use ot cverfi-m
. Design changes resulting in rework
. Late material delivery results in delays ard workarourds
. Design chamnge resulting n rework
. Inexpertenced subt.ontracted lab:.r
. Design difficulties led to doing wck out of sequence and
rework
. &hedule delays
* Bused workers to meet latr shortages
. Increases in LPD 1 translated into more hours for LPD 1
CVN 77
LPD 1
LPD 18
SSN 774
. Late matenal delrvery
. First in class design issues
. Quality prblems and design changes
. Incluskn of rcn-recurring labor hours
SSN 775
sau Empiu~r ianasoa0nu
Reasons for Shipyard Labor Hours Growth
Figure 5.
Overhead costs
of
operation
the
to
chargeable
majority of
an
include
overhead costs
significant
decrease.
costs
ship
The
in this
that
benefits,
growth
labor
in
directly
overwhelming
The
This
leads
to
time
there
manhours
don't
construction
if
incurred
not
are
related.
time
even
cost
costs
contracts.
reducing
by
increased
are
of
which
shipyard
the
particular
understanding
are
wide variety
a
(4)
relating
to
overhead
case are attributed to the decreased workload
16
shipyards are
that US
facing which would absorb some of the
operating costs.
installed.
of
the
significant
(Figure
from
4) .
for recent
budget
total
sector
has
reasons
for
cost
The
commonality
scale
of
economies
approach
procuring equipment
from
creating
an
accounts
typically
equipment
Such
it
that
The
in bulk.
organized
to
beginning
is
Navy
is
trans-vessel
however
class
5%
through
affordability
the
to
at
benefits
Navy
the
that
is
this
of this
low
relatively
30%
about
for
The growth
vessels.
remained
due
and has
the Navy purchases
equipment that
and
technologies
for
costs
the
to
refers
equipment
furnished
Navy
when
use
still
far
commonality
approach to its equipment acquisitions.
3. Underbudgeting and Price Increases
and
Underbudgeting
increased the
Antonio,
was
Nimitz,
the most
6) . DDG
levels of material
and Virginia
significant
of
Ingalls
under Northrop Grumman.
class
component
91 had $22 million
consolidation
cost
Shipyard
growth.
vessels,
of cost
in material
dramatically
have
increases
price
cost
with
material
cost
growth
(Figure
savings
due to
Avondale
Therefore materials
the San
For
Shipyard
were purchased
17
for
four ships
a price decrease
time leading to
one
at
due
to economies of scale.
Tab Is7: Growth in Material Costs
Dollers in millions
Ar"Oystased.:n data
availelIe J ULy 2i4
Total dollars due to
increased material costs
Case study ship
DDG 91
DDG 92
CVN 76
(S22)
(3%
30
294
cVN 77
LPE 17
LPC 18
SSN 774
SSN 775
Total
20
43
34
13
0
iCG
39
43
56
38%
93
141
209
$1.210
UNSu
:
sM
Material cost as a percent of
total contract growth
(40,
23
46
Percent increase
31
47
24
49
49
G1c ympe5
-te at -xipietion ic .dt-4fline total c>:inat
Note W4 cicnpar-d WHOl target i6I b3 the uIrEnt . -.
O
.>>st grcK*Ih. 0:t jrvJP:th wj tb due to Navy chanrge6 I rlract so:p. nShOullde per ntcnCA
unanicipabed oevnis.
Figure 6.
The
reasons
contracts
are
than
budget
of
the
materials
formulated.
The
first
materials
submarines'
actual
that
are
Since
budget
the
the
way
the
Virginia
class
million
lower
$132
vendors
and
aircraft carriers,
the
received by
class
on
heavily
and
four
was
that were
the Nimitz
For
cost budget was based on an incomplete materials
reason again
Why? The
list.
cost
quotes
price
subcontractors.
materials
rely
cost
the
of
quality
increases
these
for
(4)
Growth in Material Costs
negotiated
shipyards
know
in
change
orders
value
specialized
lies
between
the
that
they
contracts
or
items,
they
in the
types
shipyards
will
price
be
of
contract
the
and
Navy.
reimbursed
increases
underbudget
for
their
for
high
cost
18
forecasts,
win
the
contract
to
build
and
then
simply
pass
on the higher cost back to the Navy.
Price
of
increases
component
price
of
material
increase
levels.
materials
are
more
that
that
faced by the
the
are
the
not
subsequent
in
suppliers
growth.
Factors
than
directly
the
ship
submarines
LPD
since
industry
resulted
and a
just
the
end
rate
of
of
in
a
lack
contracts
increase
single
in
that
A
for
of a
increases
of
Changes
cold war
due
production
lower
competition
in price.
the
the
to
has
number
of
between
Over
Virginia
source vendors.
cost
range of
industry.
ship
of
affect
inflation
price
the
consolidation.
been from
the
display
construction
the
significant
national
consequent increase
material
have
17,
naval
decreasing
has
subcontractors
the
do
supplier base
resulted
of
another
Inflation itself is an average number
products
in
cost
is
75%
class
While
on
subcontractors
accounted for 70% of the increase in material costs
(4).
19
CHAPTER 2 -
The
COST ESTIMATION:
costs
overhead
costs.
capital
profit.
Due
industry
shipbuilding
between
particular
correct
cost
cost
and
estimations
is
any
include
will
inflation,
particular
nature
of
necessity
the
the
reasonably
complexity
The
imperative.
of
and
variation
of
degree
high
the
projects,
including
financing,
the
to
and
a vessel
of
price
final
for
allowances
shipyard
The
construction
the
in
involved
materials
labor
the
all
of
sum
the
is
vessel
a
of
cost
and
cost of detailed ship design and the length of time between
preliminary
design
that determine the
and
the
shipyard.
definition
of
design
is
the
change
and
the
are
completion
factors
leading
flexibility of contract between the Navy
This
leading cause
orders
lack
of
the
increasing
number
price
escalation
costs.
for
final
and
and
flexibility
inherent
Figure 7 shows a typical project timeline.
c:plete
P..ans
Cnt:jct
Io)
7Cam
r
je
r aci
r-=t
T
lne
(
I I, I n,t1
Figure 7. Typical Project Timeline
(1)
20
designers
Historically
categorize
such
costs
as
hull
electrical.
type.
sections
of
the
developed
hull
machinery,
hull
piping,
priced
on
weight
systems
segregate
different
according
costs
difficulty
of
section.
priced
to
structure
breakdown
different
the
the vendor.
outfit
analysis
and
construction
the
for
and
Major
Other
parametric
through
data
historical
extrapolated
able
and develop
generally
are
work
directly priced from
is
equipment
and
More
is
been
have
outfit,
Structure
production
the
systems
consistent
structure,
Hull
material
to
by
shipyards
and
installation of the system.
Cost
are
estimates
The
development.
required
importance
particularly at the early
when
all
at
of
levels
a
of
stages
good
of design
cost
can be
It
comparing different design proposals.
design
estimate
crucial
is very easy
to manipulate early cost estimating programs that use basic
parameters
The
as
different
into three
basis
types
general
Concept Design,
Design.
a
2)
of
and
criteria
cost
for
estimates
groups relating to
Preliminary Design,
determining
can
be
broken
cost.
down
stage of design:
3)
1)
Detailed Contract
Figure 8 shows a comparative cost comparison as the
breadth and scope of each stage of cost estimation changes.
21
BREADTH
E
/1
LEVEL
SSESSMENT
H
<$IK
LEVELI
ASSESSMENT
< $1OK
of
explanation
detailed
stage
will be presented in
shows
how
the
enviable
of
applying
(relative
to
project
savings
decrease
with
the
design.
of
greatest
innovations
Incorporating
design
is
relationship
This
introduction
The
as
dramatically
at
new
already
of
the
the
to
effect
Possible
project
is
technologies
from
stages
early
committed
is
9
in
for
cost
defined
is particularly applicable
result
technologies
Figure
stages
maximum
cost).
advanced
savings
section.
design
early
the
position
cost
clearly.
following
the
to
according
estimate
cost
each
in
analysis
cost
minimum
more
(1)
Cost of Scope of Various Cost Estimations
Figure 8.
A
LEVEL 9I
ASSESSMENT
<$IOOK
at
later
a
certain
in
ship
the
introduction
of
development.
stages
when
technology
the
will
result in increased labor costs and change orders.
22
CUMULATIVE SYSTEM PROGRAM COST
COMMITMENT DECISIONS
COST-
POSSIBLE COSTa
SAVINGS
10-95% of total Prograrn
Less Then, 5% Program
Figure 9. Cost of Design Change
In
Concept
the
estimate
to create
is
cost estimate.
are presented
are
broadly
feasibility
estimate
is
At this
the
and
a very rough order
on
based
(ROM)
of magnitude
stage basic ship type and parameters
mission
The
defined.
check
cost
the
of
purpose
the
stage,
Design
(1)
the
and
cost
operational
estimate
project.
At
as
used
stage
extrapolated
historically
on
this
is
requirements
a
cost
the
data
and
basic parametric analysis.
The
Preliminary
stage.
At
Design
this phase,
stage
is
a
very
crucial
design
the methodology and validity of
the
cost estimate is imperative since it is at this point where
the
design will be evaluated
against other
options.
It
is
23
designer
the
for
important
therefore
to understand
his
how
decisions will affect cost since major tradeoff studies are
This is a very powerful and exciting
project will be made.
that
components
capital
initial
at
addressed
must
be
cost
for
the
of
construction
the
operating costs
and the net present value of the
the
are:
stage
this
cost
necessary
two
The
choice.
design
each
of
implications
the
of
understanding
thorough
and
decisions
careful
requires
that
one
also
but
process,
design
the
of
time
the
of
future
the
about
decisions
major
and
performed
vessel,
discounted
throughout the life of the vessel.
The
estimating
cost
on
depends
stage
vessel
is
using
new
composite
materials,
of
type
the
designed
designs
methodology
radically
used
new
that
of the
equipment,
and
difficulty
are
Parametric,
The
Analogy
similar
four main types
of cost
this
stage:
available
3)
at
Extrapolation,
type
systems.
uses
a
4)
the
past
of
making
realistic and reliable estimate will be compounded.
because
If
all
from
different
the
then
underway.
project
technologies,
preliminary
this
at
a
This is
estimating methods
1)
Analogy,
2)
Expert Opinion.
direct
comparison
It is used in early stages
between
two
of design and
24
is
inherently
for new
to labor
in productibility due
features and changes
account
inability to
Its
historically based.
learning rate are its major flaws.
Parametric
parameters
mathematical
analyses
use
a
parameter
and
cost
regression
Cost
(i.e.
analysis
=
know
when
an
factor
adjustment
is
cost
The
f*(weight)).
estimator using this system must be
through
determined
historically
is
that
input
between
relationship
Such
etc.
horsepower,
weight,
ship size,
such as
design
on
predictions
their
base
estimates
knowledgeable enough to
and
needed,
to
know what
the factor should be.
costs
return
for
available
be
similar
inflation).
for
(adjusting
vessels
only
can
methods
Extrapolation
there
when
used
systems
used
prior
in
of
accuracy
The
are
the
system is a function of the length of the extrapolation and
the
consistency
the
of
factor
being
They
extrapolated.
should only be used if the project has progressed to such a
level
of definition.
In the
case of new
technologies
this
type of methodology is difficult to assume.
Expert
also
opinion
be
can
prove
misleading.
to
be
Personal
very
effective
involvement
but
in
it
can
projects
25
carries
with
A
follow.
it
Low
interests
are
the
by
low
estimates.
shipyards,
who
are
estimates
high
the
want
cost
Committee when
it turns out
by
persons
to
by
persons
not
does
some
or
the
whose
be
and
built.
be
In this case it
who
to
could
Examples
vessel
superiors
his
by
scrutinized
influences
generated
estimator
wants
subcontractors,
served by high estimates.
government
person
position
generated
designers,
interest is
be
and
each
are
vendors
Similarly,
that
estimates
served
vessel
material
agenda
occupation
person's
forecast.
the
the
want
whose
could
to
be
Congressional
requires additional
the project
funds.
The value of an experienced cost estimator is that he has a
better understanding of which particular
to
each
derived
situation.
factors,
it
most
Since
is
include
CER's
necessary
CER is
have
to
applicable
empirically
them
by
used
someone who appreciates and understands their implications.
This
is particularly important
which
technologies
Furthermore,
expert
rational
crosscheck
general,
computer
therefore
the
not
have
opinion
of
is
been
very
data
the
generated
appropriate
if the new design
in
used
useful
that
equations
combination
the
new
past.
in providing
modern,
produce.
of
uses
the
a
complex,
It
is
value
of
26
relationships
estimating
A
forecasts.
that
of the
summary
of
effectiveness
better
in
result
can
with
conjunction
in
used
expert
the
by
provided
judgment
various
types
of cost estimates is shown in Figure 10.
ABILITY ABILITY
DATA WORK
TO
TO
WITH
REFLECT REFLECT BASE
TYPE OF COST
PRECISION COST TIME PROD'TN DESIGN COST PODAC
ESTIMATE
CHANGES CHANGES
New
Work
Requires
Factor
Some
Yes
Large
Yes
Yes
Some
New
Wok
Requires
Factor
Requires
Factor
Some
New
Wouk
Modeate
Possibly
Possibly
Low
Possible
Quick
Requires
Possibly
Some
Unknown
Yes
Irp
Yes
Quick
Low
Parametric
Fair
Engineering
High
Analog (Comparison)
Fair/Good
Extrapolation
Fair
Low
Quick
Expert Opinion
Fair-Low
Low
Requires
Factor
I
Yes
Req'd
Slow
Very
II
Large
Medium Modente Requires
Factor
Req'd
Red
Unknown
Performance Based
__________
High
Re-use/Module
Low
___
______
I__
Low-
Factor
Figure 10.
final
The
design
construction is the
phase
the
costs.
It
on
a
stage
_Startup
before
expensive
"bottom up"
used to
this level
is
methodology
accounting
construct
(25)
moves
stage.
to
used
In
the
of
the
ship.
required
It
is
into
this
determine
and tedious process
the most accurate method available.
at
project
the
Detailed Contract Design
is a timely,
and materials
.
Comparison of Cost Estimates
engineering
detailed
Yes
Quick-
Medium Moderate
based
work
however,
The costing information
of design provides the
fundamental basis for
27
the contract price rather than to create
The
analysis.
the
strong
a
that
detailed
to design.
indications
are
There
modularized
a
towards
moving
This
design
however
is
implemented
is
a method
that
that
can
structure
production
This will be discussed
be
into modules
formulate and categorize the vessel
elements.
can
of re-use modules.
introduction
requires
technique
final
off
a design trade
that
and re-use
Navy
the
approach
oriented
further in the
is
following
sections.
The
difficulty
of
assigning
an
assumed
final
cost
to
a
product 3 to 7 years before its materialization is logical;
however,
it
result
could
necessary
is
in
cost
to
changes
understand
in
order
factors
the
to
develop
that
better
methods of analysis to deal with them:
1. Technology Change
"
New processes
"
New materials
2. Social,
Economic,
and Political Situation
*
Changing workforce
*
Economic downturn and unrest
3. Shipyard Backlog
0
Heavy backlog causes confusion
28
Few orders results in loss of learning
0
4. Labor Rates
0
Different for each shipyard
0
Unpredictable changes
5. Material
Costs
*
Vendor base changes
"
Delayed shipments
6. Regulatory Structure
0
New rules
7. Inflation
*
Fluctuates unpredictably
*
Different rate for each item
new
are
developing
that
cost
will
estimates.
system
analysis
deal
One
are
currently trying
with
of
the
(discussed in
which
will
these
most
issues
to
incorporate
that
distort
important
Chapter
assign
will
5)
a
the Navy
industry and
that
estimating systems
The
additions
be
certain
the
parameter
to
the
new
uncertainty
probabilistic
distribution to each parametric regression equation
11).
factors
(Figure
This will provide cost estimates with a certain range
of probable outcomes. In this way it will be easier for the
29
Navy to
plan
risk associated
of
level
the
and manage
with
each project.
Addition of Risk in CER's
Figure 12.
Since
the
cost
estimates
which
basic
is
based
construction
through
determined,
form
These
factors.
that
are
Breakdown
designer,
design
the
use
cost
estimating
level
shipyard
a
of
method
and
of
as
determined
(CER's)
relationships
a
of
ship
Ship
Work
analysis
the
common
The
directly
historically
uses
of
method
weight.
then
is
parametric
(SWBS)
Structure
communicating the
ship
of
a
developed
parameter:
cost
This
costs.
Navy
US
advance
in
required well
common
single
provide
to
used
construction
varies
a
on
the
phase,
design
contract
often
are
(1)
means
of
technical definition between the
cost
estimator.
Its
definition
in depth and breadth as a project moves through each
phase.
The
main
components
that
make
up
the
one
30
SWBS
digit
system
group
are
Figure
in
shown
The
13.
total
weight of the ship is the sum of groups 100 through 700.
Description
SWBS Group
100
Hull Structure
200
Propulsion Plant
300
Electric PIlant
400
Command
500
Auxiliary SyStwms
600
Out4it & FarnishingS
700
Armament
800
Design & Cnqgn*rirnq Sev~iceu
900
construction Services
the
group
level
of
design
increases,
within
specification
ance
One Digit SWBS Breakdown
Figure 13.
As
Sur vwi
&
the
so
system.
(1)
does
For
the
level
example,
a
of
two
digit weight group such as group 130 defines hull decks. On
the
like
Engineers
because it
design
level,
digit
three
using
group
this
is system based.
and it
lends
itself
132
type
could
of
be
second
classification
deck.
system
It is good for early stages of
to parametric
extrapolation
or
reliance
on
analogy cost estimating methods.
Such
weight
an
approach
as
the
which
results
in
of
costs
surrogate
a
heavy
can
be
deceiving.
Experience has shown that there are cost drivers other than
31
weight
cannot
that
be
ignored.
The
from
suffered
DDG51
severe operational issues due to the use of a solely weight
based
decreasing
beam
the
by
2ft
would
decrease
construction difficulty factor however,
level
that
the
overall
cost
the
costs.
The
increased to such a
ship
to the change
issues arose due
operational
of
that
believed
Designers
method.
estimate
cost
increased.
Also
since stretchers
couldn't fit in the 2ft narrower corridors.
issue
Another
system
system
ignores
designs
which
arises
when
rather
than
whole.
Figure
height
of
available
shows
of
access
for
9ft
and
structural
member
penetration
The
runs.
interference
between
design
changes
in
the
one
aspect
or
of
the
and
systems
multiple
was
6'5"
to
a
deck
is
2'7"
congested
due
to
deviation
from
space meant
that
the
common
systems.
the
installation
lack of available
as
had only
led
that
system
vessel
Since
DDG51
This
difficult
costly
issue
increasing
is
friendly
an
is
11'2".
systems.
overheads,
optimum pipe
to
personnel,
distributive
of
effect
the
from
DDG51
optimize
production
efficient
14
the
try to
it
current
The
based.
This
costs.
reduce
designers
for
required
would
that
is
production
of
possibility
the
the
classification
production
than
rather
based
SWBS
the
with
which
This
resulted in
fueled
change
32
and
orders
dramatically
increased
construction
time
and
cost.
Lnangener
80
-Pjaruwt
2.
-
PU.4
Umz
4,-,
omoo, %te* CeCX
Woo Fram*
641g
M&cUnary Plaorm
M
PIZOam
Figure 14.
DDG-51 Design Issues
(26)
33
-
3
CHAPTER
DESIGN
BUILD
IMPROVEMENTS/
BUILD
TO
STRATEGY:
Product Work Breakdown Structure
system for
The US Navy has been using a SWBS classification
the past
systems approach.
products
work
that
accordingly.
convenient
to
as
are
savings
and
group
products
These
because
functional
technology.
and
A
the
typical
incorporate
new
rather than just a
the
is
This
the
from
sequenced
process
example of
Work
interim
different
benefit
that are
Product
subdivides
work
order.
the
The
classifies
assembled
at
in subassemblies
characteristics.
(PWBS)
Structure
schedule
to
necessary
Ships are built
common
by
Breakdown
is
initial
however,
design;
look at production methods
features that
grouped
of
stage
it
level
detailed
system that provides an
is a
an early
at
approximation
more
It
60 years.
required
cost
into
and
a
is
referred
its
function
is shown in Figure 15.
34
R
A) CONVENTIONAL PROCESS METHOD
IG
M
B) GROUP PROCESS METHOD
KEY:
Figure 15.
This
system
expanded
order
from
to
efficient
of
grouping
subassembly
of
D DRILL PRESS
G -GRINDER
Efficiency of Group Technology
a
(21)
resources
efficiently
to
to
blocks
productivity
improve
use
L - LATHE
M - MILLING MACHINE
C - CUTTING MACHINE
shipyard's
and
outfit
result
resources.
be
zones
in
a
in
Since
system operates by creating interim products,
can
more
the
PWBS
the vessel
built according to zones and assembled at the final
is
stage.
(Figure 16)
35
Types of Zone Ouftftinc
Modular Construction
Zone Constructionand COutfit
P-ocess F~ow Lanes
On-Slack
Cuftfiln
UiA
On~ ~
Launcfl
Asseffibly
7
Ouffitting
Onn.acat
(26)
Figure 16. Modular and Zonal Construction
A
to
ship
have
productivity,
amount
of
production.
that
designs
this
in
efficiently
overlap
of
material
maximize
significant
procurement,
and
This is therefore placing added pressure on the
already difficult position of
incorporate
to
a
implies
approach
subdivided
be
to
attempting
In
design,
system needs
sequence
vessels
allow
way.
PWBS
the
production
this
shipyard that uses
and
anticipate
the designer who now has
the
method
and
sequence
to
of
production.
Modular Construction:
The
concept of modular construction
due
to
the
the
US
changes
Navy's
that
are
is becoming more viable
occurring
procurement
in
the
strategy.
framework
The
of
Navy's
36
the
example of
attempts
of
thickness) .
incorporated
system.
new
a
that module
or
are
a logical
existing
system
an
If
direct
and
the
existing
associated
of
database
possible
to
define
modules
at
any
design
any
of
level
subassembly to hull erection.
be
existing module
can
be
an
of
The
interim
can
it
the
added
the
added
to
it
will
Eventually
entirely
almost
be
PWBS,
cost of the module
be
will
modules.
extension
can
adaptation
information
sizes,
pipe
that
within
directly into the new cost estimate.
components
different
pumps,
priced
and
classified,
described,
then
in
an
of
components
standard
of
modules
Reuse
The program
reuse modules.
common
using
as
(such
Designs
Naval
use of
the number
standardize
to
and plate
of
effective
an
is
program
(ATC)
Commonality
Through
Affordability
production
be
by
reuse
line
from
(Figure 17)
Product A
Design A
Desin
aProducl
0
Develqopmn
Figure 17.
Converting to Re-Use Modules
(25)
37
the
Using
new
can result
time
the
determination
the
of
on cost
consequent
impact
the
estimate
cost
engineering
architects
of
the
will
a
the
better
a
of
be
will
make
the
It
reduced.
that
understanding
that
of
the
they
The
accuracy of
of
a
cost
detailed
and
give
also
cost
make
and its
design
incurred
will
comparative
a
change in
approach
study.
decisions
design
to
without
estimate
conduct
to
effects
ship procurement.
and cheaper
taken
methods
organization
production
faster,
in easier,
Moreover,
lost
and
design
time
naval
implications
ultimately
and
result in producing lower cost vessels.
DDG51
vessels
were
they
thereby
were
not
limiting
built
modular
construction
with
modular
ship
possible
savings
that
designed
the
using
architecture
would
from the advanced outfitting capabilities of the
Figure
can
18
but
result
shipyard.
shows how modular architecture and reuse systems
be incorporated,
scaled,
and used throughout
different
vessel classes.
38
Common Modular System Architecture
OBJECTIVE: RILD3 SH4IPS COMPORPM
A
DJSTRIBUTED
OF COMMON
MODULtP
-
U-----
- -
- - -
4a
-
Figure 18.
for
modules
similar
Using
be
cannot
process
construction
overlooked.
or
(26)
reaped from pursuing such a
that are
organized
and
understated
Fn t
Using Modular Architecture in the Navy
The economies of scale
focused
UL9DINn BLOCKS. AND
-q-
-
SYSTEMS RCHMTECTURES
and
productivity
different
vessel
types
improves
shipyard
decreases
costs.
Other
benefits
arise
through
the
equipment
in bulk
which again
and
of purchasing materials
process
attempted
to
incorporate an increasing number of subcontracting deals
in
in
results
order
cost.
costs.
will
construction
also
let
that they
Having
shipyards
are
more
multiple
suppliers
contractors which in
the
service,
quality,
has
The Navy
scale.
competition between
increase
It
of
decrease
to
increases
should
economies
and
focus
reduce
on
efficient
turn
acquisition
the aspects
of
or proficient
at
39
......
..
.........
......
. . ...
This
conducting.
due to the
The
the
with
deal
would
inexperience of the
overruns
hour
labor
workforce shown in Figure
4.
UK Royal Navy uses such an approach to build its Type
45 destroyer
(Figure 19).
***
..........
........
Vosper Thomycroft
BAE Marine Barrow
BAE Marine Govan
BLOCK E
BLOCK D
MEGA-BLOCK B+ C
BLOCK A
BLOCK F
Modular Construction of UK Destro yer
Figure 19.
(12)
The possible savings that can be realized by switching to a
modular
shows
production
the
cost
can
process
be
expected for
savings
pronounced.
DD-21
Figure
due to
the
20
new
design initiatives.
Mannours (K mnnrs)
(using DOG CERs)
1.458
SWBS
100
1,018
1
Savings
30%
SI
more producole structure, tritcKer plate,
less weld distortion
0%
300
145
289
400
199
145
289
135
500
557
394
29%
600
612
374
39%
200
Notes:
Percent
Mannours
(using DGIAmpntb CERs)
0%
32%
SMART decks, air lown fiber optics.
modulanty
increased deck heights, zonal systems.
ATC
700
800&900 and margin
Total
1
68
66
]
2.336
5
b.662
1.700
|
1
4121
modules
incresed deck heights. ATC mocuies
0%
27%
1 27%
function of SWBS 100-700
Figure 20. Predicted Cost Savings
(26)
40
Learning Curves:
as
cost
construction
decreases
specialization
increased
and
Modularity
more
produced.
are
vessels
similar
average
is because ship construction labor costs decrease with
This
as
experience
outcome.
efficient
more
vessel
original
have
Therefore
to
be
CER's
take
to
a
with
efforts
their
the
modified
of learning as series
the effects
and production
manufacturing
coordinate
management
and
strategy,
strategy,
build
used
into
for
the
account
of several vessels of the
same class are constructed in sequence.
The basic form of the learning curve is:
Log(y)
=
Log(a)+b(Log(x))
where:
y = Cost of x# of units
a = Cost of
1 St
unit
b = Learning curve coefficient
The
slope
for
2
of the
units,
x
learning curve
=2,
and b(Log(x))
is the
equal
learning rate.
So,
of
the
to
the
log
slope. Thus,
b = Log
(slope)
/ Log(2)
For a 90% slope, b = Log
(0.9) / Log
(2)
=
-0.152
41
= Cost of
Cost of Nth vessel
The
theory is
built doubles,
cost
the
for
first
the
the
the
vessel
third
of
cost
effect
equation,
of
will
be
first
the
different
i.e.
y
=
ships
decreases by
if
Therefore
cost
the
for
a
the
second
90% of the cost of the first.
2^(-0.152)
3^(-0.152)
=
cost
cost.
the
1,
is
year
vessel will be 10% less
(Or using
former
the
of
of
total quantity
the
construction
the basic
percentage
constant
*N^ (b)
st
time
each
that
1
.....
..
.....
........
...
. . ....
.
.
0.846,
=
21
Figure
vessel.
learning
0.9).
=
curves
The
or
shows
decreases
cost
of
84.6%
of
how
costs
the
as
output increases.
Cost Learning Curves
0
1Z
0
15
0
25
Ship Number in Series Ship Construction
Program
Figure 21. Effect of Learning on Cost
(14)
42
is
Learning
and
including
system
following
reduction
in
skill
Low
ship.
levels
low
between
learning
the
amount of
of a
certain task.
have
slopes
close
to
region
with
can
where
highly
Figure
22
learning
makes
improve
how
its
because
efficiency
different
increase
it
effects.
is
increase
Production
but
substantial
a
This
labor.
skilled
cost
learning
to
shows
not
do
machines
decrease
and
attributed
significantly
tend to also
experience.
through
efficiency
necessarily
since
unity
no
repeated performance
such as modulization and PWBS
innovation processes
shipyard
labor with
or
little
is
each
exhibit
tend to
processes
there
and
of
start
Highly automated operations
productivity
their
since
of
factors
technology,
and
completion
level
of
variety
a
manufacturing
complexity,
time
construction
on
depending
varies
performed
being
is
that
process
each
for
different
is
The
not
major
difference
skilled
with
manufacturing
is
labor
experience.
activities
exhibit differences in learning rates.
Typical Slope
%
Manufacturing Activity
Electronics
90-95
Machining
90-95
Electrical
75-85
Welding
88-92
Figure 22.
Typical Learning Rates
(20)
43
ratio
ratio
50:50,
25:75
is
Typical
is
the
in
the
vicinity
slopes are
learning
in
rate
and
manual
75%
requires
operation
slopes
automation,
the
an
if
Generally,
common.
of
80%
are
the
85%
region.
90%
the
in
is
If
If
the
region.
run between
shipbuilding learning slopes tend to
25%
80
and 85%.
There
are
instances
when
using
curve
learning
Such situations
factors is not appropriate.
correction
include:
"
When ship construction is sporadic
"
When the types of functions performed are inconsistent
(custom products)
"
When work is highly automated and production rate
cannot increase further
"
When rules and regulations limit the production rate
"
When production quantities are small
Sporadic production, either due to low levels of orders,
results in breaks in
labor issues such as extended strikes,
production.
The
effects
resumption of construction
in
cost
upon
resumption
of
of
such
can result
or
between
gap
a
time
in
a stepped increase
construction
as
shown
in
Figure
23.
44
Break
Produr
f.an
RecurrIng
Unit
Pro.Iuction
Cost
Other
where
instances
include
of
time
accustomed
become
to
requires
labor
the
to
cost
a
new
occur
can
changes
and
facilities
to
since
production processes
in
increases
similar
upgrades
major
(1)
Effect of Break in Production
Figure 23.
certain
to
amount
facilities
and
production methods. A typical example would be Philadelphia
cost of
increased the
trained
to
changes
and
can
uses
for
caution
is
the
use
in
inherently
ship
since
a
upgrade
major
A
equipment.
new
loss
upgrades
of
facilities
design
of
vessels
a
class
since
the
Thus
CER's
that
different.
can
to
Significant
learning
cost estimating have
they
the
to
construction because workers were not
technological
result
also
process
yard.
Masa
Kvaerner
result
in
to
production
the
be used with
significant
Navy
extreme
variations
between actual and predicted costs.
45
has
to
due
is
number
question
and
is
it
the US
the
Today,
applicable
use
to
could
that
benefits
cost
for
5
is therefore necessary to
It
whether
factors
correction
annum.
per
vessels
down to less than 6.
re-evaluate
current
17
about
constructing
cold war
During the
years.
10
of
order
the
of
cancellation
the
class
Virginia
the
and
79
shipyards
and
Navy
the
between
DDG
of
the past
over
vessels
contention
costs
the
been
submarines
was
of
point
A major
arise from improvements in learning.
Benefits of Reduced Construction Time:
shipyards
Korean
delivery time
with
a
by
pre-negotiating
detailed work breakdown
change
outlawing
essentially
that
proved
has
concept
decrease
shown
design
total
to
delivery by
costs
by
50%
as much
to
possible
was
as
time
the
decreasing
by
that
and
structure
Analysis of construction
decrease construction time by 30%.
costs
it
orders,
exact
an
it
will
30%
be
(19)
.
taken
from
possible
to
Although
it
may be infeasible and undesirable to decrease costs by 50%,
it is clear that the time value of money should play a much
more
important
role in
the
decision making aspects
of the
46
naval
By
process.
procurement
longer
having
the
projects
Navy incurs the following costs:
1. Interest
on capital
2. Interest on material inventory
labor and material
3. Extra
factors
cost due to escalation
(inflation)
4. Opportunity
of
cost
and
usage
facilities
cost
of occupancy of facilities
5. Increased overhead costs
6. Cost of built-in obsolescence
7. Cost of rescheduling and planning
In
as
short,
final
as
long
acquisition
to
continue
will
cost
held
is
vessel
the
cold war reduction in military spending
decrease
in
historical
of
procurement
decrease
in
the
Jones
Act
the
drydock,
With
rise.
post
and the consequent
vessels
naval
in
combined with
fleet,
shipyards
a
are
not interested in decreasing manhours and/or project time.
Since
shipyards
business,
they
expensive
ships
possible.
Thus
rely
on
work
inherently
with
the
as
Navy
procurement
naval
many
has
to
slowly,
extra
to
and
change
re-evaluate
remain
produce
orders
the
in
way
as
it
47
expects shipyards to operate if any benefits are to be made
by using
existence
highly
modern,
a
of
PWBS
efficient production
of
system
existence since the late 1980's.
that
produce
projects
cost
time
carrier
Figure
was
24
built
shows
at
has
The
been
in
In fact the same shipyards
for naval
overruns
can build commercial
time and cost.
bulk
and
construction
methods.
vessels
the
in a
fraction
speed that
Avondale
construction
shipyards
a
of the
commercial
by
using
a
PWBS for vessel construction.
48
Z<.
1:
-R now
vi
1
60
49
........
.............
..........
Fig, 3-64
Figure 24. Construction using PWBS
The
vessel
shipyards
was
are
still
in
experienced
produce
similar vessels
is
no reason
that
Far
at
days
far
very
levels
there
43
launched
from
East
about
the
after
same
keel
attaining
yards,
50%
US
(21)
laying!
US
production
which
generally
of the
time.
However,
yards
cannot
use the
same production methods to build naval vessels.
50
of
costs
it
While
to
relating
project,
assigning
obsolescence
attained
by
are
there
shown that
been
shorter
a
longer
of
built-in
itself
The elimination of change
orders
short
in
increase
significant benefits
construction
term
re-
it
has
conversely,
equipment;
of
upgrade
and
conversion
of
cost
added
the
obsolescence
an
in
result
probably
material
Built-in
harder.
is a knife with two edges.
would
the
to
a value
much
is
and
capital
labor,
estimate
to
trivial
relatively
is
construction
longer
with
associated
costs
future
periods.
construction
shorter
a
is necessary to conduct a present value analysis
it
period,
of
the value
to understand
In order
that
without
times
can be
expensive,
time consuming change orders.
Multi- Purpose Vessels
Navy mission requirements have become less focused and as a
vessels
result,
the navy is more flexible at any
capabilities. As a result,
given
By
at
time
their
performance
penalties
typical
capital
multipurpose
that
different requirements.
under
of
the expense
nature
missions
multiple
with
designed
been
have
and operating costs.
vessel
are
designs
imposed
It can be argued,
perform
only
by
incorporate
their
various
that most vessels
one
main
mission
51
of
the
With
more
focused
crew
size
which
and training
of the
requirements
could
(14).
to
possible
is
personnel
dedicated
would have
specialization
Furthermore,
capability.
mission
each
it
missions
37%
is
and extra
manning
both
reduce
to
need
the
emphasizes
equipment.
for
surface-to-air
modernization
13%
and
maintenance,
21%
personnel,
reduce
other
breakdown
cost
operating
the
ships
naval
This
many
but the capabilities were never used.
warfare,
In
Most
and
anti-submarine
as
such
functions
bombardment.
perform
to
manned
and
equipped
were
the primary use
Gulf War,
surface
to
surface
was
warships
vessels
during the
example,
For
function.
crew on primary and secondary mission
improve
operational
proficiency
and
effectiveness.
25
Figure
different
purpose
and
Navy
vessel
is
cost
and 75%
significantly
require
would
A
type
value
present
by
configurations
a
Clearly,
operate.
management.
a
performs
fleet
more
mission.
expensive
specialized
vessels
increase of
35%
three
The
multi
and
construct
to
mission
better
comprising
oriented
operations
60%
type
A
could be procured and operated at:
B vessels
(0.6*1.113+0.75*1.032)
more
more
of
comparison
=
1.442C.
This is about
82.5% of the
52
7
-
cost of procuring and operating a
-
-~
smaller fleet of multiple
purpose vessels.
Table I Comparative characteristics
Multi-purposc shiw
Displacement
AAW capability
ASW capability
GSF capabilitv
Screws#
Speed (kn)
D
Primary
Primary
Good
TFpe A
Type R
0.4D
0.4C
Pumarv
Fair
Fair
Primary
Good
Poor
2
M
Procu rement cost
Endurance
FuIe cvst. PV 20
vears*
cost PV20 years
Overhaui cos / 20 year
Operating ;und! /PV 20 y.
Same
0-0780C
0.067C
0.480C
0.11 4C
0.O IC
0.031C
0.040C
0.310C
0 00C
0.010C
0.022C
0.024C
1.746C
1.113C
rs
Re-air Oarts,. PV 20 yeas
Commissr P\ '0 ears.
Port costs and
scervice
PV
2ear
viu
0.05iC
0.310C
0.067C
0.010(C
0.020(
0 024C
20 yeArs
Total discounted
comparative 20 year cost
PV=pfes4,-
0.5M
0.iC
Same
0.tC
C
Same
Crew
1
X
2
X+2
OM
X
MaIning
Figure 25. A
Single purpot-e ships
1.032C
Lot
Single or Multi Purpose Navy
(19)
Cost Estimating Relationships:
are
CER's
item's
that
formulas
or
physical
also
compare
item
or
the
group
of
relate
the
functional
of
cost
an
items.
cost
an
of
item
They
characteristics.
item
are
They
and parametric
the
to
cost
of
historically
analysis.
Since
to
the
can
another
derived
CER's
are
through
regression
derived
from physical
how the
data correlates to the problem that is being solved
in
particular
each
data,
cost
it
is
estimate.
necessary
CER's
vary
to
in
understand
complexity
53
design
provide
the
between
and detail
time and cost that would be
the
a detailed engineering analysis
their
reliable
with
estimators
cost
ship
in
lies
detail
and the
stage
design
significance
Their
stage.
concept
ability to
without
results
incurred through
of a design.
the use
of
There are five
main types of CER's:
"
Manual
-
determined
from external
such
information
as
vendors and subcontractors
"
-
Calculated
actual
from
derived
and
determined
previous ship cost data.
"
-
Predictive
data
multiple
of
vessels
over
manufacturing method that is
"
Empirical
-
determined
regression
though
determined
time,
or
from
return
a
common
from
changing over time.
through
statistical
regression
analysis of particular shipyard processes.
"
Standard
of
the
Interim
PWBS.
standard
Products
Existing
common
-
CER's
determined
are
grouped
interim products
and
at
level
each
together
modules
into
called
re-use packages.
54
NAVSEA 017 SHIP COST ESTIMATING SYSTEM:
CHAPTER 4 -
Sea
Naval
the
to
refers
017
NAVSEA
The department
of Cost Engineering and Industrial Analysis.
prepares
estimates
cost
ship
Navy's
the
Office
Command
Systems
initial
the
from
design feasibility study phase through production award and
extends
submission
for
execution
contract
actual
into
to
the annual Department of Defense's shipbuilding budget.
The
Shipbuilding
total
Navy's
10
approximately
constitutes
(18).
conversions
constructed
authorized by Congress must be
it
This
must cease.
through
the
ship
has
that
assures
been
that funds
all
reasonably
expected
construction.
Exceptions
to
for
ship
major
and
fully funded or the work on
"end costed" policy
available
always
are
the
appropriation,
item
procurement
SCN
An
of
percent
includes the procurement of ships
newly
be
to
craft
15
The
annual procurement budget.
as indicated by its name,
and
to
percent
(SCN)
Appropriation
Navy
Conversion,
and
this
costs
policy
include ship outfitting and post delivery costs. Also there
are
provisions
costs
to
be
due
to
that
In
inflation.
considered
for
allow
as
a
of
shipyard
cost
estimate
cost escalation
order
for
potential
a
ship
budget
candidate
the
following conditions must be met:
55
OPNAV
Written
"
cost
and
be
must
request
feasibility
in
hand.
*
Formal technical design inputs must be available.
*
strategy
acquisition
An
approved
schedule must be available.
*
A
of
These
estimates
are
submitted during each
and
the
estimate
reliability
of
on
preparation.
the
estimates
the
Clearly,
improve
the
at
available
data
economic
strategy,
acquisition
program
system.
Budgeting
and
Programming
based
definition
technical
of
Planning,
the
phase
and
shipbuilding
cognizant Program Manager must be involved.
Cost estimates are to be prepared and
time
and
confidence
the
level
into
four
as
of
technical definition increases.
In
the
design
ship
acquisition
past,
phases:
Design
Phase,
Phase.
For
Feasibility
Contract
almost
design
all
Design
major
was
divided
Study
Phase
Phase,
Preliminary
Detail
and
ship programs,
new
Design
NAVSEA
would
develop a ship design up to and including Contract Design.
The
intent of Contract Design was to provide a ship design
that was
a
sufficiently detailed and technically mature
shipbuilder could use
ultimately sign a
build
the
ship.
it to develop
contract to develop
Nowadays,
NAVSEA
that
a cost proposal and
the Detail Design and
only
develops
rough
56
the DoD requests are met,
turned
be
will
design
05
NAVSEA
of different
If the specifications
submitted.
that are
alternatives
the
by
an analysis
it to make
allows
This
division.
level
design
concept
the
at
designs
that
then the development of the ship
over
latter
The
industry.
to
then
performs feasibility, preliminary and contract designs.
goal
commitment
will
not
to
due
SWBS
to
be
required
.
furnished
The
"C"
class
by
(exceptions
is
estimate also
The
system
estimate
is
the
process.
A
class
Navy
the
The estimate
material.
classification
estimate
estimating
Congress
inflation)
system.
The
cost
ship
the
of
1.
Table
in
shown
cost
ship
NAVSEA
The
that
being
ultimate
C
additional
escalation
the
based on
is
is
a
funds
factors
three-digit
includes cost
for government
Estimating
Relationships
Cost
(CERs) used to calculate the cost estimates are based on:
"
an accepted weight estimate using bid information
"
current weight estimate when using cost data
contractor's
*
similar
ship
latest Cost Performance Report
construction
building yard(s)
data
of
the
from the
(CPR)
prospective
where new designs are being costed.
57
modernizations,
The
estimate
and
is
there
are provisions
occur
with
for
of
this
the
and
and/or
include:
material
of
that
a
class
a complete parts
is
to
that
requirements
The
conversion.
that
except
C
uncertainties
with the
deal
that
repair
estimate
equipment
to
comparable
(SLEP).
Programs
Extension
Life
Ship
conversions,
ship
with
deal
estimates
D
Class
be
list,
weights
and
replaced,
a
proposed list of ship alterations.
Class
estimates
F
are
prepared
information
using
from
single digit SWBS weights
and
only general guidance with respect to major electronics
and
feasibility studies based on
weapons
equipment.
parametric
The
extrapolation
cost
of
estimate
a
is
previous
example of such an ASSET model estimate
in
most
ship
cases
design.
a
An
is shown on Figure
26.
58
]
C
A
L
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SW5
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2
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00
S
6
200
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UR
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9
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LTONS
HP
LTONS
100.6
LONS
LTN
98.1
IT.N.
LTONS
400
500
4AUXSYST r1S
0 __UTFIT/F1JRNI3H1NG$
ARHARENT
700
8
INPUTS
I________
____
LI
CRACUP
_
288.1
91.00 1
I1
RA9---r----VWM
1
2
900
13
OTA
15
~
201
21
1
233i
4701
*T*~
H
-
1
1.00
r
3359 1
6771.
31057
6260
736
-
1 6204
8475
ItS
746
994
10?5
2996,
39901
43.16
227941
24654
1216'.:
17115
-- --
---
22969
17261
9PIj16987Si
I
24
2
4..
I
10V
_PROFIT
0
I
_i461
426
NTRUCTION COST
16
12331
23S
1.00
3.15
F
_LEAD SHIP
LEADSHIP,
LEADSHIP
$31 T (S903K) T .('92SK
COT i SK
= 1.04)-2
=3 8892
I.3 j
1CNSTRLRONSERYICES
14
17
94-5
0.5
E
KN
FACTORS
2486S5
252683f
2731_
li
__
22
Figure 26. Asset Model Output
A
applicable
is
It
estimate
R
class
is a
for
rough
designs
order
when
(20)
of magnitude estimate.
design
the
information
that is being used is not of feasibility standards quality.
limited
is
There
estimate
uses
old
information
weight
or
generalized
known
adjustment
cost
the
and
Some
factors.
examples are:
"
a new design of an unconventional ship platform.
*
a
ship
platform
that
is
initially
designed
to
carry
many unconventional or developmental equipments.
*
A
a ship designed beyond the current state of the art.
class
X
estimate
is
applied
to
situations
where
the
design is:
59
*
by
developed
not
the
Engineering
and
Engineering
Cost
Division or the NAVSEA Ship Design
Industrial Analysis
Integration
NAVSEA
and
Engineering
Office,
through
Directorate,
estimating
normal
the
Cost
process
"
provided by other commands or agencies
"
directed by higher authority.
TABLE 1.
Class
NAVSEA SHIP COST ESTIMATE CLASSIFICATION SYSTEM
Use
Basic Technical Input
C
Completed Preliminary Design
Three Digit Weights
D
Scope of Work,
Including
Weights of Deletes & Adds
Budget Phase
(New Construction)
Budget Phase
(Conversion)
SHIPALTS and Repairs
F
Feasibility Study
One Digit Weights
Planning/Programming
Phase
R
Rough Order of Magnitude
Planning Phase
Less Than Feasibility Study
A directed or modified
X
estimate -
an estimate not
developed through the normal
NAVSEA estimating process.
An estimate established
external to NAVSEA.
NAVSEA 05 uses a parametric ship design model called ASSET
(Advanced
Surface
Ship
Evaluation
with an existing ship design,
Tool).
The
or parent ship,
model
starts
that is most
60
closely
model
analogous
with
iteratively
that
solution
changes
The
estimator
ASSET
from
which
by the Navy.
NAVSEA
ship
the
parent
design
is
the
input
adequate
The program also has
with the ACEIT
program
new
accommodates
requirements.
estimates.
the
ship
is
a
joint
and
factors,
reach
a
of
ship
provided
to
the
cost
to
develop
Class
"R"
cost
the capability to be linked
Army/Air
also
to
ASSET
set
Integrated Tools)
force
program
includes
learning
supported
order to conform with
It is also SWBS based in
but
The
desired
(Automated Cost Estimating
standards
escalation
concepts.
costs,
indirect
curves.
The
system
can
also output total life cycle costs for the vessel.
Once a design has been agreed upon,
project
is
turned
cost estimator
of
the
contractors'
cooperation
due
the
of
contractor
the
and
in
the
communication,
at
Navy
instrument
estimates.
and the
arise
differences
of
a validation
interaction,
contention
to
of
role
The
models
cost
amount of
between
issues
involvement
industry.
to
then becomes that
requires a large
Several
over
the development of the
This
and
Navy personnel.
this
level
estimating
of
methods
used by the Navy and all the different contractors that it
uses.
is
As
a
provided
result,
in
NAVSEA
SWBS
form
generally
requires
in
to
order
be
that
all
effectively
data
and
61
efficiently
NAVSEA
017
quality
also
analyzed
still
class
C
has
017.
to
develop
ratings
that
requests
by
for
This
is
cost
necessary
estimates
to
submission
provide
shipbuilders
because
of
budget
Congress.
017
return cost
actual
data in order to keep the system updated.
The
categories
are
show
conform
to
in
that
Figure
the
plans,
The
(GFM),
basic
and
end
Major
The
can be
portion,
general
construction,
cost
Category
and
accounting,
categories
shipbuilder
groupings:
material
27.
collection,
used by NAVSEA.
total
constitute
separated
government
change
shipyard profit which is about 10%)
Codes
review
administrative.
and
for
orders
a
ship
(MCC)
systems
into three
furnished
Construction
(including
constitute the shipyard
portion.
62
Construction Plans
MCC 100
ESWBS
Group
100
Hull Structure
200
Propulsion
300
Electric Plant
400
Command and
Surveillance
Change Orders
MCC 300
500 Auxiliary Systems
600
Outfit and
700
Armament
Contract
Escalation
MCC 291
Basic Construction
MCC 200
GFM Electronics
MCf 400
Furnishings
GFM Ordnance/Air
MCC 900
Integration/
0aA
Engineering
GFM HM&E
MCC 500
Ship Assembly and
Support Services
900
GFM Propulsion
MCC 521
Other Support
MCC 800
Total Ship End Cost (Dollars)
Total Ship Cost Categories
Figure 27.
Change
orders
long
have
been
both the Navy and Congress.
due
commonly
is
to
the
a
of
region
(18)
for
difficulty
The existence of change
orders
initial
award
of
looseness
the
contract.
The methods that such a change can take place are
indicated
in
the
federal
acquisition
regulation
"changes"
clauses. The reasons for change orders are the following:
0
To
include
about
ship,
0
during
state-of-the-art
the
lengthy
improvements
construction
that
periods
To
correct
discovered
deficiencies
in
information
furnished
drawings or government
come
of
a
contract
which
is
the responsibility of the government,
63
To
*
correct
drawings
contract
between
differences
and
ship specifications,
*
To
incorporate
construction,
safety
items
0
To incorporate improvements that
forces
afloat,
operational
during
emerge
that
are generated by
approved
and
the
for
implementation,
*
To have the shipbuilder repair or modify GFM,
"
the
contract
ship
delivery
To
change
contract date of delivery, or the method
point,
the
of shipment
or packing.
are
about
year.
The
budgeted
for
interest
as
ships
lead
of the
possible,
cost
5%
and
8000
to
3000
There
for
for
orders
change
follow
as
shipyard to include
is
there
see
to
present
system
already
mentioned
consequent
increase
especially
for
in
lead
a
1,
costs
ships.
is
For
very
the
10%
is
in
the
many
it
change
their
change
a
to
orders
under
incentive
in
decrease
Chapter
in
no
currently
amounts
As
ships.
fiscal
each
orders
change
levels.
orders
and
the
As
the
significant
number
change
orders
DDG-51
accounted for over 17% of the total cost.
NAVSEA's use of CER's
Historically CER's were used to relate cost to SWBS weights
under the following formula:
64
C = f *
f
Where
a
represents
material
per
cost
ton
technical parameters
anticipated.
systems
that
These
(SWBS weight)
relationship
functional
labor
and/or
cost
ton.
Other
also used when better results are
are
could include cost of
cost
relate
per
relating
to
power
energy generating
rating
and
weight.
The
following equation would be used:
C
=
X
(R/Rs)Kr
(Km
x
W)
where
These
Kr
R
=
Rs
Km
W
=
=
=
=
power rating (e.g., horsepower)
consideration
power rating of "standard" unit
cost per unit of weight
weight of unit
equations
in
then
cost factor based on unit power rating
the
generate
discretion
basic
of
the
CER
of unit under
as
estimator
to
what
he is going to expand on or change the initial CER.
are
adjustments
as
costs
well
made
as
for
an
inflation
It
relationships.
of
incorporation
labor
of
and
a
is
extent
Typical
material
historically
acceptable level of risk. This process is far from an exact
science
and
therefore
judgment
requires
and
experience.
According to the level of detail of the data available from
the
contractor
CER's
according
performed.
The
or
to
shipyard,
the
the
class
following
of
estimator
estimate
estimating
has
that
to
develop
is
relationships
being
are
65
by
presented
NAVSEA
as
the
suggested
group
relationships
for class F estimates:
SWBS 100 -
Hull Structure
Item
Labor CER
Material CER
GR 150, Deckhouse
weight (Tons)
X MH/Ton
$/Tons
(specific)
(specific
material)
GR 100, Remaining
weight (Tons)
X MH/Ton
(steel)
X $/Ton
(steel)
Adjustments are made for different materials used:
Mild Steel (Tons)
High-Yield Steel (Tons)
High-Strength, HighAlloy Steel (Tons)
X MH/Ton
X MH/Ton
X MH/Ton
X $/Ton
X $/Ton
X $/Ton
X MH/Ton
X $/Ton
X MH/Ton
X $/Ton
For Submarines:
Pressure Hull Weight
(Tons)
GR 100, Remaining
weight (Tons)
SWBS 200
-
Propulsion Plant
Item
Labor CER
GR 220, Energy
Generation System
Material CER
MH/Unit, Rating,
Ton, or Combination
Marine Vendor
Input
GR 230,
Propulsion
MH/Unit, Rating,
Ton, or Combination
Marine Vendor
Input
GR 240,
Transmission
MH/Ton
$/Ton
MH/Ton
$/Ton
Propulsion Systems
GR 200, All Other
66
SWBS 300 -
Electric Plant
Item
Labor CER
Material CER
MH/Unit, Rating,
Vendor
Input
Ton,
GR 310, Electric Power
Generation
GR 320, Power Distribution
Systems (Tons)
GR 330,
(Tons)
Lighting System
GR 300,
All Other
SWBS 400 -
(Tons)
GR 520,
530,
GR 500,
All Other(Tons)
540, 550,
Since
Painting
the
MH/To n
$/Ton
Material CER
$/Ton
Labor CER
MH/Ton
Material CER
$/Ton*
MH/Ton
$/Ton*
MH/Ton
$/Ton*
Outfit and Furnishings
GR 600, Outfit and
Furnishings (Tons)
SWBS 700 -
$/Ton
Auxiliary Systems
Climate Control
GR 630,
MH/To n
Labor CER
MH/Ton
Item
GR 510,
SWBS 600 -
$/Ton
Command and Surveillance
Item
GR 400, Command and
Surveillance
SWBS 500 -
MH/To n
MH/Ton
$/Ton
MH/Ton
MH/Cubic Number
$/Ton
Armament
majority
of
armament
is
GFM,
the
items
separately costed by the vendor or subcontractor.
costs are for installation of the equipment.
are
Shipyard
67
Material CER
Labor CER
Item
Guns
MH/Unit
$/Unit
(Units) MH/Unit
$/Unit
MH/Unit
$/Unit
(Units)
Missile Launchers
Torpedo Tubes
(Units)
$/Ton
MH/Ton
GR 700, All Other (less
weight of guns, etc.) (Tons)
SWBS 800 and 900- Integration/Engineering and Ship Assembly
and Support Services
The
manhours
represented by these groups are
type
requirements,
of
shipyard is
involved.
dollars
Group
of
of the
percentage
800
sum of
most
historical
900
and
for
the
work
function of specification
a
and
ship,
The
required
dollars
material
and
can
significant,
and material
manhours
be
which
expressed
as
a
and material
historical manhours
dollars for Groups 100 through 700 of the same ship.
Limitations of Weight Based System:
"
It cannot easily estimate cost differentials below gross
levels
of
precludes
studies
the
the
of
work
breakdown
method
from
designs,
(WBS) .
structure
being
materials,
useful
for
and
This
trade-off
manufacturing
processes.
"
It
cannot
estimate
cost
differentials
performed at different stages
of
outfit
of construction:
work
on unit,
68
on
and
block
thumb
on
that
indicate
Various
board.
these
cost
rules
established
can
differentials
of
vary
from 300% to 500% or more.
*
It
cannot
estimate
cost
configuration complexity,
density
HVAC
(e.g.
deckhouse)
or
differentials
such
as
compartment
installation
system
on board the
location
due
engine room installation versus
ship
to
or
system
in
tight
(e.g.
confining
easily accessible weather
deck installation).
*
It cannot estimate cost differentials due to orientation
of work
(e.g.
less
productive
work versus
over head
more
productive down hand work).
"
It
cannot estimate
build
of
strategy,
selected
cost differentials
due
the
including outsourcing
components
to
more
to changes
in
manufacturing
productive,
costly
less
vendors and suppliers.
*
Since
it
operates
mostly
at
high
levels
of
the
WBS,
it
cannot easily translate or segment costs from one type of
ship to another,
particularly ship
types
and hull
forms
not yet developed and built.
In typical
government
fashion,
although
it
is
clear that a
Paleolithic
cost estimating system is being used,
being
to
done
improve
the
current
situation.
little
The
is
NAVSEA
69
guide
for
the
ship
although
"weight
has
been
shown
the
past the
other
in
cost
available
weight
if
is
cost
the
the
most
past
parameters
reference manual
parameter
and
provide
good
estimates,
in
been encouraged
to be
are
states this
that
used
to
results
suggests
commonly
estimator has
improved
(18)
estimator
used with,
or
anticipated".
fact,
to
explore
in
lieu
Although
cost estimates
of
the
conducted
by the Navy are still primarily weight based.
How
can
when
weight
different
completely
gives
be
the
single
designs
different
can
cost?
have
The
estimates
incorrect
competing
preliminary
sensitive
enough
most
cost
the
weight
current
same
approach
when
especially
designs
when
important
because
evaluating
the
the
but
inherently
comparing
system
effects
factor
is
of
not
subtle
design changes.
The weight based model does not
reflect or incorporate
the
effects of productivity changes or the process by which the
vessel
is built.
hullform by
change
An example
reducing
in
insignificant
relationships,
actual
in
increasing
amount
the
steel
terms
resulting
is
in
of
the
parallel
structure
of
no
the
change
"shape"
midbody.
The
may
be
weight
cost
in
of a
estimating
estimated
cost.
70
.............
However,
result
definitely
product oriented cost module such as PODAC.
that
cost
only
not
changes
with
size
ship
modules
within
increase
cost
a
in
block
flat
several
eliminating
a
will
modular
Figure 28 shows
but
also
with
ship form.
Average Structural Size Productivity Factors
(Variable by Block Coefficient)
2.50
L.0
2.00
-+-
U
1.50
-
0
0
---0-
C,,
-J
040
-a- 0.50
1.00
0.60
0.70
0.80
0.90
i
R
0.50 +-
4
0
4
+
f
I
100
200
300
400
600
500
LWL (M)
i
Figure 28. Index of Estimated Shipbuilding Costs
The
current
estimating
makes
method
consideration of life cycle costs.
when
making
Operating
trade
costs
off
over
studies
the
life
allowance
or
This is major impediment
between
of
no
(16)
a
different
vessel
can
designs.
amount
to
71
Thus a cost estimating
over 75% of total life cycle costs.
that
system
without
focuses
only
for
consideration
It
be
to
conduct
trade
design
at
that
and
early
the
mission
are
requirements
is
inherently
of
visibility
the
true
be
or
problem
issue
program
that
met
the
in
an
a lack of
In most cases
to
lead
can
and
ineffective,
unnecessary,
of
appropriation
of
ensure
can
and
realistic
and
analysis
stage
leaders
and cost effective manor.
efficient
costs
benefit
cost
reliable
offs
development;
mission
cycle
life
cost
acquisition
initial
is important and necessary that both designers
flawed.
able
on
operationally useless and/or expensive vessels.
In
all
to
fairness
the
Navy,
NAVSEA
faces
in acquiring useful data from shipyards.
costs
are bid data.
of
distributed
a
unit
production
great
difficulty
In most cases the
The data is also gathered on the basis
system
which
rather
forces
the
than
on
the
basis
Navy
to
use
a
SWBS
of
a
cost
breakdown.
The
next
chapter
its
ship
incorporate
non
evolved
insight
will
give
cost
estimating
weight
based
into
how
capabilities
parameters
industry has
in
order
into
to
their
forecasts.
72
CHAPTER 5 -
The
Product
model was
PODAC:
Oriented
conceived as
that would employ
(PWBS)
by
a
Design
and
group
joint
and
a means
a product
technology
government,
Construction
of developing
oriented
(GT) .
industry,
(PODAC)
a cost model
work breakdown
The
system
and
cost
was
academia
system
developed
consortium
and the research funded by the Naval Surface Warfare Center
(NSWC). The developing team was comprised of:
"
Avondale Industries
"
Bath Iron Works
"
Ingalls Shipbuilding
* National Shipbuilding and Steel Company
* Newport News Shipbuilding
"
University of Michigan
"
Designers and Planners
"
SPAR Associates
*
NAVSEA
The new program
issue
was designed to
address
the
long
facing the traditional weight based models
primarily
linked
incorporates
to
design
algorithms
features.
that can
The
determine
standing
that were
PODAC
the
system
effects
on
cost of subtle design changes that have little or no impact
on weight.
It
is
a program that
focuses
on the
production
73
provided
generalizations
29
shows
how
rather
product
interim
each
of
process
by
for
from
project
changes the viewpoint of a
PODAC
Figure
CER's.
based
weight
broad
on
than
a System based to a Product based approach.
PRODUCT WBS
SYSTEM WBS
De:e & Eanrn
$lp
lLp Zone & -HullBkck
iull Um: & C-ifit Modjle:
S:ucStre
1i Machi:iaiElectxcal
Hui1 Ouri:
Askmb.
Sub Assembly
MPnXactSud Fa:-
systenz
C
A, c =:2:odat-::
SLp-md Suppcr Seice
Camnpc:entm
I
Figure 29.
The
in
used
successfully
government
been
has
program
and
System vs.
Product WBS
operational
industry
programs
of
specifications
both
been
has
and
1997
since
range
wide
a
(16)
for
both
domestically
and internationally.
As
already
define
to
system
previously
costs.
information:
types
of
type.
The hierarchical
Figure
defined
30.
by
At
each
their
finished product.
effects
of
design
described,
defined
is
work
The
system
the
classification breakdown
stage
or
specific
process,
work
using
process,
structure,
product
is
PWBS
a
uses
three
work
and
shown on
interim products
are
up
the
types
that
make
In this way it is possible to assess the
changes
and
innovations
as
well
as
to
74
analyze
their
on
impact
life
total
the
cost
cycle
of
a
vessel.
z
me.
..
b
Naraska ho is
wd-p
r
i
a
ftffl Piew 12
MM
1
WR
wM
.
yes Fahne~r~ft
het from meeapw
1.m11atfrmsst
1A4
L
orr
1.4
1
IS
30.3.*4..VAS3
3
Sujlo Anon"m
uve
sp
~
LIM
32ns
. WA
S&radw*c Asmeft
,j%c321
y
03eve
m.
ani
I11.411-1
1
1
-Pr~di.s
iuoem
Figure 30.
e~nge.reem a
PDAC
PWBS
Setin
&1c4n
..
KA
(P2DAC
75
"1111
in
Whereas
generally defined
are
CER's
system
estimating
cost
SWBS
a
"
...........
~~nn
nill I1'11"
~~~~~1111111
~~......
through weight based relationships,
in
a
PWBS system the definition of CER's changes with each level
of definition.
Examples of such evolution of CER definition
is shown in Figure 31.
Possible Levels of Cost Estimating Relationships
--
Mhrs"EA
Mhrs/To
hlrs/Toni
Nhrs/Ton
CER Change with PWBS Hierarchy
Figure 31.
(14)
Use of Empirical CERs in the PODAC Model
Empirical
the
PODAC
estimating
CERs
Cost
are
also
Model
Basic
to
the
used in
provide
Construction
a
Parametric
top-down
Costs
at
Module
approach
the
of
for
Concept,
Preliminary, and Contract stages of design:
*
concept design level cost based on complexity factor
(explained later
in this
report),
displacement,
and
speed,
76
"
preliminary
design
cost
level
based
on
complexity
factor and system-based weight at the SWBS one-digit
level,
*
contract
factor
design
level
cost
weight
system-based
and
based
on
the
at
complexity
two-
or
used
in
SWBS
three-digit level.
A
combination
conjunction
based
of
with
complexity
form
CER's
weight
traditional
factors,
backbone
the
of
based
CER's
and
process,
the
product
estimating
PODAC
system at every level of design.
1.
Concept Design Level:
Price = Complexity Factor x
*where
All
Price
the
is
Indirect Costs,
[ 752 x DISPL0
sum of
Labor
.835
Cost,
x SPEED'
.2]
Material
Cost,
and Profit
Complexity Factor = Ship Type Factor x Size Factor
Ship Type Factor from Table 2
Size Factor
=
32.47 x DISPL 03 7 9 2
DISPL = full load displacement in long tons
SPEED = maximum sustained speed in knots
It
is
there
important
is
elements
no
of
to
note
ability
price,
that
to
such
at
the
distinguish
as
labor
Concept
between
and
Design
the
material
level,
various
costs.
77
the
Additionally,
was
approach
first
ship
design
for
of
and
a
estimate
price
Shipbuilding
U.S.
and
class,
engineering.
did
For
using
determined
Programs,
not
include
naval
this
for
the
the
cost
for
it
did
not
was
ships,
include the costs of weapons or Navy program management.
LSHIP
FACTOR
TYPE
Tanker
Product Tanker Single Hull
Chemical Tanker
0.80
1.13
1.25
Double Hull Tanker
0.90
Bulk Carrier
Ore/Bulk/Ore Carrier
Reefer
0.86
0.95
1.16
Containership
Roll-On/Roll-Off
0.96
0.83
Car Carrier
Liquid Petroleum Gas Carrier
Liquid Natural Gas Carrier
Ferry - Aluminum High Speed
Ferry
Ferry - Aluminum SWATH
0.61
1.14
1.12
0.15
1.25
0.70
Passenger
Fishing
3.00
2.20
Harbor Tug
0.20
Naval Aircraft Carrier
6.00
Naval Combatant,
Naval Combatant,
Cruiser (Nuclear)
Destroyer
9.00
8.00
Naval Combatant,
Frigate
7.00
LHD/LHA
7.00
Amphibious, LSD/LPD
Auxiliary, Oiler
Auxiliary, Tender
Research
5.00
2.25
4.50
1.25
Naval Amphibious,
Naval
Naval
Naval
Naval
Naval Fleet Tug
1.00
US Coast Guard Icebreaker
4.50
US Coast Guard Buoy Tender
2.00
Table 2.
Sample Ship Type Factors for Empirical CERs
78
Factor =
Complexity
(from table
Ship Type Factor
2)
x
Size
Factor
0
32.47 x DISPL-
Size Factor =
.3792
DISPL = full load displacement in long tons
2.
Preliminary Design Level:
At the
CERs
Preliminary Design level,
for
Domestic
labor
distinguish
Complexity
Factors
and Size Factors as
the
Programs
Shipbuilding
from
are
material
derived
following weight-based
as
from
can
shown
the
Ship
be
in
seen
to
Table
3.
Type
Factors
shown before in Table 2.
MATERIAL DOLLARS
DESCRIPTION
LABOR MANHOURS
100
Structure
x
CF
WGT1 0 0 0.862
177
x
800 x WGT1 oo
200
Propulsion
CF
x
WGT 200 0.704
365
x
15,000
WGT 2 0 0
300
Electrical
682 x WGT 30 0 1 .0
SWBS
400
Command
Control
500
Auxiliary
and
Outfit
Furnishings
x
34.8
1.24
310 x WGT 6 00 .9 49
20,000
x
25,000 x WGT 30 0
1, 605 x WGT 40 0 .795
CF
and
5
0
WGT50
600
2
+
I
I
40,000 x WGT 40 0
x
10,000
+
10,000
x
U
U
WGT500
5, 0 0
U
U
+
10, 000
WGT 60 0
Table 3. Empirical Preliminary CER Derivation
79
x
CF = Complexity Factor = Ship Type Factor x Size Factor
0
Size Factor = 32.47 x DISPL- .3792
DISPL =
WGTxoo
3.
full load displacement in long tons
= weight of
SWBS X00 in long tons
Contract Design Level:
At
the
Contract
Domestic
guish
Design
level,
Shipbuilding Programs can also be
labor from material,
Complexity
Factors
are
from
the
for
seen to distin-
as shown in Table
derived
CERs
weight-based
4.
Ship
As before,
Type
Factors
and Size Factors.
SWBS
DESCRIPTION
LABOR MANHOURS
110
Hull Structure
CF x 4 x WGT110'
150
Superstructure
0 384
CF x 5, 157 x WGT1 5 0 .
161
Structural
Forgings
Castings
and
CF x 314
321
x WGT 1 6 1 0. 62 3
95
Structural Closures
1
60 x WGT 1 67 / 8
169
Special Purpose Closures
CF x 36 x WGT1
170
Masts and Towers
0 73 5
CF x 149 x WGT 1 7 0 '
167/
-2
8
6 9 0.
96 9
Table 4. Empirical Contract Level CER Examples
80
CF = Complexity Factor = Ship Type Factor x Size Factor
Size Factor
3 7 92
x DISPL-.
= 32.47
DISPL = full load displacement in long tons
WGTxyo = weight
Similar
of SWBS XYO
Contract
SWBS Groups 2 -
Design
in long tons
Labor
have
CERs
been
derived
for
6.
Improving Empirical CERs:
The
suggested
product-based
CERs include the following,
of detail.
It
is
important
and
process-based
Empirical
at the Preliminary Design level
to
note
that
these
Preliminary
CERs are constructed by collecting data at the Contract and
Detailed Design levels.
*
STRUCTURE
structural
at
the
weight,
BLOCK
number
level,
of
with
parts,
known
block
surface
area,
and joint weld length:
-
manhours = f
(number of parts)
for preparation,
-
manhours = f
(number of parts)
for fabrication,
-
manhours = f
(weight, surface area,
weld length)
for
sub-assembly,
81
-
manhours = f
(weight, surface area,
weld length)
for
assembly,
-
manhours = f
(weight, surface area, weld length)
for erection.
*
PIPING
at
the
BLOCK
level,
with
known
block piping
number of parts:
-
manhours =
f
(number of parts) for preparation,
-
manhours = f
(number of parts) for fabrication,
-
manhours = f
(number of parts) for sub-assembly,
manhours = f
(number of parts) for assembly.
*
OUTFIT
at
the
BLOCK
level,
with
known
block
outfit
weight and number of parts:
-
manhours =
f
(weight, number of parts)
for on-unit
outfitting,
-
(weight, number of parts)
for on-block
manhours= f (weight, number of parts)
for on-board
manhours= f
outfitting,
-
outfitting.
82
0
PAINTING
at
the
BLOCK
level,
with
known
block
surface area:
-
manhours = f
(surface area)
for block painting,
-
manhours = f
(surface area)
for final painting.
Sample Representations of Empirical CERs:
For Preliminary Design level CERs for LABOR in MANHOURS:
STRUCTURE manhours:
Preparation = f (Complexity Factor
(CF), number of parts)
Fabrication = f (CF, number of parts)
Sub-Assembly = f (CF, weight,
surface area,
weld length)
Assembly = f (CF, weight,
surface area, weld length)
Erection = f (CF, weight,
surface area,
weld length)
PIPING manhours:
Preparation = f (CF, number of parts)
Fabrication = f (CF, number of parts)
Sub-Assembly = f (CF, number of parts)
Assembly = f (CF, number of parts)
83
OUTFITTING manhours:
On-Unit Outfitting
f
=
(CF, number of parts,
weight)
On-Block Outfitting
=
f
(CF, number of parts,
weight)
On-Board Outfitting
=
f
(CF, number of parts,
weight)
PAINTING manhours:
Block Painting =
f
(CF, surface area requiring paint)
Final Painting =
f
(CF, surface area requiring paint)
= f
SUPPORT manhours:
(CF, displacement)
Complexity Factors:
There
been
are
introduced
Several
have
several
of
been
types
into
these
of
the
complexity
PODAC
empirically
presented
in
the
system
factors
that
derived
that
adjust
complexity
previous
section.
have
CER's.
factors
Complexity
factors adjust CER equations according to each level of the
hierarchy of the PWBS.
conditions
consuming,
workshop
become
and
to
The
increasingly
expensive
on
reason for this is that working
board
as
the
more
work
installation.
difficult,
progresses
Ideally
from
the
time
the
most
preferable place to do work would be:
0
Under Cover
84
..
m
e.i in
na. ienmi
nu
wimus
ng
ynsu
min
uumulys
...
mmm
""..
-
---- '1111111"'-
m
=111111..11.11............
--
*
At an easily accessible area
"
Where less support services are required
"
Where tools and equipment are readily available
Thus
most
the
assemble the vessel is in the workshop.
work
location
is
to
do
the
work
when the blocks are not too large
than
workplaces
convenient
productivity
on
which
and
The least desirable
On
board.
block work
(under 500 tons)
There
onboard.
are more
is
added
if the blocks can be assembled under cover to
eliminate the effects of weather conditions.
work,
construct
to
place
efficient
cost
involves
the
assembly
of
Lastly on unit
outfit
modules,
can
produce cost savings since it is easier to access, assemble
and outfit a unit on block rather than on board.
Figure 32
assigned to
different
shows
comparative
complexity
factors
work sites.
Addad Cost Factor
500%
400%300%200%-
100%
6
0%
In Shop
On Block
On Board
Figure 32. Complexity Factor by Work Stage
(15)
85
work,
by
but
type
the
work
of
location of the
only by the
factors differ not
Complexity
performed
being
at
that
For example down hand welding is much
particular location.
cheaper and more productive than overhead work at any stage
of production.
of
the PWBS
being
However,
conducted
to
due
same for
the
33 shows
Figure
workplace.
be the
cannot
CER's being used at
the
the
difficulty
each level
same type of work
of
access
typical complexity
to
factors
the
that
are assigned to different working sectors of a vessel.
TABLE 10.1
Typical Added Complexity Of Ship Zone Work
Ship Zone
Added Cost Factor
0%
On Weather Deck
Oil Tanks
25%
Engine Room
50%
Superstructure
25%
Pump Room
50%
Holds
10%
Double bottom
25%
Figure 33. Complexity Factor by Work Area
Interim Products
The CER's
system
(IP)
that are
are
there
developed
in
series of pre-costed,
to be conducted.
(23)
order
and incorporated
to
subdivide
the
into the new
vessel
in
a
re-usable modules or packages of work
Typical examples of standard work packages
86
are
that are
are
categorized
The
combination
estimator
Cost
can
work
or
CERs
of
sections
different
organized
and
just like
Standard work packages,
developed for
CERs
system.
34.
Figure
in
shown
in
then
libraries
the
select
packages
the
ship
within
the
of
appropriate
pertaining
to
the
particular project.
Fi
I It f11 ' ' I It IIN - Iidm I %sipand M.-imjt-mf-nk
Edt Vie Ervrrnnert LbraP Dala Sytlem Repot
?ia-
@
Window Het
CPG A Z U
De s cripfa n
h ; Alummirm b-r,
b[7e- as;-_-bl., i
tk
i
bli., :%A -6-_ khu
bL. a;Au
b"
213 E &L IS i& Sh.' Alum mLLN
r m bcn20 bk-% asiE--biv, i-ipe _ .: -ti bo::.:rr
33 -E - J -ottor AJUMm
4hA, EAL - F hp,: Ahimitm bowi-n b-1r ar-',, fbly. - pp' - de -.rall
Package
-~- -',.
6
E3,
-E 3-~ !EA 3Kh
Mi
E rh~nttn-i
de ':hvIl
r344:JL-Y ..
734
Fird I
-,I Im;I mr-nn- nn- ; '7P. -. nII
bi: as;_biv, -at __ :he
:, - IPr hn
, ppw
h
I h21 bcI z. b : el:bv, m-pw. zde i l
=I bw :-z
M c,
M Z:u i
F
i4-A-e
..
Alumritmrri iy rkn uu' ;=~" :s . - r7, derr
jN
Au ee g Jn uas-ey
1P BA 1: &L IButto,-:.- AluM Cr w. :on ::C- r2 S~F, 11a: -ulu[ b.:.:11 4-.a-AL- (-::
O
l2k
Al
Figure 34.
:ne
.:.
Examples of Work Packages
(14)
Such reusable modules can be subdivided into reusable work
that
packages
require
amount
a
of
consume
standard
money.
A
a
amount
typical
standard
amount
of
and
work,
example
of
cost
such
material,
of
a
standard
a process
is
shown on Figure 35.
87
____
---_
- ----
-
-- -
Re-Use Package CER:
Welding Repairs:Cracks Labor CER Labor JoM I
MHtFT
0.500
Drill Out
MHIFT
0.250
Welding Repairs:
MH/FT
0.250
Gen Labor:
MH/FT
1.000
Total:
Figure 35. Example of Re-Useable Work Package (16)
In
order
implemented in shipyards
presented
by
necessary that the
strategy in mind.
capability
and
to
the
outfitting,
generic
the
the
to the
from the construction of the
lack
had
shipyards
the
using modular
vessel
strategy
build
is
organization
build
a
such
although
construct
to
on block
Experience
that
showed
DDG-51
with
it
construction,
modular
technical design information sent
tailored
is
shipyard
to maximize cost savings
in order
outfitted,
pre
effectively
be
to
system
cost
a
such
for
of
methods
consideration
design
excessive
in
resulted
the
re-
workings and a low level of productivity.
SPAR Associates conducted a study to determine the possible
cost savings that could occur by the use of
built
strategy
savings
Figure
through
36
shows
vessel
the
use
that
of
attempted
minimal
on
to
a modular,
PWBS
maximize
cost
board
a summary of the results.
It
outfitting.
is
important
88
to note the 16% cost savings realized by the implementation
of such a generic build strategy.
bkc k & 0ei Jn i OuIi it nq
S-jvi,qs rrc-,
lv
si5 Mcde1:
s I An
Ssr ;:le S'im Drdjctic-. 20 130 2T
T sikr
S.-rrrary ir 'cw'd St'p
Cos v
5:C,5 - C
ti
Ca
Ra i&od
';c:I
Cvi sad
XR
5
.
1
S%
4
2X
z%2
_C S 106 CC
5yJro;
7CC165CC
%
57!
15275
Cri J Trt
c.ck
C=ni
&
O rI
=e le
X,13C
1%
,4C
2S
1.C
5 !1S4C
3 1.5
1I3
63 1&'n I
j1'
V
_,2
Dcc
C
-aings
taaid
Grig mal
12
1E
312-1
37!
313
5
T,
:)-ce
S63 . 719 927
S 2522C.28
SXelCC'202C
Possible Outfitting Cost Savings
Figure 36.
1.5%
(15)
Design Trade off Capabilities
An
feature
interesting
incorporation
trimarans
new
of
into
the
the
of
hullforms
database.
The
new
such
is
the
catamarans,
and
system
PODAC
as
of
development
new
CER's
for different vessel classes and designs is very important
as
the Navy continues
such configurations.
libraries
helps
make
to design and purchase
Any added data into the
the
final
ship
cost
vessels with
system and CER
estimation
more
89
..
.
Clearly
realistic.
cannot be used for
variations
of
CER's
that
are
Figure
for
used
monohull
steel
composite trimarans.
material
be
cannot
CER's
Similarly,
vessels.
class
destroyer
submarine
.................................
CER's
37 shows
the
with
the
available
new PODAC system.
Composte
(AH)
HY -80
HSLA-80
HTS
H -100
HSLA-100
-. 1 30
wanmAn (4:P Ti 5OAS Ti 130)
Aurzanum (Sxx)
Aiumknum
r
(2xn 7
Stanw*ss Steel itokpex Grscsj)
De
Structiral Materia Setections
MMICode
Stuctwal Mateial Selections:
Ml Steel (A. 8. C, CS, D. Ei
2
3
Compoite
4
5
Comvoste
Caffoste
6
Coposue
7
Compeoste
Composie
Compomite
a
9
10
11
fo# each nudef W provided in StrwctprpfrAy eleit.
saeH
Comrs0e
inclusion
important
design
trade
different
choosing
3
14
Is
1_
data
offs.
materials
has
That
for
led
is
to
the
_
17
1
19
20
21
22
AdvwnCed Metabc or Noin-metW CoffpoksOe
Wor kshet. Advanced L9twett. 7?WT Capwcty
SJ4 HTs 3 3A Ad Steel
1113 HTS.
d2MW
Sleel
26
such
of
12
opte - E-Gfas & EpoxY
LASCCR Meil Sand
23
24
25
Figure 37. Material Options with PODAC
The
Nanced
FRPC-Aed Ponei
- FRP Shf1ened Panel
Section
- FRP Stiffened
- SCRW FRP Cored Pane
- SCFAW FRP Stiffened Paei
- SCRW FRP Stffened FUt Section
- vARTM E-gtsitnyesteir -USection
- Carbon Fer & Epoxy
KevAw 3 Epoxy
a
(16)
area
new
decision
particular
ship
of
between
regions.
The use of a re-use/ modular construction and design allows
the designer or cost estimator to immediately determine the
cost of
for
using different materials
parts
of
it.
Figure
38
shows
for the
the
vessel
or
on weight
of
whole
effect
using different materials on a Trimaran hull.
90
--------------
...............
Trimaran Hull Materials
4,000
3.500
2,"1
3,000
2,500
2,000
1.500
1,000
500
Ftf
#
~
,
1;
<
.0
40
Figre 8. ateia Trde-ff nalsi
(16)
As already stated rather repeatedly throughout this thesis,
it is not enough to simply have a weight based analysis
order
costs,
to
determine
DDG-51's
resulted in
process.
In
costs.
deckhouse
excessive
was
plate
an
effort
built with thin
distortion
due
to
plate.
the
shows
This
welding
This distortion made the assembly of blocks highly
labor intensive requiring the use of hydraulic rams.
39
lower
produce
to
in
the
clear
benefit
of
using
a
non
weight
Figure
based
system to analyze ship construction costs.
91
Structural Hull Materials
e.s
0
.0
$20,000
$18,000
4,5
$16.000
C.
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,00
Ir
E)
C5Z
wo
7@
U)
(D
LCs
4:
a"
)<
< <
co
Cs X
(16)
Figure 39. Construction Cost Material Trade-off
Although Aluminium is the
in
Figure
The
it
38,
welding
suffers
process
labor.
strength
than
steel
structure
to
support
results
in more
This
PODAC
system
has
from
Aluminium
also
a
has
and thus
capability
with
costs.
requires
and
lower
tensile
requires
stronger
and
armament.
equipment,
hull,
structure
the
expensive,
therefore
and
the
installation
higher
difficult,
is
trained
highly
least cost solution as presented
higher costs.
its
The
comprehensive
CER's to incorporate the build complexity and difficulty of
production into its predictions.
Other trade-off
studies
that
can be
conducted by
the
new
system include:
92
Changes
"
e.g.
in
equipment
and
related
AZIPOD propulsion versus
auxiliary
geared diesel
systems
and rudder
propulsion.
*
Changes
in
subcontractors
e.g.
subcontracting
the
vessel pipe work.
"
Changes in general arrangement or mission requirement.
Such
trade-off
immediate
design
of
the
of
understanding
decisions
designer
to
as
procurement.
why
An
the
the
cost
vessel
designers
implication
on
understanding
costs
in
should
It
the
changes.
or
change
paradigmatic
allow
capabilities
is
increase
thought
their
the
part
fundamental
process
result
definitely
a
of
an
of
ship
cheaper
in
and
faster vessel construction.
Risk Analysis
An
important capability of the PODAC
that
it presents
possible
high
costs
risk.
the
for
The
cost estimator
items
greater
or
system is the ability
to specify a range of
processes
the
risk,
that
the
are
considered
greater
the
probability that the cost estimate is not realistic.
Since
type
it
of
is
impossible
probability
to
exactly determine beforehand
distribution
that
can
be
applied
the
to
93
the
maximum
and
presents
a series
program
functions
data
combined
complex
cumulative
a
into
different
the
essentially
probability
probability
then
is
data
The
the
and
distribution
Risk.
using Monte Carlo
analyzed
is
This
cost.
expected
an
of
triangular probability distributions.
single,
one
input
the
life
real
of
variability
of
combines
then
into
the
value
minimum
of
to
requires
program
issues,
The
due
CER
or
process
each
distribution
of
costs. Figure 40 shows an example of such a distribution.
CO
:4_1
1r
0m1
41:
I
Siandard N rmal Distribution, Z-Values
Figure 40.
The
of
existence
Cumulative Cost Distribution
a
probability
distribution
(14)
the
allows
estimator to develop a sense of confidence in the data that
is
produced,
wrong,
the
and what
probability
the
range
of
that
the
possible
estimate
cost
will
will
be
be
about
the expected prediction. The probability that cost does not
94
most
estimators
the
exceed
cost
likely
is
estimate
presented in Figure 41.
w~UrE ~AR
~WTE mA~.OMIAI~
AP~94
PC7 79
f
1,
S22L>
_______________
21.:
(1)"n, ---
Figure 41.
Probability Cost does not Exceed Estimate
(14)
Life Cycle Costs
Life cycle costs can be essentially divided into four main
stages:
In
to
order
necessary
have
the
The
final
correctly
been
SPAR Associates'
ship
owners
an
reason
bottom
with
cost
is
line
of
area
that
concern
ship
of profit
shipyard
design
a project
and evaluate
cost
each
and
stage.
are
return
it
ship
interested
on
is
Such costs
commercial
for
owners
disposal.
and
operation,
a prediction for
to make
always
owners.
acquisition,
conception,
in
investment.
estimating program provides
trade-offs
that
pertain
to
life
95
maintenance
several
times
estimating program allows
to
immediately determine the
to have
time
the
Thus
period.
and
ship owner
The
the
(ROI)
design
order
over a certain
be
can
analysis
trade-off
cost
designer
required freight rate in
certain return on investment
a
has been
costs)
in previous sections.
the
and
operational
cycle
(about 75% of life
costs
already stated
of
significance
The
costs.
cycle
expressed in terms of life cycle costs.
overlooked by
have
a
added
naval
Although
ROI
components
of
them.
for
necessary
life
cycle
The
Navy
the
costs
acquisitions
they
requirement,
not
should
feature
Navy
and
currently
to
do not
cost.
possible
how
it
has
several
a
It
the
understand
is
be
satisfy
must
least possible
security commitment at the
therefore
reduce
the Navy.
particular
national
is
this
of
importance
The
to
reporting
systems such as the Ownership Architecture Retrieval System
(OARS)
for
which
are
breakdown.
they
are
maintenance
part
all
These
not
COMET
issues,
of
systems
integrated
a
with
between
personnel
life
cycle
themselves
costs,
Cost
Ownership
Total
deal
for
in
(TOC)
costs
order
but
to
provide direct answers to design trade off questions at the
design, costing,
and acquisition decision level.
96
Problems:
Several
issues have arisen due
between
the
Navy,
building ships
and
Designers
subcontractors.
for the US Navy are using system based cost
which
estimates
shipyards,
to the lack of coordination
do
design.
Shipyards
product
based
not
are
focus
costing
and
while
approach;
the
on
the
producibility
vessels
building
Navy
is
of
with
a
its
conducting
own cost operation using cost data provided by the shipyard
in a product based format!
A
cost
estimate
supporting
the
collected
in
by
estimating
probably
have
is
as
only
if
estimate...
ways
that
modular
a
good
relatively
can
high
modular
be
imperative
that
shipyards
of
(14)
organize costs
in
cannot
block
difficult
degree
accuracy and validity of the estimate.
information
costs
historical
identify
blocks
the
as
costs,
and
risk
be
in
will
the
It is therefore
ways
that
can
directly benefit the cost estimating process.
97
CHAPTER 6 -
The
MIT
MIT MATH MODEL
Math
while
serving
Naval
Construction
Hamley.
for
their
Navy
the
as
the
13A
in
1975
students
with
conjunction
ship
projects.
design
and
of
Naval
Frigates".
to
designed
and
sophistication,
and
be
a
and
It
student
It
process
the
Model
for
revised
and
Math
1990.
is
in
excel
simplicity,
between
relatively
it is compatible
R.
from
adapted
was
is
of
tool in order to
model
balance
generality.
and use and
understand
The
1988,
1986,
1984,
in
updated
was
It
Professor
estimating
cost
Graham
Clark
13A
"Simplified
called
Model
Design
ship
the
with
by
Associate
course
Synthesis
format
in
developed
It was developed as an educational
13A
assist
was
Model
with all
easy
to
personal
computers.
of
Users
the
limitations.
Naval
It
Frigates,
The
8500
tons.
and
assumes
have
model
is
designed in
order
to
be
with a range of displacements
model
analyzes
standard USN
only
design
its
understand
however,
to;
applicable
from 2500 to
conventional
practices.
to
The
monohulls
system
is
limited to single screw vessels with diesel generator sets.
The
hull
options
materials
for
considered
aluminium
or
mild
are
mild
steel
steel
hull
superstructure.
with
The
98
empirically
The
weights.
its purpose
that,
flexibility
much
without
scope
has
at this
be
still
historical
methods
level
successful.
use
of
data
that
from
submitting
they
construction.
preliminary design
the
model
the
weight
(Chapter 5) .
far
to NAVSEA for
for
Even
parametric
are
said
shipyards
detailed engineering designs
Thus
nore
Congress,
from
appropriations
limited
ship design.
naval
is a teaching tool for
a
Having
change.
for
for
therefore
are
students are not presenting their designs
The
to
CER's
derived
The model therefore
based.
primarily weight
system
breakdown
weight
SWBS
USN
the
uses
system
to
most
based
modern
system
industry
systems
CER's
empirical
Thus MIT's
standard
(PODAC)
appears
is
practice
from
not using
at
this
level of design.
99
CHAPTER 7 -
1.
SHIP COST REDUCTION SUGGESTIONS:
Improve quality of Cost Estimates
*
Improve
Navy
current
the
is
cost
estimating
incorporating
using
method
improvements
that
the
discussed
throughout this thesis.
0
Conduct
independent
support,
and
cost
comparison
in
estimates
of
predictions
Navy
the
addition,
to
assure accuracy.
*
work
cost estimates
independent
Conduct
is
that
suggested
by
of any change
shipyards
in
order
order
to
determine accuracy and reliability.
2.
Improve contract award process
0
Negotiate
prices
for
construction
of
the
lead
ship
separately from the pricing of detail design work.
*
Separate
ships.
3.
the
pricing
of
lead
ships
from
follow
on
(4)
Improve management of programs
Require
shipyards
reports
in
order
to
to
submit monthly
allow project
cost
leaders
performance
to
quickly
become aware of cost driving factors.
100
4.
Design Cheaper Vessels
vessels
Cheaper
simpler,
can
be
designed
built
and
and faster methods by using the
in
cheaper,
following general
guidelines:
"
Maximum use of standard plate and stiffener sizes.
*
Avoid using thin plate to avoid distortions
*
Do
not
carry
hull
into
curvature
the
structure
inside of the hull plating
"
Run strakes in the same direction as primary framing
*
Design
for
maximum
of
high
with
the
use
productivity
tools
such as automatic welding
"
Design
bilge
strakes
same
thickness
as
bottom plates
*
Design
to
facilitate
structural units,
assembly
machinery units,
and
erection
and piping units
"
Make port and starboard units similar
"
Eliminate camber and sheer
"
Eliminate cruiser sterns and cambered transoms
*
Maximize
use
of
flat
panels,
with
straight
frames,
and
reduce plate curvature
*
Locate knuckles and chins at unit breaks
*
Run chins parallel to keel
(as much as possible)
101
Simplify bow and stern shape by removing unnecessary
0
curvature
0
Allow
for
large
deckspace
to
outfitting
facilitate
(9)
It is necessary however to be able to balance producibility
with
life
perform
cycle
design
and early
costs
and
trade-offs
stages
of
particularly
design,
established rather firmly,
performance.
where
The
at
decisions
ability
the
are
to
conceptual
generally
should be a top priority.
102
CONCLUSION
Introducing
paradigmatic
difficult.
introduction
for
teams
product
business
is
government.
The
between
the
from concept
together
a
ensure
any
harder
even
co-operating
can
delivery
is
integrated
of
industry
and the
to
so
Doing
in
change
Navy
design
for
consideration
better
acquisition and total life cycle costs.
Naval
cost
ship
change
the
since
outdated
models
is
and
any
cost
ship
inability
significant
estimated
still
based
weight
assumptions
whose
seen
not
Cost
1980's.
inaccurate
and
has
estimating
to
using
estimating
reflect
subtle
the
issues
design changes result in cost overruns.
The
cost
PODAC
model
the
Navy
funded
the
facing
essentially
using the
because
LPD-17,
new systems.
the
projects.
attempts
deal
today.
project,
with many of
Although
cost
not
been
the
government
estimations
To a large extent
have
results
this
clear
are
not
is probably
in
similar
It probably does not help that the design of the
which
ended
up being
many PODAC principles.
be
to
effective
and
grossly
overpriced,
included
Also in order for the new program to
produce
realistic
estimates,
it
is
103
for
necessary
operating
will
in
some
a
eventually
time
and
industry
thinking
and
take
faith
both
in
to
this
get
product
based
happen
for
new
Navy
and
Navy
I
but
as
practice
to
different
and
accustomed
approach
the
the
begin
believe
it
has
way.
It
to
have
it
will
happened
effectively abroad.
The
MIT
purpose
Its
Model
Math
it
that
estimates
limitations
of
is
serves
are
not
a
it
useful
is probably a
expected
the model.
engineering
to
be
It should be
tool.
For
the
reasonable method.
realistic
given
examined whether
the
it
would be possible to acquire a cost estimating program such
as the one developed by SPAR Associates
in order to
improve
the accuracy of the cost estimates conducted at MIT.
104
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a
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MIT,
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The Institute of Marine Engineers,
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MIT,
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Richard
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Inc.
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of
Cost
Michigan,
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SC
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