Affordability In Shipbuilding

Affordability in ShipbuildingM. W. TonerOctober 21, 2008

Summary of Key PointszzDescribe the Design BuildProcess and its impact onaffordabilityDescribe actions tofacilitate affordability¾Design Build¾ Collaborative environmentzExamples¾VIRGINIA – Cost Plus¾ T-AKE – Fixed Price¾ Commercial Ships –Fixed Price2

Design-Build ObjectiveszDesign high quality, low cost,mission-ready ships which meet theoperational requirements of the Navyz Establish a cost effective processthat ensures the design is complete,material is available and workpackages are developed prior toconstruction startz Develop a cost effective shipconstruction plan¾¾¾Increase ModularizationReduce construction labor and cost –Goal: Achieve 3rd ship learning curveon the lead shipReduce design changes identified bytrades during constructionVIRGINIA Class SubmarineArleigh Burke Class DestroyerLewis and Clark ClassDry Cargo/Ammunition Auxiliary3

Traditional Acquisition StrategyLimited Collaboration, Maximum Cost and Schedule RiskYear 1CAYear 2OEConcept Design and Trade StudiesYear 4Year 3CAYear 5IBRYear 7Year 6PRRRemaining Functional DesignLong Lead Time Material – Manufacturing and Delivery Lead TimePhase I Period Characterized By:Detail Design Competition – Limited Communication& Collaboration Limited Funding – Can’t Complete Functional Design FFP estimate based on incomplete information – growth likely Interruption in Design Flow While Awaiting Competitive Down SelectArrangements and Key PlansDetail DesignModelingInstallation DrawingsDetail DesignProduction InfoWork PacksConstructionSOCKDFloat OutTrialsCDzPhase II Period Characterized By:¾End of competition typically results in significant design changes ¾Impacts schedule – causes shipbuilder to revisit early decisions, delays detail designImpacts cost performance – Phase II FFP bid inadequate, shipbuilder financial riskMust expedite functional design to start detail design and support LLTM Order World shipbuilding boom – LLTM in excess of 32 monthsForces design decisions that fail to optimize total cost¾Significant Overlap between functional and detail design – rework¾ Significant Overlap between detail design and start of construction Lack of a mature design at SOC results in poor cost and schedule performanceBuild strategy is sub-optimized – construction sequence is sacrificed4

Design Build Acquisition StrategyEstablishes Potential for Success For US Shipbuilding to be affordable, a paradigm shift must take place Create Govt/Shipbuilder partnership early enough to maximize impact of collaborationand design for producibility considerations in future shipbuilding nitionDefinitionAccrue input from allrelevant stakeholdersand requirement sets CFREPAIMO Navy/MIL StdsABSSUPSHIP FacilityLimitationsUSPH/FDA ProductionSuppliersFunctionalFunctional DesignDesignPurchase LLTMfor lead shipWork instructions(detailed work packages)BuildBuild StrategyStrategymust be substantiallycomplete prior toCo-Located Design Build Teams toconstruction startDetailcomplete design prior to start ofDetail DesignDesignconstructionCost ReductionPotentialCost toChangeCostSpecification Engineering Fabrication DeliveryDesignConstructionMLP-006Integrated MasterScheduleProcure LLTM for follow shipsHigher CostCost UncertaintyRangePlanningPlanning andandProductionInformationProduction InformationCost ModelLeadLead ShipShipConstructionConstructionFollowFollow ShipShipConstructionConstructionLower Cost5

Traditional Versus Design Build ApproachLead Ship at Third Ship CostLabor Hours in 1000's5,000Traditional AcquisitionStrategy Approach4,0003,000Design 322,069Design Build Potential 3 ShipApproachClass Savings2,9211,0792,628,6522,4714492,366Total 2,1802,2872,2242,1732,1292,0912,058zz NotionalNotional10-ship10-shipClassClass¾ Traditional Approach: 4M Hour Lead Ship¾ Traditional Approach: 4M Hour Lead Ship¾ Design Build Approach: 30% Reduction¾ Design Build Approach: 30% Reduction¾ Area Between Curves: 2M Hours (3-ship Class)¾ Area Between Curves: 2M Hours (3-ship Class)1,00012345678910Hull Number6

Design Build in PracticeSEAWOLF and VIRGINIA Submarine Programs80K10068,05670K73%60K8040%Percent7050K 50%6040K5030K4020K302010Number of Changes9012,000 1%10K 6%00SEAWOLFVIRGINIAPercent Design Complete at SOCPercentage of Construction Manhours ComparisonPercent Planning Complete at SOCNumber of Trade Identified Construction Changes at Delivery7

Design Maturity at SOC Reduces CostT-AKE 3 Represents a 30% Reduction in Cost80K10070K70%80Percent7060K50K6040K5030K4030 1% 16%20Number of Changes9020K9,26710K101,08300T-AKE 1T-AKE 3Percent Design Complete at SOCPercentage of Construction Manhours ComparisonPercent Planning Complete at SOCNumber of Trade Identified Construction Changes at Delivery8

Design Maturity at SOC Reduces CostCommercial Shipbuilding Examples604,9205040302015% 12%8% 13%1010K8K6K4K 1,300Number of ChangesPercent70BP 4TOTE 28079%Hull 501 Performance to Date9073%10,039BP 1TOTE 1100Hull 501 Bid12K2K00TOTE 1BP 1PC 1Percent Design Complete at SOCPercentage of Construction Manhours ComparisonPercentage Planning Complete at SOCNumber of Trade Identified Construction Changes at Delivery9

ConclusionszThe Government/Shipbuilder Team must Change the Navy AcquisitionStrategy to Achieve the Desired Outcome¾Realistic Cost Estimating¾ Predictable Schedule Performance¾ High Quality, Mission Ready ShipszShipbuilder Focus:¾Early Requirements Definition¾ Early Functional Design Completion¾ Work Paper ready at SOCzGovernment Focus:¾Short Competition for Good Ideas¾ Maximize Opportunities for CollaborationBefore the Start of Detail DesignzDesign-Build Represents the Way Ahead –Results are Well Established¾VCS Program – 27% reduction in lead ship labor hours¾ PC-1 Program – Lead ship on schedule, under budget, minimal design change10

Lead Ship Construction Lead Ship Construction Follow Ship Construction Follow Ship Construction. Accrue input from all relevant stakeholders . Design Construction. 6-1,000 2,000 4,000 5,000 1 2 34 56 78 9 10. Traditional Acquisition Strategy Approach Design Build Approach. Hull Number Labor Hours in 1000's.