Some interesting points about selecting and building (in a different shipyard) from a Parent design. This is from the Canadian document referenced above relating the problems the Australians encountered.
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Using an existing design: A cautionary tale - Australia’s Hobart-class destroyer
National Defence has decided to build an existing surface combatant design to reduce both time and cost. Though this can be the case, it does not always work out as planned, as was discovered by Australia with its Hobart-class destroyer.
Australia selected the Spanish F100 or Alvaro de Bazan-class frigate as its design for the Hobart. Australia’s motivation for selecting the F100 was the same as that of National Defence for selecting an existing design: to save time and money rather than pursuing a new design.
Unfortunately, Australia has encountered numerous problems. The project is expected to be at least 15 per cent over budget ($9.2 billion AUS versus the original budget of $8.0 billion AUS) and 2 1/2 years late for the first ship (delayed from December 2014 to June 2017).68 With the winning design selected in June 2007, it will be 10 years between design selection and commissioning of the first ship.
Of the numerous problems Australia has encountered in building the Hobart, some are clearly not applicable to the CSC (multiple shipyard building the blocks and DND playing multiple roles – customer, supplier and partner).
For the CSC, Irving shipyards in Halifax is the only entity building the ships, DND’s only role is that of the customer; Irving is the prime contractor and it is responsible for awarding the subcontracts for the design and modifications.
Nevertheless, there are three areas in which Canada has the potential to encounter problems similar to those of Australia’s: underestimating the risks of the Canadian specific redesign; a shipyard with no warship construction experience; and the potential for sub-standard technology transfer from the original ship designer/builder to Irving.
Underestimating the effort required to make changes to an existing warship design is not surprising when given some thought. Warships are not like ice breakers or patrol ships; they are very dense with complicated interactions among all the systems.
The word “dense” in this context refers to how jam-packed the ship is with equipment, cabling, redundancy requirements, water and smoke tight compartments, and extra layers of protection. Warships don’t generally have extra space to easily add stuff, though a good ship design does provide some displacement margin to add equipment during the lifetime of the ship.
Nevertheless, the effort to make a design change to a warship is not linear: changing one item, function or feature will necessarily have multiple knock-on changes multiplying the cost and effort of the change. This is a risk that is often underestimated when making changes to the design that Canada eventually selects.
The second cost-increasing problem Canada will encounter is the lack of experience in building warships, which is not the same as building ice breakers or patrol ships. Warships are considerably more complicated to build and integrate. With this in mind, the learning curve for a shipyard that has not had previous experience building warships will be steep with a higher cost for the first unit.
As described above, this steep learning curve will result in higher construction costs (for at least the first eight ships) than those incurred by a shipyard that has previous warship construction experience.
The third area in which Canada is likely to see increased costs is the technology transfer between the original shipyard and Canada. It is difficult to capture all the nuances of building a ship through digital data files. There is organic knowledge that a shipyard develops during the construction process that is not captured in the design files.
One last item is to understand the cost premium Australia is paying to build the Hobart-class ships itself.74 For an estimated total budget of $9.2 billion AUS, Australia will acquire three destroyers at an average cost of $3.07 billion AUS each (includes all fixed costs).
In comparison, the Arleigh Burke flight IIA is 50 per cent larger than the Hobart and cost $1.9 billion in FY2010 with a 2017 delivery date.
Currently, the American dollar is worth 1.33 Australian dollars. The following calculations are all in billions of dollars.
1. Convert Aleigh Burke cost to Australian: $1.9 US x 1.33 = $2.53 AUS
2. Apply US foreign military sales surcharge: $2.53 x 1.047 = $2.65 AUS
3. Multiply by three to get the average cost of three ships including all costs: $2.65 x 3 = $7.95 AUS
4. Extra Australia has paid for three ships that are two-thirds the size of the price of an Arleigh Burke: $9.2 – $7.95 = $1.25 billion AUS
Consequently, this is 16 per cent higher for three smaller ships rather than just buying an Arleigh Burke from the United States.
As the previous endnote discusses, the above comparison is to the cost of an Arleigh Burke second in the learning curve. If the comparison was to the marginal cost of the ninth ship (that is, end of learning curve), it is estimated that the Arleigh Burkes would cost $1.43 billion US each.
Redoing the previous calculations:
1. Convert Aleigh Burke cost to Australian: $1.43 US x 1.33 = $1.90 AUS
2. Apply US foreign military sales surcharge: $1.90 x 1.047 = $1.99 AUS
3. Multiply by three for three ships: $1.99 x 3 = $5.97 AUS
4. Extra Australia has paid for three ships that are two-thirds the size of the price of an Arleigh Burke: $9.2 – $5.97 = $3.23 billion AUS
So, using the estimated ninth ship marginal cost, Australia will pay $3.23 billion AUS, or 54 per cent, more for ships two-thirds the size.
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With the
1. effort put into the the Saudi Multi-Mission Surface Combatant, and
2. the "Parent" design (afloat) requirement,
3. the similarity between the Key Threshold attributes listed in the RFI and the MMSC, and
4. the similarity between the Major Weapons Systems listed in the RFI and the MMSC, and
5. the fact that the Saudi's are paying for at least the first four MMSC's on the way to the nine estimated to complete the labor learning curve,
it seems unlikely that any other solution will do.
This open RFI has more to do with putting pressure on pricing than an actual competition.
It will be interesting to see how quickly they can take cost out of the manufacturing process. With only 10-15 years of production it doesn't have much chance to get "DDG efficient". If it's as capable as they make out then perhaps it would make sense to encourage additional quantities.
blog.usni.org
