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Independent Cost Estimates
ForHST Trimaran Trailer Ship
May 30, 2009
For
CSC - Advanced Marine Center&
Center for the Commercial Deployment ofTransportation
Technologies (CCDoTT)
Based on a concept design and costing input from
Herbert Engineering Corp.
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PERCEPTIONis a registered trademark of SPAR Associates, Inc.
ESTI-MATE, MAT-PAC,WORK-PAC, andPERT-PAC are trademarks of
SPAR.
PERCEPTION
Trade Secrets and Proprietary PropertiesOf
SPAR Associates, Inc.Annapolis, MD 21401
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Table of Contents
1.0 Introduction
...................................................................................................................
52.0 The Cost Estimates
.....................................................................................................
15
2.1 Cost Estimate Work Breakdown Structure
.............................................................
15
2.1.1 Non-Recurring Costs
.......................................................................................
152.1.2 Recurring Costs
................................................................................................
182.1.3 Program Schedule
............................................................................................
252.1.4 Series Construction Programs
..........................................................................
292.1.5 Management Costs & Fees
..............................................................................
312.1.6 Cost Risk
..........................................................................................................
322.1.7 Labor Rates
......................................................................................................
352.1.8 Material Costs
..................................................................................................
352.1.9 Profit
................................................................................................................
362.1.10 Transport Factors
...........................................................................................
362.1.12 National Defense Funding (NDF)
..................................................................
37
2.1.13 Extended Modularization Build Strategy Cost Benefits
................................ 39
2.1.14 Required Freight Rate
....................................................................................
433.0 Basis for the Cost Estimate
.........................................................................................
52
3.1 Cost Estimating Methodology
................................................................................
533.2 Impact of Build Strategy on
Cost............................................................................
55
3.2.1 Modern Shipbuilding Build Strategy
...............................................................
563.2.2 Modular Construction
......................................................................................
573.2.3 Outfitted Hull Block Construction
...................................................................
583.2.4 Extended Shipbuilding Modules
......................................................................
60
3.3 Generic Shipyard
Costs...........................................................................................
633.4 Shipyard Productivity
Factors.................................................................................
64
3.4.1 Extended Modularized Equipment & Outfit Option
........................................ 693.5 Generic Material
Costs
...........................................................................................
71
3.5.1 Adjusting Generic Material Costs for Type Contract
...................................... 713.5.2 Material Cost
Escalation/De-Escalation
.......................................................... 72
3.6 Cost Risk
.................................................................................................................
733.6.1 Cost Risk of the Production Estimate
Data..........................................................
743.6.2 Predicting Production Overlap Rework Costs
..................................................... 763.6.3
Estimating Cost Risk of Overlap Rework
............................................................
783.6.4 Estimating Cost Risk of Shipbuilder Inexperience
.............................................. 803.6.5 Estimating
Cost Risk of Engineering Quality
...................................................... 833.6.6
Estimating Cost Risk Due to Tight Production Schedule
.................................... 863.6.7 Cost Risk on Follow
Ship Programs
....................................................................
873.6.8 Cost Risk versus Contingency
.............................................................................
87
4.0 Non-Recurring Detail Production Engineering and Planning
.................................... 884.1 U.S. Navy Ships
Non-Recurring Costs
.................................................................
884.2 Commercial Non-Recurring Costs
..........................................................................
89
5.0 Manpower Requirements
............................................................................................
916.0 Follow Ship Cost Estimates
........................................................................................
94
6.1 Labor Cost Learning
...............................................................................................
94
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6.2 Material Cost Learning
(Discounts)........................................................................
957.0 Commercial Prime Contractor Management Plan
...................................................... 96Appendix
A: OUTLINE SPECIFICATION FOR HST-160x53 TRAILER SHIP ...........
98
Principal Dimensions:
...................................................................................................
98Propulsion:
....................................................................................................................
98
Electrical Power:
...........................................................................................................
98General Arrangement:
...................................................................................................
99Hull Structure:
...............................................................................................................
99Lightship Weight Estimate (metric tonnes):
.................................................................
99Capacities:
...................................................................................................................
100
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1.0 Introduction
The High-Speed Trimaran (HST) Trailer Ship study has been
conducted under a Centerfor the Commercial Deployment of
Transportation Technologies (CCDoTT) funding andHigh Speed Ship
technology development program. The Navy Strategic Mobility
&
Combat Logistics Office (OPNAVN42) is the primary stakeholder of
CCDoTT, andCSC-AMC is the prime contractor.
The HST design team, which is led by CSC/Advanced Marine Center
and HerbertEngineering Corp., has designed the ship to be able to
serve in the American MarineHighway system to carry domestic
trailer traffic between ports along the U.S. coast lines.This is a
Dual-Use design that also addresses the Navys need for a troop,
equipment andother logistics support transport ship to combat
theatres around the world on an as neededbasis.
SPAR Associates, Inc. produced this report to estimate the
design and construction costs
for two trailer ship designs: a Pure Commercial HST140-53 design
and a Dual-UseHST160-53 (Figures 1.0-1 through 1.0-5). The Dual-Use
design is somewhat larger insize than the pure commercial ship to
accommodate greater fuel capacities for trans-oceanic military
service and higher-than-commercial speeds. The Dual-Use design
haslarger 53 foot trailer capacity of 160 versus 139 for the Pure
commercial Design.
The reason for estimating these two designs is to determine the
ship construction costs ofthe Dual-Use ship to meet National
Defense Funding (NDF) features required to supportthe Dual-Use use
in Sealift transportation missions. Section 2.1.12 offers estimates
in thisregard.
The estimates were all developed using SPARsESTI-MATEcost model
modified fortrimarans. The estimates assume that design and
detailed engineering will be performedby an expert naval
architecture and marine engineering company. The construction
isassumed to be performed by a commercially competitive mid-tiered
or big six yard U.S.shipbuilder using modern hull block
construction methods.
A third estimate of the Dual-Use design also has been provided
in Section 2.1.13 tosimulate additional construction cost savings
possible from the application of extendedmodular construction
approach to ship equipment and outfit components. This
approachexpands upon hull block construction by outsourcing
selected major hull blocks formanufacturing, assembly and
outfitting. In addition, design and construction of
equipment and various outfit components are outsourced for
modular fabrication andassembly so that these modules can be
readily installed later at the assembly yard on unit,on block
and/or on board. Such an approach requires a carefully planned and
executedengineering process in order for the modules to be quickly,
easily installed and integratedwith other ship systems and
infrastructures. Further discussions of these methods areprovided
in Section 3.2.4. While some may argue that extended modularization
is notcurrently possible due to virtually no vendor infrastructure
and too few other series shipprograms needed to support the added
engineering efforts. Nevertheless, U.S.
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shipbuilders need to at least begin pursuing this approach. It
is being aggressivelyexploited by European shipbuilders with
sizeable cost savings benefits resulting.
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Figure 1.0-1: Dual-Use HST160-53General Arrangement: Profile
& Cargo D
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Figure 1.0-3: Dual-Use HST160-53Machinery Arrangement
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Figure 1.0-4: Dual-Use HST160-53Machinery Arrangement
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Figure 1.0-5: Dual-Use HST160-53Machinery Arrangement
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The cost model utilizes basic ship design characteristics of
structures; propulsionsystems; electrical generation and
distribution systems; electronics and communicationssystems;
auxiliary and outfit systems.
Figure 1.0-6 presents principal characteristics of the
Dual-UseHST160-53 used in the
ESTI-MATEcost analysis. Final ship hull lengths and beams are
slightly different basedon the calculation refinements made in task
3. These refinements do not alter the costestimates.
Main Hull:
LOA, Length Overall M 195.00
LWL, Length Waterline M 179.40
Beam, Molded M 15.00
Depth, Molded M 21.00
Draft, Design Full Load, Molded M 7.50
Cubic Number (LWL x Beam x Depth) CUNO(M) 58,545
SVI, Ship Volume Indicator (LWL x Beam x Draft) CUM 20,909
Cb, Block Coefficient COEF 0.520
SDI, Ship Displacement Indicator (Cb x SVI) CUM 10,872
Total Full Load Displacement (Main Hull Only) MTONs 13,084
Machinery Spaces:
Volume of Machinery Space (Not incl. Uptakes) CUM 12,763
Super Structure:
Super Structure Deck Area SQM 5,111
Volume of Super Structure (Incl. Storage Spaces Below) CUM
17,887
Cargo Areas:
Number Decks Below Weather Deck 2.00
Total Areas of Cargo Decks OMS SQM 8,550
Volume Cargo Decks OMS CUM 29,925
Average Deck Heights M 5.00
Side Hull:
LOA, Length Overall M 101.00
LWL, Length Waterline M 92.92
Beam, Molded M 5.30
Depth, Molded M 21.00
Draft, Design Full Load, Molded M 7.50Cubic Number (Depth)
CUNO(M) 10,342
SVI, Ship Volume Indicator (LWL x Beam x Draft) CUM 3,694
Cb, Block Coefficient COEF 0.486
SDI, Ship Displacement Indicator (2 x Cb x SVI) CUM 3,588
Total Full Load Displacement (Both Side Hulls) MTONs 3,944
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Max Beam Overall at Deck: M 35.40
Equivalent Beam: M 20.55
Combined Total Cubic Number (Combined Total): CUNO(M) 72,516
Combined Cb, Block Coefficient: Cb 0.432
Combined Ship Displacement Indicator, SDI: 13,186
ACCOMMODATIONS
Ship's Crew Number (MSC) CREW 20
Commissioned Officers PAX -
Non-Commissioned Officers PAX -
Enlisted PAX -
Troop Force PAX -
Overnight Passengers PAX -
PAX Daytrippers PAX -
Total 20
Figure 1.0-6: Dual-Use HST160-53-High-Speed Trimaran Trailer
Ship
Figure 1.0-7 presents weight and displacement characteristics of
theDual-Use HST160-53.
Displacement:
Total Displacement at Full Load Draft MTON 17,011
Total Displacement at Full Load Draft CUM 16,593
Light Ship Weight MTON 10,599
Light Ship Weight CUM 10,338
Fuel & Load Items MTON 3,520
Fuel & Load Items CUM 3,433
Total Payload Displacement MTON 2,892
Total Payload Displacement CUM 2,821
CARGO CAPACITY
Designed Deck Space per MTON Cargo SQFT/MTON -
Designed Deck Space per MTON Cargo SQM/MTON -
Required Cargo Deck Space SQM -
Number of TEUs TEU 400
Number of Vehicles at Capacity NO. 160
Average Weight per Vehicle MTON/EA 20.00
Average Deck Space per Vehicle SQM -
Liquid Cargo Capacity CUM -
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BBL -
Figure 1.0-7: Dual-Use HST160-53-High-Speed Trimaran Trailer
Ship Weights &Displacements
Figure 1.0-8 provides theDual-Use HST160-53light ship weights
for each SWBS Group.
SWBS Group Weights Computed
1 Hull MTONS 7,200 Includes masts, foundations, stacks, ramps,
etc.
2 Propulsion MTONS 1508Includes all propulsions systems,
shafting, gearboxes, thrusters, etc.
3 Electrical MTONS 493Includes generators, transformers,
batteries,panels, lighting, & distribution systems
4 Electronics & Navigation MTONS 35
5 Auxiliary Systems MTONS 698 Includes all HVAC, piping, &
deck machinery
6 Outfit & Furnishings MTONS 334 Includes all hull outfit
items & paint
7 Armament MTONS - Misc. armament foundations, small arms, etc.
only
Total: 10,,267
Figure 1.0-8: Dual-Use HST160-53-High-Speed Trimaran Trailer
Ship Light ShipWeights
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2.0 The Cost Estimates
The following describes the cost estimates for the two HST
designs.
2.1 Cost Estimate Work Breakdown Structure
Two separate estimates were produced for the design and
construction costs for twotrailer ship designs: a Pure Commercial
HT140-53 design and a Dual-Use HST160-53.
The cost model uses as its basis cost data, (cost estimating
relations or CERs) that isapplicable to a generic mid-tier
commercial U.S. shipyard. These costs are adjusted forproductivity
and pricing differences for shipbuilding companies expected to
undertakeconstruction of these vessels.
To approximate costs at time of actual construction, all cost
and pricing has beendeveloped in 2009 U.S. dollars.
The cost estimate is broken down into four (4) major cost
categories:
1. Non-Recurring Design, Production Engineering & Detail
Planning Costs2. Recurring Construction Costs3. Management Fees
(Option for managing a virtual shipbuilding approach)4. Cost
Risk
2.1.1 Non-Recurring Costs
The non-recurring costs include design development, detail
design, engineering andproduction planning.
The cost model includes the following activities as
non-recurring costs:
1. Preliminary Design & Design Validation2. Detail
Functional Engineering3. Detail Transitional (Production)
Engineering & Construction Drawings/Shipyard
Instructions, Including Lofting
4. Detail Production Planning5. Purchase Specifications &
Support6. Detail Engineering Management
The cost model develops the non-recurring labor estimates based
on a percentage of leadship production hours. Section 4 describes
this process in more detail. For theconventional hull block
construction scenarios, the non-recurring labor hours wereestimated
at 30% of the production hours.
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Figure 2.1-1 presents the non-recurring labor hours
estimates.
1
,504
25
,863
252
,617
23
,683
6,0
15
3
,007
9,7
74
12
,029
2
,003
34
,446
336
,453
31
,543
8,0
11
4
,005
13
,018
16
,022
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
C 14053
C
D 16053
C
Figure 2.1-1: Estimated Non-Recurring Labor Hours
Figures 2.1-2 presents the non-recurring cost estimates for each
of the HST designs.
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Figure 2.1-2: Estimated Non-Recurring Costs for Conventional
Hull BlockConstruction Build Strategy
The non-recurring cost estimates are based on the assumption
that the HST designs arerelatively simple and straight forward.
Outfitting is not expected to be exotic or complexwith the
exception of the propulsion systems. The commercial shipbuilder is
expected tohave a lower non-recurring cost compared to a military
design and should follow closelycommercial design and engineering
practices.
The cost model places costs for producing jigs and templates,
etc. also under this Non-Recurring Production Engineering and
Detail Planning.
The non-recurring cost estimates further assume that production
engineering will befocused on ways to simplify the manufacturing
and building processes. This engineeringeffort can capitalize on
engineering and production standards in order to exploit the
costsaving benefits of repeatable interim production products. For
example, the side hulls arealmost identical.
$52
$70
$
$10
$20
$30
$40
$50
$60
$70
$80
C 14053
C B C
D 16053 C
B C
2009$
E C
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The estimates also assume that detail production planning is of
a high level thateffectively schedules work at the earliest, most
productive stages of construction (i.e.,pre-outfitted hull blocks)
consistent with available facilities, material and qualitytechnical
and engineering information. The scheduling will effectively
coordinate all ofresource requirements throughout the various
stages of construction.
2.1.2 Recurring Costs
Recurring costs include all basic construction costs for each
ship. For series shipconstruction programs, costs are estimated for
follow-on ships by applying estimatedlearning curve factors for
labor and potential material cost savings. Refer to Chapter
6,Follow Ship Cost Estimates.
The recurring cost estimate is broken down into cost categories
similar to the NavysShip Work Breakdown Structure (SWBS), Figure
2.1-3. Differences lie primarily in
SWBS 200 which carries only propulsion machinery items and their
installation(including electric drive components and systems).
Piping systems for propulsion arecataloged under SWBS 500 for
auxiliary systems along with all other piping systems forthe
ship.
100 Hull200 Propulsion300 Electrical400 Electronics &
Navigation500 Auxiliary Systems600 Outfit & Furnishings700
Armament
800 Technical Support900 Shipyard Services
1000 Contingency Margin, Insurance & Extras
Figure 2.1-3: Recurring Cost Estimate Work Breakdown
Structure
SWBS 100: Normally, the cost model requires structural weights
to be summarized bymajor structural components (i.e., production
interim products): decks, double bottoms,side shells, frames,
transverse and longitudinal bulkheads, superstructure, etc. Each
ofthese components have different manufacturing and assembly
characteristics (i.e., requiredifferent production processes), and
therefore each can be assigned different costestimating
relationships (CERs). Material costs also will vary depending upon
thematerials used (mild steel, high strength steel aluminum,
composites, etc.)
As discussed in Section 3.4, Shipyard Productivity Factors, the
structural CERs aremodified with appropriate productivity factors
developed for each type of ship builder.The CERs also will be
modified for the overall size of the hull to account for the
general
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tendency that larger hulls are less expensive to build on a
structural weight basis (somemeasured economy of scale).
The cost model places all structural work, including ramps,
foundations, masts, andstacks under SWBS Group 100.
Structural material costs are estimated on the basis of weight
and type. The unit cost,however, is increased by 35% to account for
material transportation (about 10%), scrap(typically 12%-16% to as
much as 25% for structures with much shape andcomplexities),
welding materials and gases (7%-8%), and classification society
fees(about 1%). Figure 2.1-4 presents the steel prices and
allowances used for the HSTestimates.
Figure 2.1-4: Steel Prices & Allowances Used for HST
Estimates
SWBS 200: Somewhat divergent from the U.S. Navys SWBS, the cost
model places allpiping and ventilation systems under SWBS Group 500
(Auxiliary Systems). Therefore,Propulsion Support Systems (SWBS
250-259) & Fuel/Lube Support (SWBS 260-269)were moved to SWBS
Group 500.
SWBS 200 also includes primary costs for electric drive systems,
if applicable, such asdiesel generators, electric motors, pods,
etc.
In addition, costs for thrusters, if applicable, also are
included under the cost modelsSWBS 200.
SWBS 300carries all electric generation equipment for ship
services (not forpropulsion), as well as all electrical distributed
systems, lighting, etc. The cost modelestimates electrical costs
based on the type of electrical generation system,
includingemergency generation, and the power output (kW).
For combatant type ships, the cost model has options to reflect
the assumption that theelectrical distribution costs are
considerably higher, by factors of about three-five times
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that for a commercial vessel. This assumption accommodates added
costs for shockrequirements and for power redundancy required for
complex combatants.
SWBS 400: The cost model offers essentially two levels of
electronics: standard
electronics, communications and control systems for commercial
ships and variouselements of C4ISR for military ships.
SWBS 500: The cost model includes the following auxiliary
systems plus others:
Fans, duct work, & HVAC All piping systems, including piping
support systems for main propulsion (lube
oil, etc.)
Anchor/mooring systems & deck machinery Cargo cranes
For combatant type ships, the cost model has options to reflect
the assumption that pipingsystems costs are higher than for
commercial vessels. This assumption accommodatesadded costs for
shock requirements.
SWBS 600: The cost model includes the following in SWBS Group
600, Outfit &Furnishings Systems plus other relevant outfit
systems:
Paint Hand rails, stanchions, & walkways
Floors, ladders, grates Life boats, rafts Insulation Metal
doors, sheathing & bulkheads Accommodations outfit &
furnishings
The cost estimates do not include costs for load items, fuels,
lubricating fluids, etc.
SWBS 700: CERs are available to a limited extent for weapons
systems, mostly for their
foundations. For the DUAL-USE HST160-53, the cost model has not
estimated the costsfor armaments.
SWBS 800: U.S. Navy contracts catalog both recurring and
non-recurring technical coststogether under SWBS 800. Therefore,
the majority of engineering costs appear for thelead ship. The cost
model, instead, catalogs only the recurring costs under SWBS
800
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and catalogs non-recurring costs under a separate project WBS.
This separation allowsthe non-recurring costs to be easily
allocated to all ships of a series program.
Technical Services, includes only technical support for minor
change orders and finetuning of production engineering and planning
after non-recurring activities are complete.
For both HST160-53 designs, the assumed percentage of total
production labor hours(SWBS Groups 100-700) for shipyard technical
support services was set at 8%.
SWBS 900: For shipyard production support services, a figure of
20% of productionlabor hours (SWBS Groups 100-700) was used for the
estimate. This is a figure notatypical of North American commercial
yard that employ reasonable control over thislevel of effort and
follows a regimen that minimizes unnecessary costs. A
majorcomponent of this cost lies in supervision and production
control.
For the conventional hull block construction scenario, no costs
have been estimated fortransportation of hull modules to a central
erection site. However, for the extended
modularization scenario, costs are estimated to
load/barge/unload the side hulls anddeckhouse structures at the
final assembly yard. The estimates reflect a one-piecejoining
method for final hull block erection. Design and construction of
special erectionsite equipment such as float barges, etc. are not
included as it is assumed that the shipsize is not so large as to
present special erection and launching operations.
For both scenarios, no costs are estimated for ultimate delivery
to a location away fromthe shipyard.
The cost model places costs for producing jigs and templates,
etc. under the Non-Recurring Detail Production Engineering and
Planning described above.
General support costs, a difficult source of cost to control
because it is mostly level ofeffort, can be reduced.
1. Early stage outfitting (on unit and on block) eliminates
considerable support costsrequired for on board outfit efforts.
2. Early stage outfitting minimizing or eliminating scaffolding
and related supportcosts.
3. Improved material flow to work areas minimizes material
transport costs.4. Higher level of work skills and higher quality
of production engineering reduces
supervision and quality assurance costs.
SWB 1000: The cost model uses an additional SWBS group outside
normal U.S. Navypractice. The additional SWBS 1000 is used for
costs outside those for production andtechnical/shipyard services
(ABS, financing fees and MARAD title XI when applicable,etc.) and
for various shipbuilding risk insurance costs, warranty bonds, etc.
This SWBSgroup also includes a contingency cost item for change
orders and for yet-undefined shipsystem requirements.
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Figures 2.1-5A and 2.1-5B summarize the lead ship cost estimates
for the two HSTdesigns.
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2.1.-6: Dual-Use HST160-53-High-Speed Trimaran Trailer Ship
Construction S
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A cross-check of whether or not this schedule is reasonable is
reflected in the estimatedmanpower requirements (See Section
6).
Figure 2.1-7a illustrates that these estimated manpower
requirement figures are well
within reasonable levels available for design and construction
of a ship of this size.Figure 2.1-7b shows estimated production
manpower requirements.
Figure 2.1-7a: Combined Non-Recurring and Lead Ship Recurring
Manpower
Requirements for Conventional Hull Block Construction of
Dual-Use HST160-53
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Figure 2.1-7b: Estimated Lead Ship Production Manpower
Requirements for
Conventional Hull Block Construction of Dual-Use HST160-53
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2.1.4 Series Construction Programs
Follow ships of a series ship production program typically
experience a progression of
relative cost reductions as each ship unit is produced. Figure
2.1-8 presents constructioncosts for a series sp production program
estimated for the Dual-Use HST60-53. An 85%learning curve has been
applied for labor with the exception that the 2
ndship of the series
has been restrained to leaning of only 97%. A 95% learning
(discount) has been appliedto material costs. All cost figures are
provided in 2009 U.S. dollars. Effects ofinflation/deflation have
not been applied, and their effects upon ship costs are assumed
tobe included as an additional contact allowance.
Details of the application of learning curves for series ship
programs are provided inSection 7.
Figure 2.1-8: Construction Costs for Series Ship Production,
Dual-Use HT60-53
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Figure 2.1-9 provides averaged estimates that allocate
non-recurring costs across thenumber of ships in a series. This
chart shows both should costs and should cost plusestimated total
risk cost.
The should cost equates to the likely price bid by a skilled and
experience engineering
firm and a well organized shipbuilder experienced with
successfully executing modernhull block construction methods. These
are should prices applicable for what weshould expect from U.S.
companies. Should prices from foreign world classshipbuilders
should be expected to be considerably lower due to their greater
levels ofproductivity and their abilities to purchase equipment and
materials at prices lower thanwhat we typically expect here in the
U.S.
Another way of visualizing the should cost prices is to envision
the price bid by acommercially competitive U.S. shipyard
experienced in pre-outfitted hull block assemblydesign and
construction methods. This bid price would consider
a) The assumed need for the shipbuilding contract,b) Include
allowances for controllable and carefully managed shipbuilding
risksc) Assume a well managed yard building to a well engineered
and comprehensive
detail design.
Section 2.1.6 describes in more detail a breakdown of cost risk.
The primary elements ofthis total risk will depend upon the
relative skills and experience of the engineering andof the
shipbuilder. Recent examples of serious budget problems with both
commercialand naval construction programs have, in large measure,
been reflected in the estimatesof the risk figures. The more
skilled and experienced the contractor, the lower one wouldexpect
the actual risk to be. Each contractor will likely assess its own
levels of risk andprice its bid accordingly. Therefore, the
illustrated range between should cost and whatincludes total risk
is where bids are likely to fall.
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Figure 2.1-9: Average Design & Build Costs for Conventional
Hull Block
Construction of Dual-Use HST160-53
Details of cost risk are provided in Sections 2.1.6 and 3.6.
2.1.5 Management Costs & Fees
For a successful virtual shipbuilding approach that promises
significant cost savings,there will be a critical need for advanced
planning of both engineering and productionprocesses to ensure that
subcontractors are well organized and their schedules
closelysynchronized and supervised. As an alternative to having the
prime assembly shipyard
being the over arching program manager, the extended modular
construction approachhas its estimate including an additional cost
for a professional program managementteam. Section 7 describes a
possible expert program management team.
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2.1.6 Cost Risk
The estimates provide should costs as well as estimates of cost
risk.
Figures 2.1-10 and 2.1-11 present breakdowns of cost risk as
estimated for the Dual-UseHST160-53. Recently, there have been a
number of occasions whereby both engineeringand shipbuilder cost
and schedule performance has been less than desirable resulting
incontracts significantly over budget and schedule. The high levels
of estimated cost riskfor these build strategies reflect current
performance difficulties in the industry at large.
However, the breakdowns of cost risk provide some clarity and
focus into whereimprovements need to be made to reduce cost
risk.
Figure 2.1-10: Estimated Lead Ship Total Price with Cost Risk
for Conventional
Hull Block Construction Build Strategy for Dual-Use HT160-53
$70
$233
$30$0
$49
$98
$2
$
$100
$200
$300
$400
$500
$600
A:
E & C 2009$
E. C
E. E C
E. E C
E. C
E. CE C
E. C
D, E &
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Figure 2.1-11: Estimated Cost Risk for Conventional Hull Block
Construction Build
Strategy, Dual-Us HST160-53
With an estimated little overlap of engineering and production,
the cost risk for reworkdue to an overlap should be relatively
small. Also, the build schedule is not aggressive,so the cost risk
due to cramped scheduling also should be minimal.
Risk here defines a range of costs above the should cost to
reflect what a shipbuildermay require in his bid to accommodate a
number of adverse variables:
Costs, such as those estimated for equipment and materials, may
become greaterdue to economic uncertainties, currency fluctuations,
etc.
The shipbuilder may exact a high degree of rework due to having
too much detailengineering not being complete in time to support an
efficient production
schedule The bidding yard may expect higher costs due to the
fact that the yard may have
little actual experience building a ship of this type. In
addition, production mayno longer enjoy having a highly skilled
work force.
A detail engineering effort that has not performed well often
results in muchhigher production costs and schedule delays.
If the production schedule is too short, requiring higher than
normal levels ofresources to manage can result in higher costs in
production.
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Details of the cost risk estimates are provided in Section
3.6.
Figure 2.1-13 presents a range of potential lead ship costs
(including non-recurring costs)for the Dual-Use HST160-53
design:
Minimum costs that does not include any risk nor a 10%
contingency forunknown ship systems, etc.
Should costs that include the 10% contingency, but no risk.
Estimated maximum cost that includes contingency plus 100%
estimated risk. More likely maximum cost that included contingency
plus 67% estimated risk.
The cost at 100% risk hopefully is not likely. According to
generalized probabilitytheory, 67% of the total risk can relate to
an 80% probability. By identifying the majorareas for cost risk,
efforts should focus on working to eliminate them. Only then will
acontract opportunity have more potential for success, and less
potential for ultimate
failure should the risks not be accommodated nor remediated.
Figure 2.1-13: Range of Potential Costs for Lead Ship, Dual-Use
HST160-5
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2.1.7 Labor Rates
The following labor & overhead rates (Figure 2.1-14) are
used for the estimates. Theaverage U.S. shipyard production 2009
wage rate is based on wage data obtained fromthe U.S. Bureau of
Labor Statistics. Technical and detail engineering wages rates
were
estimated by applying the wage ratio (120.4%) of average U.S.
technical to shipyardproduction wages as measured by the U.S.
Department of Commerce
1, December 1,
2003.
The fully burdened wage rates are assumed to include fringe
benefits
Overhead is applied only to shipyard labor. Profit is not
included in any labor rates, butapplied separately (see Section
2.1.9 below).
Non-Recurring Engineering LaborCommercial Ship
Builder
Senior Professional/Manager $ 143.77
Engineer $ 128.35
Designer/Draftsperson/Planner $ 96.04
Clerical $ 61.62
Contingency (weighted average) $ 119.02
Shipyard Recurring LaborCommercial Ship
Builder
Technical Wage/Hour $ 24.56
Production Wage/Hour $ 20.47
Overhead 125%
Technical Wage/Hour w/OH $ 55.26Production Wage/Hour w/OH $
46.05
Figure 2.1-14: Applied 2009 US$ Labor & Overhead Rates
The above labor rates do not include any profit which is added
afterwards as described inSection 2.1.9.
2.1.8 Material Costs
All HST160-53material has been assumed to be of commercial grade
and have beenestimated for the year 2009. Section 3.5 describes the
processes within the cost modelfor escalating costs for a common
year estimates.
1U.S. DOC/BIS TSV Site Survey Data, dated December 1, 2003.
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A 10% mark-up (general and administrative costs) was applied to
the material costestimates. This mark-up includes any burden rate
applied by the shipyard, but does notinclude any profit which is
added afterwards as described in Section 2.1.9.
2.1.9 Profit
From 1999-2000, U.S. shipbuilders reported profits of over 11%.
For the HSTestimates, a profit rate of 12% was used. Profit is
applied to all costs: labor, material,subcontracted services,
overhead and material G&A costs.
2.1.10 Transport Factors
Transport factors measure cargo crying capacity versus ship
speed and propulsion power.
The greater the factor, the greater the capacity to carry cargo
t higher rates of speedwithout an adverse penalty for power, which
is a measure of cost. The following formulais one of several that
define a transport factor:
Transport Factor = [Payload x Speed]/HP/550
Figure 2.1-15 presents transport factors for the two HST ship
designs.
Figure 2.1-15: HST Transport Factors
Figure 2.1-16 shows the average ship cost per transport factor,
which decreases for largership construction programs.
12.79
10.37
15.78
2.004.006.008.00
10.0012.0014.0016.00
18.00
D 160
53 C
B
C 26
D 160
53 C
B
C 30
C
14053
C
B C
26
D F
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Figure 2.1-16: Comparing Average Ship Cost per Transport
Factor
2.1.12 National Defense Funding (NDF)
The estimated lead ship costs for the Dual-Use and for the Pure
Commercial designs are
compared in Figure 2.1-17.
Figure 2.1-18 compares potential NDF for average series ship
costs at different levels ofcost risk.
$29
$25$23
$22$21 $21 $20 $20
$24
$20$19
$18 $17 $17 $16 $16
$14$12
$11 $10 $10 $10 $10 $9
$
$5
$10
$15
$20
$25
$30
$35
1 2 3 4 5 6 7 8
A C/ F 2009$
F = //550
D 16053 C B C 30
D 16053 C B C 26
C 14053 C B C 26
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Figure 2.1-17: Comparing Lead Ship Costs
Figure 2.1-18: Potential NDF for Series Ship Production
Programs
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
%
%
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Figure 2.1-20 provides the cost estimate for the modularized
Dual-Use H60-53. Sizeablecost savings are very possible over
conventional outfitting. The estimate assumesmaximum
modularization, which at present is not possible. However, benefits
should be
recognized even if only selected modules are developed.
It should be expected that lower costs would be realized by
outsourcing modules tovendors that specialize in manufacturing and
assembling selected equipment andcomponents. Some cost reductions
should also be realizable if the modules weredeveloped by the
shipbuilder using internal resources.
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Figure 2.1-21 presents verged costs to build series ships of the
Dual-Use design using thefull extended modulizaion approach.
$294
$250
$
230
$2
19
$21
1
$205
$201
$197
$426
$361
$319
$297
$282
$271
$264
$257
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
1 2 3 4 5 6 7 8
A
C
D
&B
A C 2009$
& ,
Figure 2.1-21: Averaged per Ship Costs for Dual-Use Design Using
Maximum
Extended Modularizing of Design and Construction
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Voyage Segment
Distance in
Nautical Miles
At Sea
Speed
Time
Interval Time
Start Arrive at Fall River 8:00 AM
Dock+Unload + Load+Undock at FallRiver i.e. .5+3+3+.5 hrs = 7.00
3:00 PM
Fall River to Newport, RI 16 12.0 1.33 4:20 PM
Newport, RI to Sea Buoy 5 15.0 0.33 4:40 PM
Sea Buoy to Port Canaveral 905 22.9 39.59 8:15 AM
Port Canaveral sea buoy to terminal 16 12.0 1.33 9:35 AM
Dock+Unload + Load+Undock at
Canaveral i.e. .5+3+3+.5 hrs = 7.00 4:35 PM
Port Canaveral terminal to sea buoy 16 12.0 1.33 5:55 PM
Port Canaveral to Newport, RI sea buoy 905 24.9 36.41 6:20
AM
Newport, RI to Sea Buoy 5 15.0 0.33 6:40 A
Newport, RI to Fall River 16 12.0 1.33 8:00 A
TOTALS 0.0 96.00
Figure 2.1.23: U.S. East Coast Trade Route
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The Required Freight Rate (RFR) was developed under the
following assumption:
Number of Ships Built: 4 Maximum of 8 for this analysis
Total Price per Ship: 231,805,011$
Difference Dual-Use less Pure
Commercial Designs 64,671,836$ Total NDF
Credits for 21 extra trailer capacity (8,488,178)$
56,183,657$
Net Owner's Asset Value 175,621,353$ 7,024,854$ per year
Total Cost of Money per Ship: 95,889,259$ 3,835,570$ per
year
Sub-Total: 271,510,612$ 10,860,424$ per year
Anticipated Life of Ship: 25 Years
Salvage/Sale Value at Life End: 2,433,057$ 1.05% Total Acq.
Price
Average Annualized Capital Cost: 10,763,102$
Laydays & Repair Days per Annum 9.00 Days
Total Days per Round Trip 4.00 Days RoundedTotal Round Trips per
Annum: 89.00 Trips
Payload MTONs per Annum: 512,640 MTONs
Vehicles per Annum: 25,632 EA 20.00 MTON/EA
Figure 2.1-24: General Operating Scenario for Trade Route
Financing arrangements have been developed under the following
scenario:
MarAd required equity portion: 12.50% 21,952,669$
Principle % Interest Years PMTS/Year Tot. Int.
Equity Portion 21,952,669$ 28.0% - 0 $0
Finance Plan A 153,668,684$ 5.2% 25 1 ($95,889,259)
Finance Plan B -$ 0.0% - 1 $0
Finance Plan C -$ 0.0% - 1 $0
175,621,353 ($95,889,259)
Figure 2.1-25: Estimated Financing Arrangements
Figures 2.1-26 and 2.1-27 summarize the estimated annual
operating costs (90% round
the clock servicing). Fuel cost applied is $485/mt.
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Figure 2.1-28 breaks down the average required right rate per
trailer for transit betweenFall River, MA and Port Canaveral,
FL.
$419.91
$239.81
$898.71
$175.56
$415.93
$300.00
$67.83
$87.07
$
$500
$1,000
$1,500
$2,000
$2,500
$3,000
1
F
(C/
)
F BC
(F , A C, F)
, &
C
&
DD D
C & C
C C
Figure 2.1-28: Required Freight Rate per Trailer
Figures 2.1-29 and 2.1-30 break down the required freight rate
on a basis of an equivalentcost per statute mile.
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48
$0.38
$0.22
$0.81
$0.16
$0.38
$0.27
$0.06
$0.08
$
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
1
F
/
, &
C
&
DD D C
& C
C C
F C
E
C C
Figure 2.1-29: Required Freight Rate per Statute Mile
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15% 9%
33%
6%
15%
11%
1%1% 3%3% 3%
F
/
C C
E
F C
C C
& C
DD D C
&
C, &
Figure 2.1-30: Required Freight Rate per Statute Mile
The figures above all are based on 100% full load of 160
trailers and a fuel cost of $400per metric ton.
Figures 2.1-31 and 2.1-32 illustrate the effect of fuel cost and
percentage of full load onrequired freight rates.
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50
= 1.665 + 1,688.167
= 1.000
= 1.855 + 1,839.833
= 1.000
= 2.085 + 2,033.167
= 1.000
$2,000
$2,200
$2,400
$2,600
$2,800
$3,000
$3,200
$3,400
$3,600
$300 $350 $400 $450 $500 $550 $600 $650 $700 $750
E2009
$/
A F C 2009 $/
F F C
Figure 2.1-31: Fuel Cost versus Required Freight Rate per
Trailer Haul
= 0.001 + 1.523
= 1.000
= 0.002 + 1.660
= 1.000
= 0.002 + 1.836
= 1.000
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$300 $350 $400 $450 $500 $550 $600 $650 $700 $750
E2009
$/
A F C 2009 $/
F F C
Figure 2.1-32: Fuel Cost versus Required Freight Rate per
Statute Mile
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Figure 2.1-33 presents the worksheet used to determine port
costs. It is based onpublished rates from Port of Canaveral, FL.
Costs to load and unload trailers wereestimated at a labor rate of
$48/hour and applied to the number of trailers
loaded/unloaded over the seven hour time period. This figure is
probably on the highside as not all trucks would be required to
wait the full amount of time to load/unload.
These same costs were applied to the Fall River, MA port, for
which rates were notimminently available.
0 0
Trailers 144 144
2,880 3,175
195 640
0 0
' 7.5 24.6063
. = 3/2.833 3143 1,111
. 89.00 / 7
C, F
Mooring Fee -$ -$
Harbor Master -$ 186$ 186$ 185.66$ 2000
Cargo Warfage - Trailers -$ 7,873$ 7,873$ 2.48$
Cago Warfage - TEUs -$ -$ $ 23.20$ 28.98$ 450
Dockage -$ 4,875$ 4,875$ 4,874.54$ 24
Loading/Unloading Costs - Trailers -$ 48,384$ 48,384$ $48
Loading/Unloading Costs - TEUs -$ -$ $
Tolls -$ -$
Pilotage based on LOA -$ 308$ 308$ 12.50$ 12
Pilotage based on GRT -$ 70$ 70$ 0.0280$ 2500
Tugs -$ 23$ 23$ 2,025$ Agency Fees -$ -$
Homeland Security Fees -$ -$
Outside Storage Trailers (2 days) -$ 885$ 885$ 2.09$ 15
Outside Storage TEUs (2 days) -$ -$ $ 1.85$
Sanitary Waste Removal -$ 13$ 13$ 1,125$
Oil Waste Removal -$ 13$ 13$ 1,125$
Stevedoing Services -$ 19$ 19$ 1,700$
Fresh Water -$ -$ $ 1,125$
Fresh Water Hookup -$ -$ $ 50.66$
Other Port Expenses -$ -$
Total Port Costs: 62,647$
435.05$
Figure 2.1-33: Estimated Port Costs
Drayage costs to truck trailers to/from the port to local
destination (assumed 50 mileseach way) was based on a trucking
freight rate of $3.00 per mile.
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3.0 Basis for the Cost Estimate
SPARs cost estimates are generated from developed cost models.
Each cost model istailored to a specific hull form (mono-hull,
catamaran, trimaran, etc.) and usually to aspecific performance
category (slow, medium and high speed). Models also can vary
foraccommodating special equipment and mission requirements.
The cost models approach for an estimate is based first upon the
composition of thehulls structural components (decks, bulkheads,
shell, double bottoms, etc.), and thenupon the ship systems
(mechanical, piping, electrical, HVAC, etc.) in the design andupon
other ship characteristics. Factors considered and applied if
relevant are the generalbuild strategy for on-unit, on-block and
on-board construction; the type of shipyard andits established
product line, its facilities and production capabilities; and the
expectedcompetence of the shipyard to plan and manage its
resources, costs and schedules.
The methods used for modeling the ship design costs are
described in SPARspublication entitled Shipyard Cost
Estimating.
Each cost model employs a comprehensive set of Cost Estimating
Relationship, or CERs.They reside on SPARs estimating system called
PERCEPTION ESTI-MATE andrepresent a wide cross-section of current
and historical shipyard construction costs atmany levels of detail.
Adjustments can be made as necessary to reflect differing
shipyardproductivity factors, construction methods and material
costs. These CERs, whileparametric in nature, focus on a specific
area of cost (labor and material) and eachreflects the specific
material and the manufacturing and assembly processes required.
Specialized CERs focus on structural component fabrication,
assembly and erection, forinstallation of propulsion systems, and
for various support activities, etc. The CERs arebased on a many
different metrics, such as weld length, deck area, compartment
volumes,number of crew (by type crew), kW of propulsion (by type),
etc. Hull structuralcomponent costs are based upon component weight
by type of structure and material.
The cost estimates, applicable to a lead ship, are believed to
be fair representations ofanticipated true costs based upon the
design information provided. Material costs allhave been adjusted
to reflect a common year value. This assumes that for a
multi-yearprogram, appropriate contract escalation clauses have
been defined to index actual costsrelative to the base year.
Variations due to specific materials, equipment models and
configurations, and vendorpricing methods should be expected.
The cost estimates assume ship delivery at the final assembly
construction yard and donot include any subsequent transportation
costs to another site or other ancillary itemcosts as discussed
above. Also, for the commercial shipbuilder, the cost
estimateincludes typical builders risk insurance and added costs
for warranty bonds as are typical
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of commercial shipbuilding contracts (these costs are not
included in the estimates for theDual-Use and combatant
shipbuilders.
Finally, the estimates are based upon typical contract cost and
schedule performance forthe three types of shipbuilders for both
non-recurring engineering and production.
3.1 Cost Estimating Methodology
The SPAR method of cost estimating differs significantly from
the way that the U.S.Navy does its estimating. The U.S. Navy
largely develops its estimates based on similarhull forms and
design specifications. Then, for similar hull forms, system costs
areestimated based on weight and weight alone, although some
adjustment factors are oftenapplied. The primary problems with this
weight-based method of estimating are thefollowing:
It cannot easily estimate cost differentials below gross levels
of the workbreakdown structure (WBS). This precludes the method
from being useful fortrade-off studies of designs, materials, and
manufacturing Processes.
It cannot estimate cost differentials of outfit work performed
at differentstages of construction: on unit, on block and on board.
Various establishedrules of thumb indicate that these cost
differentials can vary from 300% to500% or more.
It cannot estimate cost differentials due to configuration
complexity, such ascompartment density or location on board the
ship (par. ex., confining engineroom installation versus easily
accessible weather deck installation).
It cannot estimate cost differentials due to orientation of work
(par. ex., less
productive over head work versus more productive down hand
work). It cannot estimate cost differentials due to changes in
build strategy, including
outsourcing the manufacturing of selected components to more
productive,less costly vendors and suppliers.
Since it operates mostly at high levels of the WBS, it cannot
easily translate orsegment costs from one type of ship to another,
particularly ship types andhull forms not yet developed and
built.
SPARs cost models, on the other hand, are based mostly on ship
characteristics andvarious system components that make up the ship
design. There are components that areequally applicable for almost
any ship type but will vary for size and capacity. Examples
are major equipment modules (propulsion, electric generation,
etc.). Other examples ofcommon components can be seen in certain
functional areas like berthing, galley andmess.
Some of SPARs Cost Estimating Relationships (CERs) are based on
weight, such as theships structural components. For most estimating
applications, the hull andsuperstructure weight is broken down by
type hull block such as decks, transverse andlongitudinal
bulkheads, superstructure, double bottoms, side shells, bulwarks,
etc., Each
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block type carries a different CER, mostly for labor, since each
requires a different set ofmanufacturing and assembly Processes;
therefore each type has its own cost on a per tonbasis. However,
structural materials also can vary from component to component,
suchas high strength steel for high stress areas or armor
protection, light aluminum orcomposite materials for
superstructures, etc. and the CERs address these differing
requirements.
For estimating applications where the structural definition is
less detailed, the costmodels use more global CERs based mostly on
similar hull forms, such as typical mono-hulls, high-speed
catamarans, etc. However, SPAR cost estimators also can apply
theirown judgment factors to these CERs in order to address
non-typical differences thatmight be apparent in the specific
design at hand.
The structural CERs that SPAR has developed over the years were
derived from datacollected and analyzed by SPARs shipyard planning
and resource management systemcalled PERCEPTION2. PERCEPTIONenables
the shipyard to catalog each structural
component by block type and the CERs are generated
automatically. The system reportsaccommodate not only steel
structures, but other materials as well.
Other CERs are based not on equipment specifications or weight,
but other designcharacteristics, for example:
Deck Area: paint, deck covering, fire main, etc. Compartment
Volume: cable, hangers, lighting in accommodations areas Cubic
Number (LOA x Breadth x Depth): general electrical cable,
general
paint, non-accommodations lighting, selected engine room pumps
&equipment, anchor & mooring gear, etc.
Power Requirements (kW): fuel, lube oil, seawater cooling,
engine roomventilation, etc. Crew size & Type: berthing, galley
& mess, accommodations metal
sheathing, doors, etc.
Other Number Counts: life rafts, vehicle tie-downs, TEU
cell-guides, etc. Production Labor Hours: production support
services, technical support,
etc.
When used during the shipbuilding Process, PERCEPTIONprovides
return cost detailsand summaries for these other CERs. The CERs
have been sanitized as best that can bedone so that they are not
contaminated by added costs of rework and change orders.
SPARs production system, PERCEPTION, breaks out all rework and
change order costsfrom costs regarded as normal for the assigned
budget.
PERCEPTIONalso manages purchase orders and material control
functions, with reportsat all levels of detail.
2PERCEPTIONhas been installed at a number of different
shipyards, all commercial, in the U.S. andCanada since the late
1970s through to today.
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PERCEPTION, however, is not the exclusive source of cost model
CERs, among themare direct price quotations from vendors. SPARs
cost libraries are maintained (expandedand updated) on a regular
basis.
3.2 Impact of Build Strategy on Cost
The cost estimates assume that the shipyard performs the
majority of work in-house.However, some trade-offs should be
expected between shipyard labor and out-sourcedsubcontracting (make
or buy) when the ship construction is actually planned andexecuted.
These options are likely to include the manufacturing of outfit
systems, butcould include outfitted hull modules as well. Such
trade-offs would likely be reflected inshipyard accounting systems
as lower shipyard labor hours (and costs), but highermaterial and
subcontract costs. Only detail knowledge of the shipyards specific
buildstrategy would permit a cost estimate to reflect changes in
costs due to these
considerations. However, in SPARs experience, such trade-offs
often do notsignificantly impact the relative quality or accuracy
of our cost estimates, unless theoutsourced component manufacturing
and assembly can be performed by competitive,commercially-oriented
vendors that can distinguish their cost benefits over
equivalentinternal shipyard production costs including the added
costs for transporting componentsfrom the vendor site to the
shipyard.
A specific exception to this is the cost estimate for
non-recurring design and engineering,which can be estimated as
though it was out-sourced by smaller shipbuilders. For
suchcircumstances these costs may be higher, but they also may well
result in lowerproduction costs. The cost models provided options
for alternative engineering solutions.
The cost estimates assume that the construction will be
performed using hull blockconstruction techniques. The estimate for
the first hull assumes adequate design,planning and production
engineering has been provided for some outfitting of hull
blocksprior to erection, particularly with regard to major piping
systems. Other equipment andmulti-systems outfit modules may be
included in the lead ship building plan, but it isassumed to be not
extensive for the lead ship; therefore, any cost benefits potential
fromthese construction methods have minimal impact upon the cost
estimates. Someshipyards have a high pre-outfitting goal for the
first ship, but this is a real challenge andis not always achieved.
Variations from this build strategy can be reflected by
modifyingthe cost model productivity factors.
For follow ships of a series, more extensive applications of
outfitted hull blocks andequipment/systems modules are assumed to
be included in the build strategy. Costsavings from such improving
production methods are reflected in the application oflearning
curves as discussed in Section 6.0, Follow Ship Cost Estimate.
Finally, how a contract is structured for cash flow is very
relevant to ship building cost.Contract payment schedules that do
not support modern manufacturing cost savings
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methods can lead to less productive build strategies. For
example, requiring a milestonepayment based upon completion of hull
blocks erected may force the shipyard tominimize cost savings from
on-block outfit as a sacrifice to expedite the schedule forerection
work and ensuring an earlier milestone payment.
3.2.1 Modern Shipbuilding Build Strategy
Shipyards around the world generally fall into several
categories from world class to notso world class. World-class
shipyards can be characterized as technologicallyprogressive, not
only in the ship types they build, but more in the way they build
ships,both commercial and naval (combatants & auxiliaries).
Other yards not so characterizedmore typically build ships like
they always have using legacy methods that by todaysstandards are
much less efficient. Unless they have established a niche market
thatfeatures relatively low tech ship products, their operations
are less competitive in bothcost and time to build the more complex
ship designs.
World-class shipyards have been exploiting build strategies that
have enabled them todramatically lower their costs, improve
construction quality and extend ship designfeatures and
capabilities. These strategies fall into the following general
categories:
1. Improved manufacturing & assembly methodsa. Pre-outfitted
hull block constructionb. Outfitted equipment & systems
modulesc. Group technology manufacturing methodsd. Improved
assembly technologiese. Cross-trade work agreements
f. Outsourcing specialty workg. Reduced non-value added labor
costsh. Minimized/elimination of expensive stagingi. Minimized
worker walking timej. Increased under-cover assembly operations
2. Improved procurement & material controla. Near-in-time
procurement schedulingb. Improved vendor relations & pricing
agreementsc. Material work order kittingd. Standardized material
parts & components
e. Material buffer storage nearer to worksites
3. Improved business processesa. Streamlined & integrated
departmental business process managementb. Improved
labor/material/subcontractor planning & schedulingc. Timely
& accurate progress, cost & earned value reportingd.
Improved cost estimating & faster RFP responsese. Improved
progress & cost management metrics
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This build strategy culminates in exploiting the cost-savings
benefits of modularconstruction techniques. Modules can be
developed in a wide variety of ways: outfit andequipment modules,
hull assembly blocks, and outfitted hull blocks.
Outfit and equipment systems can be designed and assembled as a
completemodule that then can be installed either on hull blocks
prior to erection orinstalled later on-board. Such modules are
called outfit-on-units.
Hull block assembly is the process of building the hull
structure in modularform of building blocks. This assembly method
replaces older methods thatbuilt structures on the building ways
from the inside out (traditional stickbuilding). Hull block
construction saves time because it can be performedmuch more easily
and with less expensive material handling and workeraccess
costs.
By outfitting hull block assemblies, productivity can be
enhanced even further.On-block work can be 30%-50% less expensive
in labor costs than equivalent
work done on-board ship.
3.2.3 Outfitted Hull Block Construction
Hull block construction is the method of building the ship
structure by erectablefabricated and assembled structural
components (blocks). Pre-outfitted hull blockconstruction is the
process of adding outfit materials (equipment and/or ship systems)
tothe hull blocks prior to erection. Pre-outfitting hull blocks can
significantly reduce
assembly costs when compared to performing the same assembly
work on-board the ship.
Figure 3.2-1: Sample Hull Equipment Block
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A successful hull block construction program can be made even
more successful with theapplication of group technology
manufacturing, zone outfit work organization, and theprinciples of
lean design.
Group technology manufacturing is the organizing of similar work
so that it canbe processed together to gain the cost savings
potential of batch manufacturing.Group technology manufacturing can
be applied not only to parts fabrication, butalso to assembly and
installation processes.
Zone outfitting, a variation of group technology manufacturing,
is the method oforganizing work within specific physical spaces by
work type to achieve the costand time savings potential. An example
of zone outfit work organization is theinstallation of piping
systems in a specified area prior to the installation of
otheroutfit systems (such as electrical trays, HVAC duct, etc.)
that might conflict or
interfere with overall work progress.
Hull block construction is typically planned and managed not
only by individualblocks, but also by the manufacturing processes
of the interim stages ofconstruction: steel preparation
(wheelabrate, prime, trim), fabrication (NC parts,end cuts,
bending, rolling, etc.), sub-assembly, assembly, erection, and
on-shipweld-out. Obviously different blocks will have a different
costs depending uponthe manufacturing processes required for its
fabrication and construction.
Blocks generally can be categorized by block type. This means
blocks that gothrough the same set of manufacturing and assembly
processes can be identified
as belonging to the same block type. Each block type will have a
different unitcost compared to other block types. Flat panels, for
example, can be processed onautomated panel lines and are less
expensive ton for ton than 3D curved blocksthat require more time
and effort and cannot be manufactured using the samedegree of
automation.
A ship is composed of a variety of blocks and block types,
depending upon thesize and type of ship being built. A ship having
little hull shape should beexpected to cost less per ton than a
ship of the same size with considerable hullshape. Flat-sided
parallel mid-bodies are easier to build than ships with finer
hullforms and shape.
Lean Ship Design is a design philosophy that focuses on making
the ship designas simple and as easy to build without compromising
upon design function andpossibly enhancing design performance. Lean
design, as espoused by many otherindustries, attempts to eliminate
as many different components, parts, andcomplexities as can be
done. Lean design also attempts to capitalize on the use
ofrepeatable interim products, within any ship design, and reduce
costs accordingly.
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3.2.4 Extended Shipbuilding Modules
Shipbuilding modules may take on almost any number of types and
extents. Hull blocksare modules that, as described above, benefit
from reduced costs compared to older stick-built methods of
assembly at the building ways. Outfitting these hull blocks
offers
further cost savings by allowing outfitting to occur at earlier
stages of construction wherework can be focused on a platen rather
than occurring later on board.
Other types of modules carry the concept of early stage
construction cost savings evenfurther. On unit outfit may be as
small as a single piece of equipment mounted on itsfoundation and
ready to install on block or on board. Or, on unit outfit can be a
complexassembly of equipment, piping, electrical and other systems
all pre-mounted on a supportstructure.
The following are good candidates for modular construction:1.
Propulsion plant & auxiliary systems modules
2. Electric generator modules3. Accommodations modules4. Masts
& stacks5. Deck & cargo system modules6. Hull blocks
Modules can cover a very wide spectrum of applications, sizes,
and systems. Modulescan include one or more pieces of equipment and
machinery with foundations and othersupport structures; they may
include sections of multiple ship systems such as
piping,ventilation duct, local electrical systems, etc. Modules may
be installed on othermodules, on hull blocks and on-board.
However, modularizing an engine room by simply cutting it into
modules is not the rightsolution. This approach typically generates
additional pipe, structures and equipment,plus additional weight,
which at least partially offsets the benefits gained
bymodularizing.4
The following figures illustrate examples where equipment and
system modules havebeen successfully developed by various European
shipbuilders (for example, ScheldeNaval Shipbuilding, Blohm &
Voss Gmbh, Abeking & Rasmussen). These samples wereobtained
from the Ship Design and Research Centre S.A., Gdansk,
Poland,Modularization in Ship Equipment, Intermodul s/03/G,
http://www.cto.gda.pl/index.php?id=232&L=1
Modularization is being applied almost universally throughout
the European shipbuildingindustry. Thyssen Nordseewrke Shipyard,
for example, has made it possible to produce
4Markku Kanerva, Modern Competitive Ship Construction,
Deltamarin LTD, SOBENA 2004, Rio deJaneiro, Brazil
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an almost entirely equippedinstall it in the ship hull. It
iproducers outside the shipyaroom, are purchased ready-m
This expands the level of cothe latter make more and
moshipbuilder with reduced costo specialized module manufbusiness
and is more likely ttheir costs and advance their
Figure 3.
ngine room in the assembly halls and then trancommon practice
that modules are made by spd. Some modules, like fuel booster
blocks forade for installation at the shipyard.
peration between the shipyard and the cooperate ship parts.
These relationships no doubt bens and reduced product delivery
schedules. By
acturers, the supply chain obtains more opportuinvest in
improving their own levels of produc
technologies for better product quality and capa
-2: Sample Equipment & Outfit Modules
61
61
port andcialized
he engine
ing firms asfit theutsourcingities for
tivity, lowerbility.
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Figure 3.2-
New Construction Benefits
1. Shorten ship construc2. Shortened time saves3. Mass
production of
efficiencies gained iftypes and classes.
4. Modules can be builtintegrated shipyard thbusiness. This can
lemore development re
5. Lead ship costs shoul
of other systems subj6. Lower cost means m7. Eventually,
standardi
and engineering.
3: Sample Machinery Equipment Modules
from Extended Modularization:
tion time with modules built in parallel.cost with lower
overhead, less impact of inflati
odules saves cost from learning effects. Additimodules are
standardized and applicable to mul
by a competitive industry that does not rely onat is less
productive more opportunities for sad to greater participation of
supplier base thatsponsibilities to improve quality and reduce cosd
be lower because modular approach is less int
ct to change orders.re products can be built for available
funds.
zed modules can lead to lower costs for non-rec
62
62
nonaltiple ship
he fullyaller
an assumes further.er-dependent
rring design
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Ship Maintenance Benefits from Extended Modularization
1. Modules can be easily removed from onboard and repaired in
shop2. Maintenance of modules on-shore less costly than
on-board
3. Faster turn-around time to repair/replace modules4. Even
faster turn-around with Swap-out/Swap-in scenario of selected
modules5. Increase fleet operation time6. Decrease time in shipyard
for repairs and overahauls
Other industries have long exploited the benefits of modular
construction:1. Aircraft F4 began modularization; F35 extensive use
of modules2. Cars parts and components, often interchangeable
between different models3. Home appliances parts and components
There are precautions that must be taken in order to minimize
failures in applying
modular construction techniques:1. Requires better than normal
engineering2. Requires better than normal quality assurance3.
Requires higher level of design standards to minimize interferences
and
disconnects.
3.3 Generic Shipyard Costs
The underlying cost estimating relationships (CERs) used in the
Cost Model apply to ageneric mid-size commercial U.S. shipyard
having reasonably productive manufacturing
and assembly facilities, and technical and management
competence. The CERs are basedupon a comprehensive analysis of U.S.
shipbuilding costs gathered from SPARsworking experience with a
variety of shipyards, large and small, commercial and
navalcontractors. As noted earlier, the cost model outputs were
adjusted as necessary to reflectcurrent shipbuilding practices and
costs.
It is assumed that the generic commercial U.S. yard extensively
employs modernmethods of work organization and has competent worker
and management skillscomparable with internationally competitive
shipyards. The approach to ship design andconstruction is partially
based on insights obtained in a comprehensive evaluation ofnorthern
European shipyards.
The generic shipyard is assumed to have the following general
operating characteristics:
Current technology CAD and resource planning and management
systems. Moderate levels of pre-outfitted hull block and modular
construction N/C plasma plate cutting Automated panel line Covered
hull block assembly hall
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Hull block shot blast and painting facilities Steel
manufacturing capacity of approximately 20,000 MTONs (steel or
equivalent) per annum.
These characteristics apply generally to mid-tiered U.S.
commercial shipbuilders.
The cost estimates assume that the construction will be
performed using hull blockconstruction techniques. Some outfitting
of hull blocks prior to erection is expected,particularly with
regard to major piping systems.
The cost estimate assumes cost savings are obtained by painting
hull blocks prior toerection, after which remaining painting (60%
of the total) is performed on board.
Other equipment and multi-systems outfit modules may be included
in the building plan,but they are not expected to be exploited
extensively for the lead ship.
Learning curves are used for follow ship estimates and assume
that additionalengineering will result in increasingly more
outfitting of hull blocks prior to erection andmore applications of
outfit modules.
3.4 Shipyard Productivity Factors
When estimating cost, there are a number of issues that need to
be considered.
While there is a concept of a standard cost for performing a
specific element of work, theactual cost will always vary depending
who, when and where the work is to be
performed. A shipyard that has the right equipment and
facilities, a skilled work force, acompetent plan and management
team will almost always perform the work more quicklyand less
expensively than the shipyard that is compromised in one or more of
these areas.In addition, a standard cost may identify expected
costs for work under normalcircumstances, but the actual cost will
likely be higher if the work area is congested,confined and/or
difficult to reach.
There are other technical issues that need to be considered.
Working to a poorlyengineered design will always be more costly
than working to one that is well done andeasier to build. An
extension to this is whether or not technical information is
readilyavailable when the work is scheduled to begin. For example,
if technical information is
not available at early stages of construction, when work can be
performed moreefficiently, the work will need to be scheduled later
in time when efficiency is less likely,often by cost factors of 3-5
times. Such savings from early stage construction is theobjective
for on-unit and on-block outfitting versus on-board outfitting when
work carriesa much higher burden of lost productivity.
Therefore, for a cost estimate to be realistic the following
issues need to be consideredand their effects included:
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1. Available & capable facilities2. Experienced &
skillful work force3. Good planning & early stage outfit
scheduling4. Experienced and competent management
5. Efficient business practices6. Quality design and
engineering7. Minimum change orders
It is assumed that rework is not included in a cost estimate
except as a consideration forcost risk. Owner changes can impact
costs too, but they should be covered with a setaside budget or
decided later as a subsequent renegotiation of the scope of
work.
All of the above issues influence the relative level of
productivity for the shipbuilderworking on a given contract.
The cost models provide for several types of productivity
factors.
1. For technical support2. For structural manufacturing and
assembly work3. For outfit manufacturing and assembly work4. For
material costs
Therefore, the acquisition costs will be influenced by where the
ship is to be built and tospecific contractual requirements. The
cost model provides indications of cost differencesbetween
shipyards of various sizes and the impact upon higher costs
expected fromshipyards building naval ships.
For the notional shipyard, each of the above productivity
factors equal 1.00. For a lessproductive shipyard, the factors
increase greater than 1.00. For more productiveshipyards, the
factors are less than 1.00.
As prime contractor for the U.S. Navys Product Oriented Design
and Construction(PODAC) Cost Model in the late 1990s, SPAR
researched relative productivities of anumber of U.S. shipyards.
Its findings are summarized in Figures 3.4-1 and 3.4-2. Thestudy
also compared data SPAR had obtained from various commercial
shipyards (SPARshipyard clients) and from data collected from
several projects involving NorthernEuropean shipyards. Additional
productivity factors were compiled and reported by P.C.Koenig, H.
Narita, and K. Baba for East Asia5.
5Shipbuilding Productivity Rates of Change in East Asia, SNAME
Journal of Ship Production, February2003.
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Figure 3.4-1: Relative Productivity for Steel Fabrication &
Assembly
Figure 3.4-2: Relative Productivity for Typical Outfit Work
Structural Work Labor Hour Factor
(By Type Shipyard)
5.00
2.50
1.701.90
0.90 1.000.76 0.71
-
1.0
2.0
3.0
4.0
5.0
6.0
Combatants
(Very Large)
Combatants
(Large)
Dual-Use
Non-
combatants
(Large)
Dual-Use
Non-
combatants
(Mid-Size)
US Modern
Commercial
(Large)
US Modern
Commercial
(Mid-Size)
Northern
European
(Large)
Korean
(Large)
LaborCostFactor
Outfit Work Labor Hour Factor
(By Type Shipyard)
1.00
1.24
1.56
0.33
0.20
0.99
0.28
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
US
Commercial
Shipyard
General
Productivity
US Dual-Use
Shipyard
General
Productivity
US Naval
Combatant
Yard General
Productivity
Northern
European
(Large) 2002
Japan 2002 China 2002 South Korean
(Large) 2002
LaborCostFactor
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Other organizations have attempted to measure relative
shipbuilding productivity usingan approach called compensated gross
tons, or CGT.
Adopted in the 1960s by the Organization for Economic
Cooperation and Development
(OECD), CGT is a normalized measure that allows the work content
(per unit of volume)of different types of ships to be compared on
the same basis. CGT-based calculations canbe used to make
high-level cost estimates, to compare shipyard performance
(eventhough they may be building different types and sizes of
ships, and to set targets forshipyard performance.
NOTE: CGT is not an exact science, and its ability to compare
cost performance acrossdifferent sizes and types of ships must be
regarded as very approximate. The approachconsiders all costs,
labor and material lumped together.
It should be recognized that productivity of U.S. shipyards
building Navy ships has
proved to be much more than a 37% premium over equivalent
commercial practices. Themethods for developing CGT for warships is
still not fully understood, while the PODACresults are based on
more in-depth analysis of actual shipyard return costs.
Figure 3.4-3 provides a spectrum of productivity factors from
various studies using theCGT approach.
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Figure 3.4-3: Approximate Worldwide Shipbuilding Productivity
Factors
0.2042 0
.3960
0.1
573 0
.3583
0
.2427
0.3
831
0.3
563
0.2
672
0.3
678
0.4
344
0.2
986
0.4
431
0.9
564
0.4
259
1.1
294
0.4
431
0.8
449
0.4
104
0.4
290
0 3 0 1 3
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
SPARPro
duc
tiv
ity
Fac
tor-
Re
lative
toU
.S.
Mid-S
izeC
ommerc
ial
(Lower
th
eFac
tor,
the
Grea
ter
the
Pro
duc
tivi
ty)
Productivity Factors
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SPARs cost model also takes into account the overall size of the
ship, as larger ships aretypically less expensive due to economies
of scale to build on a structural cost per tonbasis than smaller
ships of the same hull form and relative complexity.
3.4.1 Extended Modularized Equipment & Outfit Option
As discussed earlier in Section 3.3, the cost models standard
CERs are based on anotional U.S. commercial shipyard (productivity
factors for structural and outfit work =1.0). The notional U.S.
commercial shipyard is assumed to build using conventional,
butlimited pre-outfitted hull blocks and few on-unit modules. The
user can adjust theseproductivity factors for a specific type yard
and/or for a specific anticipated buildstrategy.Section 3.2
describes the concept of extended modularization in ship design
and
construction to equipment and outfit components promises a
number of cost savingsbenefits. SPAR cost models provide the option
for estimating cost savings fromimplementing extended
modularization. The cost model breaks down the standard CERcosts
into two categories:
1. Labor hours that can be allocated to manufacturing and
assembling modules; and2. Labor hours required to integrate the
module with other ship systems and
interfaces.
While these cost models use the shipbuilders labor rates for the
manufacturing andassembly of modules, the user most likely will
specify that the production hours for this
work be of a higher level of productivity than what the shipyard
normally can beexpected to produce. For example, if the notional
U.S. commercial shipbuilder has aproductivity factor of 1.0, the
productivity factor for module manufacturing and assemblywork
should be expected to be something less than 1.0.
The cost models assume that productivity factors applied to the
labor hours estimated forinstalling the modules are what is defined
for the shipbuilder.
The process by which the cost model separates the labor hours is
based from studiesmade by a Canadian yard in the mid-1980s that
experimented with various modularconstruction techniques and proved
conclusively that cost saving benefits are very real.
Depending on the type of module, its equipment and systems, the
cost model estimatesthe number of hours for the module fabrication
and assembly work as a percentage of thetotal conventional standard
hours (% Total Modularized in Figure 3.4-56), from 20% to100%. The
actual labor hours spent doing the modular fabrication and assembly
work issimply the percent of the standard CER hours allocated for
modules times the improved
6The factors presented in Figure 3.4-5 are stored in the cost
model Module Factors worksheet and canbe modified to suit the users
own preferences.
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productivity factor for modular work. The estimates assume that
on-unit factors apply formanufacturing most modules.
% Total Onboard On Block On Unit
Work Type Modularized Factor Factor Factor
Piping - OMS 85.00% 1.000 0.530 0.280HVAC - Rectangual Duct
85.00% 1.000 0.800 0.400
HVAC - Spiral Duct 85.00% 1.000 0.650 0.325
HVAC - Fans 85.00% 1.000 0.650 0.325
HVAC - Air Handlers 85.00% 1.000 0.800 0.400
HVAC - Spools 85.00% 1.000 0.650 0.325
HVAC - Fire Dampers 85.00% 1.000 0.750 0.375
Electric Cable (Local) 85.00% 1.000 0.500 0.200
Auxiliaries - IMS 85.00% 1.000 0.650 0.325
Piping - IMS 85.00% 1.000 0.800 0.400
Cable Trays - IMS 85.00% 1.000 0.800 0.400
Staging - IMS 85.00% 1.000 0.800 0.400
Exhaust Casing - IMS 95.00% 1.000 0.500 0.500
Casing Vent Trunk 95.00% 1.000 0.500 0.500
Foundations 100.00% 1.000 0.830 0.390Seats - IMS 100.00% 1.000
0.750 0.375
Paint - Excluding Block Paint 85.00% 1.000 0.690 0.170
Paint - Block Paint 40.00% 1.000 0.800
Paint - Unit Paint 20.00% 1.000 0.500
Propulsion Machinery 90.0% 1.000 0.700
Outfit Machinery 90.0% 1.000 0.500 0.250
Electronics 85.00% 1.000 0.300
Outfit Equipment 85.00% 0.300
Armament 85.00% 0.300
Structures 85.00% variable variable
Cable, Machinery Spaces 80.00% 0.50
Cable, Accommodations Spaces 80.00% 0.50
Cable, Superstructure 80.00% 0.50
Cable, Exterior Decks 50.00% 0.85
Figure 3.4-5: Selected Productivity Factors Used for On-Block
and On-Unit Work
% Total Modularization = Estimated Maximum Percentage of Work
that can beModularized beyond conventional methods.
Onboard Factor = Maximum Labor Cost at Onboard Stage of
Construction On Block Factor = Percentage Labor Cost for On-Block
Work Relative to
Onboard Cost
On Unit Factor = Percentage Labor Cost for On-Unit Work Relative
toOnboard Cost
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3.5 Generic Material Costs
Underlying generic material costs of the cost model assume
commercial-gradeshipbuilding materials and management methods.
Variations due to specific materials,equipment models and
configurations, and vendor pricing methods should be expected.
Foreign acquired equipment is subject to changes in exchange
rates, which are oftendifferent from
