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Massive Overspend at BAE on Astutes and other contracts.

Nutty said:
Daily Telegraph today.

BAE


Got all the numbers wrong again how long can MOD and BAE play this game.

Nutty

The audit commision reports are better than the select committee which is often trying to make political capital.

The game will go on until the mod sort out how they buyt things and get their act together. The septics had the same sort of thing when they changed to competitive tendering but have done a lot to sort their system out since then
 

angry_mac

War Hero
Its all a joke, the government just paid 26 billion to bail out a private company, now they are quibbling over 2 billion for the future defence of our shipping lanes.
 

Not_a_boffin

War Hero
I wouldn't describe $3bn (and climbing) for a DDG1000 or $1.7Bn for an LPD that doesn't work very well, sorting out their system Maxi! They do make a much bigger effort to get a grip on their programme costs than we do, but then their budget request and approvals system (HoR, Senate and then the Prez all with different views) lets them down a bit. They are running out fo competition in the shipbuidling industry as well - essentially Ingalls vs Bath IW for surface combatants, EB vs Newport News for SSN, amphibs are Ingalls and Avondale (owned by same company) and NN build the CVN. In effect there is very little competition anyway, as any contracts are in any case split between these yards to prevent any of them folding. Just to make things better, BAES are making big inroads into the US naval industry.

Our problems are an inability to cost ships properly and (just as importantly) a failure by MoD to understand that failure to make a decision will almost certainly mean cost increase. The cost forecasters try their best, but are hamstrung by lack of data. One of them told me in all seriousness that 6 MARS tankers would require 42 MILLION manhours of effort in UK yards (ie 7M a pop). The going rate for a product tanker of the right size is about 500000 manhours. No wonder we get shafted.......
 

P2000

Lantern Swinger
Forget £26bn, much nearer £60bn. Makes you realise what their priorities are...
 
Not_a_boffin said:
I wouldn't describe $3bn (and climbing) for a DDG1000 or $1.7Bn for an LPD that doesn't work very well, sorting out their system Maxi! They do make a much bigger effort to get a grip on their programme costs than we do, but then their budget request and approvals system (HoR, Senate and then the Prez all with different views) lets them down a bit. They are running out fo competition in the shipbuidling industry as well - essentially Ingalls vs Bath IW for surface combatants, EB vs Newport News for SSN, amphibs are Ingalls and Avondale (owned by same company) and NN build the CVN. In effect there is very little competition anyway, as any contracts are in any case split between these yards to prevent any of them folding. Just to make things better, BAES are making big inroads into the US naval industry.

Our problems are an inability to cost ships properly and (just as importantly) a failure by MoD to understand that failure to make a decision will almost certainly mean cost increase. The cost forecasters try their best, but are hamstrung by lack of data. One of them told me in all seriousness that 6 MARS tankers would require 42 MILLION manhours of effort in UK yards (ie 7M a pop). The going rate for a product tanker of the right size is about 500000 manhours. No wonder we get shafted.......

T septics are not perfect by a long way but they have made more effort to sort out their system, I have had experience of both systems and they are still streets ahead of us.

As for our own estimating problems the usual problem is not over estimating but underestimating, then trying to get the product to fit the inadequate budget, which even further reduces capability whilst putting costs up even further. The MOD estimators wouldget n better if they actually talked to industry rather than wet fingering all the time. One job I was nvolved in in early discussions I was asked wjether the projected budget was realistic and I suggested they double it, when we finally estimated the cost of what they specified who was closer them or me? We then wasted a shed load more cash descoping the job to fit the budget. End result we made a loss, it was late and wasn't what they had originally wanted
 

Karma

War Hero
Proud_2_B_RN said:
I bet not all of that money goes into BAE projects, management is skimming some off the top.

So you're suggesting widespread corruption in the defence acquisition system?

Personally I'd go for a flawed acquisition system, p!ss poor requirement management at Fleet, London and Abbey Wood, indecision and political interference.
 
Karma said:
Proud_2_B_RN said:
I bet not all of that money goes into BAE projects, management is skimming some off the top.

So you're suggesting widespread corruption in the defence acquisition system?

Personally I'd go for a flawed acquisition system, p!ss poor requirement management at Fleet, London and Abbey Wood, indecision and political interference.

I believe you are spot on there Karma :thumright:
 

Not_a_boffin

War Hero
[quote/]T septics are not perfect by a long way but they have made more effort to sort out their system, I have had experience of both systems and they are still streets ahead of us.[/quote]

As have I - and I agree they at least attempt to keep cost as a "live" value, rather than revisiting it at the end of each FY (or worse) for a project. The whole CAIV approach is as you say streets ahead of ours. It's a shame the budget appropriations shenanigans take some of the benefit of that away.

As for MoD estimators - talking to industry only works if both sides are playing a straight game. There are PFG types in all UK shipyards, but do they actually get to see the costs (or indeed productivity indices) as opposed to the prices? We paid £120M each for a couple of product carriers (admittedly with some fancy bits on) ten years ago - at very least 5 times what should have been paid for the ships that we ended up with. That said, we just don't handle continuos cost tracking very well at all. CVF would be significantly cheaper and a bit earlier had the initial cost estimates done in 1997/8 for the 40000te concept ship been updated as soon as it became clear that a 60000+te beast was what was actually required. All that time and money p1ssing about trying to square a circle that should have been constantly updated.
 
The septics for example do understand the difference between cost and price and do serious cost performance trades and much of the 'bargaining stage is done 'open kimono' as they say.

The problem with PFG is to industry they are auditors and who ever employs them they are the enemy. For estimating future costs perhaps parametric tools would be better, my first experience with then was on a job for the septics where the process was applied to check that our price was in the right ball park and that we were not the low bidder because we didn't know what we were doing. Parametric costing also drive value for money as the costings are based on best practice costs.
 

Not_a_boffin

War Hero
Indeed - and that is precisely the sort of tool that PFG could do with. Trouble is, to populate that tool they need a feel for the basic work content cost drivers (not weight groups!!!!) which is what they can't get hold of.

UK MoD needs to get a grip of this sort of thing and rather than [email protected]@rse around with MDALs, three-point estimating and the like where you can't actually see meaningful data assumptions, develop (or pay for) some sort of PM tool that breaks a job down by work process, material etc. At least then, you can challenge the assumptions in open forum.
 
parametric costing tools are not for accountants they are for engineers, no one from PFG will ever be able to input the level of equipment complexity that parametric costing requires. This sort of work would need to be done by the service engineering branches and DSTL, or in some circumstances (wash my mouth out with soapy water) consultants.


Equally we need to work towards more open contracting and partnership rather than confrontational and adversarial contracting. Assumptions don't need challenging they need to be reviewed and revised in partnership, challenging me to lose 50% of my risk allowance does not make the risk go away, nor does it make the risk any less costly to the programme. On the other hand proper trading of the risk, performance, cost and requirement may well be even more cost effective.
 

slim

War Hero
We should count ourselves lucky that the old Cost Plus contracts no longer exist. Now they really were a licence to print money.
 
slim said:
We should count ourselves lucky that the old Cost Plus contracts no longer exist. Now they really were a licence to print money.

Cost plus contracts were not so much a licence to print money as you only got the plus when you had incurred the cost and even then MOD margins were not over generous, you could make far more profit with an export deal. The major proble with cost plus was in fact the lack of control of cost which meant one things did cost too much and two companies were ineficient because they had no reason to control cost. The septics have restarted variations on the cost plus theme but where there is much closer monitoring of cost and performance month by month, and they even pay an incentive if you come in under budget, equally there is an effective penalty if you go over. The process though does share risk which is important on development work where you are pushing the boundaries of the technology.
 

rn147scc

Newbie
the royal navy and BAE need to take a gcse maths exam!
all of there figures are completly wrong. even todays news there are not going to be able to supply our new aircraft carriers with f-35`s they have to use harrier GR9`s

we need to sort out this problem or our armed services are going to be destroyed
 

mophead

Lantern Swinger
The Services and MOD Contracts need to get themselves sorted before approaching the Contractor.Contractors need to know what is required without endless design changes and further endless budget meetings.The bottom line is that the Services and MOD do not know what they want and this indecision causes the cost overruns.
Funny thing though,when a Contractor brings a job in on time,on or below cost nothing is ever mentioned......and yes ,it has happened.
 

Oil_Slick

War Hero
Maxi_77 said:
The septics for example do understand the difference between cost and price and do serious cost performance trades and much of the 'bargaining stage is done 'open kimono' as they say..


We've always been prone to the 'But Minister, for only 'x' million more our version can also make the tea and give you a blowie in the morning'.
 
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