I keep hearing that the cost of the Type 45s ia about Â£750million+. Does anyone know if this includes the development cost of the new radar system and the missile system, or is it just the build cost of each unit?
I believe it includes at least some elements of PAAMS (and Sampson) development and the missiles come at a seven figure sum each. Not even Big And Expensive Ships could stack up Â£750m on just the ship & equipt material & labour costs....What am I saying - Â£3.5 Bn for two relatively simple big ships......
Im probably wrong to try and compare the construction industry with the ship building industry but there could be similarities.
There are construction companies around who actually tender for projects and go in with minus profit margin. They hope, and invariably do make their money from the poor subcontractors and by stininging the client for every penny they can get. Before the project has even started on site the variations and associated costs have already started mounting up. These companies employ people who know specific contracts inside out to find any little loophole which they can make money on.
There is also the danger of traditional build contracts where the specification is so detailed that if anything, reglardless of how small, is incorrect in the tender documents then it can and will be charged to the client. On the other hand you have the design and build principle where the client outlines their requirements and it is up to the contractor to meet those requirements within the agreed cost. The general idea being that the product must be 'fit for purpose'. The only time that the client is charged is if the client changes anything.
Why can the design and build aspect not be applied to ship building?
Believe it or not it is. Design & build is the entire rationale behind leaving equipment specifictaion to a User requirement document and a system requirement doc. The problem is twofold - the MoD centre and DPA tend to produce very detailed URD/SRD but often in the wrong areas. The shipbuilder (or sometimes prime contractor) then translates those into a set of equipments etc which will typically be based on lowest cost and because the shipbuilding industry has lost a lot of design skills may not be fit for purpose. The IPT then comes along and may notice something in the design it doesn't like, requests a change and then the PCO and IPT spend months wrangling over the cost. Sometimes, they DONT spot something that isn't fit for purpose until the ship is in service and then the costs really start to climb (ooh contractual variation? suits you sir!).
There are no easy answers, but it would be a start for the MoD/DPA and the contractor to start using the same language. On the CVF project, several yaesr were spent creating a URD / SRD database with all sorts of links etc. A couple of years ago, it had to be completely rewritten as a Ship technical Spec, because the shipbuilders were having difficulty translating the systems engineering speak into a design.
Certainly requirements capture and understanding is a real problem and will not become easier as systems become more and more integrated. As suggested the DPA tendency to micromanage requirements often does not make any ones task easier.
Equaly the innability of the UK to grasp the benefits to be gained from trading specification and cost makes a lot of our kit more expensive than it need be without improving operational capability. Our tranatlantic cousins do this one h*ll of a lot better.
A simplistic example would be that you specify a new bullet that will be 20 times better than the old one, ie you make one kill with 5 instead of 100. The contactor takes your requirements away and comes back and says that he can make this new bullet for half what you have allowed but it will not be quite as good as you asked, it will take 7.5 per kill. You now have the choice of buying twice as many bullets for the same money and getting a greater kill capability than planned or retaining the original kill capability of your purchase and save money. As things stand our smart procurement is not yet this smart.