Everyone, please stop dividing the estimated project cost for the AWD by three to determine how much each ship cost, it is totally inaccurate and misleading.
The project included massive amounts of reusable infrastructure, not just in Adelaide, but also in Melbourne and Newcastle. Facilities built and personnel trained at BAE Williamstown also benefited the LHD project, meaning AWD subsidised LHD to some extent.
Each ship includes equipment procured from overseas that would be used on the ships, no matter where they were built, the AEGIS combat system, propulsion system, weapon systems, auxiliaries, etc. a very substantial fixed cost. What was done, ironically to save costs, was the majority of these systems were procured upfront all at once for all three ships, too bad they didn't factor in the costs of warehousing and in-store maintenance.
Then there is the costs of the materials the ships are constructed from, the costs of changes specified by the RAN, the costs of changes force by other factors, such as the cancelation of the Super Seasprite program, followed by the procurement of the Romeo which forced design and configuration changes to the AWDs.
In addition to all of this there are the labour costs, these are the most telling as this is where significant improvement has been achieved but is being ignored. As I understand it the breakdown is approximately 45%, 32% and 23% for ships 1, 2 and 3 respectively, a very impressive improvement. So based on this alone simply dividing the whole cost by three is totally wrong.
In a nutshell, six years ago the CUF and most of the shipyard did not exist. First steel was cut only four years ago, last Saturday the first ship was floated out. This first ship is the first ship built at this yard, it is the first ship of its class, it is the most advanced and capable ship ever built in Australia or procured for the RAN and all we hear is bad news as if the project has failed when that is not the case at all. What has actually happened is cost and schedule was underestimated by over optimistic individuals who chose to ignore the professionals who told them point blanks that there was no way on the face of the planet an existing shipyard could deliver a design they had never built before to that schedule, let alone a new yard with an inexperienced workforce.
V, I agree with the points you have made, ok?
I agree that you can't just do 'simple' maths and divide the eventual $9+Billion cost by three and end up with each AWD costing $3+Billion each, all true.
But equally true is the fact that this 'project' to deliver three AWD's is costing $9+Billion, ships, infrastructure and all the other costs associated with the project, the bottom line is that the 'spend' is still exactly the same, regardless how the dollars are sliced and diced and what cost is attributed to what part of the project.
And yes again, if the Government does proceed with building the eight Future Frigates at Techport, then no doubt that investment in infrastructure today will be a benefit to that future project, but that is still for the future, quiet a way into the future.
And that is exactly what my concern is, the significant cost blow outs (on top of what was a substantial amount of dollars originally allowed for this project in the first instance) are going to have to be borne by the Defence budget, probably most specially the Navy's part of the Defence budget, it will be borne 'today' and not spread out into the future over the total cost of the AWD's and Future Frigate programs.
The Def Min did say the other day that the extra $1.2Billion required to complete this project (and of course it should be completed), is going to come at the expense of some other Defence capability or capabilities, and that is what I get upset about.
This project isn't just a project to deliver three AWD's to the Navy, it's also an infrastructure, industry and employment project all rolled into one, and in my opinion costs for the project that are not directly 'ship' related costs should be borne elsewhere.
If for example during the GFC when Rudd was throwing Billions of dollars around like confetti for employment and infrastructure projects, a good way of spending money during that time would have been to have paid 100% of the cost of the infrastructure required by the AWD project, that would have no doubt taken a lot of pressure of the Defence budget for this project, and the monies that were originally allocated would have 'allowed' for cost blow outs without having to rob Peter to pay Paul.
V, again, I'm not against Naval shipbuilding in this country, not at all, I just get frustrated that at the end of the day once these three ships are delivered, the Navy will have had to 'pay the price' in more ways than one for these three ships to be built locally.
Cheers,