Mun Johnathan. Empirical Cost Estimation for U.S. Navy Ships, Journal of Management 7(5): 152-176, 2019 is a very useful analysis of construction cost of warships as well as Laurent Deschamps and Charles Greenwell, Integrating Cost Estimating with the Ship Design Process, SPAR Associates, Inc.
The MTI study referred to in Mun noted that 30% of the build cost in warships is the labour element, this can be higher or lower depending on the volume and density of the warship as well as the design philosophy and the extent to which modulisation was part of not just the design and construction but also capacity of platform growth and flexibility and in serviceability.
This is also a useful article I relied on in developing my "Type 35" concept:
James A. Johnson and Ian H. Wakeling, Flexible Design as an Acquisition Opportunity - Diseño Flexible como Oportunidad de Adquisición,
from the proceedings of the 5th International Ship Design and Naval Engineering Congress, March 2017, Cartagena de Indias, Colombia, BMT Defence Services Ltd. Salient bits pertaining to the Iver F-370.
A good example of this incremental strategy is that adopted during the Danish Iver Huitfeldt Class
Frigate acquisition, described later within this paper. In this Danish example the first of class prototype
was later refitted with the additional capability to bring her up to the full class requirement, and only
entered service at full capability after all other ships in the class were delivered.
This incremental acquisition, together with the functional arrangement, also raises other opportunities
for the capability that the Navy can acquire. As the design itself has the flexibility and space to be
reconfigured without incurring significant costs, additional capability can be added to later ships of a
class if the threat environment or roles change during the build programme, or more funding becomes
available.p8
For example, the stern sections could be changed to a Variable Depth Sonar option, or the number of
cells in the Vertical Launch Silo (VLS) could be increased, or swapped out for a different type of silo.
These capability upgrades on later ships are a more cost effective method of acquiring this capability,
reducing the risk overall by spreading out the design, build, test and acceptance risk for different
aspects of the programme over time. The functional arrangement means that only certain individual
blocks require this re-design effort, which would not affect the overall platform, reducing the
associated cost and maximising commonality. If a Navy wished to procure an initial batch of ASW
specialised Frigates, followed by a second batch of AAW specialised Frigates, this functional
arrangement means that the commonality of the base platform is also accentuated between the two
batches, contributing to a lower through-life cost.This concept can also be extended to incorporate
the latest technologies and equipment, to mitigate the risk of obsolescence. p8
A Navy may also wish to specify individual systems or equipment produced by manufacturers in their
own country. This is where a flexible design, and a functional arrangement, is required so as not to introduce
a high level of re-design work to accommodate these new system choices, which would add risk and cost
into the programme and make the design itself unattractive or unaffordable. p10
For reference, Lamb (2013) (Reference 3) outlined a number of acquisition strategies that could be
taken, and Tascon (2015) (Reference 4) further analysed these different potential approaches.
One acquisition strategy to highlight is that used to acquire the Iver Huitfeldt Class Frigate. The
acquisition of the Iver Huitfeldt Class by the Danish Defence and Logistics Organisation (DALO) used
a model that had strong parallels with the commercial procurement of ships by companies such as
Maersk. This also provides a good example of a flexible design, based on the earlier Absalon Class,
and was designed by the Royal Danish Navy and the Odense Steel Shipyard working in close cooperation. p10
The platform, combat system and integration of the Iver Huitfeldt Class were split, with the
DALO organisation itself effectively taking responsibility as the prime over all these elements. All of
the blocks for the three ships of the class were constructed by Baltija Shipyard (Lithuania) and Loksa
Shipyard (Estonia), before final assembly in Odense Shipyard. p11
It is claimed that this split procurement model, where platform and combat system were procured,
built, integrated and tested separately and incrementally saved around USD 65 million per vessel
overall (Reference 6), with the allocation of risk within the programme a contributory factor. This
resulted in a low procurement cost of these vessels, when compared to contemporary Frigate
programmes. A breakdown of the cost for these Frigates has also been published (Reference 6),
showing almost a 50/50 split in costs between the platform and combat system elements. However, it
is important to note that for this type of acquisition strategy to be successful it is vital that the platform
design itself is flexible enough to allow the selection and fit of the combat system once the ship itself
has been built. p12
Once the platforms themselves were complete, the installation of the military equipment and testing
took place. Procurement of this combat system equipment was also undertaken („primed‟) by the
DALO itself. p12
Acquisition Strategy – Alliance Approach
Not all governments will have the capability and capacity to undertake the prime integration role as
taken by the DALO in the Danish example described above. However, many of the benefits of the
approach can be delivered through a strategy based on the engagement of an alliance. The Navy or
procurement body can work as closely with alliance members as they wish, depending on their
capabilities and desire to learn through participation in the project, tailoring the levels of technology
transfer to suit all parties. p12
The flexible alliance incorporates a Shipbuilder, a Platform Designer, a Combat System Integrator
(CSI) and a Platform System Integrator (PSI). The level of involvement each party plays depends on
the nature of the acquisition strategy, and some roles may be fulfilled by the same company. The
focus of effort will change between these parties as the programme proceeds. p12
The MTI study referred to in Mun noted that 30% of the build cost in warships is the labour element, this can be higher or lower depending on the volume and density of the warship as well as the design philosophy and the extent to which modulisation was part of not just the design and construction but also capacity of platform growth and flexibility and in serviceability.
This is also a useful article I relied on in developing my "Type 35" concept:
James A. Johnson and Ian H. Wakeling, Flexible Design as an Acquisition Opportunity - Diseño Flexible como Oportunidad de Adquisición,
from the proceedings of the 5th International Ship Design and Naval Engineering Congress, March 2017, Cartagena de Indias, Colombia, BMT Defence Services Ltd. Salient bits pertaining to the Iver F-370.
A good example of this incremental strategy is that adopted during the Danish Iver Huitfeldt Class
Frigate acquisition, described later within this paper. In this Danish example the first of class prototype
was later refitted with the additional capability to bring her up to the full class requirement, and only
entered service at full capability after all other ships in the class were delivered.
This incremental acquisition, together with the functional arrangement, also raises other opportunities
for the capability that the Navy can acquire. As the design itself has the flexibility and space to be
reconfigured without incurring significant costs, additional capability can be added to later ships of a
class if the threat environment or roles change during the build programme, or more funding becomes
available.p8
For example, the stern sections could be changed to a Variable Depth Sonar option, or the number of
cells in the Vertical Launch Silo (VLS) could be increased, or swapped out for a different type of silo.
These capability upgrades on later ships are a more cost effective method of acquiring this capability,
reducing the risk overall by spreading out the design, build, test and acceptance risk for different
aspects of the programme over time. The functional arrangement means that only certain individual
blocks require this re-design effort, which would not affect the overall platform, reducing the
associated cost and maximising commonality. If a Navy wished to procure an initial batch of ASW
specialised Frigates, followed by a second batch of AAW specialised Frigates, this functional
arrangement means that the commonality of the base platform is also accentuated between the two
batches, contributing to a lower through-life cost.This concept can also be extended to incorporate
the latest technologies and equipment, to mitigate the risk of obsolescence. p8
A Navy may also wish to specify individual systems or equipment produced by manufacturers in their
own country. This is where a flexible design, and a functional arrangement, is required so as not to introduce
a high level of re-design work to accommodate these new system choices, which would add risk and cost
into the programme and make the design itself unattractive or unaffordable. p10
For reference, Lamb (2013) (Reference 3) outlined a number of acquisition strategies that could be
taken, and Tascon (2015) (Reference 4) further analysed these different potential approaches.
One acquisition strategy to highlight is that used to acquire the Iver Huitfeldt Class Frigate. The
acquisition of the Iver Huitfeldt Class by the Danish Defence and Logistics Organisation (DALO) used
a model that had strong parallels with the commercial procurement of ships by companies such as
Maersk. This also provides a good example of a flexible design, based on the earlier Absalon Class,
and was designed by the Royal Danish Navy and the Odense Steel Shipyard working in close cooperation. p10
The platform, combat system and integration of the Iver Huitfeldt Class were split, with the
DALO organisation itself effectively taking responsibility as the prime over all these elements. All of
the blocks for the three ships of the class were constructed by Baltija Shipyard (Lithuania) and Loksa
Shipyard (Estonia), before final assembly in Odense Shipyard. p11
It is claimed that this split procurement model, where platform and combat system were procured,
built, integrated and tested separately and incrementally saved around USD 65 million per vessel
overall (Reference 6), with the allocation of risk within the programme a contributory factor. This
resulted in a low procurement cost of these vessels, when compared to contemporary Frigate
programmes. A breakdown of the cost for these Frigates has also been published (Reference 6),
showing almost a 50/50 split in costs between the platform and combat system elements. However, it
is important to note that for this type of acquisition strategy to be successful it is vital that the platform
design itself is flexible enough to allow the selection and fit of the combat system once the ship itself
has been built. p12
Once the platforms themselves were complete, the installation of the military equipment and testing
took place. Procurement of this combat system equipment was also undertaken („primed‟) by the
DALO itself. p12
Acquisition Strategy – Alliance Approach
Not all governments will have the capability and capacity to undertake the prime integration role as
taken by the DALO in the Danish example described above. However, many of the benefits of the
approach can be delivered through a strategy based on the engagement of an alliance. The Navy or
procurement body can work as closely with alliance members as they wish, depending on their
capabilities and desire to learn through participation in the project, tailoring the levels of technology
transfer to suit all parties. p12
The flexible alliance incorporates a Shipbuilder, a Platform Designer, a Combat System Integrator
(CSI) and a Platform System Integrator (PSI). The level of involvement each party plays depends on
the nature of the acquisition strategy, and some roles may be fulfilled by the same company. The
focus of effort will change between these parties as the programme proceeds. p12
