Naval Ship Life Cycle Cost (LCC) Model

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The Naval Ship Life Cycle Cost (LCC) Model is an extension to SPAR’s existing cost model for estimating costs for ship design and new construction. This model may now include the capability for estimating the costs of ship operations and other life cycle activities. While the cost model offers cost data extracted from SPAR’s wide ranging libraries, other sources of cost data can be added.

The LCC Model estimates these costs throughout any stage of a ship design’s evolution.

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To produce a system that can offer a useful life cycle cost estimating capability quickly and as realistically as possible, the LCC Model focuses on various aspects of life cycle costs: design, construction followed by operations (fuel and manning) and support (primarily maintenance, repairs, refits and modernization). Other LCC elements, such as training, technical services, decommissioning and disposal also are addressed.

LCC Model is flexible enough to permit rational cost estimates to be developed throughout the evolutionary development of a given ship design: from concept through preliminary design to contract design and production engineering.

Life cycle costing can be applied to establish improvements at different levels of technology evolution:

1. Ship Design Decisions2. Ship Alterations/Modifications/Conversions3. Equipment Selections4. Plant Configurations5. Commonality Evaluations6. Replacement Upgrades versus Maintaining Older

Obsolete Equipment/Systems7. Substituting Different Materials & Methods in Design,

Engineering, & Manufacture8. Alternate Maintenance and Upgrade Plans & Schedules

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The LCC model works from design information directly available from SPAR's Design & Construction Cost Model:• structural definitions of weights and type materials of hull and

superstructure; • type and size of propulsion machinery; • type and size of electrical power generation and distributed systems; • electronics & navigation systems; • selection and capacities of piping and HVAC systems; • coating surface areas and coating specification for various ship areas

(bottom, topsides, superstructure and internal spaces); • specifications for accommodations areas; deck equipment; and armament;

etc.

Details of the ship design and construction phase of the cost model are provided in the design and construction cost model user manual that can be downloaded from SPAR’s web site. Details of the LCC cost model are provided in a separate user manual.

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The LCC model accepts entries of typical planned schedules for maintenance, repair, overhaul and modernization activities over the life time of a ship.

Relatively simple inputs of estimated equipment repairs, maintenance overhaul and replacement activities can be readily defined from the design specifications available from the construction model while the ship repair, maintenance and overhaul costs that can be related to that equipment.

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The following slide presents an example summary of the lead ship “should cost” for design, detail engineering and construction as well as estimates of cost risk.

Cost Model Summary of Lead Ship “Should Costs”

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Initially, there may be few details about the design. At these initial stages of design, the cost model provides its own default estimates of missing design parameters, which can be later replaced by the estimator when that data becomes available.

The cost model also generates estimates of cost risk that is described in the user manual.

The cost model also can estimate costs and schedules for a multi-ship construction program as illustrated in the following two slides.

Estimating Costs for a Multi-Ship Construction Program with Learning Curves & Apportioned Non-Recurring Costs

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Estimating Multi-Ship Production Schedule Quickly & Easily and its Impact on Manpower

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Estimating Multi-Ship Production & NRE Costs and Cash Flow Requirements

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With the basic design characteristics and construction costs defined for the lead ship, the cost model then progresses into the features for estimating the life cycle costs.

The Life Cycle of a Ship

• Conception Stage: All activities necessary to develop and define a means for meeting a stated requirement. For ships and equipment, this normally includes research and development, design, contract specifications, identification of all support necessary for introduction into service, and identification of funding required and managerial structure for the acquisition.

• Acquisition Stage: All activities necessary to acquire the ship and provide support for the ship and equipment identified in the conception stage.

• In-Service Stage: All activities necessary for operation, maintenance, support and modification of the ship or equipment throughout its operational life. The in-service stage is normally the longest stage.

• Disposal Stage: All activities necessary to remove the ship or equipment and its supporting materials from service.

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The cost model provides a summary worksheet for defining the ship operating characteristics as illustrated in the next slide.

A number of the operating characteristics are estimated by the cost model, but they too can be over-ridden by the estimator if better information is available.

Some of these default operating characteristics have been based on analyses produced by the U.S. Navy’s Naval Cost Analyst Division (NCAD).

Cost Model Basic Operating Data for Developing Life Cycle Cost

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The cost model uses a unique method for estimating maintenance, repairs, & modernization costs.

Data entries define each of these cost segments for the primary ship systems (structure, propulsion, electric generation, electrical systems, electronics, auxiliary systems, outfit systems, and coatings.

For each of the system categories the estimate is broken down into basic stages: regular maintenance and major refit cycles.

Where estimated costs are not known directly, the estimator can define these costs as a percentage of the original construction cost provided by the design & construction sections of the cost model.

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Filling out Maintenance

& Repair Scenarios

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Filling out Coatings

Maintenance Scenarios

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Filling out Estimated Casualty Repairs

Scenarios

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Filling out Modernization

& Upgrade Scenarios

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Summarizing annual ship LCC maintenance & repairs costs

The Cost Model estimates average hours per annum of lost operations due to maintenance and repairs activities over the life of the ship.

The Cost Model can be used to explore various design and operational scenarios in order to minimize these costs.

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Estimated Average Hours of Lost Operations Hours from Maintenance, Repairs & Upgrades per Annum

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Estimated Average Cost of Lost Operations Hours from Maintenance, Repairs & Upgrades per Annum

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Summarizing all annual ship LCC costs

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Summarizing LLC per Ship Operating Hours

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The life cycle modeling provides many ways to vary not only the impact of changes in elements of design and construction, but also the many variations of maintenance and upgrade plans.

The cost model further estimates total life cycle costs for an entire fleet. The model works off the multi-ship new construction cost and schedule data.

For additional details of the LCC cost model, its user manual can be downloaded from SPAR’s web site.

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Users of a cost model are cautioned that it is intended to provide only an estimate of cost information. There are limits to the capabilities of these calculations beyond which results may not be accurate.

The data provided in the cost model is not a substitute for judgment, analysis and sound estimating practice. The cost model is an aid in developing an informed opinion of cost. If you are using the cost model as your sole cost authority for contract bids, you are reading more into the cost model than what has been intended.

SPAR ASSOCIATES, INC. MAKES NO WARRANTIES OF ANY KIND WITH REGARD TO THIS MATERIAL, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTIBILITY AND FITNESS FOR A PARTICULAR PURPOSE.

SPAR Associates, Inc. shall not be liable for errors contained herein or for incidental or consequential damages in connection with the furnishings, performance or use of this material.

User Caution

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The extensive list of SPAR clients indicates the company’s wide and long standing experience in the field of cost and schedule estimating, modeling and earned value management within the ship design, construction and repair/overhaul industries.

SPAR’s personnel are familiar with the all major components of shipbuilding construction and repair processes and have extensive knowledge of developing Cost Estimating Relations for materials, facility utilization and manufacturing processes.

SPAR has provided direct support to the shipbuilding industry in the development of cost estimates and methods for reducing production and life cycle costs.

Over 40 Years Serving the Shipbuilding & Repair Industry

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