Avoidable Cost & Schedule in Shipbuilding: Navigating the Massive Risks Inherent in Functional Engineering

Both customers and shipbuilders are unknowingly driving massive cost and schedule growth into shipbuilding programs by not giving sufficient attention the Functional Engineering phase of shipbuilding programs. Technology is not as it once was when ships could be quickly designed and moved into production as in the Spruance and early large deck amphibious programs. Even the successful Ticonderoga class cruisers, Arleigh Burke class destroyers, and San Antonio class amphibs went through many engineering, contract, and program planning evolutions before they reached reliable designs that have become the foundation for reliable acquisitions supporting the surface ships of the U.S. Navy. Recent efforts in the acquisition in new classes have repeated run into difficulty at levels that have undermined the viability of future planning of both class and fleet operations projections far into the future.

As written in a previous article, “If one is in or around a shipyard very long, one is bound to hear the phrase, “We have to finish the engineering before we build the ship.” While this phrase has some truth to it, finishing all the engineering is not a feasible reality; what is more accurately meant is that we must finish the functional engineering before we build the ship. Many shipbuilders are pressed by many internal and external factors to begin building ships before the functional engineering is complete, yet this is the single largest factor by far that impacts unanticipated scope, schedule, and cost growth during production. Even in moderate sized vessels of a three to five thousand tons displacement, the unanticipated schedule and cost impacts of poor execution of functional engineering discipline to production can be measured in years and up to 65-80% cost growth of the total program for the company, if not for the customer.”

The Government’s guidance on ACAT I programs have a “Milestone A” that is the result of all the preceding effort from developing threats, potential responses, assessments of strategies, accumulation of solutions into different operation products, and the determination of the suite of defense and warfighting instruments that emerge, among which the different ships of the future fleet that make their way into the acquisition programs that shipbuilders compete to supply. “Milestone B” is identified at the end of a “Technology Maturation & Risk Reduction Phase,” yet the functional engineering/design is the critical phase for which the configuration of systems is determined that drive the ultimate quality, cost, and schedule parameters of the program. There is a very wide gulf between the requirements focus of the Concept Design studies during early industry contracts and the level of maturity of a total integrated ship system design that can be used with any confidence for Detail Design & Construction (DD&C) contracts. What compounds this difficulty is the current acquisition milestone guidance that places the disruptive contractual transition between concept study contracts and DD&C contracts occurs before the functional design is complete. This contractual break without ensuring completion of the design means that programs the size of ship acquisitions are based on “concepts” meaning that the early un-validated requirements (de-conflicted and reconciled in the functional system designs), contractually binding key performance parameters, and quality, cost, and schedule expectations for the program are based on data that is insufficient to conduct a valid estimate and planning without risk that is so prohibitive that companies are forced into competitions that are based on factors other than the actual design and reasonable expectations of performance.

This article is part of a continuing effort to further discuss and emphasize how important the completion of Functional Engineering/Design is to all subsequent process steps in the shipbuilding process, and the only people who can ensure that the effort to ensure the avoidable costs, driven by undisciplined engineering, are eliminated are the senior leadership teams in stakeholder organizations and the shipbuilding companies. A vital consideration to a solution is that it cannot be undertaken upon contract award; if the details of a reliable plan for systematically working through a functional design are not established at contract award it is likely not to happen at all without great difficulty and enormous growth to cost and schedule across the execution timeline of the program. The fallback approach for this is to have available an agent or company that have these capabilities and plans readily transferable, but even then bringing them in at contract award will incur a significant delay until the proper program planning can be achieved to a degree from which to reliably execute the Functional Engineering phase.

WHY YOU SHOULD CARE: THE RISK THAT INCOMPLETE FUNCTIONAL ENGINEERING POSES TO DETAIL DESIGN & PRODUCTION PROGRAMS

The timelines for shipbuilding programs can last decades, so gaining of the deeper insights far below the obvious can take seeing multiple programs from beginning to end in order to validate perceived underlying root causes. This highlights the benefit of whole careers, decades and even generations, in the industry from vantage points to provide the visibility for the clarity of issue to emerge and reveal its true form. The avoidable costs on shipbuilding programs was assisted in increasing clarity by the observation of a number of medium sized vessels (3,000 to 7,000 gross tons) with regard to issues first identified on ships much larger (9,000 to 70,000 gross tons). After development among the depth of knowledge available in big shipyards, being in the intermediate and auxiliary ships market has enabled a closer look at the issues, not because the small ship programs are accelerated (to the contrary, 7,000 gross ton ships can take as long as 45,000 gross ton ships to build… topic for another article), but because the magnitude of the issues is less obscured and more clear in important details while analyzing smaller populations of work orders being worked within comparable schedules. One particular program among the others had many things that worked adequately, but the critical role of completing Functional Engineering was bright and loud as a fire truck. Educating shipbuilders, and other stakeholders in the ship acquisition process, is the underlying reason for this article by addressing the vital role that Functional Engineering has in the whole sequence of events throughout the shipbuilding process and the compounding effect on quality, cost, and schedule that undisciplined systems and functional engineering have on subsequent activities.

The previous article “LARGE DENSE SHIP FUNCTIONAL ENGINEERING PLANNING FOR A NEW DESIGN-BUILD” speaks to the important differences between Functional Engineering and Detail Design (Production Engineering). The article highlights that in spite of a general current practice of allowing many details to travel far into the production timeline, the Systems and Functional Engineering must be completed before, or very shortly after, the CDR milestone if a shipyard wants to maintain any hope of staying within their estimated contract price (yes, contract PRICE!). The illustration below shows a proposed contract program plan or baseline with the major risk mitigation opportunities shown.

A crucial revelation from this illustration is that there is a zone where risk mitigation activities, lasting until the Detail Design is largely underway, where thereafter there is no real opportunity for risk reduction, but rather, turns into not much more than damage control. The heavy arrows indicate the diminishing likelihood of substantial risk reduction, and, by the time the Risk Mitigation Zone is depleted, the cost growth will be structurally embedded but invisible until sometime after the unit/module erection activities. When they do begin to appear, they will have exponentially impact in their full emergence as the program attempts to muscle through the production with the incomplete engineering. In addition, whether the schedule is reacting to it or not, there will be corresponding schedule delays that are inevitable and will inevitably emerge.

RISK & AVOIDABLE COST GROWTH

If you have studied the reports that come out regularly about the interest of Governments and the defense departments into the cost growth in shipbuilding, there is a lot of good information to learn about cost growth. The U.S. Navy and other defense departments, the General Accounting Office, and the Congressional Research Services has regularly reported on the costs and execution issues on major shipbuilding programs. In addition, Rand McNally has been sponsored in the past to conduct reports and have issued excellent publications on the root causes and drivers of costs in other countries that all available in the public domain. But what is not routinely emphasized is the separation of costs among those that are unavoidable driven from such factors as labor, systems, equipment, and materials, and those that are avoidable driven from economic factors such as regulatory requirements, contracting arrangements, process discipline, business systems technology, leadership and workforce competency requirements, etc.

Corporate and program risk are inextricably intertwined because programs can make some progress in program management and risk mitigation processes, but this is limited; the real gains that are possible in correcting the current cost drivers are truly on the company’s leadership. This responsibility being largely on the company’s leadership is because Program Management is one department among many; while program management will set priorities, the different departments will have direct access to the senior leadership team to ensure that they are in agreement on what their priorities are, which are not always consistent. This means that unless the CEO/President, Chief of Operations (COO) (with a fully integrated scope of Engineering, Supply Chain and Production), and a team of some high level senior vice presidents are engaged in the initiative in an enduring manner, the level of address of the topic will be sporadic and highly variable. This is one reason that it is difficult to bring this topic up to senior leaders, rarely is it possible to get a consistent agreement as a critical priority long enough to ensure the corrective actions required are brought to fruition.

Leaders in the shipbuilding industry have heard about process improvement and risk mitigation so much that it has created a barrier to its continued discussion at levels that make it relevant and convincing to people that it is worth investing the mental space and energy. Program Management and Risk Mitigation programs are leveraged currently only to the degree necessary to convince customers or oversight boards (internal or external) that the company has all the working machinery sufficient to win contracts or enable continued operations for another year or so. Program Management and Risk Mitigation are mentioned together because, while both the corporate organization and the Program Management team both own risk, it predominantly falls to the Program Management team, though they are severely constrained by the unwillingness of leaders to be open to realistic assessments of potential growth to cost and schedule. Corporate risk typically ends up in a continuous improvement bucket and distributed among Information Technologies, Capital Improvements, or special initiatives that are continually at risk depending upon the available funding each year.

TECHNOLOGY MATURATION & RISK REDUCTION

The most consistent use of the period between Milestone A and B, according to the intent of the acquisition guidance documentation was during the DD 21, DD(X), DDG 1000 evolution. Congress was so anxious about the amount of new technologies that had been proposed, many technologies of which had not even been deployed in operational forms, that the Navy’s DD 21 acquisition strategies for the class had been repeatedly and strenuously criticized and rejected. The DD 21 program, at the very last minute before DD&C proposals were sent in, went into deferral until a new strategy could be developed. The result was a transition of the program that became known as DD(X) wherein over 30 Advanced Technology Demonstrators (ATDs) were implemented to provide a demonstrable basis for the new technologies that had been proposed in the design. Congressional oversight turned out to be correct because many of the technologies did not mature to the level necessary to produce DD 21 as was about to be proposed by shipbuilders and continued to diminish to alternative, more proven technologies, that became the basis for DDG 1000. Those in the industry who watched the class shrink from 32 down to 27, then down to 12, and then ultimately down to the three that were finally produced, could only see the story unfold if one’s perspective was consistently engaged over a twenty year period. Even then the lessons learned from this representative use of technology development phase were overcome by practical realities of the end products with uncertainties about what to do with them. Just a couple of examples are: 1) the functional capabilities of systems related to the comprehensive vision of the C6ISR operations suite where the eventually fielded systems were far less capable than was planned and 2) the smart munitions with the timed firing enabling blanked saturation of target areas that turned out to be so expensive that it was not cost effective to purchase the munitions for the advanced gun system.

During the concept development study phases there is great flexibility in some cases who leads a team; in different cases the systems integrator, design houses, and shipbuilders have all led concept development. When the program moves toward the functional engineering, detail design, and production phase, customers have tended to give preference to the shipbuilder for the prime contract, although the LCS Freedom class variant was a prime example of the integrator as the prime contractor. For DDG 1000, the Government took a major role in the functional/systems engineering and total ship integration role. For T-AGOS, the Government has ended up with a far larger ship than what is a balanced cost for the assets, and in the Light Amphibious Warship, there is so much disagreement in the operational concept and requirements for the ship, it is currently entangled in a web of conflicting opinion rather than a substantial documentation of a clear needs statement. Most of this turmoil is the racing from a concept design to contracts for ship acquisitions before the technology and design maturity supports reliable program planning including validated engineering and reasonable bases for quality, cost, and schedule expectations that are presented in summary level charts used for much of the decision making.

All of what took place was in the news or in the regularly publicly published reports supporting congressional oversight, and of late recent classes have been plagued by serious questions about their developments that would have been greatly reduced or eliminated through a more extensive technology maturation and risk reduction phase, especially if it had focused on maturing a functional design in true readiness for DD&C contracts. The most obvious and infamous example of this has been in the Littoral Combat Ship (LCS) program. The concepts of the LCS ships did not have the rigorous validation of previous ships because the drastic reductions of NAVSEA (a result of the revolutionary acquisition strategy innovations under DD 21/DD(X)/DDG 1000 that included massive outsourcing of traditional NAVSEA functions to industry ) and its re-establishment and work up to operational proficiency. The conceptual validation of the LCS was occurring while all those operational validation and technical functions were being reestablished. The new hull forms, aluminum materials, integrated drive systems, and modular mission modules were not proven, but yet were included in the DD&C contracts. On LCS, we did not just fall in to this trap once, but we compounded the problem by authorizing two separate classes for the same mission. Politically this may have been popular, but for the service this has compounded the difficulty into life cycle burdens that have doubled many of the costs from that of supporting a single design. Similar mission and engineering evolutions have been occurring on new classes such as:

1.??????the Antonio (LPD 17) Landing Platform Dock (LPD) ships

2.??????Polar Ice Breaker (pardon the Polar Security Cutter),

3.??????the T-AGOS class,

4.??????the Light Amphibious Warship (LAW),

5.??????the Offshore Patrol Cutters (OPCs),

6.??????the unmanned vessels (where technology architecture, operational requirements, and production contracts for the light, medium, and large were all out on the street in generally the same time period likely to drive interrelated changes from lessons learned across the entire mix),

7.??????and other classes.

The large number and variety of controversies would fill volumes, but should not be disregarded and should be considered with regard to this issue of technology maturation and the completion of Functional Engineering before undertaking DD&C contracts. Some attempts have been made to control the pressures from including technology maturation by the use of cost plus contracts for the functional engineering and low rate production and prototype technology demonstrators, but because of the acquisition profiles for full rate production, Milestone B was passed and proposals were submitted for fixed-price proposals and contracts before the first ship designs and system capabilities had been delivered and operated to prove out the promised technologies.

FUNCTIONAL ENGINEERING MATURITY: THE CENTRAL ISSUE TO AVOIDABLE COST GROWTH

When the word “Engineering” is used in shipbuilding programs it is so broad that it can mean so many different things as there are numbers of personnel on the program. For those who have lived the ACAT I ship acquisition across many programs there is a great difficulty that is rarely addressed even though many experience the phenomenon. The front end, in engineering, drives most of the difficulties in later execution phases. The plans for the later phases for many traditional and most innovation programs have been structurally unsound because of their heavy reliance on the preceding engineering work lacking the requisite maturity from the beginning as a result of undisciplined system and functional engineering processes. Production work is not nearly as technologically challenging as completely de-conflicting and reconciling a design, yet the majority of measures for exhortation about performance and correction/refinement of processes are focused at the end, largely AFTER IT IS TOO LATE to achieve the turnarounds that are looked for to achieve program objectives.

To get from the concept design to the completion of the function design is shown in most acquisition guidance document as a single step, but it is massive step. An approach of this phase of the program is unwise without a definitive plan. The most obvious method of attack is to divide and conquer. What has been an effective element of most Function Engineering phases is to break the process into multiple design spiral iterations in which the objective milestone can be supported by a few intermediate spirals (initial and intermediate CDR milestones) used to ensure and confirm disciplined progress among the different systems that have critical relationships to one another. The Government provides good guidance on the requirements for completing milestones, and most contracts will contain detailed requirements for technical documentation (Contract Document Requirements List requirements, aka CDRLs); a common mistake is to think that if a company satisfies the customer’s CDRL requirements, then they will achieve all that is necessary to complete the functional design. No matter how strong an effort a customer acquisition office may make to encompass these requirements, the nature of CDR milestone criteria and the list of CDRLs are insufficient to address the details in a well-planned process. The CDRLs will not reveal all the detail level activities and products that are required to produce the resulting end product documents that must ultimately be delivered,?and a simple list will not provide a reliable schedule for the all the activities based on the requested delivery dates for the CDRLs.

An anecdotal sequence will be useful to convey the nightmare that is created by focusing only on contract required documents. Upon the contract award of a new program, some engineers undertook to decompose the actual details required to get to the end, but because this sequence was not worked out before the contract award, for the purposes of time, unrealizing program office personnel drove to a schedule created by leveraging an assumption of delivering each CDRL in a series of three to four submittals in hopes that they would conceptually result in the final approved documentation. There where intermediate CDR milestones to go with the different submittals that implemented a conceptual element of the design spiral by its multiple iterations, but the submittals were not defined by levels of maturity required. The other input data products required to complete the detailed engineering activities supporting each review were not defined or clearly synchronized. In the end, the document/CDRL approach did not recognize the full scope of the engineering activities required and confused things by using output products to represent the multifaceted engineering activities. Eventually, because of lagging critical inputs from among the internal and external design teams, the documents would be issued according to the schedule dates assigned; the required level of completion maturity was never achieved and the published documents contained whatever level of completion that had been achieved in this passive and unorganized management environment.?The budgets were burned through, progress for the activities claimed, and a mountain of new document submittals were inserted into the schedule to account for the remaining incomplete work. Each time this happened, internal and external organizations would make new demands to the program office in the form of budget requests or subcontract claims for equitable adjustment. Before long the new tasks being entered into the schedule had no budget at all and the subcontractors were not getting any additional contract value for the continuing effort required. Needless to say the progress began to experience a strong level of resistance without any way to know the true cost and schedule that would be required to meet the final CDR milestone criteria. Programs in such situations are in continual risk of partial or complete gridlock while the pressure to move into Detail Design and Production continues to grow.

During the sequence, at one point, it was acknowledged that the details among all the inputs required among all the different technical documents/CDRLs were so extensive that a technical integration team was established with continuous technical interchange meetings. There was a lot of good work that went into defining the many inputs and interdependencies among the activities compiled that were tracked and statused in spreadsheets outside the schedule. The meetings were grueling and tedious, especially because all this new information was considered to be increased scope by all the different participants who either did not realize, or conveniently chose not realize, or appreciate the full scope of what was required for completing the Functional Engineering effort in way that would: 1) satisfy the contract requirements of the document specification and milestone satisfaction criteria, and 2) satisfy the needs of the subsequence procurement/supply chain, planning, and production processes and stakeholders.?Ultimately because of the slow progress, leadership changes were eventually made, the work that had been completed was no longer a priority of the new administration, and the important work of the true nature of the network required to complete the activities was replaced by entirely new strategies to gain progress. Both the work at the beginning of the program to develop of valid engineering schedule and the later work that had been captured during the technical integration meetings had been subsumed into the depths of the company’s vast depths of the ocean of the data directories unlikely to ever rise to the surface again.

This story illustrates the scope of the complexity and the reactive dynamics to the pressures to complete a program’s Functional Engineering phase and the need for a company to have a process by which to complete Functional Engineering before a CDR milestone is claimed to have been complete, or preferably a DD&C contract is awarded. This process is so large in scope and quantity and diversity of activities that it is THE critical risk at the beginning of any program. This risk is compounded by the number of subcontractors involved in the engineering team because if the full scope of the requirements, their progression, and the schedule for these activities for critical inputs into all the others. Contracting vehicles are much slower and cumbersome to work through than dealing with internal personnel because of the legal steps and technical details that must be worked through formally compared to how responsive the process would be if the work were internally. One of the most beneficial things that a shipbuilding organization can do is to ensure that they have personnel on staff that thoroughly knows the processes for getting from the beginning to the end of the Functional Engineering and have worked this process into an operational model that has the essential elements in it for ships in their market range that can be readily used to produce the engineering plans for this phase. The operational model does not have to anticipate every detail that may come in unique contract requirements from program to program, but there must be a sufficient representation of all the different types of systems so that the schedules can be expanded or reduced to address the full scope of the systems included in future contracts.

The illustration below is at the higher level of the design spiral process to illustrate the top level objectives of each complete circuit of the spiral highlighting: 1) the allocation of requirements downward, 2) the development of the system designs and engineering, and 3) the validation of disciplined compliance in conformance to the contract’s critical performance parameters and specifications. System Engineering disciplines each have a requirement for the end product, but to ensure the satisfaction of the total integrated system, a process of decomposition and allocation of the requirements to the different systems must be undertaken. Once complete each engineer will understand the constraints that apply to the systems that they are working to establish engineering integrity. During the design of the system, the engineers will be able to determine whether they can stay within the allocated parameters and constraints or not. Through the process of their design and engineering calculations they will be able to determine forecasts of the measures above or below the different parameters along with potential options with the pluses and minuses capped with a summarization and recommendation of which option would be the most ideal for the program and ship product. These results must then be aggregated up into the system engineering disciplines to provide the results for the total integrated ship system to validate the extent to which the design satisfies the contractual key performance parameters and specifications. If the process is undertaken with reasonable expectations at the outset and refined incrementally through each spiral, then the outcomes of the total system should be very close to compliance by the completion of the three cycles for the Functional Engineering objective. What will be critical is to ensure that all participants know and execute to complete the levels of maturity required for every system as progression is made.

CRITICAL DIFFERENTIATION OF FUNCTIONAL ENGINEERING FROM PRODUCTION ENGINEERING (DETAIL DESIGN)

Shipbuilders, because their emphasis is on production, focus on building ships. Even when a sizeable engineering workforce is maintained, the disciplines of system engineering are not fully sustained and resident in the company because of the necessity of cost efficiency in not carrying extraneous personnel with this experience and KSAs when they are not required. This is also why there are a number of established and growing veteran engineering and design firms who do have the activity base to sustain these talents and a growing number of technical consulting firms to complement production companies in the different specialties required although both are at risk of not having the critical understanding of how the engineering and designs drive intimately through the shipyards subsequent processes. Unless a shipbuilder has come through the repeated development of new classes of ships, when a DD&C contract is awarded with the functional engineering phase to be completed, the need for highly mature, competent and experienced leadership and execution planning is, of necessity, the most intense at the very beginning, yet awareness of the intensity of this need is only gradually discovered far after the program is underway. Shipyards do not typically receive many major new ACAT I programs in quick succession because of the customer’s assessment of the capacities of the different yard and the political “desire”/necessity to allocate among the nation’s critical defense industrial infrastructure at down select for contract award.

So what is it that should be done about undisciplined and incomplete engineering that commonly lingers far into the detail design and production phases and causes the disruption that drives cost in the later phases? When one talks with “planners” (there are many different fields of expertise) about what is needed for good Work Order documentation, a reasonable budget, and a proper schedule for the work, the answer invariably is a good complete design. There is not much out there that a good program planner cannot scope, budget, and schedule with reliable definition if the design is complete to the Functional Engineering level and CDR exit criteria. Program planners can work wonders from functional designs if they are complete and stable (they do not need production detail designs to develop accurate program plans). The problem for many shipyards is the differentiation between program planning required by shipyard management systems and the detail planning required to drive the shipbuilding production facility.

ENGINEERING PLANNING

One of the critical factors in making the way around the design spiral is being able to understand and define the critical relationships among the thousands of detailed engineering data elements, activities, and the inputs necessary from among the different disciplines among one another in order to complete their individual steps. Only after a detailed schedule among the technical “feeds” and “feds” are defined sufficiently to develop a detailed engineering schedule of the lower level tasks can the planning be done to ensure that each system is carefully understood to know what level of maturity they must meet to ensure the reliable progression of the process. The details should be documented into exit criteria to document precise expectations of what completion of the intermediate milestones represent.

A COMPREHENSIVE OPERATIONAL MODEL OF “PROCESS STEPS” FOR COMPLETING FUNCTIONAL ENGINEERING

When functional engineering is considered to be so routine that it is not seriously considered and effective controls are not implemented to ensure hard fast requirements compliance of the technologies planned for construction, problems are bound to occur and keep recurring until a deep consideration and corrections are made. When the functional engineering/design is not complete, the DD&C estimates in terms of quality, cost and schedule are at best considered “Class F” Rough Order of Magnitude (ROM) estimates, and at times the variances have far exceeded the +/- 40% characterization of these estimates. This variation is due to the fact that product and production technology is developing at such accelerated rates; the previous vessels that shipbuilders go back to as the bases of their estimates are no longer valid with the degree of systems engineering that must be applied to come through the new development that must be processed through a valid functional engineering/design phase. When the functional engineering is passed through so quickly without the required discipline, buried costs emerge on the program in the later phases that provides clear evidence that these processes were not conducted with the rigor and discipline necessary. Just where the quality, cost, and schedule will end up it is difficult to tell until after multiple ships have been built. For the low numbers associated with recent ship acquisitions other than in exceptional cases, this magnitude of “discovery” can be doing more to damage the U.S. shipbuilding infrastructure than is readily understood by many veteran industry insiders.

Because shipyards depend upon future contracts, when DD&C requests for proposals go out on the street, most shipyards will be involved because their futures depend on a significant future order book. The competition is fierce with the proposal of the latest technologies, high quality standards, the best cost possible, and in conformance with schedules that customers demand. The reality is that the winners have not been able to successfully meet the parameters for these awarded contracts without great detriment to themselves in a long time. This is because the shipyards are signing up to contracts that do not have the systems defined as they should be through a functional engineering process that implements the disciplines of all the required elements of systems engineering to reach the integrity of a de-conflicted and reconciled design before the Government’s Milestone B and DD&C contracts are solicited. Many shipbuilders only discover the full scope of what is required of a functional design after they get the award, plow into the engineering effort, and realize the full scope of what is required after they have spent years attempting to make progress. This is because of a number of factors affecting the leadership and management communities at shipyards: 1) lead ship contracts are not very frequent, so resources covering this functional scope are not sustained after their immediate need; 2) the acceleration of advancement pathways into management and leadership do not ensure an understanding of the scope of the acquisition process, especially in shipbuilding were programs continue for decades; and 3) the turnover rate of leaders and managers has been volatile as both the Government and commercial customers are in intense competition for hiring qualified personnel with existing and new entrants into the shipbuilding industry?(especially with the increasing rate of retirements and other recent actions that have moved many of the highest caliber and most qualified out of the available workforce even before they may have desired to exit).

Continuing to press DD&C contracts out onto the street before the requirements for Critical Design Review gates are met is detrimental and to many inexplicable. It is not as hard to understand when one considers that in many cases customer acquisition program offices are under as much pressure, if not more, to make progress than are the shipbuilders to get and execute programs. When a customer acquisition program office is able to demonstrate progress toward an acquisition for the promises of the desired functional asset within the bounds of the allocated resources, cost, and schedule, they are rewarded and promoted for their aggressive APPEARANCE OF PROGRESS. When shipbuilders brief the promise of what the contracts could do for their companies, the forecasts are typically aggressively optimistic, and owners and oversight members are elated with the prospects for their future including: 1) the immediate prestige it brings to the company brand and reputation, and 2) the opening up of future opportunities reaching out to the distant horizon, and 3) the promise of longer term viability for the company. This may partly be why the need to address the functional engineering and what culminates in the successful passage of the Critical Design Review (CDR) milestone has not been discussed in great detail; it can be a personally affecting and distressing subject.

THE DIFFERENCE BETWEEN ENGINEERING MANAGEMENT & ENGINEERING

If engineering progress is tracked by the detail engineering schedule the many inputs and dependencies among all the specific activities, the systematic progression can be thoroughly obscured for the non-engineer (even many engineers not familiar with management processes and tools). The design spiral process should be able to be summarized at a higher level by process steps enabling the tracking of progress; the full details below the management view of progress can be easily accessed to further investigate where process is lagging. A way to do this is to use and integrate the difference between the management level system and the task level M/ERP.

Fatal flaws can end up being built into schedules by not being clear on just what it is that has to be managed and at what level. Engineers will have to manage the many different pieces and evolutions that must be addressed in order to complete activities that others know by a more general name; all of the details that the engineers will go through need not be included in a management system, but they all must be captured in the individual steps that make up the flow of tasks from beginning to end. A way of illustrating the processes and systems that shipbuilders have available to them is to compare the two levels of the system: 1) the operation of the management levels system (Work Packages) for managing planned work, progress, actual costs, schedule, and estimates at complete, and 2) the M/ERP that is used to accomplish work by way of the Work Order that drive the work through the production facility. In production, the management schedule need not identify every single sub-process of each step, yet individual work orders will be issued to ensure that each workstation receives the specific tasks that must be completed.

In the illustration below this division of detail between the Production Work Package in the schedule for the “Cut” process step is compared-contrasted with the activity in the Functional Engineering Design Spiral Step of “Requirements Analysis, Decomposition & Allocation.” In the same way, the Work Package in the management system is all that is required in a top level management activity along with the different analyses, decompositions, and allocations that must be made down to the systems in the ship product as a whole. Consolidation at the management level eliminates detracting detail but retains the benefit of objective progress because of the multiple Work Orders below with each providing a lower level of objective evidence of progress as these are completed.

For Engineering, the Control Account attributes must include “SWBS (MIL-STD-881)/ESWBS” and the “OBS (Engineering Functional Section within the Department), with the Work Packages the necessary process steps to be completed for management visibility and control. Within the M/ERP would be the individual engineering task Work Orders for each of the many lower level engineering activities required and that would also reflect the detail progress and summarize to enable accurate reporting of the planned work (activities & BCWS), work achieved (BCWP), actual cost (ACWP), and the enabled forecasting of Estimates at Complete (EACs). The fundamental difference between a system built on contractual technical documents and this approach is that the criteria for progress is based on the satisfaction of completion criteria rather than the simple publication of documents at predetermined dates regardless of their maturity and contract specification compliance.

TRACKING PROGRESS OF THE FUNCTIONAL ENGINEERING/DESIGN SPIRALS

The illustration below shows the different design spirals. They are represented with the Concept Design and Functional Spiral #1 collapsed only to show the top level status; the current Functional Engineering spiral expanded to show the progress across the steps, and the Functional Spiral # 3 is collapsed for maintaining sensitivity to future dependencies and able to be expanded for future management use. The illustration is also arranged in order to show the early down-and-in activity progress in comparison to the later up-and-out sequence. The steps progress from the different System Engineering functions into the general requirements that feed the typical sections of the construction specification. Once the general specification categories are satisfied, then the System Engineering allocations are tracked down into the development of the details of the specific ESWBS third digit systems to address the main steps required for system definition: 1) hardware and software identification/definition, 2) spatial arrangement of all equipment, 3) 3 dimensional routing of all piping, cabling, vents, etc., 4) the documentation of all specifications, design, analysis, and resultant compliance or deviation from system constraints required for system approval, and 5) the test planning required for validating the compliance of inspections and tests to validate compliance of performance to allocated requirements. These steps have been presented to engineers repeatedly to validate the reasonable expectation of these items for achievement during Functional Engineering; while their responses have been consistently confirmatory, the actual achievement of these objectives have been elusive and consistently impacted in most instances from the lack of coordinating orchestration of the other disciplines, suppliers, and technical data upon which finalization of the engineering designs and calculations must be based. This is the major challenge for the company leadership, Program Management, and Engineering Department leadership for this phase of the program.

BETTER DD&C ESTIMATES & PROGRAM PLANS

For DD&C estimates to increase in quality, cost, and schedule reliability there has to be a substantial improvement in the bases upon which they are estimated. When ships must be proposed based on the concepts and requirements from current phases preceding DD&C according to the current Government Acquisition Guidelines for ACAT 1 (Ships) defense programs, the lack of clarity in design specificity forces shipyards to rely on past like ships produced, sometimes many years in the past, in conjunction with modifications based on best known information derived from the Request for Proposal and tentative specifications. Awarding DD&C contracts requiring both Functional Engineering represented by a CDR milestone and completion criteria, it is imperative to fully satisfy this milestone before preceding significantly into Detail Design. This is critical to ensure both the shipbuilding company and the customer have a reliable basis for future performance expectation to ensure that agreements can be validated to prevent major program disruptions and/or interruptions.

The illustration below identifies just some of the essential elements of the design derived from the Functional Engineering phase that contribute to the major increases in the reliability of the company’s ability to develop a meaningful program plan, including a DD&C Performance Measurement Baseline and future time-phased cost estimates and EACs.

Ideally, a way shall be found to enable the contracting for the DD&C effort after the Functional Engineering and Final CDR milestone has been completed. In the end, this will enable the more disciplined execution of the Functional Engineering phase of the program, bring more reasonable cost and schedule forecasts, and bring more reasonable competition focused on more relevant production factors among the competing shipyards.

STRATEGIC DIFFERENTIATION OPPORTUNITIES

I have mentioned in a number of articles the opportunity for key participants in the marine and shipbuilding industries to develop a strategic capability in the management of shipbuilding processes that could help the shipbuilding industry and the organizations that work together on future programs. The ability to manage the establishment of a solid design upon which all subsequent process in shipyards rely will be one the biggest, if not THE biggest, cost and schedule drivers in the execution of ship acquisition programs. Shipyards that are able to demonstrate this capability reliably in the past performance records will have a great advantage over those that cannot, or at least cannot demonstrate the capability.

In addition to shipyards, who do not always have the ability to carry the type of personnel who have these special engineering planning and management skills based on a strong competency and experience base, other companies like major shipbuilding engineering and design houses or even management specialty firms with marine divisions have a unique opportunity. Stakeholders of shipbuilding programs, regardless of whether a customer, shipyard, integrator, or major subcontractor, are all in need of tools by which to conclusively assess progress for these types of programs. It is only a matter of time before people begin to understand the massive cost reduction advantages that can be seized through aggressive management of the functional design, and afterward the window of opportunity will begin to close.