The demand for increasing the operational availability of the naval ships is at its peak due to the increasing mission commitments across the world. The exponential cost of building complex naval ships coupled with the global economic slowdown has constrained even the most powerful governments from venturing in to the programs for fleet expansion at a rate proportional to the existing demand. This situation has forced the world navies and leading naval ship builders to focus on optimizing and strategizing the maintenance aspects of the naval platforms and the equipment onboard in order to provide enhanced availability and a robust Through Life Management of the assets. The requirement is to increase the operational availability of the existing assets through the implementation of efficient maintenance strategies and to optimize the life cycle maintenance of the future assets through the application of logistics engineering right from the design and construction phase up until the disposal phase.
The engineering decisions taken during the various phases of the life cycle of a naval platform is not only relevant from an overall cost perspective but also has the potential to make serious impact on the efficiency and availability of the platform to deliver the role and functions envisaged during the conceptual stages. Life Cycle Management Matrix has been developed to focus on identifying the key elements and areas of logistics engineering which needs to be considered during the life cycle of a naval platform for optimizing the maintenance requirements and to establish an efficient and cost effective maintenance program.
(Abstract of article)
Reasonable estimation of the Maintenance Cost of the ships is one of the important requisites for preparing the fleet Operation and Support (O&S) budget of any Navy. The O&S cost would mainly include the Personnel, Fuel and the Maintenance cost and normally the yearly maintenance cost of commissioned Naval Ship would consist of the following:
1. Afloat Maintenance Cost – Man-hours of the ship’s crew involved in the Level 1 maintenance activities.
2. Intermediate Maintenance Cost – Man-hours of the Base Maintainers involved in the Level 2 maintenance activities.
3. Workshop and Depot Maintenance cost – Man-hours for the Level 3 maintenance activities, Cost of Docking, Refits, Planned Additions & Alterations, unscheduled maintenance costs etc.
4. Material costs – Cost of spares, consumables etc. including material handling costs.
5. Industrial Service Costs – Cost of optional and mandatory service support availed from industries, including the OEM assistance.
6. Maintenance Training and quality costs.
While the calculation of the maintenance cost based on the historic data for the fleet and organization shall give a more accurate estimation, this is often tedious and time-consuming; especially in cases where the availability of reliable historic data is a question mark. In such situations the alternate solution is to go for a high level estimate using the Life Cycle Cost thumb rules.
According to the thumb rules of Life Cycle Costing the procurement cost of a ship amounts to 40 percentage of the total Life Cycle Cost and the balance 60 percentage amounts for its sustainment and disposal. Further break down of the cost of sustainment shows that the cost of maintenance amounts to 20 to 30% of the procurement cost and it varies with the size and complexity of the ships.
The success of a project is mainly determined by the quality of the human resources. In large organization the selection process of the key project team members normally starts before or during the final stages of a tender closing. More often than not, one of the key positions for which the resource is identified for the Project would be the Project Manager or a Technical Lead for the project. The association of key members during the pre-project phase not only facilitates the smooth transition of the project to the Project Team from the Sales Team but also provides the much-needed continuity in taking forward the project from a technical and management perspective.
Once the Project is confirmed, the selection process of the project team commences on priority to ensure that the required resources are mobilized to kick off the project in accordance with the resource mobilization plan envisaged during the project conceptualization stages. The success of the resource mobilization process greatly depends on the quality of the mobilization and sourcing plan envisaged during the tendering stages and the support extended by the organization to materialize the same.
The roles and quantity of the team members are decided during the tendering stages based on the requirements of the project and this estimated manpower is also used to do the costing and budgeting for the project. The details of the roles shall be elaborated through Job Description documents produced during the initial stages of the recruitment process. The resource mobilization plan may be materialized through a sourcing strategy which leads to the formation of a project team constituted through a combination of existing resources of the organization, new recruitment or sub contractor personnel. The formulation of the sourcing strategy depends up on the availability of suitable internal resources, the time frame available for the recruitment and cost considerations.
All the above mentioned activities lead to the recruitment and mobilization of the Project Team and the key part of the recruitment is the selection of the right candidates. Personnel with the right qualifications and experience are to be shortlisted and thereafter interviewed to verify their capability and suitability for the project. Apart from the qualification and experience, the important factors to be considered while selecting the project team is the attitude and the inter personnel skills of the candidate which plays a major role in the successful integration of the project team. Honesty, reliability, flexibility, discipline and team spirit are few the qualities to be given utmost consideration while selecting a project team member.
The capability of the interviewers to identify the suitable candidates also plays a major role in the selection of the right project team. Therefore the panel of interviewers shall be carefully chosen by the management and the panel shall ideally consist of the management and lead technical representatives of the project, subject matter experts and HR representatives.
One of the most common mistakes which is committed while recruiting the project team members is the selection of over qualified personnel for positions which do not demand the higher level of qualifications possessed by the candidate. Such candidates once selected and inducted in to the team, find it difficult to integrate in to the project team leading to poor cooperation and communication among the team members. Another mistake of similar proportion is the selection of under qualified candidates which may happen due to nepotism and organizational pressures to select the available internal candidates. It is the duty and responsibility of the management to support the project by eliminating the factors which may lead to such mistakes leading to the selection of the wrong candidates in to the project team.
Choosing the right Project Manager and Project Team is extremely important and the criteria for the selection are much beyond the qualification and experience of the candidates. It is equally important to continuously improve and strengthen the team by organizing an efficient induction plan for the selected team members followed by training programs and team building activities.
Naval and Commercial Shipbuilding have many similarities which has enabled the commercial yards to embark on challenging Naval Shipbuilding programs to take advantage of the huge business opportunities associated with it. The cost of building a Naval Ship is normally huge and so are the risks associated with it. There are several elements of construction and design aspects which are similar and complementary in the construction of a Commercial and a Naval ship. However it is necessary for the commercial yards to understand the critical areas of differences which needs to be focused to mitigate the risks which are normally associated with the Naval Shipbuilding.
The areas of differences in Naval and Commercial Shipbuilding can be identified right from the conceptual stage to the commissioning stage of the ship building program. Commercial ships are normally build based on a patented or approved design of a particular class of ships meeting the requirements of the customer. These designs may be reused as it is or else it may be used with some minor changes. This approach not only reduces the cost of acquisition of commercial ships but also enables the ship’s construction to be planned and progressed with a mature design, meaning no or very little re-work with very small possibility of schedule and cost overruns. On the contrary the Naval Programs are characterized by customer demands for ambitious functionalities which are predominantly based on the state of the art technology emerging out of the research and development stages. More often than not the warship production and the system development runs concurrently which eventually leads to the implementation of an under developed system or increased acquisition cost and schedule delays in the final commissioning of the ship.
One of the general misconceptions about the Commercial ships is that they are weaker in less durable as compared to the war ships. From the current industry standards and practices for Commercial Shipbuilding, it can be seen that some of the Commercial ships are now built with capability to operate in much severe weather and risky conditions to meet the operational requirements. However the amount of redundancy which is imbibed in the designs of a commercial ship is still lesser as compared to that for the warships. This not increases the weight of a Naval ship but also makes it very much expensive as compared to a Commercial vessel.
The life expectancy of a Commercial ship is normally lesser as compared to that of a Naval ship. A Naval ship is built to serve for several decades more than that of a merchant vessel. Periodic Refits are planned throughout the life cycle of the Naval ship not only to strengthen the structure but also to ensure that the equipment systems onboard are upgraded to keep pace with the advances in the technology.
Another key area of difference is the decision making process involved in the building of these ships. In the case of commercial ships the power to make important decisions rests mainly with a small group of owners/ owner’s representatives and hence the process of decision making is generally quicker. Whereas in the case of a Naval ship, the key decisions are taken by the empowered group involving uniformed personal, bureaucrats and the politicians. As the warships are built from the tax payers money, a lot of time is spend in deliberations and for following the procedures associated with the government machineries.
The opportunities and business volume in Naval shipbuilding is huge and steadily growing to certain extend. However the global financial crises have forced the governments of many countries to implement measures to reduce the cost overruns in the defence programs- especially that of warship acquisitions. It is therefore more prudent for the commercial yards embarking in to the Naval Shipbuilding to understand the differences in the commercial and Naval ship building practices and come up with solutions which are not only economical but also meets the specific requirements of these programs.
Life Cycle Cost analysis conducted on various classes of ships have proved that the cost of the operation and maintenance of a ship can be approximately 50% to 60% of its Life Cycle Cost. Considering the fact the cost of ships are normally several millions or billions of dollars, it can be seen that the cost of maintenance is quite a significant amount in the annual budgets of the ship owners. Therefore various options are considered by the ship owners to reduce the maintenance cost without any major impact on the performance of the equipment and the operational availability of the ships. In addition proper maintenance of the ships are also necessary to reduce the risk of environmental pollution and to ensure safety of men and material at sea.
Some of the most common maintenance concepts followed by ship owners are as follows:
Reactive or Corrective Maintenance: Reactive or Corrective maintenance, also known as Break Down Maintenance is based on the policy of ‘Run Until It Breaks’. This is the most avoided kind of maintenance onboard ships as it poses a serious safety risk. In this case, no actions are carried out to maintain the equipment and it is expected that the equipment will fulfill its design capability for the for the duration of its designed life. Reactive maintenance may at times prove to be cost effective type of maintenance through the life cycle of an equipment, provided the failure of the equipment does not lead to any major catastrophe. But considering the fact that most of the equipment onboard ships are critical, Reactive Maintenance is the least recommended mode of the maintenance of equipment onboard.
Preventive Maintenance: Preventive Maintenance or Scheduled Maintenance is the most common mode of maintenance followed onboard ships. This system reduces the malfunctioning of the equipments and thereby reducing the downtime. Preventive maintenance is a calendar based or running hour based maintenance concept which employs various scheduled offline testing methodologies to conduct periodic assessment of the system and thereafter carry out the maintenance activities as prescribed in the schedule. The detailed procedure and schedule for the preventive maintenance routines such as change of filters, insulation tests, lubrication etc. are normally advised by the manufacturer and, if followed correctly, it ensures efficient running of the equipment resulting in reduced life cycle cost.
Predictive Maintenance: The Predictive Maintenance method analyses the causes, symptoms and effect relationship of the equipment’s performance to predict the requirement of any corrective actions. In the case of a Predictive Maintenance program the key values of the equipment are measured or monitored and the values obtained are compared with the standard set of values for the respective equipment to identify the deviations if any. The causes of the deviations found are thereafter analyzed to identify the maintenance routines to carried out normalize the equipment’s performance parameters.
Condition Based Maintenance: Condition Based Maintenance is the maintenance activity carried out based on the knowledge of the condition of an equipment obtained from routine or continuous monitoring. Condition Based Maintenance is similar to the Predictive Maintenance but uses both online and offline test data to decide up on the requirement of maintenance to be carried out. In the case of Condition Based Maintenance, if the test results fall in the normal or acceptable range, the scheduled Preventive Maintenance may be skipped which shall reduce the maintenance effort and the associated costs. Application of a customized Condition Based Maintenance plans are now gaining wider acceptance in the shipping world with the classification societies such as DNV coming up with the standards which permit the inclusion of this maintenance methodology in the overall maintenance program of ships.
Several aspects of an equipment including its functionality and criticality are to be considered before deciding up on the maintenance program for each equipment. The choice of the maintenance strategy also varies based on the class and type of the ships. The criteria for deciding the maintenance program for a commercial ship is different from that of a military ship. Commercially available analysis tools such as the FMECA, RCM, RAMS may be used to support the selection of the maintenance strategy. The continuous quest of the ship owners for a safe and economical maintenance methodologies has led to the introduction of Reliability Centered Maintenance in which an optimized maintenance strategy is formulated through a combination of Preventive, Predictive and Condition Based Maintenance practices best suited for the particular equipment. The advancements in the engineering and technology have led to the development of more reliable and rugged marine equipments and the monitoring systems which have revolutionized the maintenance requirements and widened the scope for introduction of more efficient and frugal maintenance programs for ships in future.
Ship’s Life Cycle Cost (LCC) is the total cost of ownership of a ship and its equipment including its conception, acquisition, operation, maintenance, upgrade and decommissioning. LCC is normally calculated by summing up the cost estimates from inception to disposal or in other words cost estimates from cradle to grave. While LCC analysis is carried out for commercial ships to estimate the net profit and return of investments, in the case of Naval Ship Building it is mainly used to choose the most cost-effective options from all the options available. LCC is normally used in the corporate world as a management decision tool based on facts, money and time.
To understand and analyze the LCC of a marine platform, it is very important to understand the various stages of its life cycle from different perspectives. The stages of life of a marine platform based on a shipbuilder’s perspective would be Conception, Design, Engineering & Development, Production and Logistics Support. From a customer’s perspective the stages of life of a marine platform are Purchase, Operation, Support, Maintenance and Disposal.
Life Cycle Cost of a ship can be divided in to two parts – the initial cost or the acquisition cost and the future cost or the sustaining cost. The initial cost is the incurred prior to the purchasing of the ship and the future cost is the cost incurred after the commissioning of the ship.
In the case of marine platforms, especially the Naval ships, it is seen that the acquisition cost is approximately about 20% – 40% of LCC whereas the sustaining cost would be about 60% – 80% of LCC.
The LCC of Naval ships are normally reduced by the application of the Integrated Logistics Support (ILS) principles. The costs are normally estimated based on the predictive method where no historic data are available or a method based on statistical data available for the existing systems. In all cases, appropriate discount rate and escalation rates are incorporated in to the calculations to make the future cost comparable with the present cost.
The success of any business depends on the application of a combination of good engineering practices and sound economic decisions. LCC analysis acts as a data based decision-making tool which can potentially provide comprehensive cost information that takes in to consideration a number of factors and brings out the hidden costs, thereby playing a decisive role in capital-intensive programs like ship building. However it should be noted that LCC does not provide an exact value of cost. As it is an estimate, the accuracy of LCC depends up on the correctness of inputs and the method adopted for calculations. Notwithstanding this vital assumption, the LCC definitely provides an insight in to the cost factors and the magnitude of the associated costs which are critical for decision-making.