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.
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Life cycle costing can be applied to establish improvements
at different levels of technology evolution:
1.
2.
3.
4.
5.
6.

Ship Design Decisions

Ship Alterations/Modifications/Conversions
Equipment Selections
Plant Configurations
Commonality Evaluations
Replacement Upgrades versus Maintaining Older
Obsolete Equipment/Systems
7. Substituting Different Materials & Methods in Design,
Engineering, & Manufacture
8. Alternate Maintenance and Upgrade Plans & Schedules
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To begin the life cycle cost estimating process, the cost
model requires the user to define the ship via entries of
basic design characteristics.
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.
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.

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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.

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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.

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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
inservice 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).
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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

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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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User Caution
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.
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Over 40 Years Serving the Shipbuilding &
Repair Industry

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