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Canadian Surface Combatant RFQ

We also (really inconsistently) sometimes makes adjustments to some kind of future dollar values with assumptions for inflation, vice actual in year costs.

So you may take $10M today, and say it's in fact the equivalent to $15M in 2040 dollars, and then project that cost. It might make sense on some kind of CPA kind of accrual accounting thing, but when you do the budget requests you ask for whatever it will cost you that year. Sometimes they do the opposite and adjust future costs to current in year cost, sometimes they use actual costs, so it's confusing.

Normally when you do cost predictions on the project side, if you have a recurring item (like buying the same widget) you just take the current cost and apply some kind of annual assumed inflation, so that your year to year cost projections take into account normal increases over time for the same kind of work. The obvious example for that is labour and material costs. The amount of steel you need is pretty fixed, but you still want to account for normal increases over time. The amount of labour will go down over time on predictable rates (and plateau when they hit peak efficiency) but the overall costs may still increase as labour rates go up.

For example, first time you do something might take 10 hours, second time 9 hours, and then eventually get down to 6 hours the tenth time. But if your labour rate goes from $80/hour to $120 over 20 years you may pay more in dollar figures for the 10th one (realizing that the dollar is worth less 20 years out).

Trying to find a good way to explain big dollar costs on a long term strategic project is a challenge, but the way we do it inflates the sticker shock by a lot. If you told someone the cost of ownership of a $50k car was $250k (with potentially another $80k of repairs) that wouldn't really make sense to them, but that's essentially what we have to do under TBS costing rules.

So what you are saying is that any firm cost evaluation can only ever be a real time snapshot of the situation on the day the snapshot was taken.

Everything else is assumption and supposition and subject to negotiation and interpretation.

If I go back to the infamous Absalon, which the Danes claimed cost less than a Littoral Combat Ship. That might be because that is what they actually paid for the ship.

The weapons they installed they already owned in many cases and were designed for plug and play installation. That was a separately funded project that had been paid for years previously.

The munitions for the weapons were also funded by a separate project with some of the munitions, consummables, being common across the services and not tied to any particular platform or service.

The service contract was also priced, costed and reported separately.

On a given day it can be said that that hull cost XX krone to put in the water. 10 years later that information is stale and less useful. But probably more useful than the guessing on the day it was launched what the replacement value would be 10 years later and what her in-service costs would actually be.

40 year budgets really are a nonsense.
 
Trying to find a good way to explain big dollar costs on a long term strategic project is a challenge, but the way we do it inflates the sticker shock by a lot. If you told someone the cost of ownership of a $50k car was $250k (with potentially another $80k of repairs) that wouldn't really make sense to them, but that's essentially what we have to do under TBS costing rules.
Yup. And DCostS has the multi-year inflation model which rarely survives contact with reality, but they don’t certify the cost ING’s unless you use their model, then everyone gets up to go to the bathroom when the Auditer General comes by to ask you why your cost was off be so much… sigh

Funny you mention the car…I walked a few guys through a $265K Toyota Camry…once I told them that’s how the GoC costs MCPs, the lights went on. (And why you can’t say price per helicopter is $340,000,000….)
 
Yup. And DCostS has the multi-year inflation model which rarely survives contact with reality, but they don’t certify the cost ING’s unless you use their model, then everyone gets up to go to the bathroom when the Auditer General comes by to ask you why your cost was off be so much… sigh

Funny you mention the car…I walked a few guys through a $265K Toyota Camry…once I told them that’s how the GoC costs MCPs, the lights went on. (And why you can’t say price per helicopter is $340,000,000….)
It also seems that no one uses the same models so TBS, PBO, Dept of Finance (FIN?), all do some different things with nuances to assumptions, inflation and phasing that result in different costings.

The other variable is the actual contract milestones, which can make huge differences in cost. If a major payment milestone is delayed a few years, your costs might go up a lot just from billable hours shifting to higher rates. So everytime they pause major decisions for elections, budget reviews etc it adds on hundreds of millions to the project in real terms over the life.

Inflation is another fun one; StatsCan has dozens (hundreds?) of different indices, and they each apply differently to different sectors. So you may get a general 3% inflation, but a 10% on things like steel and copper for supply chain reasons, 5-7% on labour etc etc. They also don't really do +/- to show the uncertainty on budget demands, so if you work through something, and end up with a most likely cost of around $10, but may be as low as $7 best case, or $20 worst case, you basically have to ask for $20, then get kicked in the balls when you return unspent money that was essentially contingency.

That happens a lot on the in service side as well, where we have been forced to go to task based annual contracts for in service work, which requires us to have all the money in the project in March to get the DND 626 task authorization form actually issued. So we do things like tie up $1M in April, track monthly burn rate against it, and then generally either have to return money too late for anyone else to use, or scramble to get more money. Before the updates to the Log SOW for R&O we just got monthly invoices, and would ask for budget top ups as the year went on, so was much less PM work on the financial side.

The amount of time and effort that the CAF and the public service writ large puts into all of this is pretty appalling, and probably doesn't get much better real results compared to the initial back of the napkin cost estimates somebody did a SWAG on during the initial bit. But no one wants to ever hear about the real SWE costs of all this internal processes, or the lost opportunity cost of those same SMEs working on basically process busy work that doesn't really add value but is required to get things approved.

Travel is probably a great example, where we have people doing thousands of dollars in staff time for the bureaucracy to travel, with delays making things like airline tickets cost a lot more, while also not working on things that are their core job.
 
There are also problematic contracts where labour rate risk is transferred to the Crown. Imagine if contractors had to carry that risk - it would incentivize meeting timelines...
 
Inflation is another fun one; StatsCan has dozens (hundreds?) of different indices, and they each apply differently to different sectors. So you may get a general 3% inflation, but a 10% on things like steel and copper for supply chain reasons, 5-7% on labour etc etc. They also don't really do +/- to show the uncertainty on budget demands, so if you work through something, and end up with a most likely cost of around $10, but may be as low as $7 best case, or $20 worst case, you basically have to ask for $20, then get kicked in the balls when you return unspent money that was essentially contingency.

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People really love it when they ask for an estimate and I give them a Class 5.

"Your project will cost 2 MCAD .... or it could cost 1MCAD .... or it could cost 4 MCAD. You can take that to the bank."
 
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People really love it when they ask for an estimate and I give them a Class 5.

"Your project will cost 2 MCAD .... or it could cost 1MCAD .... or it could cost 4 MCAD. You can take that to the bank."
The way our approval works you basically have to start with a Class 5 for total cost approval, then live within that for the life of the project. It's a lose-lose though; you either have reasonable levels of variation for the unknown, which may massively over-estimate cost (or if something like COVID happens, still underestimate some things), and then get the constant sniping you get now with CSC, F35 etc, or try and have a low end estimate, then prepare of an absolute kicking and accused of mismanagement and incompetence if you go back with an updated estimate that is an increase.

Initial CSC estimates were done back as far as 2005, and that was also based on the costing requirements at the time which was different. So a lot of the change from $25B to $60B is due to time as well as additional costs and scope being added to the estimate
 
The way our approval works you basically have to start with a Class 5 for total cost approval, then live within that for the life of the project. It's a lose-lose though; you either have reasonable levels of variation for the unknown, which may massively over-estimate cost (or if something like COVID or the TBS Red Light-Green Light game happens, still underestimate some things), and then get the constant sniping you get now with CSC, F35 etc, or try and have a low end estimate, then prepare of an absolute kicking and accused of mismanagement and incompetence if you go back with an updated estimate that is an increase.
😉
 
Doesn't anyone realize......

Imagination Kazoo Kid GIF by Dark Igloo


The $$$$ numbers are completely made up LOL. Also, Navy isn't getting 15 ships. They'll be lucky to get 8. I predict a lot of "Fitted For, Not With" 😄
 
I return to my prediction that the Navy is going to get told that they're getting 15 extra AOPS instead of any CSC's. They'll get a chance to do some re-design of the AOPS to give it some actual 'capability' that they'll strip off the Frigates as they retire them.

-surface mounted 57mm on the focs'le (no below deck loading capability, put the rounds in through the back door)
-Link 16 fit
-2D Radar
-Fire Control Director added
-Bare bones CMS330 (one FCS, two Radar Consoles, and one ORO/SWC console)
-Containerized ability to carry and launch SAM
-Containerized ability to carry and launch SSM (Harpoon)

From the public's perspective, it's still gray, it's still a warship, and it's got Radars and weapons. It meets our needs.

From the Navy's perspective, the MARS NWO officers will still have as many platforms to act as commanders on. This will solve the crewing problems, and streamline training for everyone with only a single class of ship.

Win-Win

Right?
 
I return to my prediction that the Navy is going to get told that they're getting 15 extra AOPS instead of any CSC's. They'll get a chance to do some re-design of the AOPS to give it some actual 'capability' that they'll strip off the Frigates as they retire them.

-surface mounted 57mm on the focs'le (no below deck loading capability, put the rounds in through the back door)
-Link 16 fit
-2D Radar
-Fire Control Director added
-Bare bones CMS330 (one FCS, two Radar Consoles, and one ORO/SWC console)
-Containerized ability to carry and launch SAM
-Containerized ability to carry and launch SSM (Harpoon)

From the public's perspective, it's still gray, it's still a warship, and it's got Radars and weapons. It meets our needs.

From the Navy's perspective, the MARS NWO officers will still have as many platforms to act as commanders on. This will solve the crewing problems, and streamline training for everyone with only a single class of ship.

Win-Win

Right?
You're an evil MOFO.
Angry Looney Tunes GIF
 
I return to my prediction that the Navy is going to get told that they're getting 15 extra AOPS instead of any CSC's. They'll get a chance to do some re-design of the AOPS to give it some actual 'capability' that they'll strip off the Frigates as they retire them.

-surface mounted 57mm on the focs'le (no below deck loading capability, put the rounds in through the back door)
-Link 16 fit
-2D Radar
-Fire Control Director added
-Bare bones CMS330 (one FCS, two Radar Consoles, and one ORO/SWC console)
-Containerized ability to carry and launch SAM
-Containerized ability to carry and launch SSM (Harpoon)

From the public's perspective, it's still gray, it's still a warship, and it's got Radars and weapons. It meets our needs.

From the Navy's perspective, the MARS NWO officers will still have as many platforms to act as commanders on. This will solve the crewing problems, and streamline training for everyone with only a single class of ship.

Win-Win

Right?
Redesigning the AOPs to do all that would cost a fortune. At that point just buy off the shelf combatants and don't make any changes at all (other then maybe getting 60 hz 110V for domestic power supply, and using Canadian stickers for common format with the fleet for DC markings). That would be even less work than updating the CPF design and rebuilding those, as we don't have a lot of the paper production models, and creating those in CAD/3D would all be new work.
 
I return to my prediction that the Navy is going to get told that they're getting 15 extra AOPS instead of any CSC's. They'll get a chance to do some re-design of the AOPS to give it some actual 'capability' that they'll strip off the Frigates as they retire them.

-surface mounted 57mm on the focs'le (no below deck loading capability, put the rounds in through the back door)
-Link 16 fit
-2D Radar
-Fire Control Director added
-Bare bones CMS330 (one FCS, two Radar Consoles, and one ORO/SWC console)
-Containerized ability to carry and launch SAM
-Containerized ability to carry and launch SSM (Harpoon)

From the public's perspective, it's still gray, it's still a warship, and it's got Radars and weapons. It meets our needs.

From the Navy's perspective, the MARS NWO officers will still have as many platforms to act as commanders on. This will solve the crewing problems, and streamline training for everyone with only a single class of ship.

Win-Win

Right?
I suspect you will end up with 9 CSC.
I don’t think anyone would accept the AOPS as a Surface Combatant.
 
57mm - needs a bit of additional steel restructuring on the focs'le. Not a big deal where it's just surface mounted. We stiffened the flight decks of all the CPF's to accept the Cyclone....ISI will love doing this work.

Link 16 fit. That's a few equipment racks...and a bunch of cabling. I'll say not difficult, but detailed, and in terms of weight? Not significant.

2D Radar - that's the tough one. Needs to be high up on the mast so there's weight, and strength factors there...but, with the updated cabinets there's a smaller indoor footprint than there used to be for the 150.

FC director - this one's a bit of a bigger problem, but can probably be shoe-horned in

Barebones CMS330 fit? There's gotta be space for 4 MFW's...maybe knock out the thin-client side and just go with 2 displays? Save some footprint?

As for containerized missiles, that's a no-brainer unless there's a problem fitting 20 foot TEU's onboard?

It ain't ideal, but maybe it's all the Canada can afford.

Send them out in pairs like we do with MCDV's?
 
I return to my prediction that the Navy is going to get told that they're getting 15 extra AOPS instead of any CSC's. They'll get a chance to do some re-design of the AOPS to give it some actual 'capability' that they'll strip off the Frigates as they retire them.

-surface mounted 57mm on the focs'le (no below deck loading capability, put the rounds in through the back door)
-Link 16 fit
-2D Radar
-Fire Control Director added
-Bare bones CMS330 (one FCS, two Radar Consoles, and one ORO/SWC console)
-Containerized ability to carry and launch SAM
-Containerized ability to carry and launch SSM (Harpoon)

From the public's perspective, it's still gray, it's still a warship, and it's got Radars and weapons. It meets our needs.

From the Navy's perspective, the MARS NWO officers will still have as many platforms to act as commanders on. This will solve the crewing problems, and streamline training for everyone with only a single class of ship.

Win-Win

Right?

Or you end up with a CSC hull and a bridge, a door in the stern and bunch of rectangular holes in the deck where you can drop stuff if you ever get it.

You wouldn't want to call it Absolon though. That name has been taken. :LOL:
 
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