Abstract
During the design and engineering process for naval projects a comprehensive cost management is required. The overall aim is to ensure the financial feasibility throughout the project with a low financial risk. Cost management combines acquisition costs and in-service costs in order to obtain life cycle costs. In this context methods for cost estimation have to be adapted to the phase of the planning process of a naval vessel. This paper introduces challenges and solutions for the cost estimation in general and describes MTGÅLs cost estimation approach for conceptual and preliminary designs. Additionally the utilization of cost risk analyses in order to ensure a reliable budget planning and the identification of cost risk drivers will be described.
Highlights
An inherent requirement of every naval project is a timely and economical meeting of the customer’s demand
Reliable cost estimates are necessary for the government to support funding decisions and budget planning
Compared to the typical presentation of net present values the sign has been changed in order to achieve positive values
Summary
An inherent requirement of every naval project is a timely and economical meeting of the customer’s demand. This implies a nearly exhaustive planning process. In early design phases – and in mid-term planning - risk minimization is emphasized. Reliable cost estimates are necessary for the government to support funding decisions and budget planning. They are useful for the project management to avoid budget overruns and its consequences (e.g. performance cutbacks, missed time schedules and increased funding), assessing competing solutions and evaluate tenders and select the most efficient solution. In early design phases cost estimation is extraordinarily challenging because:
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