On Guard – The Australian Air Warfare Destroyer Program

The Australian National Audit Office recently released a review of how a strategy of constructing Australian designed and built naval infrastructure was progressing.

Upon initial reading of the report, one could be forgiven for thinking that such a review holds lessons only for that very small minority that actually design and build naval infrastructure.

Such an approach would waste the many good observations that the review contains for the lessons are relevant to any organisation – sovereign or private.

First a background on the project under review

At a budgeted cost of $8.455 billion for all phases, the SEA 4000–Air Warfare Destroyer (AWD) Program is to design, build and deliver three Hobart-class guided missile destroyers (DDGs) and their Support System to the Royal Australian Navy (RAN). These DDGs are to be named and are scheduled for delivery as follows: HMAS Hobart—March 2016; HMAS Brisbane—September 2017; and HMAS Sydney—March 2019. They are to replace the RAN’s six Adelaide-class guided missile frigates (FFGs), two of which were withdrawn from service in 2005 and 2008. The remaining four FFGs are scheduled for withdrawal from service by June 2019.

The AWD Program has four principal objectives: deliver an affordable Maritime Air Warfare capability to meet Australian Defence Force (ADF) requirements, within established schedule and cost constraints; markedly improve the overall capability of the RAN’s surface combatant force; build the ships in Australia, thereby sustaining and providing significant work for Australia’s shipbuilding industry; and establish and sustain a design capability in Australia that can support the evolution of the ships in service in a responsive and cost-effective manner.

It is not surprising that a project of this nature hits hurdles and this project lived up to the well-worn stereotype:

Despite the contractual arrangements put in place to manage the project, the AWD Program has experienced a range of delivery issues, including significant immaturity in detailed design documentation, major block construction problems and substantially lower than anticipated construction productivity. The design and construction issues have led to extensive, time-consuming and costly rework.

In part the problems stem from using inexperienced resources:

Notwithstanding the risk mitigation strategies applied by the DMO in the program’s design phase, the selected design did not exist in an ‘as built’ form.

Experience shows that assessments about the quality of design supplies were overoptimistic during Phase 2 of the AWD Program.

Defence and its industry advisers underestimated the risks associated with incorporating the design changes to Navantia’s F-104 design, exporting that design to Australia, and adapting the designer’s build strategy and processes to accommodate a distributed build at shipyards that lacked recent experience in warship building. Further, this is the first time Navantia has exported one of its ship designs for construction by international shipyards, and the first time ASC has built a surface ship.

A better understanding of these risks is likely to have led Defence and the Industry Participants to proceed more cautiously in accepting the detailed design and moving into production, with strengthened design supply management processes to reduce the risks associated with the exported design, and its distribution to the shipbuilding contractors

But in what is a very detailed report perhaps the most telling comment – and the reason why this report can and should resonate so widely – is the following observation:

No matter how well planned a project has been, if there is inadequate control over changes, this will compromise the likelihood of completing it on schedule and to budget.

And so it has!


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