scope:

INTRODUCTION

The design and procurement of modern complex naval warships is an involved process. The development of the associated cost estimates for both initial acquisition and those incurred during the life of the warship is a difficult task that involves the assignment of values to several hundred cost elements. Further, in a multinational program:

• The issues of cost sharing and work sharing must also be addressed, and

• Differences in national budgeting practice for total ship costs leads to difficulty in comparing cost estimates prepared by different countries.

Resolutions of both of these require a sufficient level of detail in the estimates. Therefore, it is essential that the cost element definitions and Cost/Work Breakdown Structure (CWBS) be clearly defined at the beginning of any multinational development and acquisition program for such ships.

The purpose of this publication is to establish a framework and overall process for developing future ship cost estimates for NATO collaborative programs. The principal elements of this process are: definitions of cost-related terms, a cost/work breakdown structure, an agreed costing methodology (including a baseline ship design, industrial scenario and cost model), and multinational program considerations (cost sharing, work sharing, and currency conversion). In any future collaborative program, the generic NATO cost/work breakdown structure described in this publication should be the starting point from which the specific Project Cost/Work Breakdown Structure is developed (completely defining the project). The Cost Analysis Requirements and Assumptions document provides the ship project description and is essential to ensure a common understanding of that which the cost estimate is being prepared.

This publication derives from references (a), (b) and (c) and is intended as a common basis of costing terminology and frame of reference for use in application to future NATO collaborative ship acquisition programs. It may also serve as a reference document to enable comparison of costs between nations.

The scope of this document covers all aspects of the costs incurred in the design, development, procurement, operation, support and disposal of the ship or class of ships.