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US Navy: Helping to define a cost reduction strategy to achieve savings of $400m per boat

The US Navy’s Virginia-class submarines cost approximately $2.4 billion to produce and $50 million a year to operate, and make 13-15 deployments over their 33-year lifecycle. Following a defense review, the Navy was instructed to increase production from one to two Virginia-class submarines a year – but only if it could reduce the cost of producing each submarine by $400 million.

Given the excellent performance of the Virginia-class program to date, it was imperative to aggressively drive down cost without disrupting ongoing performance.   

We worked collaboratively with the Virginia-class program office and shipbuilding team to model the overall cost and schedule performance of the program from design through to full construction of 18 submarines. We evaluated the full, program-wide direct and indirect impacts of potential changes to the design and construction process in combination with other potential changes such as funding levels, engineering investments, production rates construction schedules and shipyard workforce. Using dynamic simulation and rigorous analysis, we provided a clear, realistic view of the likely savings from the changes and helped stakeholders to agree on an effective path forward to achieve the desired reductions of $400 million.

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