SLAM takes a systems dynamics approach to cost modeling for the U.S. Navy’s early-stage lifecycle cost estimation. This innovative approach combines discrete, linear, and hierarchical cost-estimating methods with activity based costing and non-linear system dynamics modeling tools to create cost models that refine themselves.
Cost estimating methodologies and tools currently used by the U.S. Navy do not accurately determine the impact of early-stage design decisions on either acquisition or lifecycle sustainment costs. Early-stage cost estimation in ship building is an inherently difficult task, due, in part, to the absence of firm definitions for specific ship components, including those for the structural design, propulsion system design and components, combat system design and components, and most auxiliary systems definitions. Many of these details, in fact, are not known until later design stages.
While producibility cost issues have received significant attention in the production of several new ship classes, these issues are also not typically addressed until the designs are very mature. The separation of the acquisition community from the operations community—between production and sustainment (which includes budgeting)—has made lifecycle concerns that much more difficult to address during acquisition. Complicating the issue is the fact that current cost-estimating tools tend to be “hard-wired” to the details of the design, ignoring costs related to the producibility of the design and lifecycle. By the time producibility and lifecycle-cost impacts are discovered, it is generally too costly to undertake the design changes that would improve producibility or impact lifecycle costs.
The Ship’s Lifecycle Affordability Model (SLAM) initiative took a systems dynamics approach to cost modeling for early-stage lifecycle cost estimation. This innovative approach combined discrete, linear, and hierarchical cost-estimating methods with activity based costing and non-linear system dynamics modeling tools. This approach takes into account the variables that influence producibility and sustainability and includes the development of a system in which the cost models refine themselves based on the current state of particular variables, including the current level of development and the estimated time to contract.