January 20, 2016

Additional Data - One Japanese estimate, Build + Maintain 10 Australian Submarines

COST FORMULA

S has made an interesting comment as follows:

“[S] analyzed cost of Soryu based on budget, and [S] concluded that Australia can build and maintain 10 submarines for 30 years (total cost 1,600B Yen) [= approximately A$20 Billion] under a proper management system. 

Modification cost of 29SS to Aus 1 [per submarine for Australia] is 5 B Yen [A$62 million].

Adoption cost of US combat system is not high.

Premium [build] cost in Australia is 10B Yen

30years- operation cost is double of building cost.

Life cycle cost for 30 years = {basic cost (65B) +US combat (0B)+ modification (5B)+ premium (10B)}x 2= 160B Yen [= approximately A$2 Billion per submarine]

[S] January 18, 2016 at 1:15 AM”

QUESTIONS AND COMMENTS

The figures above in square […] brackets are in Australian dollars where
1B = 1 Billion Yen = 12.4 million Australian dollars (A$) at January 18, 2016 exchange rates.

Building and maintaining 10 submarines for 30 years (at total cost 1,600B Yen) [approximately A$20 Billion] appears to be an attractive all up price.

1. However if:

Building cost is {basic cost (65B) +US combat (0B)+ modification (5B)+ premium (10B) = 80B Yen = aproximately A$992 million 

and 

"30 years operation cost is double of building cost" = 2 x A$992 million = A$1.984 Billion

Then wouldn't total for "Building and maintaining 10 submarines for 30 years" = A$992 million + A$1.984 Billion = A$2.976 Billion per submarine = approximately A$3 Billion per submarine?

Making Total for all 10 approximately A$30 Billion?

Actually A$30 Billion is much lower than a September 2015 estimate of $40 Billion ($14 Billion "Build" + $26 Billion "Maintain").

2.  I assume that the Maintain costs would not include personnel costs for (Navy + Defence civilian) pay and updating Combat System costs?

ADDITIONAL DATA - FURTHER EXPLANATION OF THE FORMULA FROM S

On January 19, 2016 S provided further comments:

LCC, Software and Labour Costs etc

“Life cycle cost (LCC) means total cost including design, building, operation/maintenance and abolishment stages. The Japanese MoD reports LCC of submarines based on the actual data every year. I estimate LCC is twice of building cost in the case of 30 years, it means LCC of one submarine is 160B yen [A$ 2 Billion].

Hardware of command system is not so expensive, but the US license fee for US [mainly Combat System and Weapons] software should be considered. The torpedo tube [electronics and software updates and hardware replacements] is expensive, but I think US torpedo tubes costs may be cheaper than Japanese, [because the US can spread the cost of tubes over large existing fleet of SSNs  and Ohio subs and the 2 to 3 Virginia SSNs per year that the US is building].

For a new Australian submarine modification of fuel tanks, improvement of endurance and hull lengthening will be conducted, but they are not bigger modification than between the Oyashio-to-[currently being built late model Soryu Mark 2s] (+8B yen). Improvement for the earlier Soryus Mark 1s included hull lengthening, [Anechoic tiles] and installation of AIP.

[Of the 65B Yen per submarine – see above formula] 30B yen, amounting to about 50% of Building cost is labour cost. I considered the GDP per capita ratio between Japan and Australia (= 0.6), then premium becomes 10B yen (= 30B yen x 0.5/0.6).

1600B yen LCC for 10 subs may be tough, but 2400B yen [800B Building cost + 1600B LCC for the whole Australian  submarine fleet] I think is very achievable.”

Delete
SPECIFIC COSTS FOR 23SS 

As an example. 23SS launched October 2014 – to be commissioned March 2016.

[Pete Comment - Much of the costings below can be considered elements of the Japanese Combat System. This Combat System is likely to have many commonalities with the US AN/BYG-1 Combat System, given Japan uses the Harpoon missile, (Mark 48 similar) Type 89 torpedo and the Japanese Navy operates closely with the US Navy. Both the Japanese Main (including half the submarine fleet) Fleet and US Seventh Fleet ar based at Yokosuka thus likely to share many C3 - Command, Control & Communications (hardware, software and personnel “wetware”)].

S said “According to official data, costs of 23SS (total cost 54.6B yen) are as follows:

Command System (2.5B yen):

C2T (Command and Control Terminal) & MTA (Maritime Terminal Adapter), LCS (Launch Control System), NICI (Navigational Instruments Connection Interface), TDBS (Target Data Base Server) and TDS(Tactical Display System)

Weapon and Sensor System (10B yen):

Electro-optic mast, 13m Periscope, Submarine sonar system, Jamming system, Radar system, 53cm Torpedo tube, Harpoon launching system, Submarine decoy, Sound device for submarine decoy


[Upgrades to Torpedo and Harpoon missiles? (1.5B)]

Communication System (0.4B yen):

Radio communication device, Secure &Encryption device, Bridge information display, Submarine signal flare, Antisubmarine morse signal, Rescue signal generator for submarine

Propulsion, [LAB] Batteries, Generators and Building Costs (40B yen):

Submarine electric motor, Stirling AIP, Submarine building, Diesel generator, Main batteries, Condenser of cooling units.”

S and Pete

6 comments:

Anonymous said...

Hi Pete

Life cycle cost (LCC) means total cost including design, building, operation/maintenance and abolishment stages. MoD reports LCC of submarine based on the actual data every year. I estimate LCC is twice of building cost in the case of 30 years, it means LCC of 10 submarine is 160B yen.

Hardware of command system is not so expensive, but license fee of US software should be considered. The torpedo tube is expensive, and I think US torpedo tube is cheaper, because US built much more submarine. Modification of fuel tanks, improvement of endurance and hull lengthening will be conducted, but they are not bigger modification than that in Oyashio-to-Soryu (+8B yen) which includes hull lengthening, coating by blanket absorber and installment AIP generator. 50% of Building cost (30B yen) is labor cost, and I considered GDP per capita ratio between Japan and Australia (= 0.6), then premium becomes 10B yen (=30B yen x 0.5/0.6). 160B yen with 10 subs may be tough, but 240B yen is very achievable, I think.

Anonymous said...

According to official data, costs of 23SS (total cost 53B yen) are as follows:

Command System (2.5B yen):
C2T(Command and Control Terminal) & MTA(Maritime Terminal Adapter), LCS(Launch Control System), NICI(Navigational Instruments Connection Interface), TDBS(Target Data Base Server) and TDS(Tactical Display System)

Weapon and Sensor System (10B yen):
Electro-optic mast,13m Periscope, Submarine sonar system, Jamming system, Radar system, 53cm Torpedo tube, Harpoon launching system, Submarine decoy, Sound device for submarine decoy

Communication System (0.4B yen):
Radio communication device, Secure &Encryption device, Bridge information display, Submarine signal flare, Antisubmarine morse signal, Rescue signal generator for submarine

Propulsion, Batteries, Generators and Building Costs (40 B yen):
Submarine electric motor, Stirling AIP generator, Submarine building, Diesel generator, Main batteries, Condenser of cooling units.

Regards
S

Anonymous said...

2 Corrections

Before correction
it means LCC of 10 submarine is 160B yen.

After correction
it means LCC of one submarine is 160B yen.

Before correction
160B yen with 10 subs may be tough, but 240B yen is very achievable, I think.
After correction
1600B yen with 10 subs may be tough, but 2400B yen is very achievable, I think.

Peter Coates said...

Hi S

Thankyou for your three extra comments.

Regards

Pete

Anonymous said...

Hi Pete

The executed budget of 23SS was 54.6 B yen higher than above mentioned budget (53.1 B yen). I think this budget difference (1.5B yen) due to torpedo and missile. I could not estimate these costs, because I did not have detail information.

Regards
S

Peter Coates said...

Hi S [Jan 22, 10:20PM]

Thanks for " (1.5B yen) due to torpedo and missile".

I have added that to the text.

Regards

Pete