So now we know that the Ministry of Defence (MoD) has drawn the short straw for building the Prime Minister’s latest vanity project. The good news is that, notwithstanding the regular damning reports of its performance, Defence Equipment and Support does know a bit about acquisition and programme management. There are no other departments that have the expertise to set about a major ship procurement.
So what will happen next? As at 17 June no contracts had been placed for defining the requirement for the ‘national flagship’ and no companies had expressed interest in bidding. The project is therefore getting off from a standing start. On 2 July a Prior Information Notice was published, which provided an initial outline of the programme, and this was followed on 19 July by publication of an invitation for Expressions of Interest for Design Phase 1. Invitations to tender or to participate are scheduled to be issued to selected candidates by 23 August 2021.
And what is it that the Ministry of Defence is buying? To quote the prime minister, on LBC on 28 July:
“We need somewhere where the UK can show itself off to the world and attract investment and that will drive jobs and growth in the UK – not just in shipbuilding but across every sector of the UK.”
Not a very precise requirement against which to design a ship! Where the ship is to go and whom it is intended to impress are delightfully vague.
Fortunately, the advertisement for the Competitive Design Phase 1 goes into a little more detail:
“A typical six month itinerary for the flagship might include docking at a port in a country where a British Prime Ministerial visit is taking place to accommodate parallel discussions between British and local businesses, hosting trade fairs to sell British products to an emerging market and providing the venue for an international ministerial summit or major trade negotiations between the UK and another government.
“The ship, the name of which will be announced in due course, will be the first national flagship since 1997 when the HMY Britannia was decommissioned. However, its role will be distinct from that of any previous national flagship, reflecting the UK’s new status as an independent trading nation and helping us to seize the opportunities that status presents.
“As well as being a resource for British firms looking to export globally, the ship will also be a tangible manifestation of British ingenuity and shipbuilding expertise. The Government’s intention is to build the ship in the UK. This will create jobs, help drive a renaissance in the UK’s shipbuilding industry and showcase the best of British engineering around the world.
“In addition to promoting trade, it is expected that the flagship will play an important role in achieving the UK’s foreign policy and security objectives, through hosting summits and other diplomatic talks.”
The strategy is for more than one contract to be placed for Stage 1 Design (System Design) in order to develop competing ideas. The most suitable will be taken forward to Stage 2 (Detailed Design). This will then form the basis for a Competitive Build Phase Contract.
“Construction of the ship is expected to begin next year, and the ship will enter service within the next four years. An emphasis is placed on building a vessel which reflects British design expertise and the latest innovations in green technology.”
On this basis, if the initial design contract is placed by late August, the intention is to have a contract to build in place within 17 months, by the end of 2022. This means that the output of the Stage 1 Design contract will have had to be delivered and assessed, a down-selection made for the Stage 2 Detailed Design contract, and sufficient work completed for a tender for construction to be carried out and a contract awarded. This may sound a long time, but in reality there is a huge amount of work to carry out, both in industry and in the MoD. Moreover, there is the ever-present risk of a legal challenge from a disgruntled unsuccessful bidder, which may throw the schedule off track.
One option to compress the schedule may be to award the construction contract while the detailed design is still evolving. There will be a fine judgement as to when enough information is available to enable a bidder to offer a fixed price. Too soon and you will end up with design changes which will result in cost and possibly time growth, too late and you will have a grumpy and impatient customer!
That neatly brings us to the biggest risk in the project manager’s register – the customer. In this case it is no less than the prime minister. A considerable amount of cost growth in projects arises from what is known as ‘requirement creep’, where the aspirations of the customer develop as the options are explored. The design phases are going to present a number of opportunities as the design evolves, and the production cost implications will only become evident when the competition for construction is run next year. What follows is, of course, an imagined conversation:
“Do you need a helicopter deck, Prime Minister?”
PM: “Abramovich has got one and he says that it is essential. Great place for cocktail parties.” (Abramovich’s yacht is alleged to cost £430m).
“Will you need a Royal Marine band on board, Prime Minister?”
PM: “Absolutely; fantastic way to impress the natives”.
“We are looking at defensive aids for the ship as Great Britain is not terribly popular in some parts of the world.”
PM: “No need. We will just take a frigate with us”.
“Prime Minister, we need to equip the conference facility for simultaneous translation if you intend to use the ship as a venue for international meetings”.
PM: “No need for all that sort of stuff. Johnny Foreigner will have to speak English or stick a Babel fish in his ear”.
Phrases like ‘a tangible manifestation of British ingenuity’ and ‘the latest innovations in green technology’ should also set off alarm bells. From the project manager’s point of view, a good way to minimise risk is to choose options that include phrases like ‘tried and tested’ or ‘proven in service. Novel and unproven items immediately increase the risk of things going wrong, which tend to result in time and cost increases.
In short, the defence secretary is almost certainly wise to have added a healthy contingency to last week’s £150m price tag for the national flagship. If costs are to be kept within £250m it will be no surprise if, this time next year, when the production contract is under discussion, there is some frantic de-scoping to ensure that the project remains within that figure. But, as they say, if you have to ask the price, you can’t afford it.