Managing Change on Complex Programs: VIRGINIA Class Cost Reduction

Today's ship acquisition environment demands the delivery of more ship for less money. The VIRGINIA Class Submarine Program faced this challenge explicitly, with its mandate to achieve cost reduction of approximately $400 million per ship by FY 2012 as a necessary condition for increased production. For VIRGINIA Class, accomplishing this objective meant implementing a number of significant cost reducing changes to a mature design and hundreds of construction processes—ensuring that these changes enhanced rather than disrupted the “normal” learning occurring in the serial submarine construction. Managing these changes and their impact on ongoing efforts to achieve good learning from ship to ship (also known as the learning curve) was further complicated by interactions between learning and other factors like changes to production rate, funding profiles, construction schedules, and the workforce. Performance of the VIRGINIA Class Program was dynamically simulated to determine in advance the likely full consequences (including indirect impacts) of cost reduction actions in the context of evolving program conditions. The simulation of VIRGINIA Class Program performance captured individual factors whose improvement together drives the classic learning curve—for example, design maturity, material availability, staff experience, and so on—and was validated against historical program performance. This simulation capability was used to evaluate the full impact of potential changes, individually and in combination, along with sensitivity to a variety of different future scenarios. The analysis provided insights regarding the degree of disruption from different cost reduction changes, synergies between these changes, and interactions with other program conditions. This provided an independent “reality check” on the path taken by the VIRGINIA Class cost reduction effort, guidance regarding key sensitivities and risks to be managed, and data that supported contracting for the next block of ships.