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Pearl Harbor Beats SHIPMAIN Goal For Late Work Premiums

Navy NewsStand

Story Number: NNS060512-22
5/12/2006

By Marshall Fukuki, Pearl Harbor Naval Shipyard Public Affairs

PEARL HARBOR, Hawaii (NNS) -- Pearl Harbor Naval Shipyard’s (PHNSY) on-time completion of USS O’Kane (DDG 77) Feb. 1 puts the shipyard on course to meet a key Navy objective to cut surface ship maintenance costs.

The project team finished the availability with a 7.14 percentage in late work premiums paid, meeting and exceeding the goal.

Premiums are the additional expenses incurred for work identified late during an availability. The Navy’s SHIPMAIN (for ship maintenance) initiative has targeted premiums as a way to streamline surface ship maintenance, thereby releasing more funds for the purchase of new ships and weapon systems.

Commander, Naval Surface Forces (COMNAVSURFOR) set the ceiling for premiums at 7.75 percent for fiscal year (FY) 2006. PHNSY’s average premium percentage was 12 percent in FY 2005.

“This is a big deal,” said Lt. Cmdr. Daniel Ettlich, shipyard surface maintenance coordinator, of the achievement on O’Kane. “It puts the shipyard on track toward meeting the premiums target for the rest of the year.”

The 7.75 percentage is a port goal, meaning that it’s an average of all surface availabilities done by PHNSY during FY 2006, he explained. O’Kane was the shipyard’s first Chief of Naval Operations (CNO) surface ship availability for the current fiscal year.

“The O’Kane project team was under tremendous pressure to meet a very aggressive cost-reduction schedule,” Ettlich said. “This was a broad all-hands effort to really manage our planning aspect, and the low late work premium shows the success of that planning.”

Several shipyard members of the O’Kane SHIPMAIN core maintenance team shared how their project was able to cut premiums paid by over half from that of a previous availability.

“We applied a business case analysis (BCA) whenever new work came up," Project Officer Lt. j.g. Michael Risik said. "Is this the right time to do the job? Can it last until the next window of opportunity? A big factor was the ship’s force had a really good idea of the material condition of the ship.

“We had great communication [with all the key players] and it showed," he added. "Everybody knew what we were going to do before it happened. Everybody had the same goals and focus – to give the ship the best product. We all did our best to have the project succeed.”

“We included some pre-negotiated options in the contract," added Project Manager Gene Nishikawa," so if funds became available during the availability to do a job, we wouldn’t have to pay late penalties."

The USS Chafee (DDG 90) project shows promise of doing just that. Although a final figure is still being compiled, data available at this time indicates a premium percentage between 7.00 and 7.10.

For more information on Pearl Harbor Naval Shipyard, visit www.phnsy.navy.mil.