Defence Business: DMO - Sirius project management | ADM Jul 08

1 July 2008

On the 16th of September 2006 HMAS Sirius was commissioned into the Royal Australian Navy (RAN) with all essential requirements either met or exceeded.

In trying circumstances the project team achieved the somewhat rare feat of delivering a capability under budget and ahead of schedule.

The management practices used in the project have received wide acclaim and DMO is keen to ensure that it documents the strengths and weakness of the project to educate future project managers.

Brian Humphreys, Canberra

In 2001 government announced it would replace auxiliary oiler HMAS Westralia with a purpose-built support ship to provide a refuel-at-sea capability to the RAN.

With a budget of $450 million and a delivery date of 2009, Project SEA 1654 (Maritime Operational Support Capability - Westralia Replacement) had begun.

On the 6th of November 2003, with much of the technical planning and specifications well advanced, government’s National Security Committee approved a revised Defence Capability Plan that dramatically changed the expected outcome and scope of SEA 1654.

New maritime pollution rules and regulations (MARPOL) meant HMAS Westralia would need to be decommissioned by 2006 instead of 2009.

Government determined that the most practical and cost-effective solution was to purchase a second hand commercial MARPOL-compliant vessel and convert it for RAN use before the end of 2006.

In keeping with these new requirements, the budget for the project was reduced by $310 million to $140 million.

Acquiring a civilian vessel
MT Delos was chosen as the base ship following a detailed evaluation exercise that considered 11 short-listed candidate ships.

Delos was a standard panamax-sized double hull tanker with 37,000 dead weight tonnage.

The vessel was ordered from Hyundai Mipo Dockyard Company in Korea, by Greek shipping firm, Tsakos Shipping and Trading and was registered under a Panama flag upon delivery.

The team managed to secure Delos fresh from the shipyard and at a very competitive price.

According to DMO finding and successfully negotiating the purchase of Delos were both remarkable achievements for project manager Gary McFarlane and his team - especially given the bullish nature of the commercial ship market at the time, where good ships were appreciating in value by as much as $50,000 a day.

Leasing
Between 16 June 2004, when MT Delos was delivered to the Commonwealth, and September 2005, when the ship arrived for modification at the common user facility at Henderson in Western Australia, the project team found a unique way to ensure the ship did not lay dormant while contracts where finalised, and system design and specifications were completed.

The team arranged for Teekay Shipping Singapore Pty Ltd to operate the tanker under a commercial time charter contract for 14 months.

The lease carried significant operational caveats to ensure the ship’s condition and accessibility.

In its review of the Sirius project, the Australian National Audit Office (ANAO) expressed some concern that the daily charter rate paid to the Commonwealth for the use of the Delos was perhaps below market rates.

The Commonwealth might have received more per day had it been prepared to lease the vessel for a longer period, and allow it to carry ‘dirty’ products and travel outside the region.

The DMO and its shipping industry advisers are confident the Commonwealth got the best available market rate considering the necessary limitations placed on the lease.

Perhaps the greatest benefit of the lease arrangements was that it gave the project team an opportunity to identify any problems with the vessel that could be remedied under warranty.

Modifying Delos
In March 2005 the government contracted Tenix Defence Systems to undertake the modifications to turn the tanker into an auxiliary oiler.

There were seven major modification packages in the contract. These were:

1. The design and installation of the Replenishment at Sea (RAS) capability, including the RAS masts, mechanical and electrical equipment, and its control centre.

This would allow the tanker to receive and distribute fuel, water and hard stores to RAN and allied ships.

2. The most significant modification would be the installation of a state-of-the-art communications suite.

This communications upgrade would be the biggest capability enhancement to the ship in terms of cost, complexity and schedule, representing around 20 per cent of the total modification budget.

3. A container deck capable of taking twelve 24 ft shipping containers would need to be added to the existing cargo deck.

These containers would carry dry provisions and spare parts for fleet exercises.

4. Two upgraded tanker lifeboats, each with a capacity of 70 people.

5. Two rigid hull inflatable boats for boarding parties (and associated launching davits) were to be taken off HMAS Westralia and installed on the Delos.

6. The interior of the ship would require considerable modification.

The accommodation would need to be upgraded significantly.

Delos was designed for a crew of 20 (with bunks for 35) while HMAS Sirius would need to accommodate a crew of 70.

Additionally, it would require room for people rescued at sea and the transportation of personnel other than the ships crew.

7. The last major modification would be the design and integration of a vertrep platform into the stern of the tanker.

Vertrep Platform
In simple terms, vertical replenishment (vertrep) is the ability for the ship to receive and deliver stores via helicopter.

In its basic configuration this involves loads being relayed to and from the ship by being slung from a helicopter.

While the ships have the capacity to receive stores via a hard line extended between vessels, it is easier to transfer stores via helicopter.

It is a much simpler task for the ship’s crew to remove stores from large containers on the container deck and assemble them onto pallets on a deck ready to be lifted off via helicopter than to use the hard line.

Another advantage of the flight deck is that a ship wishing to take on stores from to the auxiliary oiler does not need to be alongside it; with a helicopter the ship can be some distance away.

To accommodate vertical replenishment, the tanker would need to have suitable deck space over which a helicopter could hover and upon which crew members could work without compromising individual safety or the safety of the ship.

During the systems requirements review it was determined that the platform for vertical replenishment would need to be located aft to avoid the dangers posed by venting gas from the fuel tanks in the forward part of the ship.

When the decision was made to place the platform aft, the project team discussed with the Director General Maritime Development an option to make it marginally stronger so it could act as a flight deck for emergency landing of helicopters.

This was a potentially significant increase in capability for a relatively small additional cost.

When the vessel is not fully loaded, its pitch and roll make helicopter operations difficult in nearly all circumstances.

As the Navy operates the vessel partially loaded (to fill the ship with 37,000 tonnes of fuel costs more than one and half times the cost of the vessel itself) on most occasions helicopter landings will be difficult and on many it will be not safe enough to proceed.

That said, the cost of upgrading from vertical replenishment to a flight deck was not significant and the added capability of being able to land a helicopter on board, when conditions allowed, was seen as a cost-effective and valuable additional capability.

Lessons learned - Expectation Management
One of the first lessons was recognition of the importance of effective expectation management.

Navy needed to adjust its expectations given that DMO could not deliver for $140 million the capability that would have been delivered for $450 million - this adjustment was not always easy, especially when it came to the fine details of what was, and was not, acceptable naval standard.

DMO learned the importance of gaining senior naval agreement to the ships’ IOR certification basis to both ensure that end users know what to expect from the capability and to help contain changes to the contract.

Operating along commercial lines
Capability guidance documents stated that Navy would operate the modified ship ‘along commercial lines’.

Unfortunately, commercial vessels are normally designed for tasks considerably different to military vessels.

According to Gary McFarlane, they learned that it is very difficult for Navy to operate and maintain a vessel ‘along commercial lines’ as training and experience levels, and operational needs of Navy are markedly different from those of commercial operators.

Using a commercial vessel for military purposes will almost always involve significant deviation from commercial norms to accommodate military practice and standards.

A focus on innovation
Not all lessons stem from things that could have been done better, many come from what project teams do well.

With SEA 1654 one positive lesson was the value of focussing on innovation.

According to DMO, project team members were innovative in their use of commercial contracts and contract incentives; they sought innovative solutions within a challenging acquisition process.

Innovation - a willingness to think beyond the tried and true - was a major part of the success of the project.

Many tasks and potential outcomes of the project were completely unknown, with standards and templates not in existence.

Cultivating relationships
During SEA 1654 the project team cultivated the relationships pivotal to delivery of the capability.

From the occasional relationships with overseas defence acquisition agencies through to ongoing relations with industry partners such as Tenix, relationships were seen as critical to effective design, maintenance of schedule and the control of cost.

Using mechanisms such as Integrated Product Teams, the project team promoted the interaction, communication and negotiation so vital to effective working relationships.

Teamwork
DMO noted that although the workload of SEA 1654’s core project team was very high, the productivity achieved was exceptional.

According to McFarlane, the team was close knit, flexible and focused on achievement of the same goal.

This teamwork made it possible to keep abreast of current and emerging issues and focus limited resources on those issues presenting most risk to a successful project outcome.

A matter of class
HMAS Sirius was the first tanker in the world to be converted under classification society rules to be able to conduct underway replenishment at sea.

The entire journey from MT Delos to HMAS Sirius was done while the vessel remained under Lloyd’s Register of Shipping Classification.

Working within classification society rules allowed the project to be used as an important test of a key change in DMO operations designed to improve future project performance.

The massive projects for Australia’s Air Warfare Destroyers and Landing Helicopter Dock ships will now be required to design and build their ships to classification society rules.

The acquisition of Sirius, using the same rules, was seen as an ideal opportunity to trial the new relationships being established between DMO and the classification societies.

While classification societies have traditionally focussed on commercial maritime activities, they are now playing a much larger part in naval shipping.

Lloyd’s Register of Shipping, in particular, has developed and enhanced its commercial system for naval projects.

DMO hopes hoped that involvement with classification societies will see improved internal processes as well as the emergence of alternative business models.

Working within classification societies should result in better design, construction and through-life maintenance of naval ships, all ultimately leading to better capability being delivered to the Royal Australian Navy in a more timely and cost-effective manner.

Brian Humphreys was Director General Communication Strategies in the Department of Defence between 1999 and 2004.

He is principal author of Getting Sirius DMO’s internally published history of project SEA 1654, which has been published internally is publicly available upon request to the DMO.