“On time and on budget,” said Rear Admiral Michael Alfultis, president of the State University of New York Maritime College. He was speaking to guests on board the Empire State, a new dual-use ship that the U.S. Maritime Administration (MARAD) was transferring to the college. The 525-foot vessel, the largest passenger-type ship built in the United States in 66 years, will serve as a training ship for the school’s 1,500 cadets and as a rapid-response vessel for emergency workers.

Admiral Alfultis’s comment was newsworthy not just for what he said, but for what he didn’t say: the American shipbuilding industry—or what’s left of it—is notorious for high costs, delivery delays, and cost overruns. Those problems mostly affect the U.S. Navy; the aircraft carrier USS Ford, for example, cost $13.5 billion—27 percent more than expected. Integrating the carrier into the Navy’s fleet took 18 years from the time construction started.

Though some of the Ford’s issues could be ascribed to its being the first ship in its class, with many new and untested systems, the long delay between construction and integration is emblematic of the Navy’s fleet problems. Take the small, speedy Littoral Combat Ships (LCS), which were supposed to cost about $200 million each. The price tag for those ships wound up reaching more than $500 million per hull, and the ships themselves proved woefully inadequate for their intended tasks. Some are being retired after less than ten years of service, far short of the 25-year expectation.

Given the American shipbuilding industry’s long history of such problems, how did MARAD manage to deliver a new class of ship in a timely and cost-effective fashion? Eugene van Rynbach, the principal naval architect and chairman of Herbert Engineering (HEC), which designed the Empire State, attributed the success to three factors: “First, we incorporated into our team people with passenger ship and prior training ship experience. Having people on the team who had actual familiarity converting older ships into training ships and what features are needed on a training ship shifted the paradigm from the theoretical to the practical: you actually know what is important.” To develop the detailed design and acquire most of the machinery, Van Rynbach explained, it was critical for a U.S. shipyard to work closely with a foreign partner. Foreign yards build far more ships than do American yards and use standard designs. Those foreign yards’ experience and refusal to reinvent the wheel results in fewer mistakes and faster construction.

Second, though the Empire State was to be a new type of ship, van Rynbach said that his team “started with proven design details that took much of the guess-work out of a complex project.” He gave the ship’s users and stakeholders “real input into the design,” and made sure to resolve any design conflicts “before construction began.” Using this input, HEC prepared a complete “guidance design” so that bidders would be confident the ship could be built. Having a guidance design was central to the on-time-on-budget strategy; regulators had already approved it, which told the shipyard what the owner (MARAD) wanted.

By contrast with HEC’s straightforward process, the Navy often changes its ships’ designs on a dime, even after construction has begun. The LCS project, for example, began as an adaptation of an existing commercial-ferry design—in theory to build the ships faster and at a lower cost—but was derailed because neither the Navy nor the contractor (which had no shipbuilding experience) had analyzed the difference between commercial and combat construction standards.

The third factor in HEC’s success, van Rynbach noted, was its fixed budget, and the presence of an outside oversight group known as a “vessel construction manager,” or VCM. Instead of forcing taxpayers to bear any cost overruns, the VCM contracted with the shipyard to build the ship and thus controlled the construction process with MARAD oversight. Thus, the VCM’s incentives and profit margins were based on delivering the ship to the government on time and on budget.

The Navy almost seems to be learning HEC’s lessons—but not quite. The newest class of warship under construction is the Constellation frigate. At nearly 500 feet and 7,300 tons, the frigate is larger than the ill-fated LCS, but lighter than the 9,500-ton Arleigh Burke–class destroyers that are the backbone of the Navy; it is based on a proven foreign-warship design. Yet the Navy can’t seem to grasp a lesson that was fundamental to the Empire State’s success and brilliantly explained in the book How Big Things Get Done, by Bent Flyvbjerg, the University of Oxford professor recognized as “the world’s leading megaproject expert” by KPMG: “think slow, act fast.” In the ship-building context, this means putting in the time to get the design right before starting construction. Unfortunately, the Navy began constructing the first-in-class Constellation frigate when the design was only 80 percent complete, and naval officials can still make design changes as construction proceeds.

It doesn’t have to be this way, as the Empire State’s construction reveals. The vessel, built to even higher safety standards than the Coast Guard requires, will serve as a hands-on teaching tool to thousands of young sea-faring cadets and prepare them for important careers. The Navy, too, should absorb the lessons of the Empire State.

Photo by Carl D. Walsh/Portland Portland Press Herald via Getty Images


City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).

Further Reading

Up Next