FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
1960
1960 - 0331.PDF
11 March 1960 331 Missiles and Spaceflight . . . LOOKING AFTER THE PENCE IN the 1958-9 Civil Appropriation Accounts (Classes VI-X),now on sale (HMSO, 16s), miscalculations in the estimated costs of guided weapons figure prominently for the first time. The report deals with the year ended March 31,1959, and describes the financial history of three missiles. These are identified only as "Type A, B and C" but little skill is required in identifying the weapons concerned (in fact, all three have been named by the daily Press). The following are extracts from the report. Type A "In November 1948 the MoS sought Treasury approvalfor ... a particular type of guided weapon for which a Staff Require- ment had been issued. The Ministry stated that the total cost ofdevelopment might be of the order of £1-1.5m. The Ministry informed the Treasury that they were proposing to place the work with a membercompany of a large Group, and they had been assured that the full resources of this Group would be behind the company. . . . TheTreasury approved the proposals in December 1948, and in February 1949 a contract was placed covering development up to March 1950.Development thereafter continued under annual contracts up to March 1953, when a contract was placed covering development to completion.A specification was not incorporated; instead the contractor was pro- vided with details of the Staff Requirement setting out the objectivesto be aimed at. ... "At a meeting ... in February 1953 it was stated that a great dealof time had been lost ... in July and August 1954 the Ministry made representations to the contractor about further delays. In October 1955in discussion with the management of the contractor's parent Group, the Ministry were critical of the Group's failure to bring its resourcesinto action. ... In August 1956 . . . the Ministry's Director of Contracts negotiated a reduction of £36,125 in the profit allowed. TheMinistry themselves thereafter assumed responsibility for co-ordinating all firms. . . . Delivery is planned to commence at a date some five yearslater than that originally called for . . . [but] in good time to meet the dates when the Service Department now requires them. "In reply ... the Ministry stated that it was the first guided-weaponproject in this country and was the start of the process of building up a guided-weapon technology. Before 1948 work on guided weaponshad been limited to research at Ministry Establishments and the manu- facture of simple test vehicles by industry. Two particular sources ofdelay were the need to change from one type of rocket motor to another, and the failure of the main contractor to provide the degree of leadershipexpected and to apply the requisite amount of effort to pursue a balanced and vigorous programme. "The Ministry stated in this connection that the profit penalty wasnot an assessed compensation for extra costs which had been incurred through delays for which the contractor was responsible. Generaldissatisfaction with a contractor's work on such a development project was in the main a matter of opinion and impossible to express inmonetary terms which could be relied upon for forming a claim against the contractor; but the Ministry had insisted on a reduction in profitas an expression of their dissatisfaction. . . . "The latest estimate of the direct cost of developing the missile andits control and guidance systems is £40m. The Ministry explained that the impossibility of estimating the time and effort involved incompleting the programme meant that the cost estimates made at the start of the development could only be conjectural. In accordance withthe practice at the time, the initial estimate of £1-1.5m represented estimated payments to the main contractor only; and available recordsseemed to indicate that it related to the development period only up to the time when intensive firing trials would start, although this wasnot made clear to the Treasury. However, the Ministry had taken the initiative in providing the Treasury with estimates which took accountof all the incidental costs of development, and this was now the standard practice for guided weapon projects. Actual expenditure under themain contract up to the start of intensive firing trials was £9m, and this, allowing for increases in wages and materials prices, gave a figureof £6m to compare with the initial estimate." Type B "In August 1950 the Ministry . . . placed a contract fordevelopment of another type of guided weapon, based on a design study carried out by the contractor proposed for the development contract.It was tentatively estimated that the total cost of the project would be of the order of £2.5m. The contract covered work up to March 1951 and thereafter development continued under annual contracts untilMarch 1953, when a contract covered development to completion. "The weapon was initially designed to meet a War Office require-ment, but was later developed for the Air Ministry in accordance with an Air Staff Operational Requirement. After a review on economygrounds in 1955, work was continued with a view to only limited production of the weapon for the Army, pending development of amore advanced version in which both the Army and RAF were interested, and for which a development contract was placed in March1956. It was accepted that the original weapon would not meet the full Operational Requirement. "During the financial year 1956-57 the contractor was anxious tomaintain his total effort on both the original weapon and its more advanced version at a rate greater than the Ministry were prepared tofinance. The contractor accordingly offered to finance from his own resources work to a value of £0.75m that year, provided that a produc-tion order for the Army, which was then being considered, was placed by December 31, 1956. Under the terms of this offer, which wasimplemented after a formal exchange of letters in September 1956, it was agreed that the £0.75m borne by the contractor would be recover-able by additional payments at an agreed rate on production orders for either die original weapon or its more advanced version. If productionorders were reduced or cancelled the sums which would have been recovered on them would rank as cancellation charges against theMinistry. "In December 1956 the first production order for the original weaponwas placed, covering missiles for Army use, and in November 1957 a further order was placed covering missiles for use in trials by theRAF. The latter order was reduced in July 1958 and cancelled com- pletely in September 1958. Shordy afterwards the Air Ministry aban-doned their interest in the advanced version ... in favour of an advanced version of a different weapon. . . . The contractor claimed immediatereimbursement of his development contribution at the agreed rate in res- pect of all missiles cancelled. A payment of £210,000 on this accountwas made to the contractor in January 1959.. .. "Latest estimated development cost of tile original weapon is £27m.The Ministry have informed me that the estimate of £2.5m made no provision for the cost of manufacture and evaluation of missiles foracceptance trials. No firm prices for production missiles have yet been agreed but the Ministry's estimated price at November 1958 was morethan double the estimate ... in September 1956. . . ." Type C "In 1952 the MoS obtained Treasury approval to placea contract for. . . a guided weapon with a contractor who had pre- viously been carrying out a design study. Total cost was estimated tobe of the order of £4m, spread over a period of approximately five years. . . . The original contract covered work up to March 1953and a further contract covered development to completion. These con- tracts stated that development should be to a specification and inaccordance with a programme approved by the Ministry. A specification was not, however, incorporated. "In the course of developing the weapon it was found possibleto build improved performance into successive models. . . . Some five months later the Ministry . . . stated that the Mk IV weaponrepresented so substantial a change that it was appropriate to ... make it the subject of a separate development contract. . . . Sub-sequently the Treasury authorized progressive increases in the rate of expenditure, and ultimately gave their approval in principle for theMk IV at an estimated total cost of £20m (additional to a revised total estimate of £23m for the Mk I). A separate contract for the Mk IVwas not entered into until some fifteen months after the commencement of the work. . . ." To an observer it seems clear that the root cause of the troublein this case was the incredible over-optimism of those whose task it was to cost the programmes in the first place. The Britishaircraft industry seems to be peculiarly prone to over-estimating what it can do in a given period and to underestimating what itwill cost. In conclusion, it is worth noting that, although the Ministry of Aviation (or, earlier, the Ministry of Supply) havenever permitted any publication to reveal dates when contracts were placed, a chronological history of three weapons can be builtup from the foregoing report. In the development of most guided weapons, environmental and rig testing plays an even larger part even more than flight trials. Here are (from left) a frozen Seaslug; a frozen Thunderbird; and a F'trestreak on a rig designed to prove the feasibility of tip launching
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
