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Improvements in total project cost analysis for naval ship acquisitions

  • Journal of Advances in Military Studies
  • Abbr : AdvMil
  • 2025, 8(2), pp.21~41
  • DOI : 10.37944/jams.v8i2.278
  • Publisher : Institute of Defense Acquisition Program
  • Research Area : Social Science > Military Science > Other Military Science
  • Received : March 31, 2025
  • Accepted : October 30, 2025
  • Published : October 31, 2025

Son, Soona 1,  Kim, Jungsu ORD ID 2

1광운대학교 방위사업학과
2광운대학교

Accredited

ABSTRACT

In defense force improvement programs, requests for total project cost (TPC) increases—arising from deviations from the initially planned budget—can hinder the initiation of new projects and negatively affect overall force modernization. This research investigates three cases of naval acquisition programs in Korea—the Jangbogo-III Batch-I, Ulsan-class Batch-III, and KDDX naval projects. These cases were selected due to significant total project cost increases primarily driven by escalating material costs during their implementation phases. Naval projects are distinct from general weapon system acquisitions; they are long-term endeavors that progress through conceptual design, basic design, system development (including detailed design and lead ship construction), and subsequent mass production of follow-on ships. Our analysis reveals that cost increases in these naval acquisition programs were predominantly caused by design modifications resulting from evolving operational performance requirements from the Navy, occurring either after the initial conceptual design phase or following lead ship construction. Furthermore, annual price fluctuations over the extended project durations significantly contributed to the overall cost escalation. These findings align with observations that inflation can affect defense spending, even when contract spending appears stable. To improve the effectiveness of TPC analysis, we propose that the initial total project costs for approved programs should be meticulously managed. it should be managed similarly to the defense mid-term planning framework, by maintaining cost estimates and rationales at the contract-item and detailed cost-element levels from the initial TPC confirmation stage. And strengthening data sharing and coordination between Integrated Product Teams (IPTs) and cost and contract management teams is necessary to enhance the efficiency of TPC analysis for ship acquisition programs. Finally, there is a pressing need to stimulate academic research that rigorously analyzes the major variable factors and their root causes that may emerge during actual project implementation stages.

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