Comments by "Tony Wilson" (@tonywilson4713) on "Elon Musks 5 Year Countdown!" video.
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​ @jameskelly3502 Great point, YOU ARE RIGHT and I checked it out and there's an explanation.
Here's the second paragraph of that press release.
"This is a firm fixed-price, indefinite-delivery/indefinite-quantity contract modification for the Crew-10, Crew-11, Crew-12, Crew-13, and Crew-14 flights. The value of this modification for all five missions and related mission services is $1,436,438,446. The amount includes ground, launch, in-orbit, and return and recovery operations, cargo transportation for each mission, and a lifeboat capability while docked to the International Space Station. The period of performance runs through 2030 and brings the total CCtCap contract value with SpaceX to $4,927,306,350."
SHOR EXPLANATION
When people are talking about the US$70Million that's the LAUNCH. What you are talking about is the ENTIRE PROJECT with all the other stuff added in. As you can see there's a difference and quite often it can be a massive difference.
Those 5 Crew Dragon missions average just under US$300million which means that on top of the $70M for the launch there's almost another $230M for each flight. This is not simply a NASA problem. Its actually a major problem with projects EVERYWHERE.
For Example: Right now in Australia (as I'll explain) we have the AUKUS submarine project. The current Block 5 Virginia subs have a cost AUD$5 Billion each. The project cost for the 8 subs is AU$33-46 Billion each. From what information that's available there's AU$20-32 Billion for each sub that is currently unaccounted for.
LONGER EXPLANATION and again I am Sorry to all if this if this is long.
With almost every wonderful announcement the devil is in the details and the magic words in that announcement are indefinite-delivery/indefinite-quantity and related mission services.
BACKGROUND
I'm Australian but did my degree in America. It was in the late 80s during Reagan's Star Wars Program. Most of the department was on DARPA funding as were most of the postgrads. We all sort of new it was BS but we liked the funding and a lot of people got their MS & PhDs.
I came back to Australia afterwards which wasn't good timing and I ended up in industrial control systems, automation and robotics. In 2002 I met Apollo 17's Harrison Schmitt and he mentioned Helium-3, which meant we might be going back to the moon for mining. So I thought I'd go off to the Australian Mining sector and get some experience building mines so I could then do the same on the Moon.
Yeah I know that didn't work out, but what I got was an education in large multi-billion dollar contracting jobs and how contractors milk them for all they are worth. I also learned how to build complex systems in remote places and I know NASAs plans for a lunar base are crap because of these very issues of "other stuff."
Its not only in engineering and in fact the worst cases In Australia are in government department consulting. Go and check out the PwC scandal.
ISSUES WITH ENGINEERING and COST PLUSS CONTRACTS
1 mine site I worked on was the BHP Ravensthorpe Nickel project. Now you'd think BHP the largest mining company in the world would know how to get a mine built - WRONG. That job was budgeted at AU$1.5 Billion and ended up costing over AU$3.5 Billion and then they found out that someone had skimped on the drilling program and the ore body was nowhere near what they had expected in either quality or quantity. WHERE it really blew out was the cost plus contracting.
We had an electrician just not show for work one day on that project. He turned up at dinner time in the mess wearing another companies shirt and proudly announced he was getting an extra AU$10 and hour. Working 60+ hours a week, which you do on site that adds up to a lot of money. Within days other electricians were being snapped up in similar ways and the pay rate went from about AU$35/hr to AU$65/hr in about a week as people bounced from company to company.
For those who have never worked on cost plus contracting it goes like this. You have expenses (labor & stuff) and you hand them in and if the contract is cost plus 20% (which is common) then for every $1 of expense you get $1.20 in cash back. The reason why cost plus happens is that for large projects that go for several years you just cant plan everything. They can be made to work but the managers running them have to know what they are doing. This is why we see so many government and private sector projects blow out on their costs.
So when those electricians went from AU$35/hr to AU$65/hr their actual employers went from charging about $60/hr to over $100/hr. Here's where that adds up. If you have a 100 people and they suddenly cost an extra $10 that gets passed onto the company and they return (at 20%) $12 for which means your profit margin just went up $200 per hour.
So with something like SpaceX every time NASA makes an adjustment to a mission it means extra profit to SpaceX and its in their interests as a commercial company to max out those expenses.
Here in Australia we have a litany of projects both in the government and in the private sector that have blown out with some projects going billions over budget. The worst private sector project I heard of was the Gorgon Gas project which blew out by $15 Billion. You'd think Chevron would know their job and know how to manage a project BUT THEY DIDN'T. The Australian Navy is not only buying submarines but new frigates and that project recently jumped from AUD$30 Billion to AUD$45 Billion. These things happen from contract variations and that word "variation" is the sound of cash being printed to a cost+ contractor.
MORE EXAMPLES
Back in the day before the ISS came into being there was the Space Station Freedom project. Me and Classmates all believed that was what we'd be building before heading back to the Moon.
The 1st budget was USD$20 Billon and VP George Bush told them that was too expensive and to redesign it.
The 2nd budget was USD$30 Billon and VP George Bush told them stop being ridiculous.
The 3rd budget was USD$40 Billion and VP George Bush scrapped it, but not before a lot of money got spent doing those design studies.
In the end the ISS cost America $120 Billion to build and I think the current estimate puts it over $220 Billion so far when you add in the operations AND NOBODY has ever explained where its all gone.
The F35 program cost over a $Trillion in development AND NOBODY has ever explained where its all gone.
Here in Oz other than submarines and frigates we also have a patrol boat project underway. The previous class cost under AUD$30 Million each and these new ones are AUD$300 Million each - more than 10x the cost to do the same job AND NOBODY can explain the costs.
As part of Australia's AUKUS submarine project there was a AU$4.3 Billion dollar upgrade to facilities at the base near Perth. Knowing what they are basically doing I checked with a couple of people I know and that project shouldn't cost more than AU$1 Billion. Just 2 days ago they announced new plans and its now budgeted at AU$8 Billion with NO EXPLANTION what this extra AU$3.7 Billion is for let alone what most of the AU$4.3 was for.
BACK TO FALCON 9/CREW DRAGON
We know the cost of each Falcon 9 Crew Dragon launch is $70 Million but what you have shown is a fundamental problem in all these sorts of contracts. There's a lot more than just the basic costs than can be itemised and a lot of it we know nothing about.
So you are right there's a lot more, but when we are comparing apples to apples we have to compare what we can. The reason we talk about the at $70 Million is because we know its real and we can compare it to other things. We know the Shuttle flights cost US$350-450 million each, but that doesn't include the development and operational costs. We know the Soyuz seats at the end cost US$80 million each but we don't know what other costs with training (including language training) were incurred.
Hope that all explains it.
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