An Application of Data Mining Algorithms for Shipbuilding Cost Estimation

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An Application of Data Mining Algorithms for Shipbuilding Cost Estimation

Journal of Cost Analysis and Parametrics

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This article presents a novel application of known data mining algorithms to the problem of estimat-ing the cost of ship development and construction. The work is a product of North Atlantic Treaty Organization Research and Technology Organization Systems Analysis and Studies 076 Task Group “NATO Independent Cost Estimating and its Role in Capability Portfolio Analysis. In a blind, ex post exercise, the Task Group set out to estimate the cost of a class of Netherlands amphibious assault ships, and then compare the estimates to the actual costs (the Netherlands Royal Navy withheld the actual ship costs until the exercise was completed). Two cost estimating approaches were taken: parametric analysis and costing by analogy. For the parametric approach, the M5 system (a com-bination of decision trees and linear regression models) of Quinlan (1992) for learning models that predict numeric values was employed. Agglomerative hierarchical cluster analysis and non-linear optimization was used for a cost estimation by analogy approach void of subjectivity.


Bohdan L. Kaluzny is a defence scientist with Defence Research & Development Canada, Centre for Operational Research & Analysis. He completed his B.Sc., M.Sc., and Ph.D. in Computer Science at McGill University, Montreal. His research interests include polyhedral computation, combinatorial optimization, multi-criteria decision analysis, and operations research.

Sorin Barbici received his M.Sc. degree in Aeronautical Science from the Polytechnic Institute, Bucharest. After post graduate studies in System Engineering at The Royal Institute of Technology, Stockholm, he joined the Swedish Defence Materiel Administration (FMV). He is currently the project manager of Logistics Models at the Logistics Development Department at FMV, overseeing the strategic development of models for simulations and analysis for the joint logistics area for the Swedish Armed Forces.

Göran Berg obtained a M.Sc. in Metallurgy and Material Science from the Royal Institute of Technology in Stockholm. He was an operational analyst at the Swedish Defence Research Agency and is currently a program manager and logistic analyst at the Swedish Defence Material Administration.

Renzo Chiomento obtained a degree in Mechanics and Automation from Ecole Centrale de Nantes, France. He has held different positions in the French aeronautics and aerospace industry dealing with airborne mission systems. He is presently an expert of cost estimation and analysis for major programs at the French Ministère de la Défense.

Major Dimitrios Derpanis graduated from the Greek Military Academy with the rank of the second lieutenant. He has received his BA in Finance from the University of Piraeus, and his M.Sc. in Information Systems from the Economic University of Athens, and a Ph.D. in Decision Making Science from the University of Piraeus. His research interests focus on multi-criteria decision analysis and operations research. He is currently the director of the Life Cycle Cost Department of the Greek Defense Planning Programming Division.

Ulf Jonsson is an analyst of economics and business adminis-tration at the Department of Defence Analysis at the Swedish Defence Research Agency. He has participated in several NATO RTO SAS panel working groups and his research interests center around efficiency and effectiveness in defence materiel acquisition, logistics, manning, and personnel.

R. H. A. David Shaw received a B.Sc. in Mathematical Physics and a M.Sc. in Physics from the University of Alberta, Canada. He is currently a defence scientist with Defence Research & Development Canada Centre for Operational Research & Analysis. His research interests include combinatorial optimization, computa-tional complexity, transportation modeling, and data mining.

Marcel C. Smit received a M.Sc. in Econometrics from the University of Amsterdam. He is a senior research scientist at the Strategic Business Analysis section of the Netherlands Organization for Applied Scientific Research (TNO) supporting the Netherlands Defence Organisation in large acquisition projects. He partic-ipated in and chaired several international working groups related to cost analysis. His research interests include cost analysis, business case analysis, affordability studies, and operations research.

Franck Ramaroson  is a Wing Commander (R) in the French Air Force. He held appointments at several strategic and operational positions in the French Air Force before joining a European Organisation for Armament Cooperation (OCCAR). He is currently the Deputy Leader of the Integrated Logistic Support Section and senior advisor in Life Cycle Cost (LCC) estimating for OCCAR. He has participated in several NATO RTO SAS working groups dedicated to LCC. He received a M.Sc. in Aeronautics from the French Air Force Academy and an Executive MBA from INSEAD.