India wary of cost of joint ventures with Israel

[anant_s]

NEW DELHI: India plans to further expand its strategic ties with Israel through more R&D projects to develop hi-tech weapon systems, as also clinch several deals in the pipeline, but has expressed concern over the exorbitant costs involved in deploying a jointly-developed surface-to-air missile system on frontline Indian warships.

Highlights

• Defence Minister has red-flagged the “high costs” involved in production of Barak-8 by Israel, sources said
• However, India plans to further expand its strategic ties with Israel through more R&D projects

Sources said this came through in the 12th meeting of the high-powered joint working group between the two countries, co-chaired by defence secretary G Mohan Kumar and director general of Israeli defence ministry Major General Udi Adam (retd), which was held in New Delhi on July 13.

Though there has been no official word on the JWG meeting, sources said defence minister Manohar Parrikar has red-flagged the "high costs" involved in production of the medium-range surface-to-air missile (MR-SAM) systems called Barak-8 by Israel.

First, there was a huge delay by DRDO-Israel Aerospace Industries (IAI) joint venture to develop and test the MR-SAM systems, which are to be produced in bulk by defence PSU Bharat Dynamics Ltd (BDL). Now, the projected costs in deploying them have also raised eyebrows.

As earlier reported by TOI, while the naval MR-SAM project was sanctioned by the Cabinet Committee on Security in December 2005 at an initial cost of Rs 2,606 crore, the IAF one for nine squadrons worth Rs 10,076 crore was cleared in February 2009. While the naval system was tested for the first time in November 2014, the IAF one was tested thrice earlier this month.

With an over 70-km interception range against enemy aircraft, drones and missiles, the naval MR-SAM has already been fitted on the three new Kolkata-class destroyers. But each MR-SAM system is now projected to cost around Rs 1,200 crore for the 12 under-construction warships in Indian shipyards, including aircraft carrier INS Vikrant, four guided-missile destroyers and seven stealth frigates. "Consequently, the orders are on hold as of now. A review to cut costs is in progress," said a defence ministry source.

This has also led to the estimated Rs 14,000-crore Army project to acquire these MR-SAMs, which come with missiles, launchers, surveillance and threat tracking radars, and fire control systems, to be kept in abeyance till now.

The JWG also discussed probable joint R&D projects in fields like high-endurance UAVs (unmanned aerial vehicles), micro-satellite surveillance systems, armoured vehicles and different types of missiles and precision-guided munitions, said sources.

Then, there are several big-ticket deals in the pipeline. These include two more Israeli Phalcon AWACS (airborne warning and control systems), which are to be mounted on Russian IL-76 military aircraft, and four more Aerostat radars.


The IAF is also on course to acquire 164 laser-designation pods or 'Litening-4' for fighter jets like Sukhoi-30MKIs and Jaguars as well as 250 advanced 'Spice" precision stand-off bombs capable of taking out fortified enemy underground command centres.

The Army, in turn, is looking to acquire the Israeli third-generation Spike anti-tank guided missile systems, with an initial 321 launchers and 8,356 missiles, which too is making slow progress due to the high costs involved. The force is likely to go in for an initial two regiments of the Israeli Spyder quick-reaction SAM systems to defend its forward units for enemy air strikes.

http://timesofindia.indiatimes.com/...ventures-with-Israel/articleshow/53256697.cms

 

[Beast]

There is no way to cut cost. The only way to cut cost is to cut less order but will increase price per unit. That is the price to paid when you do not have your own indigenous technology.

 

[nik141993]

There is no way to cut cost. The only way to cut cost is to cut less order but will increase price per unit. That is the price to paid when you do not have your own indigenous technology.

तू लैमन चूस

 

[Alphacharlie]

Very Valid Point Raised by Govt.

But would respect point raised by @Beast as well. --- You need to increase Usage to reduce Costs.

You Cant Cut Corners!!

 

[Agent_47]

Already posted https://defence.pk/threads/india-wary-of-cost-of-joint-ventures-with-israel.439862/

@waz

 

[#hydra#]

Barak8 is actually an Israel project funded by india,except rocket motor. AFAIK the most important thing is in barak8 is its software part,which solely developed and protected by Israelis and India doesn't have any clue on its software part.

 

[PARIKRAMA]

As earlier reported by TOI, while the naval MR-SAM project was sanctioned by the Cabinet Committee on Security in December 2005 at an initial cost of Rs 2,606 crore, the IAF one for nine squadrons worth Rs 10,076 crore was cleared in February 2009

But each MR-SAM system is now projected to cost around Rs 1,200 crore for the 12 under-construction warships in Indian shipyards, including aircraft carrier INS Vikrant, four guided-missile destroyers and seven stealth frigates. "Consequently, the orders are on hold as of now. A review to cut costs is in progress," said a defence ministry source.

This has also led to the estimated Rs 14,000-crore Army project to acquire these MR-SAMs, which come with missiles, launchers, surveillance and threat tracking radars, and fire control systems, to be kept in abeyance till now.

A bit long post but may be helpful to understand

The term to use is PROJECT COST MANAGEMENT

“The processes involved in planning, estimating, budgeting, and controlling costs so that the budget can be completed within the approved budget”

We need to understand why we are trying to manage costs and under what circumstances. There are majorly 3 constraints

• scope of the projects
• time
• quality

A simple graph between costs and scope against the plan can help us identify where is the cost escalating or cost over runs happening.. like this

The simple conclusions from this so called graph is

• Is this project over/under budget?
  
  
• Is it ahead of/behind schedule?

HOW DO WE MANAGE SUCH COSTS
There are 3 ways to manage costs

1. Estimate costs
2. Determine budget
3. Control Costs

The most important part is this

What this whole episode and in multiple different projects of DRDO shows is it lacks what we call as PROJECT CONTROL. The chief reasons behind such a control is

• Stewardship of Organizational Assets
  • physical asset control
  • human resources
  • financial control
• Regulation of Results Through the Alteration of Activities

How are such review for control is being done is a good indicator if we have slept through this project and have put onus/responsibility in Israeli side completely or we have done the right method like below and have red flagged it time and again

The right method of periodic review is

• Process Reviews
• Personnel Assignments
• Resource Allocations including financial resources

As you see

Sources said this came through in the 12th meeting of the high-powered joint working group between the two countries, co-chaired by defence secretary G Mohan Kumar and director general of Israeli defence ministry Major General Udi Adam (retd), which was held in New Delhi on July 13.

"Consequently, the orders are on hold as of now. A review to cut costs is in progress," said a defence ministry source.

It implies in 12th meeting this agenda has been discussed so the periodic process review to assignments is not done so frequently. Of course the project is delayed from onset but still such reviews would have helped us run cost control much better

Beyond this there is another reason for COST OVER RUNS. It can also be defined as below

• Scope Creep
• Change Control

Scope creep is basically changes frequently cited by the Project management team . This is bcz

• Client request based changes which are frequent in nature and change in goal posts
• Availability of new technologies and materials

Change control is more simply defined as

• Review all requested changes
• Identify impact of change
• Evaluate advantages and disadvantages of requested change
• Install process so that individual with authority may accept or reject changes
• Communicate change to concerned parties
• Ensure changes implemented properly
  
• Prepare reports that summarize changes made to date and their impact

Its clear scope creep is sureshot happening (take for example HAL Tejas where goal posts were changed in another project) but where is the change control happening.

What should have been laid out rules to have change controls was missing. Some of the rules are

• Include in contract change control system
• Require all changes be introduced by a change order
• Require approval in writing by the client’s agent and senior management
• Consult with Project Manager/Lead prior to preparation of change order
• Amend master plan to reflect changes

Thus, this is how basically we have to break it down to understand whats the major issues and how we have managed the project. Inspite of above part being theoretical, it makes sense to understand how the whole Project Cost Management is being done.

Saying only Israel based projects are costly or any other JV project is costly is a incomplete story. Unless the whole process is followed and if periodic reviews and better /effective steps were taken to stop cost over runs were being done then perhaps the results would have been better.

+++
Tagging many people bcz i believe many folks can give us better insights on this. Its a good topic bcz irrespective of any project and associated issues in terms of cost and delays, we all need to understand the intricacies and process based approach. A similar example based insight based on your own expereinece would be very welcome

@Abingdonboy @MilSpec @nair @AUSTERLITZ @SpArK @Nilgiri @Oscar @Joe Shearer @zebra7 @Vergennes @Taygibay @randomradio @Levina @WAJsal @fsayed @Water Car Engineer @Koovie @Echo_419 @Dash @hellfire @ito @SR-91 @AMCA @DesiGuy1403 @ranjeet @hellfire @nair @proud_indian @Roybot @jbgt90 @Sergi @Water Car Engineer @dadeechi @kurup @Rain Man @kaykay @Tshering22 @Dandpatta @danger007 @Didact @Soumitra @SrNair
@TejasMk3@jbgt90 @ranjeet @4GTejasBVR @The_Showstopper @guest11 @egodoc222 @Nilgiri @SarthakGanguly @Omega007 @GURU DUTT @HariPrasad @JanjaWeed @litefire @AMCA @Perpendicular @Spectre@litefire @AMCA @Perpendicular@Ryuzaki @CorporateAffairs @GR!FF!N @migflug
@SvenSvensonov

Source: Various sources via google

 

[[Bregs]]

Price is the issue with Russian, US and French(Unending Rafale saga) why single out Israel for it. Its normal to have differences in pricing and they have to be negotiated for the convenience of both

 

[Taygibay]

Recurrent disadvantages in JVs for one partner versus the other
come from too a great difference in their tech/R&D levels, industrial
( and sometimes social ) cultures disjointing & poorly drafted contracts.

Enough said!
Have a great day PariK, Tay.

 

[Grevion]

Foreign acquisitions will always be costly. Is rafale deal not costly, aren't Russian assets costly to operate, US tech may be the best in the world it has always proved to be costly to us with no substantial help to our local industries. It is in India's interests to go for joint development of strategic assets rather then off the shelf purchases.
Local production of as much components as possible is a must for weapon platforms developed in JVs to bring down the cost.

 

[GuardianRED]

Why only TOI????... to me it another BS article from Rajan Panjit! and again some source?