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The U.S. Navy spends nearly $4 billion annually on maintaining ships. Most of this work is done at public shipyards that perform some of the most complex tasks the Department of Defense must accomplish. Shipyard managers face some unique challenges. The shipyards are required to be flexible enough to meet both planned and emerging operational needs that can cause significant disruptions to schedules and workloads. Laws and policies dictating when, where, and by whom maintenance can be performed limit management options.

In this demanding environment, achieving cost-effective operations and business practices is challenging. RAND therefore investigated cost-effective workforce-management strategies, alternative workload allocations, and the relevant best practices of comparable organizations. The authors concluded that the Navy uses practices common in other organizations to manage workload variability and uncertainty. However, the Navy's workload forecasts have consistently underestimated the eventual demand on the shipyards. To accomplish the additional, unplanned work, the Navy has used overtime levels that significantly exceed cost-effective levels.

RAND found that increasing the number of permanent journeyman staff at the public shipyards could provide a hedge against future workload growth. By also helping to reduce current high levels of overtime, this option would add virtually no additional cost to that of accomplishing planned work. Although other measures (such as shifting more work to the private sector through subcontracts) could also prove useful, they would require changes to longstanding policies or statute, events not considered likely in the immediate future.

The research described in this report was prepared for the United States Navy. The research was conducted in the RAND National Defense Research Institute, a federally funded research and development center sponsored by the Office of the Secretary of Defense, the Joint Staff, the Unified Combatant Commands, the Department of the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.

This report is part of the RAND monograph series. RAND monographs present major research findings that address the challenges facing the public and private sectors. All RAND monographs undergo rigorous peer review to ensure high standards for research quality and objectivity.

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