Researchers at the University of South Australia have proposed a new planning formula to optimize the lifecycle value of Australia’s warships, aiming to strengthen naval strategy amid growing geopolitical instability.
The formula builds on the Real Options Approach (ROA), a model commonly used in financial decision-making. Researchers have modified the approach to suit the complex and long-term nature of warship planning. These adaptations account for factors unique to naval operations, such as evolving threats, technological change, and strategic uncertainty.
“Due to diminishing budgets, rapid advances in technology, and emerging threats, it is more important than ever to build a naval framework that is more flexible and cost effective,” according to lead researcher Ben Petersen , a recent UniSA graduate who undertook this research as part of his university degree.
Along with UniSA systems engineer Dr Mahmoud Efatmaneshnik , the pair recently outlined their proposed model to the International Symposium on Systems Engineering, held in Italy in late 2024.
“Military assets such as warships and other naval vessels must maintain high levels of readiness and capability despite constrained financial resources,” Petersen said.
As emphasized by the researchers, by using an adaptation of the ROA model, naval forces will be able to assess multiple future scenarios, reducing the risk of overinvestment or premature commissioning.
Specifically, the research identified key benefits to adopting a Real Options Approach:
“Australia’s defence environment is evolving rapidly. Our research provides a clear pathway for defence planners to ensure that our warships remain at peak capability while maximising taxpayer investment in national security,” Efatmaneshnik concluded.
Australia is heavily investing in maritime defense capabilities – including the Hunter-class frigates , nuclear-powered submarines under the AUKUS agreement, and upgrades to existing vessels.
Recently, the country announced the 2024 Naval Shipbuilding and Sustainment Plan, which outlines the government’s record investment of up to $159 billion over the next decade through the Integrated Investment Program.
The plan articulates a 30-year pipeline of construction and sustainment projects, largely across South Australia and Western Australia, including conventionally armed, nuclear-powered submarines and an enhanced lethality surface combatant fleet.