This paper describes an improved velocity based source boundary element method (HEM) as applied to modeling of podded propellers and propeller/rudder systems. The distinctive feature of the present method consists in the direct satisfaction of the Kutta-Joukowski condition on the additional Kutta panel constructed behind the realistic blade trailing edge when defining the unknown doublet strength. This Modified Trailing Edge (MTE) is also used as a tool for the approximate accounting for viscous and related effects on circulation. The integrated propulsive/steering system is simulated within the potential frameworks using the velocity field iterations method and quasi-steady approach, which assumes the simulation of a propeller in a spatially varying flow field while pod and strut(/rudder) are considered in a circumferentially averaged flow field The developed method is applied for calculation of rudder behind the operating propeller and podded units of different arrangement tested at MARINTEK (Norwegian Marine Technology Research Institute). The results of the measurements and theory/experiment comparisons are discussed.

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