It is said that preparations rarely survive contact with reality, but shipyards are realising that engaging with contractors adds value, writes German Cagliardi from RNDV Group of Companies.
The business of actually building a ship gains far less attention than contract announcement or christening, despite it being the most complex part of the process. Once the signing ceremony is done, attention turns to the detail of how to design a plan that will get the ship on the slipway so the champagne corks can pop.
The problem for shipyards – and contractors alike – is that the hard bit in the middle of the process can be seen as the lowest value link in the chain. Working with steel plate and blocks, pipework and components are often viewed as elements where costs should be driven down to the lowest possible number.
It’s a strategy that rarely returns positive results, and instead creates problems that could have easily been avoided, had the contractor and shipyard had a more constructive conversation before work begins.
The traditional industry perception of contractors is of a workforce that can be brought in to perform whatever functions the project requires. Because supply is plentiful and demand is elastic, there is built-in inefficiency and waste of time and resources inherent in their use.
This may once have been true but no longer. The challenge of today’s shipping market is that assets must be far more efficient than previously, less polluting, but also constructed to adapt over their lifetimes as technology advances and regulations tighten.
RNDV works with clients across Europe building for the merchant, naval and offshore sectors, including some of the largest cruiseship newbuildings of the last decade. The lesson of these projects is that, while the industry may have seen the business of shipbuilding as a low cost process, the future will demand a higher focus on quality, sustainability and value generation.
In many ways, contractors have been seen as a necessary evil in the shipyard process and there is a simple reason for that. Winning bids based on lowest cost rarely complete the project anywhere near the initial estimate. There are simply too many unknowns in the process once it has begun to make these quotes reliable. Instead, low cost bidders hope to make up the difference in variation orders once work has started.
It’s unsustainable, for the shipyard, for the contractors and ultimately the owner. Quality doesn’t need to be compromised and it can be accurately costed with the right approach. Adopt this mindset and the benefits are shared, the product delivered closer to expected cost and timescale.
In an industry so focused on margin performance, shipyards can hardly be blamed for seeking to contain costs. The key to success is for a contractor to understand what client needs, their routines and preferences. It can take one to two years to fully understand how a shipyard really operates.
Infrastructure limitations at specific shipyards, often related to crane lifting capacities, mean ship blocks may be constructed using non-traditional methods. This approach introduces additional complexity to the usual process and increases labour intensity. The process needs a plan that goes beyond throwing workers at the problem and hoping for the best. Deploying people is simple compared to co-ordinating the equipment, components and expertise into play at the right time.
The level of planning required goes beyond headcount and an optimistic quote. Major projects like cruiseships or offshore structures need serious project management. Bringing the expertise of supervisors, team leaders and the right tools is what makes the difference to accurate estimates and a successful project.
It is virtually impossible to calculate any kind of cost estimate with accuracy it unless you put in the time before the team starts work. Site visits, checking drawings, asking questions and understanding how the yard works, are essential for minimising surprises.
There will always be some issues in the business of building a complex ship or offshore asset, Understanding this risk and being prepared for it are key to managing the process of change that always accompanies ship construction.
Beyond understanding the international norms that shipyards operate under, our work has enabled us to create a database that can be used to derive scenarios for any project. A clear picture enables a comparison of theoretical requirements versus historical deliverables. Negotiating every line of the client budget might be tedious, but in the long run it creates value.
If it avoids a day’s delay in the shipyard – which on a big project can run to Euro1m – then the effort put into making the job financially sustainable is time and money well spent.
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