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July 28, 2015

In my last post What is the Biggest Challenge in Shipbuilding? I talked about what I feel is one of the biggest challenges in the shipbuilding industry. To recap, it was related to our incorrect focus of cutting steel for the first deliverable. I argued that if we concentrated more on the digital ship model for the first deliverable, we would be able to design ships faster, be more cost effective and deliver a ship with better quality which includes meeting the owner’s expectations. My previous post stirred up a lot of good discussion with the majority of respondents agreeing with most of my assessment. The question that arose several times was, “How do we change this perception?”

That is a great question. I have several thoughts and ideas but it is far from an implementable strategy. To be completely honest, most of my discussions about this challenge have been with individuals from the shipyard side and only a few discussions with people from the owner’s point of view. Because of this I am confident I am not seeing the entire story and therefore I do not think I could provide an answer to that question. However, in the next couple of blog posts I will share more of my ideas with the goal of continuing the discussion and I hope I will better understand the hurdles we need to face.

If we really want to change our industry’s mindset we will have to first understand each stakeholder’s perspectives and their goals. Here are my thoughts regarding two major stakeholders’ perspectives: owners and shipyards.

1. Owner’s perspective

Investment & ROI

Whether an owner is looking at building a new ship or repairing/retrofitting an old one, it will mean a huge investment. In most cases this will require the owner to borrow money from a financial institution. The ship price including interest or the opportunity cost of using the $ differently is one of the major factors an owner considers when calculating their Return On Investment (ROI). A higher cost will affect the ROI calculation but it is only one of the many factors considered in the ROI calculation. For example, another factor is time of delivery.

Time of Delivery

It is very important for the owner to determine a date for when the ship is to be finally delivered and ready for operation. A ship can’t start producing income until it is in  operation so the sooner it is complete, the sooner it can deliver a positive ROI. That is why there are often fees charged to the shipbuilder if the delivery date of the ship is not met.


No one really likes risk and owners are no exception. We take calculated risks if the potential of a positive outcome outweighs the chances of having some degree of failure. Changing the milestones our industry has been using for years will absolutely add risk and/or perceived risk. Most owners will air on the side of very low risk.

Visual Progress

The current milestones are related to seeing physical progress. To see something tangible is very important to the owner and also the financial institution. Having something that the owner relates to making progress is key.

2. Shipyard’s perspective

Client is King

Many shipyards have the philosophy that the client is king and it is not their business to tell the client what they want. Other shipyards have the philosophy that in order to provide the client with what they need, the two parties have to engage in a two way conversation. These discussions often change the initial requirements of the project (not the ship requirements per-se) allowing the client to actually get what they need.

Being Inefficient is More Profitable

I know this is terrible to say but it is the reality for some shipyards. Owner changes to the ship design while in construction are very costly for the owner but in some cases very profitable for the shipyard. If there were less changes it could be argued that some shipyards would be less profitable.

Multiple Clients Requiring Education & Convincing

If a shipyard wanted to adopt a strategy of emphasizing a 3D model for the initial deliverable(s), this would require convincing many of their clients. This could be a time consuming and costly effort initially. There is also the potential of losing business because the owners might want to stay with the process that they knew and would look for another shipyard if a different process was proposed.

Processes, Environment, Culture and Usage of Tools

Changing the focus of the first deliverable(s) would require a lot of changes to how a shipyard and its design partners go about creating the 3D model. A lot of internal workflows and processes were designed to best solve a different delivery strategy. There would need to be some changes to many Standard Operating Procedures (SOP) as well as the way we use our current tools. This change could be disruptive initially and in some situations the reason why shipyards do not want to change.

Closing Remarks

Change is hard, especially when it requires modification to one of the key upstream processes that effects many downstream activities. Changing how ship milestones are delivered will require changes from many different stakeholders, only two of which were mentioned in this post.

Understanding the stakeholders’ perspectives and goals is important if we plan to change how our industry builds ships. We need to be make sure we understand the realities of our industry and not assume decisions will always be logical.

To keep my blog post to a reasonable size I only listed some of the perspectives and goals of the shipyard and owners. I am interested in your thoughts and look forward to any insights you will share.

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