Marine Log - January 2008 - (Page 24) SHIPBUILDING B Y L A R R Y T. R I G D O N * WHAT SHIPOWNERS WANT FROM A SHIPYARD Rigdon Marine has worked with several U.S. second tier shipyards, including C&G Boat Works, Mobile, Ala. W hat should a ship owner expect from a shipyard? To tell you how I would answer this question, I think it’s only logical to work through the entire ship building process, from contracting to construction. The process of contracting for the construction of a vessel begins with the selection of a design. Today, there are only a few shipyards that have proprietary ship designs. My advice for those that do, is not to fall in love with those designs. While a shipyard may have a higher comfort level with the hours and materials in their proprietary designs, many ship owners might have their own ideas to differentiate themselves from their competitors. The shipyard should focus on what the owner wants to build, not what you want to sell. Quoting a lower price for your proprietary design may be logical and justified, but pushing your design can also suggest to the ship owner that you really don’t have an interest in his construction needs. Balancing your desire to sell the product you are comfortable building against the ship that the owner wants to build is difficult, but essential if you want the order. The next step is the contract negotiations. Insisting on using your contract is certainly easier for the shipyard, but may not meet the needs of the ship owner. Unless the shipyard is prepared to finance the majority of the construction cost with a relatively small down payment and the balance upon delivery MARINE LOG JANUARY 2008 or to provide a full refund or performance bond, then the contract will have to provide the ship owner significant financial protections to enable the ship owner to obtain construction financing at a reasonable cost. Experienced ship owners will likely have existing banking relationships and loan agreements that have been tied into the shipyard construction contracts. The time spent negotiating the contract and the related ship specifications, construction drawings and makers’ list is critical for both the shipyard and the ship owner. If you have done a good job of working through these contract documents and have really reached a meeting of the minds which is reflected in the contractual documents, you have dramatically increased the probability of a successful ship construction program. There are two additional points that the shipyard and the ship owner need keep in mind as they work through the contract process. First, they both need to recognize that the construction contract is a long-term relationship. In a series building program the relationship between the shipyard and the ship owner begins with the contract negotiations and does not end until the warrant period of the last vessel ends. This could easily be a four- to five-year relationship. The second point to bear in mind is to never ever sign an unreasonable contract. Unreasonable contracts end badly and with great cost. ve wit Don’t insist h on usin your own Never design g your sign a s own c n unre Carefu ontrac asona l plan t ble co shipya ning d ntract rd uring the tion p engineering hases and eq detailed may s uipm struct tream ion pr line th ent selecocess e ship Get re consubco gular appro ntract val an ors an d inpu Owner d own t from your greate -furnished m er’s represe nt r coop ateria eratio ls dem ative owner n betw and ev and s een th e ship en Comple uppliers yard, te tes to deli ting o very d f all th ramat e syst time a ically ems p nd rior and th warranty co reduce ves sel do e equip sts for wnthe sh ment suppli ipyard ers WORD S OF A DVICE TO SH IPBUI Don’t LDERS fall in lo After the contract is signed, the real work begins. The detailed shipyard engineering and final equipment selections need to be agreed upon. Both parties need to be committed to establishing an open, mutually respectful relationship between the shipyard staff and the ship owner’s staff. Certainly this is a commercial transaction and will have a competitive edge, but working closely together can generate lower costs for the shipyard and higher quality for the ship owner. Time spent in the engineering phase can return huge benefits to both parties. Change orders that result from poor or incomplete engineering by the shipyard and poor or incomplete review and approval by the ship owner will result in change orders and commercial disputes. I don’t think you can say enough about the importance of this time period in the www.marinelog.com 24 http://www.marinelog.com
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