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COST MANAGEMENT IN SHIPBUILDING

Case Studies Software System "CostFact"

NSRP Joint Panel Meeting

San Diego, CA, USA

December 8, 2015

Develop new ships at competitive costs. Combine engineering know-how and costing experience to ascertain the real costs of new vessels and generate reliable quotations very quickly.

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CostFact is the number one in maritime specialized costing software.It is developed in close cooperation with several of the world’s leading shipyards, which means that a number of best-practice methods have been incorporatedinto the system, covering all of a shipyard’s calculation demands.

Overview Cost Management System "CostFact"

Parametrical Cost Estimation with CostFact

Case Study I: Integration of CostFact with ShipConstructor

Case Study II: Capability Costing at ThyssenKrupp Marine Systems

CONTENTS

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Overview Cost Management System “CostFact”

Estimation, Planning and Controlling of Cost

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Information Management

Integrated administration of all cost relevant information.

Cost Rates

Spreadsheet Calculations

ERP System Data

Consumptions (Material,

Labor Hours)Product

Breakdown Structures

Technical Parameter

Cost Escalation

Manual InputsSupplier

Proposals

Specification

PROJECT 4713

PROJECT 4712

Previous Projects with all relevant

information

PROJECT 4711

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Efficiency & Quality

Cost estimations based on existing calculations allow to generate reliable quotations very quickly.

“CostFact reduces the time until a first cost indication is available from 14 days to 4 hours.”

Oliver Andresen, ThyssenKrupp Marine Systems (Hamburg, Germany)

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Parametrical Cost Prediction

PROJECT 4713

Incorporation of technical parameters forcost prognoses and project comparisons.

Previous Projects

PROJECT 4710

PROJECT 4712

PROJECT 4709

PROJECT 4708

PROJECT 4711

Regression Analysis Cost Forecast Current Project

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Clarity

Calculating in the product breakdown structure provides high clearness.

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Error Avoidance

No errors due to incorrect links in spreadsheets.

“CostFact is a powerful cost management tool. It enables an impartial cost evaluation and comparison

of most different alternative ship designs.”

Rolf Nagel, Flensburger Shipbuilders (Flensburg, Germany)

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Input Logging

Automatically created cost history that documents all single cost inputs and cost changes.

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Continuity

- L i f e C y c l e C o s t i n g -

Manual Calculations

Projects of Comparison

ERP-System

Continuous cost planning and controlling accompanying the design and production process, up to the entire life cycle.

Project Phase

Building Groups

Ship

Components

Reference Sources

Initial Design

Detail Design

Engineering

Manufacturing

In-Service

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Trouble-Free Integration

Easy integration of CostFact in the existing system landscape.

“Due to its flexibility, CostFact is very well suited for planning and controlling the costs of new ships, even for a shipyard of our size.”

Hermann Barthel, Barthel Shipyard (Derben, Germany)

AVEVA MARS

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Parametrical Cost Estimation with CostFact

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CALCULATION

Current Project

Overview CostFact Structure

Not shown: Life Cycle Costing

CALCULATION ANALYSES

Previous Projects

PROJECT 4713

PROJECT 4712

PROJECT 4711

DIRECT INPUTOF NORMS

POOL "PROPOSALS"

POOL "NORMS"

DIRECTINPUT

PROPOSALS

INDEXATION TABLE

PROPOSALS

BASICSTRUCTURES& SETTINGS

EXTERNALSOURCES

ACTUAL COST

SPECIFICATION

DIRECT INPUTOF COST ITEMS

COST RATES &PRICE LISTS

COST RATES &PRICE LISTS

CALCULATIONDIRECTINPUT

DIRECTINPUT

REGRESSION ANALYSES

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Current Project

CALCULATION ANALYSES

Previous Projects

PROJECT 4713

PROJECT 4712

PROJECT 4711

DIRECT INPUTOF NORMS

POOL "PROPOSALS"PROPOSALS PROPOSALS

BASICSTRUCTURES& SETTINGS

EXTERNALSOURCES

ACTUAL COST

SPECIFICATION

COST RATES &PRICE LISTS

DIRECTINPUT

Selected Software Features Presentation

CALCULATION

POOL "NORMS"

DIRECTINPUT

REGRESSION ANALYSES

CALCULATIONINDEXATION TABLE

COST RATES &PRICE LISTS

DIRECTINPUT

DIRECT INPUTOF COST ITEMS

POOL "NORMS"REGRESSION ANALYSES

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Relation between cost drivers and technical groups (examples)

(See Haakon Shetelig: “Shipbuilding Cost Estimation – Parametric Approach”)

DWT

LOA

DECK AREA

SPEED

POWER

DYNAMIC POSITIONING

CLASS

CARGO PUMPS

TANK CAPACITY

ACCOMO-DATION

1 - HULL2 – MACHINERY

AND PROPULSION

3 – CARGO CONTAINMENT AND HANDLING

EQUIPMENT

4 – COMMON SYSTEMS AND

COSTS

5 - SHIP GENERAL

TOTAL COST

PRICE

CO

ST D

RIV

ERS

GR

OU

PS

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Sources of (cost) norms: Quantifying the relation

Existing Knowledge

Regression Analysis of Previous Projects

“Cost of our Super Yachts is 1,000,000 EUR per Metre Length”

“1 ton steel causes 150 labour hours steel work”

Cost Norms

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Regression analysis: Cost estimate in 4 steps

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Selecting calculation object (Propulsion Plant)

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Defining regression parameters (Power & Production Cost)

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Apply indexation (escalation)

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Selecting reference projects

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Calculating the regression function

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Calculating the regression function (2)

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Applying the regression function

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CASE STUDY I

Integration of CostFact with ShipConstructor

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Administration of (Cost) Functions in CostFact

Variant 2:Generating functions by regression analysesVariant 1:

Manual entry of functions into norm pool

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Central administration of a project’s technical parameters

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Quantity calculation based on parameters and attributes

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Model Data Cost Rates

Automatic cost calculation by integrating CAD and ERP data

CAD-System ERP-System

Function y = f(x)

Quantity ofCost Element

Cost of Object

CostFact

Model Data (x) Cost Rate

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Company “SSI” and Software Product “ShipConstructor”

SSI develops autodesk based solutions for the shipbuilding and offshore industry

ShipConstructor:

Suite of software products designed for engineering and construction in the shipbuilding industry.

With AutoCAD providing the underlying CAD engine, the user environment is a globally recognized CAD/CAM standard

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Utilization of CAD model data in CostFact

By the interface to ShipConstructor, the corresponding attributes of technical parameters can always match the current data of the CAD model.

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CAD changes are shown in the project overview

If model data in the CAD system change due to decisions in the design department, CostFact checks whether these changes affect the calculation. In case of identified cost impact, CostFact shows an alert in the project administration.

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In-depth information on the impact of CAD data changes

After selecting a parameter in the list on the left, this list on the right shows the utilization of its attribute for parametrical calculation.

The column “Usage” shows the number of different cost items, calculated based on the respective parameter.

The parameters with changed CAD values are highlighted

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Updating the project automatically

By clicking the alert, a context menu appears that enables the user to:

Update the project, according to the current CAD attributes

Update the project, according to the current CAD attributes while the previous version is automatically saved as a project revision

Create a new project, which is based on current CAD attributes

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CASE STUDY II

Capability Costing at ThyssenKrupp Marine Systems

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ThyssenKrupp Marine Systems, Operating Unit Surface Vessels

One of the leading system providers for high-end naval vessels with more than 3,200 employees in Germany (including operating unit submarines).

Development of a new product family:

Addressing changing future requirements

Simultaneous optimization of costs and technical value

Consistently oriented along target costing

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Cost management starts with the definition of a cost target

(See also Haakon Shetelig: “Shipbuilding Cost Estimation – Parametric Approach”)

Earnings + RiskPremium

Allowed ProductionCosts

Market Price

Bottom-up Pricing

Earnings +Risk Premium

Loosing contract

CalculatedProduction Costs

Top-down Pricing

Loosing Money

Target Costs

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Capability costing identifies approaches for cost reduction

CostFact:

Calculating the cost of a capability

Capability’s CostCapability’s Valuefor the Customer

Sales Department:

1. Defining capabilities

2. Analysing the value of each capability

Contrasting Cost and Value

Target Costing strives for a balanced relation of value and cost

Cost cutting activities have to focus on capabilities with low value and currently high cost

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Step 1: Defining capabilities

Main Capabilities at entire ship level:1)

Offensive Effectiveness

Survivability

Mobility

Surveillance

Standards

Each capability is fulfilled by several sub functions.

1) Schematic representation for confidentiality reasons

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Structuring capabilities in CostFact

- Schematic representation for confidentiality reasons -

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Quantifying the contribution of groups to capabilities

- Schematic representation for confidentiality reasons -

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Project cost according ESWBS (basic costing structure)

- Schematic representation for confidentiality reasons -

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Resulting costs of capabilities

- Schematic representation for confidentiality reasons -

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Target cost chart

S H A R E T O T A L T A R G E T C O S T

C U

R R

E N

T

C O

S T

S H

A R

E

20%

10%

20%

30%

OFFENSIVE EFFECTIVENESS

SURVIVABILITY

SURVEILLANCE

MOBILITY

STANDARDS

- Schematic representation for confidentiality reasons -

30%10%

Example Survivability:

Current Cost Share 20%:20,672 TEUR Capability Cost / 101,661 TEUR Total Cost

Share Total Target Cost 28%:Estimated share of customer’s total value

40%

40%

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Control of target cost achievement

- Schematic representation for confidentiality reasons -