EFFECTIVE MANAGEMENT OF SHIPBUILDING PROJECTS

Presented at SORTA 2002 15th International Scientific and Professional Congress

THEORY AND PRACTICE OF SHIPBUILDING

Trogir, Croatia

15th November 2002 By Ian Paul Edwards

Authors: Torstein Dehn, Ian Paul Edwards and Hans Gerhard Wagner Nordic Maritime Services AS, Hamangskogen 60, 1338 Sandvika, Norway

Tel. (+47) 67 52 19 00 Fax (+47) 67 56 83 66 Email nms@nordic-maritime.no

Abstract: The paper presents concepts for effective management of shipbuilding projects developed through the accumulated experience of the authors mainly through their work for Nordic Maritime Services; a successful marine consultant and ship management company who have implemented project procedure manuals based on the ISO 9000 standard. The objectives in management of shipbuilding projects on behalf of ship-owners are outlined and the methods used to achieve these objectives are described. An example of how a project organisation can be formed is detailed, including a brief description of the responsibilities of the different personnel. The project initiation stage is outlined, covering tasks such as budgeting, preparation of project procedure manual and project planning meeting with the shipbuilder. The aims of plan approval are presented and procedures applied to the plan approval activities are described. The selection of makers of major equipment and machinery is highlighted as an important aspect of the shipbuilding process, and the objectives of such are outlined. Important aspects that should be evaluated when selecting makers for a shipbuilding project are described in detail. An outline of the principles behind site inspection and construction supervision at the shipbuilders premise is presented. The different types of inspections are categorised and the procedure for follow up of inspection comments is detailed. Last but not least, the paper highlights the importance of reporting and documentation of the management work and outlines, among other things, the structure of the reporting system, and how computerised document and project control systems can benefit shipbuilding management. 2002 Nordic Maritime Services AS No part of this document may be reproduced, utilised, stored in any retrieval system or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information, storage or retrieval system without the permission of Nordic Maritime Services.

1. INTRODUCTION The objective of this paper is to present the concepts developed by Nordic Maritime Services; a successful marine consultant and ship management company, for the management of shipbuilding projects with regard to technical quality, use of resources, economy and schedules. The concepts form the basis of Project Procedure Manuals, based on the ISO 9000 standard, that are prepared by Nordic Maritime for each shipbuilding project under their management. Management of shipbuilding projects on behalf of ship-owners is carried out in order to verify that the new ships are designed and built in compliance with shipbuilding contracts and specifications, maritime authorities requirements, classification regulations, charterers requirements and the ships meet the ship-owners quality objectives, and, moreover:

That the ships comply with the approved plans, and that specified equipment and materials are used That the materials and components have been selected with the aim to attain the most reliable operation

mode and that such materials and components are certified in accordance with the specifications. Therefore, the Management can be defined herein as covering the planning, execution, reporting and documentation of plan approval, selection of makers of principal equipment and machinery, supervision of fabrication and construction and test and trials of the new ship. The Management normally commences when the shipbuilding contract becomes effective and ends when the ship has been delivered to the ship-owner and is generally divided into the following main tasks:

Project Management Project Initiation and Planning Plan Approval Selection of Makers Site Inspection & Construction Supervision

2. PROJECT ORGANISATION The Project Organisation carries out the Management and consists of a team of personnel who are provided with clearly defined communication/reporting lines, responsibilities, tasks and work steps required to perform the work. The personnel making up the Project Organisation will normally consist of the following, organised as per Figure 1.

Project Manager (PM) The PM is appointed by the ship-owner and acts as the ship-owners representative for the management and execution of the shipbuilding contract, has authority to act for and on behalf of the ship-owner and has overall responsibility for the Management. The PM is responsible for ensuring that the Management is planned in sufficient detail to reach the aim in a cost-effective way and that the work is carried out by qualified and experienced personnel in accordance with applicable instructions and procedures. The PM also monitors and ensures that the work is verified, properly documented and made at the agreed time and price.

Project Supervisor (PS) The PS is appointed by the PM to ensure that the specified quality and optimum use of resources is obtained and to support the Site Chief Inspector (SCI). The PS is the contact person towards the PM for the Management work. The PS reports to the PM.

Project Co-ordinator (PC) The PC is appointed by the PM and acts as the co-ordinator of approval work and regular progress reporting to the ship-owner.

Site Chief Inspector (SCI) The SCI is appointed by the PM prior to commencement of construction and acts as the ship-owners representative on-site and the official contact between the shipbuilder, Project Organisation and the ship-owner.

Project Task Members (PTM) The PTMs are appointed by the PM and receive written work assignments from the PM containing information about their task and scope of work, start and termination of the task and reporting procedures. The PS has discussions with the assigned PTM before any work is allowed to start in order to clarify each main step in the scope of work and ensure common understanding of the task to be performed. Self-checking of own work is carried out by the PTM and all tasks are verified in sufficient detail.

Ship-owner

Project Supervisor(PS)

Plan Approval Site Inspection &Construction Supervision

Project Co-ordinator(PC)

Site Chief Inspector(SCI)

Administration

Admin. Manager

Project Manager(PM)

Project Task Members(PTM)

Project Task Members(PTM)

Figure 1 Typical Project Organisation 3. PROJECT INITIATION AND PLANNING The aim of Project Initiation and Planning is to identify the activities and resources required to obtain the desired quality and to describe the procedures used to control and execute the work. Additionally, the intention is to give factual information about the project and to ensure that the entire Project Organisation is properly informed about major project aspects. A Project Procedure Manual is usually prepared at this stage. 3.1 Project Plan

The Project Organisation consists of several members who are involved in carrying out the work (see Chapter 2). A Project Plan that defines the division of work, responsibilities and budgets is prepared by the PM covering:

Budgeting Project Planning Meeting with Builder Plan Approval Administration Site Inspection Administration

3.2 Budgeting An estimate of the man-days and other expenses for the total scope of work is prepared. Separate cost budgets are prepared for Project Management, Plan Approval and Site Inspection & Construction Supervision work as applicable. Budgets reflect the estimated cost necessary to comply with quality criteria, established procedures and what ever is specified in the shipbuilding contract and agreement with the ship-owner. 3.3 Project Planning Meeting with the Shipbuilder The aim of the Project Planning Meeting is the prevention of mistakes and substandard work by reviewing and establishing sound procedures and practices for all activities that may influence the quality of the ship. The agenda of the Project Planning Meeting is prepared so that each main step in the shipbuilding project is discussed systematically. A successful Project Planning Meeting ensures that a common understanding of the Plan Approval, Site Inspection & Construction Supervision and completion of the supervision is obtained. The Project Planning Meeting covers, as a minimum:

Shipbuilders organisation, schedule, subcontracted works Procedures for modification of specifications where applicable Communication lines Plan approval procedures, list of plans for approval Selection of makers and purchase procedures Inspection during construction Commissioning, test and trials Delivery

4. PLAN APPROVAL The purpose of Plan Approval is to evaluate the Plans (drawings and documents used in the design and construction of the ship) to ensure that they comply with the shipbuilding contract and specification, maritime authorities requirements, classification regulations, charterers requirements and the shi-owners operational patterns (collectively known as the Requirements). In addition, the evaluations should consider whether proper and cost effective maintenance and repair work can be made throughout the ships life time. The Plan Approval personnel, principally the PS, PC and PTMs, shall review Plans submitted and approve them if found to comply with the Requirements. A stamp and signature is used to identify approved Plans. The stamp is complemented with the signature(s) of the approval personnel and the date of approval. When such Plans do not meet the Requirements, the shipbuilder is advised in writing. Conditions and limitations of the approval may be stated on the Plan and/or in the accompanying letter in the form of comments.

Comments relating to approved Plans are marked in red ink on the Plans for easier identification. 4.3 Shipbuilders Correction of Approved Plans The shipbuilder normally corrects the plans to comply with comments from both the ship-owners representative and the classification society and submits such revised plans to either the Plan Approval Office (the office where plan approval is carried out) or Site Office (the ship-owners representatives office at the shipbuilders premises) for verification that comments have been implemented on the final drawings. In case of a large amount of comments, resubmission of the subject plan to the Plan Approval Office may be requested. 4.4 Design Changes Design changes requested by the ship-owner or shipbuilder during plan approval and construction affecting the contract price, compliance with Requirements or delivery time are always advised to the PM for evaluation and approval. All such design changes are recorded in writing and include:

Relevant section of building specification Affect on contract price for the change Affect on delivery time

When changes are approved by the PM, the shipbuilder is then informed in writing. 5. SELECTION OF MAKERS The aim of selection of makers of principal equipment and machinery is to select only those materials and components that have been evaluated and found to be of high quality with recorded good reliability, designed for cost-effective operation and planned maintenance routines. The shipbuilder has all commercial contacts with makers and evaluates their quality and delivery capability. Normally, the shipbuilder has the right to propose three technically equivalent solutions and propose their preference to the ship-owner. However, the shipbuilder and maker should ensure and be able to verify that the following conditions are met by their proposed components and/or materials: Functionality The proposed component/material must be suitable for the function required and:

The material, capacity and performance shall comply with the Requirements The component shall be designed with respect to the loads and ambient conditions which are expected to

occur during normal service/operation. Maintenance tasks normally expected to occur at short intervals during normal service/operation can be

carried out without interruption Reliability Components and systems should have reliability as required in the classification rules and arranged in the way that a single failure in a sub-component will not cause loss of main function for a longer period of time, defined by the time required to restore the function as follows:

Critical component (the function to be maintained by a redundant component) Main component, the function to be re-established within 10 minutes Sub component, the function to be re-established within 3 hours

Where classification rules do not specify redundancy type, it is normally specified by the PS. Generally recognised methods and formulas are used in the calculation of reliability, availability and related parameters. Where numerical calculations cannot be performed due to insufficient data, the reliability and availability evaluation is based on qualitative failure analysis of the component or system. Operational experience with components and materials from other ships may be used as a basis for the availability calculations and makers evaluation. Use of novel and non-conventional (prototype) components and materials shall generally be avoided, and if considered, an in depth evaluation of the reliability and availability should be performed by the shipbuilder. Maintenance The components should be able to be maintained/repaired in a cost effective way. An evaluation on the availability of service engineers and spare parts for all main components should be prepared by the shipbuilder or maker covering:

Availability of service engineers in the vessels main trading ports/areas Cost of service engineers Availability of spare parts

The instruction and maintenance manuals provided by the makers should be evaluated by the shipbuilder (and the Project Supervisor where applicable), based on:

Content of operation instructions Coverage of maintenance repair instructions Spare part list, including reference system for purchase orders Information required for Planned Maintenance System (PMS) input

For main components, it is preferable that the makers provide the operation and maintenance manual in electronic format for use on ships internal computer systems. For all components, the instruction manual shall at least contain:

Component description Cross section drawing Maintenance instructions List of spare parts

6. SITE INSPECTION & CONSTRUCTION SUPERVISION The aim with Site Inspection & Construction Supervision at the shipbuilders premises during construction, test and trials is to ensure that the materials and components are installed and tested in a manner that ensures the functionality and reliability required for trouble-free ship operation and to verify that the ship complies with the approved Plans, and Requirements (as defined in Chapter 4). The site inspection period will generally be from the steel cutting event until delivery of the ship with a scope of work, depending on the type of ship, covering:

Hull construction Surface preparation & anti-corrosive coating application Machinery installation Electrical/automation installation Cargo system installation Outfitting

All inspections and attended tests are properly planned, documented, and the results recorded in an inspection record that is signed by the SCI or attending Project Task Member (hereafter referred to as the Inspector) and the shipbuilders representative. The SCI plans and coordinates the site inspection tasks in accordance with the

shipbuilders production schedule and agreed quality plan. The following inspection methods are normally applicable:

Scheduled inspections Unscheduled inspections Inspection of incoming materials and components Inspection at subcontractors

Scheduled inspections are performed upon request of the shipbuilder according to the agreed scope and list of items to be inspected by the ship-owner. Unscheduled inspections are carried out at random by Inspectors and mainly directed at problem areas identified during the plan approval and construction phases. Reports from unscheduled inspections are normally reported in writing and may, at the discretion of the SCI, be submitted to the shipbuilder upon completion of the inspection. For inspection of incoming materials and components, the controlled items can be either shipbuilders or ship-owners delivery items. The inspection is made with reference to the specification, ship-owners purchase order or order confirmation, product description or instruction manuals and reported to the shipbuilder or supplier through the party who ordered the goods. The shipbuilder normally handles non-compliances in equipment supplied by the shipbuilder in a similar way, and the Inspector will only follow up necessary corrective actions by verifying any non-compliance recorded by the shipbuilder when their inspection has revealed irregularities on received goods. Such non-compliances can include:

Damages Incorrect dimensions or quantities Incorrect quality or standard Surface/paint condition Incorrect storing by the shipbuilder

The Inspector ensures that the storing of materials and components is safe and dry and in ventilated spaces according to good ship building practice and any special requirements which might be specified. The SCI can always seek information about storage-procedures from suppliers of major machinery and components sensitive to environmental conditions. Any shortcomings in this respect are reported as a non-compliance and corrective actions followed up. 6.1 Comments during Inspection During the inspection or tests, the Inspector is obliged to inform the shipbuilders representative of any conditions which need improvement, defects, deficiencies, or observed non-compliances with the Requirements. The Comments will normally fall into one of the following three Categories:

1) Comments that shall be corrected by the shipbuilder before construction work proceeds 2) Comments that shall be corrected by the shipbuilder before final acceptance of the inspection task is

given 3) Observed non-compliances with the Requirements

The shipbuilder should implement procedures for identification and handling of all comments. Comments are documented by the Inspector and normally presented to the shipbuilder on an inspection record. As far as practical, the shipbuilders standard format is utilised for this purpose. For control and follow up of comments, the following procedure is normally adopted:

Comments are always given in writing with proper reference to work failure, standard, specification or rules and regulations.

The shipbuilder generally corrects or responds to the comments within 7 days Where the shipbuilder does not correct or respond to the comments, the SCI issues a reminder to the

shipbuilder with request for immediate response In the case of Category 1 and 2 Comments, if no response is received within 7 days, the SCI issues a

Non-Compliance Report 6.2 Non-Compliance Category 3 comments or failure to reply to category 1 and 2 comments as per the above requires immediate issuance of a written Non-Compliance Report (NCR) to the shipbuilder by the SCI. Where an NCR is issued, reference is made on the inspection record to such NCR number. The NCR contains a request for corrective action by the shipbuilder and such corrective action must be approved by the Project Manager who is the only member of the Project Organisation who has authority to permit deviations from the building specification. All Non-compliances must therefore be reported to the Project Manager (PM) and Project Supervisor (PS). When a fully completed NCR has been received, the shipbuilder should respond within 7 days. A corrective action contains at least:

An analysis of the cause Planning of corrective actions, including deadlines for implementation Implementation and follow up inspection

Non compliances, cause analysis, corrective actions and the outcome of these are properly documented in the form of an NCR Register. The SCI verifies that corrective actions have been taken before signing off the NCR. 6.3 Tests and Trials By attending the test and commissioning of machinery, equipment and complete systems, the Inspectors ensure that installations meet with the specified Requirements. The scope of work generally covers the following tasks:

Shop test of machinery, equipment and systems Tank structural and tightness tests Dock test and trials Inclining experiment Sea trial Cargo tank cleanliness test (where applicable)

The shipbuilder or subcontractor should prepare a test procedure for approval well before the various items are tested covering:

Test procedure to be carried out Reference standard/acceptance criteria Performance data as per specification

The supervision team are obliged to check that the shipbuilder has implemented a system for:

Quality control and approval body Procedure for calibration of any measuring equipment Standard procedures for test to be carried out

6.4 Delivery The actual procedures during delivery and registration are normally attended by the PM and SCI, where one or both have a Power of Attorney to sign protocols and other documents related to the ship-owners acceptance of the ship and transfer of the ships title and ownership. Prior to the delivery the following is normally checked and confirmed in order:

Crew is mobilised and in place for operation All operation and maintenance instruction manuals have been received Plan maintenance program is initiated Owners supplied items, initial suppliers, consumables, stationary and books, etc. are received and stored

safely Necessary items for the delivery ceremony are readily available such as flags, emblems, uniforms etc. The ship-owners participation during the delivery ceremony is established

Upon completion of the Site Inspection & Construction Supervision, the SCI ensures that all approved plans have been evaluated and corrected in compliance with the ship as-built. Such plans are stamped As Built in accordance with the established routines. When the delivery condition of the ship has been accepted by the ship-owner and once their authorised person has signed the protocol of delivery, a variety of documents are submitted to the ship-owner with a copy to the PM, required for closing with any financial institutions and/or flag state administration upon taking delivery of the vessel. 7. DOCUMENTATION AND REPORTING The supervision reporting system should in a systematic manner document that the work is carried out based on the established procedures and in particular that the fabrication and construction complies with the approved plans and that the inspection, test and trials have been carried out to the extent and in the manner as agreed with the ship-owner. In particular, the Site Inspection & Construction Supervision reporting system enables the identification of inspections and tests carried out, performance of inspection work, recorded comments, non-compliances and corrective actions implemented. The reporting system can be structured in three levels. Starting with the inspection report and ending with the monthly report to the ship-owner:

Inspection Checklist/Report Inspection Progress Report Inspection Summary Report / Monthly Report to the Ship-owner

The reporting system can therefore be structured in accordance with the example shown in Figure 2.

Block Construction

Block Outfitting

Block Painting

Deck outfitting

Cargo pump instal.

ME instal. report

Tank outfitting. ME system test

Electrical instal.

Automation test

Generator test

MONTHLYREPORT TO

CLIENT

HULL OUTFITTING MACHINERY EL/AUTOMATION

Hull constr. / outfittingprogress report

Outfitting/ installationprogress report

Machinery installationprogress report

EL / automationinstallation progress

report

Figure 2 Example of the 3-Level Reporting System 7.1 Inspection Checklist/Report The Inspection Checklist/Report is primarily a tool for the Inspector, specifying main steps, areas of importance and which parameters are to be recorded from inspections, test and trials. The Inspection Checklist/Report is developed in such manner so that verification of inspection work performed is as far as possible built into each work step/stage. For practical reasons the inspection checklist and report can be combined into one document. 7.2 Inspection Progress Report The intention with the Inspection Progress Report is to specify inspection areas and items, enabling evaluation and preparation of actual inspection work progress. Therefore the Inspection Progress Reports normally include:

List of items to be inspected Inspected date and status of inspected item Summary of comments

7.3 Monthly Report to the Ship-owner The intention with the Monthly Report to the Ship-owner is to summarise the progress in the shipbuilding project. At the end of each month the PS evaluates the progress in plan approval, maker selection, inspections, test and trials and prepares a report to the ship-owner covering:

Status of Plan Approval Progress of Plan Approval Maker Selection

Accepted component makers Status & progress of Site Inspection & Construction Supervision Observations & corrective actions Matters effecting progress and delivery schedule Milestones during reporting period Matters effecting contract price Maters of dispute

7.4 Document & Project Control Considering the large quantities of Plans, documents and correspondence accruing during a shipbuilding project, Nordic Maritime has developed computerised systems for document and project control. These include software to keep track of drawings, status of plan approval, comments given to each plan and comments implemented, giving an accurate real time status of plan approval. This is a vital tool for ensuring that all comments given during the plan approval stage are implemented within the construction drawings and actually built into the vessel. These systems are being further developed, enhanced and integrated to create a fully comprehensive, web based project control system giving access to all members of the supervision team any where in the world. Access to shipbuilders is also being considered as this would considerably speed up the plan approval process and enable better control of comments to plans and drawings. 8. CONCLUSIONS By implementing the concepts presented within this paper using a Project Procedure Manual, the Management of shipbuilding projects can be executed in accordance stringent quality control procedures. This combined with the application of a regular audit programme to assess all aspects on the Management work enables a system to be established based on the ISO 9000 standards. The benefits to ship-owners include cost effective, properly documented supervision carried out in line with a well established industry standard. Such Management of shipbuilding projects not only ensures that ships are built to the highest levels of safety, quality and reliability in accordance with the specifications but assists the shipbuilder in delivering ships on time and budget by identifying and proposing solutions to problems before they affect cost and delivery schedule.