THE SHIP ACQUISITION PROCESS
Transcript of THE SHIP ACQUISITION PROCESS
![Page 1: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/1.jpg)
1
![Page 2: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/2.jpg)
2
PROJECT MANAGEMENT
WITH REFERENCE TO THE CAPITAL
ACQUISITION PROCESSCopyright C. R. Cushing
2011
![Page 3: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/3.jpg)
3
Charles R. Cushing, Ph.D., P.E.30 Vesey Street, 7th Floor
New York, NY 10007Tel. (212) 964-1180Fax (212) 285-1334
E-mail [email protected]
![Page 4: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/4.jpg)
4
![Page 5: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/5.jpg)
5
Typical Ship PricesShip Type $, MillionsContainer Ship, 12,600 TEU 165
Tanker, Capesize 95
Tanker, VLCC 115
Container – Reefer, 7450 TEU / 3400 Reefer 143
Container Ship 70
Bulk Carrier, 92,500 DWT 70
Bulk Carrier, 34,000 DWT 37
Tanker, Chemical 4,300 DWT 20
Ore Carrier, VLOC 350,000 DWT 135
Cruise Ship, 6,400 Passenger 1,240
Log Carrier, 35,000 DWT 30
Multi-Purpose Cargo, 5,670 DWT 14
Bulk Carrier, 92,500 DWT 70
![Page 6: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/6.jpg)
6
World Population of Merchant Ships, December
2010Commercial Ships: No.(%) GRT x 1,000(%)
General Cargo 18,178(23.4) 63,525(6.8)
Container Ships 4,869(6.3) 158,112(16.9)
Ro Ro Ships 1,556(2.0) 41,704(4.5)
Bulk Carriers 8,920(11.5) 292,906(31.4)
Oil and Chem Tankers 12,014(15.4) 260,735(27.9)
Gas Tankers 1,552(2.0) 48,159(5.2)
Passenger Vessels 6,382(8.2) 34,100(3.7)
Offshore Vessels 6,283(8.1) 19,248(2.1)
Tugs 3,757(17.7) 3,879(0.4)
Other 4,257 (5.4) 10567(1.1)
Total 77,768(100) 932,935(100)
![Page 7: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/7.jpg)
7
Ships on Order (December 2009)
No. 9,226*GRT 300,500,000CGT 152,000,000* Of which 7,282 are cargo vessels
Source: Lloyds Fairplay Dec. 2009
![Page 8: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/8.jpg)
8
Process Applies To:
Ships Ports Cranes Factories Refineries Other Capital Projects
![Page 9: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/9.jpg)
9
Capacity Acqusition Alternatives
New Construction Conversion Purchase Second-hand Vessel Bareboat Charter Time Charter Contract of Affreightment Freight Service Agreement Consecutive Voyage Charter Spot Charter Vessel Pooling Slot Charter
![Page 10: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/10.jpg)
10
History of Project Management
Dates back to early civilization
Creative architects and engineers
![Page 11: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/11.jpg)
11
Capital Projects
Egyptian Pyramids
![Page 12: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/12.jpg)
12
Capital Projects
Great Wall of China
![Page 13: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/13.jpg)
13
History of Project Management Imhotep – Pyramids (2630 BC) Qin Shi Huang – Great Wall (221
BC) Vitrvius – Roman Aqueducts (100
BC) Christopher Wren – St. Paul’s
Cathedral (1632 – 1723 AD) Thomas Telford – Bridges & Canals
(1754 – 1834 AD) Isambard K. Brunel – Great
Western Railway (1806 – 1859)
![Page 14: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/14.jpg)
14
Recent Developments in Project Management
Fredrick Wilson Taylor – Pioneer in theories of scientific management (WBS)
Henry Gantt – Father of planning and control techniques – (Gantt Chart)
Dupont / Remington Rand – Critical Path Method (CPM)
Booz – Allen & Hamilton – Program Evaluation and Review Technique (PERT)
![Page 15: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/15.jpg)
15
Capital Projects Ships Ports
![Page 16: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/16.jpg)
16
Project Management
Planning Organizing Managing Resources to Achieve
Specific Goals
![Page 17: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/17.jpg)
17
Project
Temporary Endeavor Defined Beginning Defined End Unique Goals and
Objectives
![Page 18: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/18.jpg)
18
Traditional Project Management
Initiation Planning Design Execution
Commercial Production
Completion
![Page 19: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/19.jpg)
19
![Page 20: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/20.jpg)
20
![Page 21: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/21.jpg)
21
Project Management Process Traditional PM Critical Chain PM Extreme PM Agile PM Event Chain PM Event Chain Methodology Prince2 (Prompt + Prince) Process-Based Management
![Page 22: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/22.jpg)
22
Planning Design Commercial Production
The Process Consists Of:
![Page 23: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/23.jpg)
23
“Now here’s an advanced organism. You’ll note the nucleus and cytoplasm development, along with what appears to be the first draft of a strategicplan.”
![Page 24: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/24.jpg)
24
![Page 25: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/25.jpg)
25
![Page 26: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/26.jpg)
26
![Page 27: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/27.jpg)
27
![Page 28: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/28.jpg)
28
Origins of Strategic Planning
473 BC Sun Tzu’s The Art of War 1645 Miayamoto Mushashi’s A
Book of Rings
1800 Napoleon 1850’s Industrial Revolution 1860’s Policies and Procedures 1900 Work Norms and
Standings
![Page 29: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/29.jpg)
29
Origins of Strategic Planning (Cont’d.)
1916 WWI Battle Strategy 1920’s Financial Planning and Control 1930’s Management by Objectives 1940’s WWII O.S.S./C.I.A. 1950’s Strategic Planning 1970’s-80’s Global Spread of
Strategic Planning 1990’s Strategic Management
![Page 30: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/30.jpg)
30
Development of Planning
![Page 31: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/31.jpg)
31
Factors that Make Strategic Planning Essential in the Marine Industry
Cyclical market conditions Fluctuating currency exchange rates Uncertainty in fuel costs Uncertainty in interest rates Emergence of trading partners and trading
alliances Over tonnaging due (partially) to overly
generous subsidies Regulatory and governmental restraints Fast paced technology (leading to
premature technological obsolescence) More rapid response by Safety and
Environmental Regulatory Bodies to disasters
![Page 32: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/32.jpg)
32
Benefits of Using this Process
Opportunity to optimize vessel characteristics
Improved delivery time Better use of lead time Better financing and currency terms Better guarantees Control of extra costs and changes Improved quality Chance to introduce innovation Product is more “obsolescence – proof” Fewer disputes or litigation
![Page 33: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/33.jpg)
33
Strategic Planning Asks Four Questions
How did organization get to its present position?
Where does organization want to go?
How will it get there? How will it function successfully
when it gets there?
![Page 34: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/34.jpg)
34
Strategic Planning ProcessAppraisals
External Internal
Create Strategies
Evaluate and Choose Strategy
Implement Strategy
![Page 35: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/35.jpg)
34a
Strategic Planning Process (Cont’d)
![Page 36: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/36.jpg)
Strategic Planning Process
34b
![Page 37: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/37.jpg)
37
The Company Environment
The Industry The Company The Market The Competitors
![Page 38: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/38.jpg)
38
Other Aspects of the Company Environment
Legal Regulatory Suppliers Service Technology
![Page 39: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/39.jpg)
39
Internal Factors
Company strengths Company weaknesses Areas of vulnerability Profitability Productivity Customer satisfaction
![Page 40: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/40.jpg)
40
Other Internal Environmental Factors Load factors Service levels Transit times Frequency of sailings Schedule reliability Cargo damage statistics
![Page 41: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/41.jpg)
41
The Competitive Environment
Strength of competitors Weakness of competitors Market shares Technology Pricing
![Page 42: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/42.jpg)
42
Analysis of the Market Historical demand Current demand Forecast
![Page 43: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/43.jpg)
43
FORECASTING
![Page 44: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/44.jpg)
44
Sources of Data for Cargo Flow Studies
Government report (National and U.N.) Custom revenue statistics Manifests Census data Government statistical abstracts Industry commodity trade data Trade association reports Newspaper/trade journal traffic reports Port authority statistics Trade Conference data Market research consultants
![Page 45: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/45.jpg)
45
Sources of Data for Competitor Analyses
Advertising Sailing schedules Web sites Directories Classification society computer
searches Shipping directories Ships-on-order publications Search services
![Page 46: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/46.jpg)
46
![Page 47: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/47.jpg)
47
![Page 48: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/48.jpg)
48
![Page 49: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/49.jpg)
49
Pricing Studies
Tariffs Charter fixture data Industry scales Periodical summaries Cost analyses National and international
economic indices
![Page 50: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/50.jpg)
50
Pricing Perturbations
Government aid International conflicts and
calamities “Cut Throat” competition Predatory pricing practices Price wars Technology breakthroughs
![Page 51: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/51.jpg)
51
Global Events AffectingShipping and Shipbuilding
Natural Disasters Major Earthquakes (i.e. Kobe) Tsunami El Nino Effects Drought in Panama Global Warming Pollution Epidemics, Plague, etc.
![Page 52: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/52.jpg)
52
Global Events AffectingShipping and Shipbuilding
Economic Conflict Subsidies Embargoes Protectionism Trade Wars Monopolies Etc.
![Page 53: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/53.jpg)
53
Global Events Affecting Shipping and Shipbuilding
Protectionism Nationalism Tariffs Subsidies Cabotage Preferential treatment Bi-lateral trade agreements Cargo sharing Restriction on flow of capital Barriers to investment Government aid
![Page 54: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/54.jpg)
54
Global Events Affecting Shipping and Shipbuilding
Economy and Trade OPEC Shipbuilding Shifts: Europe to Japan to
Korea to China Availability of Capital for Investment World, Regional, and Local Economies Confidence of Investors Availability or Shortage of Workers Depressions and Recessions Inflation Market Volatility
![Page 55: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/55.jpg)
55
Global Events Affecting Shipping and Shipbuilding
Technology Channel Tunnel Second Isthmus Canal Superconductivity Fuel Cell Propulsion Post-Panamax Containerships Double Stack Rail Cars Land Bridges Etc.
![Page 56: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/56.jpg)
56
Global Events Affecting Shipping and Shipbuilding
Anti-Social Activities War Terrorism Piracy Drug Trade Government Corruption Commercial Corruption Etc.
![Page 57: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/57.jpg)
57
Global Events Affecting Shipping and Shipbuilding
Legal Impact of Marine Disasters Torrey Canyon Amoco Cadiz Herald of Free Enterprise Estonia Braer Erika Prestige Etc.
![Page 58: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/58.jpg)
58
Global Events Affecting Shipping and Shipbuilding
Shipping and Shipbuilding Conventions and Legislations
Port State Control Erika I and II Basel I and II Ballast Regulations Air Pollution Regulations Etc.
![Page 59: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/59.jpg)
59
Strategy Development
Corporate objectives
Strategic objectives
![Page 60: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/60.jpg)
60
“Objectives are the fundamental strategy
of a business.”- Drucker
![Page 61: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/61.jpg)
61
Corporate Objectives Profitability Return on Investment/Payback
period Market share Growth Stability Product or service quality Meeting market needs Competition
![Page 62: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/62.jpg)
59a
“No Smedley! I said we need more profits, not more prophets!”
![Page 63: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/63.jpg)
63
Strategic Objectives – Fixed Elements Competitive environment Company resources Management values Societal expectations
![Page 64: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/64.jpg)
64
Strategic Objectives – Controllable Elements Corporate structure Marketing policies Finance policies Accounting policies Manufacturing or service policies Human resources policies Research and development policies Organizational policies
![Page 65: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/65.jpg)
65
Strategic Issues
Volume of cargoes Actions of competitors Technological developments Governmental restraints Other external environmental
factors impacting the company’s ability to meet its projections.
![Page 66: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/66.jpg)
66
Strategy Selection
Develop a number of options Prepare pro forma financial
projections Compare alternatives against
corporate objectives Compare alternatives against each
other Select best alternative Optimize selected alternative
![Page 67: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/67.jpg)
67
Selection Process Pro forma financial projections Carry out simulations Perform sensitivity analyses Test options against financial
criteria Minimize risk Optimal use of corporate resources Examine impact of unexpected
changes in forecasts
![Page 68: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/68.jpg)
68
Risk Analysis
Risks we can afford to take Risks we cannot afford to take Risks we cannot afford not to
take.- Drucker
![Page 69: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/69.jpg)
69
Entry Plan Timing and scheduling Time table Coordination of corporate activities Coordination with external
organizations Marshalling of resources Government actions, permits,
licenses Political support
![Page 70: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/70.jpg)
70
Exit Plan - Actions
Scrap the plan Sell Swap Merge Withdraw gradually Withdraw completely
![Page 71: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/71.jpg)
71
Alternatives to Exit
Commit additional resources Shift priorities Reduce effort Merge
![Page 72: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/72.jpg)
72
Strategy Implementation Business plan Marketing plan Competitor plan Operations plan Financial plan Technology plan Organization plan Corporate development plan
![Page 73: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/73.jpg)
73
Business Plan Description of Company Company History Marketing Strategy Management Team Organization & Personnel Operations Funds Required & Their Use Financial Data Risks R & D Required Legal Issues Insurance Considerations Schedule
![Page 74: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/74.jpg)
74
Financing Plan Amount Requested Purpose of Financing Use of Funds Description of Collateral Source of Repayment Whether Seeking Other Debt Financing History of Company Description of Business Description of Market Financial History of Company Financial Projections Financial Assumptions Schedule of Assets & Liabilities Description of Management & Ownership Financial Status of Owners References
![Page 75: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/75.jpg)
75
“On second thought, maybe a periodic re-assessment of the MISSION STATEMENT might not be such a bad thing”
NON SEQUITUR-WILEY
![Page 76: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/76.jpg)
76
Mission Statement - Route Origin, destination and route Transit distance Transit time Frequency of service Delays in service, planned and unplanned Weather conditions Current Vessel traffic systems Canal characteristics Ice conditions
![Page 77: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/77.jpg)
77
Mission Statement - Cargo Quality of cargo Type of cargo Cargo characteristics Cargo stowage and securing
requirements Cargo care requirements
![Page 78: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/78.jpg)
78
Mission Statement - Infrastructure Port characteristics
Terminal characteristics Physical restrictions Port costs Cargo handling methods and rates Turnaround time Inland transport considerations Weather conditions Docking assistance and mooring
requirements Fuel availability and cost
![Page 79: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/79.jpg)
79
Mission Statement - Vessel
Type of vessel New, converted or existing vessel Number of vessels Capacity, normal and maximum Speed, normal and maximum Type of machinery if known Type and source of fuel Chewing – nationality, unions,
quarter standards
![Page 80: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/80.jpg)
80
Mission Statement- Commercial Existing or projected freight rates Competitor characteristics Anticipated market share Conferences Trade restrictions
![Page 81: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/81.jpg)
81
Mission Statement - Economic Required international rate of return
Prime and/or other rates Subsidies and/or grants Crew rates Insurance rates Fuel costs Tolls Port charges Vessel financing and interest rates Life of vessel Tax schedules
![Page 82: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/82.jpg)
82
Mission Statement - Government
Vessel registry and classification Governmental restrictions Cabotage laws Environmental restrictions Safety restrictions Registry
![Page 83: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/83.jpg)
83
![Page 84: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/84.jpg)
84
Planning Design Commercial Production
![Page 85: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/85.jpg)
85
Engineering
The art of applying – Knowledge Scientific principles
![Page 86: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/86.jpg)
86
DESIGN is the essence of ENGINEERING
- Buxton
![Page 87: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/87.jpg)
87
The CPCD Design Sequence
Concept Preliminary Contract Detailed
![Page 88: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/88.jpg)
88
![Page 89: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/89.jpg)
89
Design Drawings Sketches Artist renderings Diagrams/Schematics Computer imaging Calculations Models Model testing Research/Development Experimentation
![Page 90: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/90.jpg)
90
Design Includes
Industry standards Classification society rules Governmental regulations Manufacturers’ specifications Shipbuilder’s design detail
standards
![Page 91: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/91.jpg)
91
The Engineer Is Faced With Conflicting RequirementsExample
Physical – minimum weight Economic – minimum cost Social – maximum safety Environmental – minimum impact Commercial – maximum efficiency Esthetic – maximum stylishness Etc.
![Page 92: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/92.jpg)
92
The engineer resolves these conflicts and
searches for “optimum” solutions.
![Page 93: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/93.jpg)
93
Design is solving a problem with many VARIABLES.
![Page 94: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/94.jpg)
94
Design is an ITERATIVE process.
![Page 95: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/95.jpg)
95
Prior to 1970, designers used
The DESIGN SPIRAL.
![Page 96: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/96.jpg)
96
DESIGN SPIRAL Hull form Appropriate dimensions Hull prismatic coefficients Power estimates Weight estimates
- Hull- Machinery- Outfitting
Deadweight capacity
![Page 97: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/97.jpg)
97
![Page 98: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/98.jpg)
98
![Page 99: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/99.jpg)
99
![Page 100: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/100.jpg)
100
![Page 101: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/101.jpg)
101
![Page 102: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/102.jpg)
98a
![Page 103: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/103.jpg)
98b
Computers permit multiple criteria – multi variate search
patterns.
![Page 104: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/104.jpg)
104
“Conservative pressures increase as the design progresses.
Hence the early stages should be biased towards the novel.”
- Brown
![Page 105: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/105.jpg)
105
“New ships should be 25% novelty 75% well proven
practice.”
- Baker
![Page 106: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/106.jpg)
106
CONCEPT DESIGN
Requires Innovation Creativity Judgment Technical perception Economic awareness Analytic log “Hands on” control of the synthesis
process No computers
![Page 107: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/107.jpg)
107
Concept Design Synthesis takes place. Requirements evolve into form and
configuration. Some dimensions and principal
characteristics may evolve. Results in sketch or drawing. May include a written description. May include more than one
alternative. 10 to 80 man – days.
![Page 108: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/108.jpg)
108
Preliminary Design
Should also establish
Ability of vessel to meet mission statement.
Regulatory feasibility. Patent infringements (if any). Need for new technology. Model testing requirements.
![Page 109: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/109.jpg)
103a
Preliminary Design The second iteration in the design
process. Provides more detail. Provides more accurate dimensions. Focuses on essential features. Provides enough detail to verify.
- technical feasibility- economic feasibility
Provides outline specification. Provides enough information for
- Construction cost estimate- Operating cost estimate- Revenue generating estimate
![Page 110: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/110.jpg)
110
Contract Design The third iteration in the design process. Creates definitive description of the
vessel. Can be used as contract documents. Permits total meeting of the minds
between designer and builder. Increase details and accuracy of the
design. Increase accuracy of feasibility checks. Decreases risks.
![Page 111: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/111.jpg)
111
Typical Ship Design Package
Plans Specifications
Reference material- Drawings- Guidance calculations
![Page 112: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/112.jpg)
112
Contract Design
Should Avoid ambiguity Avoid excessive specifics. Be precise. Use legal terminology. Avoid use of guidance drawings.
![Page 113: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/113.jpg)
113
Classification Societies
![Page 114: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/114.jpg)
114
The Role of Classification Societies Construction Standards
- Rules- Survey
Maintenance and Repair Standards- Rules- Survey
Certification Safety Auditing (ISM) Environmental Auditing (ISO) Technical Guidance Regulatory – Flag state
![Page 115: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/115.jpg)
115
![Page 116: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/116.jpg)
116
THE IACS SOCIETIES
ABS BV CCS DNV GL KR
LR NK RINA RS CRS (Associate) IRS (Associate) PRS (Associate
![Page 117: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/117.jpg)
117
Class is not a substitute to an effective project management, inspection and survey program.
An owner cannot delegate his responsibility to assure that his vessel is seaworthy.
- Sundancer decision
![Page 118: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/118.jpg)
118
![Page 119: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/119.jpg)
119
Model Basins Resistance and Propulsion
- Still water- Waves
Seakeeping Mooring forces Maneuverability Forces and motions Propeller performance Wake field Ice breaking Wind resistance (wind tunnels) Smoke flow (wind tunnels)
![Page 120: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/120.jpg)
120
The Role of the Manufacturerin High Tech Equipment
Technical Information Quality Control During Manufacture Installation & Start-Up-Support Guarantees Service Stock of Spares Crew Training Documentation
![Page 121: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/121.jpg)
121
Consulting Naval Architectsand Marine Engineers
Transportation planning Marine economic analyses Conceptual design Preliminary design Contract design and specifications Working (detailed) drawings Plan review Tests, sea trials, witness same Construction and repair inspection Contract management (owner’s
representative) Guarantee engineering
![Page 122: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/122.jpg)
122
Terms Used for EngineersWorking in Marine Field
Naval Architect Marine Engineer Naval Engineer Naval Constructor Ocean Engineer Shipbuilding Engineer Marine Surveyor Licensed Marine Engineer
![Page 123: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/123.jpg)
123
Planning Design Commercial Production
![Page 124: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/124.jpg)
124
Commercial Selection of yards for invitation Request for expression of interest Invitation to bid Bid analysis invitation to bid Pro-forma contact invitation to bid Negotiations Financing Contracting
![Page 125: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/125.jpg)
125
Factors in Selecting Yards for Invitation
Physical characteristics Technical capabilities Experience Order book Employment Location Ability to assist financing Reputation References
![Page 126: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/126.jpg)
121
![Page 127: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/127.jpg)
121a
![Page 128: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/128.jpg)
128
Request for Expression of Interest
Simple and brief inquiry. Sent by e-mail or fax. Saves time and effort. Permits assessment of number
of yards participating.
![Page 129: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/129.jpg)
129
Invitation to Bid (RFP)
Best process. Make create legal obligations. Not to be used to develop price
estimates. Use standard formats. Formality is required. Use bid form.
![Page 130: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/130.jpg)
130
Information to be Sent in Invitation to Bid
Brief description of vessel. Name and address of person requesting
proposal. Number of vessels and options (if any). Documents
- Plans- Specifications- Pro-forma contract or Heads of Agreement
Required delivery. (cont’d.)
![Page 131: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/131.jpg)
131
Requirement for cash price Currency Financing terms Confidentiality of owner’s documents Performance bond (if any) Period of validity of bid Obligations on owner concerning bids Signature by authorized representative
(Cont’d.)
![Page 132: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/132.jpg)
132
Additional yard information- Quality information- Yard standard details- Current order book- Financial statement- Bank reference- Management plan- Technical plan- Major event schedule
Complete bid form
![Page 133: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/133.jpg)
133
Tips in Bidding
Hold bidders’ conference. Use addenda, if necessary. Be firm on submittal date. Create short list. Be courteous and fair. Ensure ethical practices.
![Page 134: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/134.jpg)
134
Bid Analysis Price for one vessel Price for a multiple vessel order Currency of payment Additional cost for financing Location of yard (and distance to where
vessel or vessels will be deployed) Cost of positioning vessel Reputation, experience and quality of yard Financial health of yard Proposed building schedule Owner’s costs as they relate to yard
location (i.e. inspectors’ housing, travel, taxes, etc.).
![Page 135: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/135.jpg)
135
Negotiations Have primary bidder and two back-up bidders. Beware of driving bidder below level of
profitability. Be well informed and prepared. Be aware of legal obligations in negotiating
stage. Have at total and complete meeting of the
minds. Yard to take total responsibility for design. Avoid split responsibilities. Review, in detail, all documents and initial
every page and drawing.- Contract- Specifications- Drawings
![Page 136: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/136.jpg)
136
Tips in Negotiating
Be fair. Be patient. Be firm, until it is absolutely
necessary to be flexible. Take enough time for the process.
![Page 137: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/137.jpg)
137
McCormack’s Rules for Negotiating Do not get stranded by “how much”.
Money issues are only one part of the transaction.
Let the other party go first (with terms and numbers).
Play in majors. Do not deal in round numbers. Avoid showdowns. Negotiate backwards. Trade places. Mollify then modify. Deflect with a question. Question positions but do not ignore them.
![Page 138: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/138.jpg)
138
McCormack’s Rules for Negotiating (Cont’d.)
Improve the offer with other parties’ self interest.
Consider barter. Keep your time frame quiet. Step back and relax. See emotional outbursts as
opportunities. Act in anger – never react in anger. Give the other parties side victories. Use candor.
![Page 139: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/139.jpg)
139
Silbiger’s Rules for Negotiating
Know your opponent. Know yourself. Do your homework. Understand your strategy. Understand your limits. Review your negotiations,
afterwards.
![Page 140: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/140.jpg)
133a
Buyers’ Market
Low prices Early delivery Attractive financing terms Proactive engineering Yard flexibility Buyers’ contract terms
![Page 141: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/141.jpg)
133b
Sellers’ Market
High prices Long delivery Little or no yard financing Sellers’ terms Inflexibility
![Page 142: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/142.jpg)
142
Ship Finance
Sources Equity Debt Grants
![Page 143: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/143.jpg)
143
World wide need for Ship Financing
$250,000,000,000 per year
![Page 144: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/144.jpg)
144
What form of financing to use?
FRICT approach Flexibility Risk Income Control Timing
![Page 145: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/145.jpg)
145
Factors to Consider in Financing Unused tax depreciation - Leasing
Excess debt - Equity Potential business risk - Equity Buyer’s market - Shipyard Credit Large earning power - Debt Strong, predictable cash flow - Debt Low stock price low expectation – Hybrid Long term, fixed rate- Bonds
![Page 146: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/146.jpg)
146
Debt Financing Least expensive Most restrictive Commercial or government loans Loans secured or collateralized Mortgages Possible pledge of:
- earnings- insurance- corporate guarantees- pledge of shares- personal guarantees
Seldom 100%
![Page 147: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/147.jpg)
147
![Page 148: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/148.jpg)
148
Sources of Debt Financing Commercial banks Ship finance banks Investment banks Government banks Commercial finance companies Saving and loan associations Pension funds Insurance companies Commercial credit companies Account receivable factors Manufacturers and vendors
![Page 149: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/149.jpg)
149
Debt – Commercial Finance Cos.
GE Capital Greyhound CIT Kleinwart Benson Henry Ansbacher Samuel Montagu Others
![Page 150: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/150.jpg)
150
Debt – Commercial Banks Norwegian owners -
Norwegian banks Chinese owners - Hong Kong
banks Japanese owners - Japanese
banks Greek owners - Non-Greek
banks
![Page 151: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/151.jpg)
151
Debt – Mezzanine Financing
Used when bank unwilling to loan owner sufficient money.
High yield corporate debt, i.e. Junk Bonds.
Closes gap. Provides high return. Compensates for high risk. Usually arranged by investment
banks.
![Page 152: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/152.jpg)
152
Debt - Bonds
Issued by shipowner Certificates of indebtedness Specific purposes Specific rates and period
![Page 153: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/153.jpg)
153
Debt – Ship MortgagesPurposes: Public record of lien Priority of the lien Sequence of prior liens Agreement between lender and
owner:- Operation- Insurance- Maintenance- Trading areas
![Page 154: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/154.jpg)
154
Debt – Factors Considered in Granting Loans
Age of business Type of operation Method of payment Currency of loan and repayment Collateral Character of management Credit history National economic factors Industry Mortgage and loan terms
![Page 155: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/155.jpg)
155
![Page 156: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/156.jpg)
156
Quality of Borrower Liner Co.
- Ability to Market it’s Service
Bulk Carrier Owner- Ability to Service Debt- Cash Flow- Quality of Charters
![Page 157: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/157.jpg)
157
Debt - Rates Floating (variable)
- usually tied to LIBOR Fixed
- Rare from commercial banks. “Swap”
- Swaps are more costly- Lender and third party who have excess variable and fixed rate funds arrange swap.
“Cap”- Protects against rising rates.- Lender pays interest over an agreed level.
“Collar”- Reduces extra costs for a cap.- A combination of a cap and “floor”.
![Page 158: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/158.jpg)
158
Spread Difference between cost of funds to
the lender and the borrower. Based on:
- Credit worthiness of owner- Risk in shipping operation- Size of loan- Period of loan- Type and amount of security- General supply and demand for loans
![Page 159: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/159.jpg)
159
Leases
Operating Finance
![Page 160: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/160.jpg)
160
Leveraged Leases
Most ship leases are leveraged leases.
Owner Lessor■ Provides equity portion of funding■ Provides debt portion■ Retains ownership ■ Holds mortgage■ Make lease payments ■ Receives assignment of lease
payments.■ Tax benefits■ Residual at end of lease (sometimes).
![Page 161: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/161.jpg)
161
Off-Balance Sheet Financing
Indebtedness does not show on balance sheet.
Usually done through chartering Not legal in U.S. nor GAAP.
![Page 162: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/162.jpg)
162
Sources of Equity Funds
Retained earnings Cash Flow Sale of Assets Sale of stock
- common- preferred
Limited partnerships
![Page 163: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/163.jpg)
163
Sale of Stock Public Offering
- Strict government controls- Rigorous accounting- Expensive- Time consuming
Private Placement- Insurance Cos. (casualty and property)- Mutual funds- Finance cos.
![Page 164: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/164.jpg)
164
Hybrid Financing Schemes
Convertible debt Debt with warrants DIFKO (Danish) K/G System (German) Blocked currency schemes Barter deals
![Page 165: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/165.jpg)
165
Government Grants Loans Loan guarantees Subsidized interest rates Cash grants (owner or builder) Cash or credit to allied industries Operating subsidies Favorable tax treatment Moratoria on debt repayment Training funds R & D Scrapping subsidies
![Page 166: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/166.jpg)
166
The Shipbuilding Contract
![Page 167: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/167.jpg)
167
ContractingWhy It Can Be Complicated
International transaction Different laws:
- construction/building- provision of services- sale of goods
More than 2 parties Much money Obligation may occur early, during
- bidding phase- negotiations
Constantly changing- laws- interpretations of law- tax regulations
![Page 168: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/168.jpg)
168
Contracting
Written (usually) Involves legal advice and
assistance Often starts with “Heads of
Agreement” and a “pro forma” contract
Sometimes letter of understanding
![Page 169: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/169.jpg)
169
Shipbuilding Is Governed By Many Laws
Contract law Other laws:
- tort- fraud- negligence- employment- environmental- etc.
![Page 170: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/170.jpg)
170
Contract
A promise enforceable by law. “A contract is a promise or set of
promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.”
Pact Sund Serventa (Promises made must be kept)
![Page 171: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/171.jpg)
171
Conditions for a Contract An offer An acceptance Consideration Intent to create a legal relationship In writing (sometimes oral) Parties are competent Form required by law Not impossible of performance Not contravene law or public policy
![Page 172: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/172.jpg)
172
An Offer Complete Free of ambiguities Properly communicated Fixed time of acceptance (or kept
open for a reasonable time) May be revoked
- before acceptance- providing offer provides for
notice of revocation.
![Page 173: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/173.jpg)
173
An Acceptance
Creates the binding contract Must be absolute and complete Qualified or conditional is NOT
an acceptance (it is a counter offer).
Silence is NOT an acceptance.
![Page 174: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/174.jpg)
174
A Contract May Be Voided
Material misrepresentations
Fraud Duress Improper conduct
![Page 175: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/175.jpg)
175
Shipbuilding Contracts
Specially drafted Owner or builder’s standard form Industry standard
- SAJ form- AWES form- MARAD form- Norwegian form-BIMCO
![Page 176: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/176.jpg)
PRINCIPAL ELEMENTS OF A SHIPBUILDING CONTRACT
166a
![Page 177: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/177.jpg)
177
A Comparison of Standard Form Shipbuilding Contracts
![Page 178: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/178.jpg)
178
![Page 179: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/179.jpg)
179
Basic Elements of a Shipbuilding Contract
The parties What is to be done Price Delivery Guarantees Tests Change procedures Right to reject Default Title Jurisdiction
![Page 180: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/180.jpg)
170
Escaping Contracts
Walk Away Delay Renegotiate Delivery Frustrate Greenfield Yards
![Page 181: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/181.jpg)
171
Planning Design Commercial Production
![Page 182: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/182.jpg)
182
Production Management
Specialized Management Techniques
To Plan and Control Projects To Complete Defined Work On Schedule Within Budget Meet Quality Constraints
![Page 183: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/183.jpg)
183
Purposes of Production Management
Fulfill original objectives Keep project within budget Keep project on schedule Coordinate project team Detect need for and take corrective
action Communicate progress to
management
![Page 184: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/184.jpg)
184
Define Project
State objectives and goals Prepare mission statement Develop work plan Create Work Breakdown
Structure Document (WBSD)
![Page 185: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/185.jpg)
185
Establish Schedule
Define Tasks Select milestones Define interrelationships Establish timing and deadlines
![Page 186: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/186.jpg)
186
Prepare Budget Identify or estimate all
costs Allow for
margins/contingencies Establish timing of
expenses Adopt financial controls Obtain approvals
![Page 187: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/187.jpg)
187
Team Budget Elements Wages Benefits Local taxes – if any Global taxes – if any Travel expenses Supplies and equipment Communication costs
![Page 188: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/188.jpg)
188
Owner’s Expense Budget Owner furnished equipment Crew costs Professional costs
Legal Accounting Technical
Stores and supplies Fuel and lube Entertainment and ceremonies
![Page 189: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/189.jpg)
189
Team Select and recruit team leader Develop team position/tasks Establish timing for each Recruit members Indoctrinate Delegate
![Page 190: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/190.jpg)
190
Managing Your Team Staying in control Evaluating your team Identifying and dealing with
different personality types Motivating your team Managing clients Effective team organization
![Page 191: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/191.jpg)
191
Control Project Communicate Coordinate Meetings – scheduled and
unscheduled Review and audit Make adjustments/corrections as
necessary Document
![Page 192: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/192.jpg)
192
Production Control Techniques
Full wall scale charts Gantt charts PERT CPM Programs
![Page 193: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/193.jpg)
193
Gantt Chart
![Page 194: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/194.jpg)
194
PERT Chart
![Page 195: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/195.jpg)
195
Monitor Critical Elements
Require production statistics Monitor milestones Watch critical paths Identify choke points/bottlenecks Make projections/extrapolations Anticipate problems
![Page 196: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/196.jpg)
196
When Things Go Wrong
Identify real problems Get input from team Investigate thoroughly Analyze possible solutions Take timely corrective action Meet with yard Communicate with stakeholders
![Page 197: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/197.jpg)
197
Tips Delegate effectively Be a good listener Be fair with everyone Use good time management Avoid bureaucracy Be decisive and clear Communicate thoroughly Insist on ethical behavior
![Page 198: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/198.jpg)
198
Production Activities Owner’s representative Contract management Project management Plan approval Inspection Quality control Testing Crewing, storing, fueling Delivery and acceptance Post production activities Warranty and guaranty Closing the project
![Page 199: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/199.jpg)
199
Detailed Design Materials Working plans Finished drawings Posted plans Vendor drawings Field sketches Shop drawings Schematics Drawing changes Operating manuals Safety manuals Maintenance, repair and trouble shooting manuals Test agendae, protocols and results Tech specs for equipment procurement
![Page 200: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/200.jpg)
200
Inspectors Hull Machinery Outfitting Electrical Coatings Welding
![Page 201: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/201.jpg)
201
Delivery and Acceptance Title passes when
- physically delivered- at another time, if both parties contractually agree- vessel registered- execution of bill of sale- when both parties so declare- when ship is in a “deliverable” state- bill is paid- builder completes his performanceprogressively
![Page 202: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/202.jpg)
202
Post Production Activities Deficiencies Unfinished work Temporary and permanent
documents Warranty and guaranty
![Page 203: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/203.jpg)
203
Management Science Techniques Linear programming Integer linear programming (simplex
method) Network flow models PERT/CPM Queuing models Inventory models Computer simulation Decision analysis Goal programming Analytic hierarchy process (AHP) Forecasting process models Dynamic programming
![Page 204: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/204.jpg)
192a
Innovative Techniques Clarification of aims Abstract reformulation Morphological synthesis Inductive reasoning Deductive reasoning Value analysis Brain storming Brain writing Heuristic programming
![Page 205: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/205.jpg)
192b
Innovative Techniques (Cont’d.)
Idea combinations Negative brain storming Re-thinking through questioning Lateral thinking Independent review S Curve strategy The in-and-out strategy The 5-15 idea generating
![Page 206: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/206.jpg)
206
ProblemSolving
DecisionMaking
Define the ProblemIdentify the AlternativesDetermine the Criteria
Evaluate the AlternativesChoose an Alternative
Implement the DecisionEvaluate the Results
![Page 207: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/207.jpg)
193b
Innovative Techniques (Cont’d.) Synetics process
Attribute listing PMI evaluation Matrix thinking Forced relationships Force field analysis The angel’s advocate Extrapolation and interpolation
![Page 208: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/208.jpg)
194
ComparingTechnologies
FeasibilityStudies
Ideal DesignIn one
TechnologyOptimization
Studies
![Page 209: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/209.jpg)
195
Economic Analysis
![Page 210: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/210.jpg)
210
![Page 211: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/211.jpg)
198
![Page 212: THE SHIP ACQUISITION PROCESS](https://reader030.fdocuments.in/reader030/viewer/2022013005/5868bedf1a28ab39568ba408/html5/thumbnails/212.jpg)
199