COST MANAGEMENT IN SHIPBUILDING Case Studies Software System - PowerPoint PPT Presentation

COST MANAGEMENT IN SHIPBUILDING Case Studies Software System "CostFact" NSRP Joint Panel Meeting Develop new ships at competitive costs. Combine engineering know-how and costing experience to ascertain the real costs San Diego, CA, USA of new vessels and generate reliable December 8, 2015 quotations very quickly. 1

CONTENTS  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 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 incorporated into the system, covering all of a shipyard’s calculation demands. 2

Overview Cost Management System “CostFact” Estimation, Planning and Controlling of Cost 3

Information Management Integrated administration of all cost relevant information. ERP Consumptions System Data Spreadsheet (Material, Calculations Labor Hours) Product Breakdown Structures Cost Rates Previous Projects with all relevant information PROJECT 4713 PROJECT 4711 PROJECT 4712 Technical Parameter Specification Manual Cost Supplier Inputs Escalation Proposals 4

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) 5

Parametrical Cost Prediction Incorporation of technical parameters for cost prognoses and project comparisons. Previous Projects Regression Analysis Cost Forecast Current Project PROJECT 4713 PROJECT 4710 PROJECT 4712 PROJECT 4709 PROJECT 4711 PROJECT 4708 6

Clarity Calculating in the product breakdown structure provides high clearness. 7

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) 8

Input Logging Automatically created cost history that documents all single cost inputs and cost changes. 9

Continuity Continuous cost planning and controlling accompanying the design and production process, up to the entire life cycle. Project Phase Reference Sources Initial Design Projects of Comparison Ship Detail Design Manual Calculations Building Groups Engineering ERP-System Components Manufacturing In-Service - L i f e C y c l e C o s t i n g - 10

Trouble-Free Integration Easy integration of CostFact in the existing system landscape. AVEVA MARS “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) 11

Parametrical Cost Estimation with CostFact 12

Overview CostFact Structure Current Project Previous Projects PROJECT 4713 SPECIFICATION PROJECT 4712 PROJECT 4711 DIRECT INPUT OF COST ITEMS BASIC STRUCTURES CALCULATION CALCULATION & SETTINGS INDEXATION TABLE DIRECT INPUT COST RATES & COST RATES & PRICE LISTS PRICE LISTS PROPOSALS POOL "PROPOSALS" PROPOSALS EXTERNAL SOURCES DIRECT INPUT DIRECT INPUT DIRECT OF NORMS INPUT POOL "NORMS" REGRESSION ANALYSES ACTUAL COST CALCULATION ANALYSES Not shown: Life Cycle Costing 13

Selected Software Features Presentation Current Project Previous Projects PROJECT 4713 SPECIFICATION PROJECT 4712 PROJECT 4711 DIRECT INPUT OF COST ITEMS BASIC STRUCTURES CALCULATION CALCULATION & SETTINGS INDEXATION TABLE DIRECT INPUT COST RATES & COST RATES & PRICE LISTS PRICE LISTS PROPOSALS POOL "PROPOSALS" PROPOSALS EXTERNAL DIRECT SOURCES INPUT DIRECT INPUT DIRECT OF NORMS INPUT POOL "NORMS" POOL "NORMS" REGRESSION ANALYSES REGRESSION ANALYSES ACTUAL COST CALCULATION ANALYSES 14

Relation between cost drivers and technical groups (examples) CARGO ACCOMO- DWT SPEED PUMPS DATION COST DRIVERS TANK LOA POWER CAPACITY DYNAMIC DECK AREA POSITIONING CLASS 3 – CARGO GROUPS 4 – COMMON 2 – MACHINERY CONTAINMENT 5 - SHIP 1 - HULL AND SYSTEMS AND AND HANDLING GENERAL COSTS PROPULSION EQUIPMENT TOTAL COST (See Haakon Shetelig : “Shipbuilding Cost PRICE Estimation – Parametric Approach”) 15

Sources of (cost) norms: Quantifying the relation Regression Analysis of Previous Projects Existing Knowledge “Cost of our Super Yachts is 1,000,000 EUR per Metre Length” “1 ton steel causes 150 labour hours steel w ork” Cost Norms 16

Regression analysis: Cost estimate in 4 steps 17

Selecting calculation object (Propulsion Plant) 18

Defining regression parameters (Power & Production Cost) 19

Apply indexation (escalation) 20

Selecting reference projects 21

Calculating the regression function 22

Calculating the regression function (2) 23

Applying the regression function 24

CASE STUDY I Integration of CostFact with ShipConstructor 25

Administration of (Cost) Functions in CostFact Variant 2: Generating functions by regression analyses Variant 1: Manual entry of functions into norm pool 26

Central administration of a project’s technical parameters 27

Quantity calculation based on parameters and attributes 28

Automatic cost calculation by integrating CAD and ERP data CAD-System ERP-System Model Data Cost Rates CostFact Model Data (x) Cost Rate Function y = f(x) Quantity of Cost of Object Cost Element 29

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 30

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. 31

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. 32

In-depth information on the impact of CAD data changes The column “Usage” shows the number of different cost items, calculated based on the respective parameter. 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 parameters with changed CAD values are highlighted 33

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 34

CASE STUDY II Capability Costing at ThyssenKrupp Marine Systems 35

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 36

Cost management starts with the definition of a cost target Loosing contract Market Price Earnings + Earnings + Risk Risk Premium Premium Calculated Allowed Production Target Costs Production Costs Costs Loosing Money (See also Haakon Shetelig: “Shipbuilding Cost Estimation Bottom-up Pricing Top-down Pricing – Parametric Approach”) 37

Capability costing identifies approaches for cost reduction Sales Department: CostFact: 1. Defining capabilities Calculating the cost of a capability 2. Analysing the value of each capability Contrasting Capability’s Value Capability’s Cost Cost and Value for the Customer 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 38

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 39

Structuring capabilities in CostFact - Schematic representation for confidentiality reasons - 40

Quantifying the contribution of groups to capabilities - Schematic representation for confidentiality reasons - 41