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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,


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COST MANAGEMENT IN SHIPBUILDING

Case Studies Software System "CostFact"

NSRP Joint Panel Meeting

San Diego, CA, USA December 8, 2015

Develop new ships at competitive costs. Combine engineering know-how and costing experience to ascertain the real costs

  • f new vessels and generate reliable

quotations very quickly.

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CostFact is the number one in maritime specialized costing software. It is developed in close cooperation with several of the world’s leading shipyards, which means that a number of best-practice methods have been incorporated into the system, covering all of a shipyard’s calculation demands.  Overview Cost Management System "CostFact"  Parametrical Cost Estimation with CostFact  Case Study I: Integration of CostFact with ShipConstructor  Case Study II: Capability Costing at ThyssenKrupp Marine Systems

CONTENTS

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Overview Cost Management System “CostFact”

Estimation, Planning and Controlling of Cost

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Information Management

Integrated administration of all cost relevant information.

Cost Rates Spreadsheet Calculations ERP System Data Consumptions (Material, Labor Hours) Product Breakdown Structures Technical Parameter Cost Escalation Manual Inputs Supplier Proposals Specification

PROJECT 4713 PROJECT 4712

Previous Projects with all relevant information

PROJECT 4711

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Efficiency & Quality

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

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

Oliver Andresen, ThyssenKrupp Marine Systems (Hamburg, Germany)

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Parametrical Cost Prediction

PROJECT 4713

Incorporation of technical parameters for cost prognoses and project comparisons.

Previous Projects

PROJECT 4710 PROJECT 4712 PROJECT 4709 PROJECT 4708 PROJECT 4711

Regression Analysis Cost Forecast Current Project

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Clarity

Calculating in the product breakdown structure provides high clearness.

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Error Avoidance

No errors due to incorrect links in spreadsheets.

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

  • f most different alternative ship designs.”

Rolf Nagel, Flensburger Shipbuilders (Flensburg, Germany)

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Input Logging

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

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Continuity

  • L i f e C y c l e C o s t i n g -

Manual Calculations Projects of Comparison ERP-System

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

Project Phase Building Groups Ship Components Reference Sources Initial Design Detail Design Engineering Manufacturing In-Service

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Trouble-Free Integration

Easy integration of CostFact in the existing system landscape.

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

Hermann Barthel, Barthel Shipyard (Derben, Germany) AVEVA MARS

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Parametrical Cost Estimation with CostFact

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CALCULATION

Current Project

Overview CostFact Structure

Not shown: Life Cycle Costing CALCULATION ANALYSES

Previous Projects

PROJECT 4713 PROJECT 4712 PROJECT 4711

DIRECT INPUT OF NORMS POOL "PROPOSALS" POOL "NORMS"

DIRECT INPUT

PROPOSALS INDEXATION TABLE PROPOSALS BASIC STRUCTURES & SETTINGS EXTERNAL SOURCES ACTUAL COST SPECIFICATION DIRECT INPUT OF COST ITEMS COST RATES & PRICE LISTS COST RATES & PRICE LISTS CALCULATION

DIRECT INPUT DIRECT INPUT

REGRESSION ANALYSES

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Current Project

CALCULATION ANALYSES

Previous Projects

PROJECT 4713 PROJECT 4712 PROJECT 4711

DIRECT INPUT OF NORMS POOL "PROPOSALS" PROPOSALS PROPOSALS BASIC STRUCTURES & SETTINGS EXTERNAL SOURCES ACTUAL COST SPECIFICATION COST RATES & PRICE LISTS

DIRECT INPUT

Selected Software Features Presentation

CALCULATION POOL "NORMS"

DIRECT INPUT

REGRESSION ANALYSES CALCULATION INDEXATION TABLE COST RATES & PRICE LISTS

DIRECT INPUT

DIRECT INPUT OF COST ITEMS POOL "NORMS" REGRESSION ANALYSES

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Relation between cost drivers and technical groups (examples)

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

DWT LOA DECK AREA SPEED POWER DYNAMIC POSITIONING CLASS CARGO PUMPS TANK CAPACITY ACCOMO- DATION 1 - HULL 2 – MACHINERY AND PROPULSION 3 – CARGO CONTAINMENT AND HANDLING EQUIPMENT 4 – COMMON SYSTEMS AND COSTS 5 - SHIP GENERAL TOTAL COST PRICE COST DRIVERS GROUPS

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Sources of (cost) norms: Quantifying the relation

Existing Knowledge Regression Analysis of Previous Projects

“Cost of our Super Yachts is 1,000,000 EUR per Metre Length” “1 ton steel causes 150 labour hours steel work”

Cost Norms

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Regression analysis: Cost estimate in 4 steps

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Selecting calculation object (Propulsion Plant)

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Defining regression parameters (Power & Production Cost)

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Apply indexation (escalation)

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Selecting reference projects

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Calculating the regression function

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Calculating the regression function (2)

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Applying the regression function

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CASE STUDY I

Integration of CostFact with ShipConstructor

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Administration of (Cost) Functions in CostFact

Variant 2: Generating functions by regression analyses Variant 1: Manual entry of functions into norm pool

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Central administration of a project’s technical parameters

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Quantity calculation based on parameters and attributes

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Model Data Cost Rates

Automatic cost calculation by integrating CAD and ERP data

CAD-System ERP-System Function y = f(x) Quantity of Cost Element Cost of Object CostFact Model Data (x) Cost Rate

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Company “SSI” and Software Product “ShipConstructor”

SSI develops autodesk based solutions for the shipbuilding and offshore industry ShipConstructor:

 Suite of software products designed for engineering and

construction in the shipbuilding industry.

 With AutoCAD providing the underlying CAD engine, the user

environment is a globally recognized CAD/CAM standard

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Utilization of CAD model data in CostFact

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

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CAD changes are shown in the project overview

If model data in the CAD system change due to decisions in the design department, CostFact checks whether these changes affect the

  • calculation. In case of identified cost

impact, CostFact shows an alert in the project administration.

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In-depth information on the impact of CAD data changes

After selecting a parameter in the list on the left, this list on the right shows the utilization of its attribute for parametrical calculation. The column “Usage” shows the number

  • f different cost items, calculated based
  • n the respective parameter.

The parameters with changed CAD values are highlighted

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Updating the project automatically

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

 Update the project, according to the

current CAD attributes

 Update the project, according to the

current CAD attributes while the previous version is automatically saved as a project revision

 Create a new project, which is based

  • n current CAD attributes
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CASE STUDY II

Capability Costing at ThyssenKrupp Marine Systems

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ThyssenKrupp Marine Systems, Operating Unit Surface Vessels

 One of the leading system providers for high-end naval vessels with more than

3,200 employees in Germany (including operating unit submarines).

 Development of a new product family:

  • Addressing changing future requirements
  • Simultaneous optimization of costs and technical value
  • Consistently oriented along target costing
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Cost management starts with the definition of a cost target

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

Earnings + Risk Premium Allowed Production Costs Market Price

Bottom-up Pricing

Earnings + Risk Premium

Loosing contract

Calculated Production Costs

Top-down Pricing Loosing Money Target Costs

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Capability costing identifies approaches for cost reduction

CostFact: Calculating the cost

  • f a capability

Capability’s Cost Capability’s Value for the Customer Sales Department:

  • 1. Defining capabilities
  • 2. Analysing the value
  • f each capability

Contrasting Cost and Value Target Costing strives for a balanced relation of value and cost Cost cutting activities have to focus on capabilities with low value and currently high cost

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Step 1: Defining capabilities

Main Capabilities at entire ship level:1)

 Offensive Effectiveness  Survivability  Mobility  Surveillance  Standards

Each capability is fulfilled by several sub functions.

1) Schematic representation for confidentiality reasons

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Structuring capabilities in CostFact

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

  • Schematic representation for confidentiality reasons -
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Project cost according ESWBS (basic costing structure)

  • Schematic representation for confidentiality reasons -
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Resulting costs of capabilities

  • Schematic representation for confidentiality reasons -
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Target cost chart

S S H A A R R E E T O T A A L L T A A R R G E E T C O S S T C U R R R E E N T C OS S T S S H A A R R E

20% 0% 10% 20% 30%

OFF FFENSIVE EFFE EFFECTIVENESS SU SURVIVABILITY SU SURVEI EILLANCE MOBILITY STANDARD RDS

  • Schematic representation for confidentiality reasons -

30% 0% 10% 10% Example Survivability: Current Cost Share 20%: 20,672 TEUR Capability Cost / 101,661 TEUR Total Cost Share Total Target Cost 28%: Estimated share of customer’s total value 40% 40% 40%

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Control of target cost achievement

  • Schematic representation for confidentiality reasons -