by
Mr.J.L. Hutchinson CEng MIMarE
7he author oflhe original completepaper thanked Exxon International Company and Esso Petrolewn Company Ltd.forpermission to use the information and also thanked his coUeaguesfor their advice and comments during the preparation o!thispaper. These extracts are reproduced with kind permission of '!he Institute of Marine Engineers.
Introduction
TIlE AUTHOR'S COMPANY, in line with most ofthe major tanker operators, plan vessel shipyard repair periods around the 15 year dry-dock cycle which results in a substantial number of scheduled repairs having to take place each year. For tankers voyaging worldwide, a ship manager has a wide selection of shipyards from which to choose. Various methods of selection can be used, but usually it is a relatively simple choice based on an economic assessment of total repair costs, summating the best estimates for:
Overall cost of repairs (yard quote against specification).
Forecast of exchange rate.
Owner supply items: cost of parts and spares, including freight costs.
Diversion costs, including bunker costs.
Agency and port costs, including tugs and shipyard services.
Specialist expertise to be paid by shipowner, including coating and supervision.
Tank cleaning and gas freeing costs.
In addition to the above costs, the cost of out-of- service repair time has to be included in the calculation covering the estimated calendar repair days (at vessel's daily rate at forecast Worldscale) plus days spent gas freeing and diverting to the rep air port.
Most of the above information can be estimated by the tanker operator for budgetary purposes.
However, the two most important pieces of data, the cost, and duration of repairs, have to be obtained from the shipyards. To do this one of the following three ways is used:
(i) Competitive bidding, based on a standard specification.
(ii) Competitive tenders based on actual ship's specification.
(iii) Cost-plus arrangements taking into consideration the owner's past experiences with the yard and the confidence the owner has in the ability of his repair superintendent to monitor and control the costs.
Competitive bidding
In an effort to overcome the sources of error in yard selection, the author's company has evolved a
148 THE NAUTICAL INSTITUTE
standard specification which is intended to represent the approximate volume of work which the yard will eventually execute, although in practice the standard specification items will normally cover only 70-80 per cent of items actually carried out. The missing 20-30 per cent is made up by new items in the final working specification which compensates for items deleted from the standard specification.
The standard specification approach permits each repair yard to be cost evaluated on an equal basis, permitting a ship to be allocated to the successful yard well in advance of the actual docking date, which enables the yard to plan its base load programme, takes the element of yard selection out of the communication and allows time for better preparation of the working specification. Where a number of ships of the different classes are to be dry docked, shipyards are screened so that only the bid invitations are sent to yards equipped with facilities appropriate to the vessel size.
The standard specification for each class oftanker will contain a detailed description of each item of the work which is normally carried out in dry dock - for example, normal survey work such as checking sea valves, and hull inspection, cleaning and painting. The specification also includes details of special projects planned for many or all vessels in a particular class - for example, crude oil wash (COW) modifications and inert gas installations. Yards are also asked to provide prices for certain unit items, such as cost of erected steel per kilogram, or cost of hull blasting and painting per square metre.
Since it is important that a competitive bidding analysis treats each yard on an equivalent basis, where a yard has not costed a particular item an appropriate figure has to be applied. A relatively simple way of
dealing with 'excluded' items is to apply the highest bids received from yards in the same geographical area for the same items. This will penalise those yards with the highest numb er of excluded items.
Before the ship arrives at the repair yard, the yard should receive the working specification similar to that described in competitive tender, which will include items directly transferred from the standard specification plus a number of newly- identified items for which the yard will be asked to quote. The
superintendent will compare the quotations against
unit prices from the standard specification to check that they are consistent and any unexpected divergence should be resolved before the ship docks.
The advantages of the standard specification method for selecting a repair yard are:
(i) Each repair yard receives the same specification well in advance of the docking.
(ii) The successful repair yard establishes a better comprehension of the repair work before the ship arrives, by communicating and planning with the owner's representatives. For example, the method of dealing with any outstanding 'unbid' items can be resolved in advance.
(iii) An owner operating a large fleet can select ayard on a fair and equitable basis, so providing a further incentive for yards to prepare competitive bids.
(iv) Both the shipowner and the selected shipyard gain through the learning curve of their employees when a number of similar ships with almost the same repair specification are overhauled in the same yard.
(v) Due to the 'standard' nature of most of the information required, afterthefirstpass, very little effort is required by the repair facility to update the bid information each year.
(vi) Due to the 'standard' nature of most of the information supplied, comparisons on the competitiveness of the bid and settlements on completion of repairs are greatly simplified.
(vii) Where an owner has a large number of vessels, the system lends itself to improved competitiveness by the repair facilities offering additional incentives in the form of volume discounts, either for a number of vessels, or on the volume of cash flow, or both. It should be noted that this volume discount is discretionary:
in the author's company it is not negotiated or used in order to give one facility an unfair advantage over another, nor is it used to induce shipyards into making non-commercially viable bids. The competitive bid in formation is strictly controlled to ensure that all of the bids received are held and opened at the same time, before being registered as official bids.
(viii)The system updates the information the shipowner has of the worldwide repair facility trends in prices, which can be used for unscheduled repair reviews.
(ix) Due to awards taking place well ahead oftime of repair it enables a planned approach to 'positioning' the vessels in order to minimise any deviation debits.
(x) Lead time assists rep air facilities in their future planning.
(xi) The lead time between the awards being made and the start of the vessel repair period also allows planned manpower deployment.
(xii) Information on repair costs is available in time to be included in the next years budget forecasting.
(xiii)The single effort awards lends itselfto being more
readily controlled and reviewed by in-house auditors.
The disadvantages of the standard specification are:
(i) When the standard specification does not represent a major part of the value of the final working specification the yard's expectation of work and advance planning will suffer.
(ii) Ifthe ship repairyard employees do not appreciate the relationship between the standard specification and the working specification confusion will occur.
(iii) If the final invoice contains a small number of items ofsignificant value which are not common to all vessels - e.g. installing an inert gas system, fitting a crude oil washing installation, installing bilge separators and sewage plants. In this case each item should be considered as a special project at the time of the bid inquiry with a separate specification. The quotation would then be considered at the bid analysis stage since these costs mighthave influenced the allocation of ships to repair yards.
Competitive tenders
With this system of yard selection the quality of the actual specification is all important. This is the most common method of yard selection, particularly with operators of smaller ships, such as coasters and the like where the opportunity for worldwide tenders does not exist, since the cost of diverting the ship outweighs the differenti al in yard costs. The specification in this case serves two purposes:
(i) to enable the shipyard estimator and buyer to assess time and material costs;
(ii) to inform the shipyard and the shipping company staff of the work required to be done.
The specification should describe and define the work so ac curately that it can be costed and executed without the need to refer back to the ship, or to the superintendent and incurring additional expense and delay.
To meet this objective, the information required will vary according into which category it falls:
standard item, repair item or modification.
Standard items
These items from the normal routine dry dock work are usually similar in content every docking, including for example:
Anchors and chain; inspection and overhauls.
Sea valves and sea chests; inspection and overhaul.
Propeller and rudder; inspection and overhaul.
Lifting equipment; inspection, overhaul and load test
Anodes; list of numbers, location and weights.
Hull painting; description of surface preparation,
areas and film thickness required, including special hull markings.
Any special requirements known beforehand should be described and included in the appropriate specification item, especially with respect to the surface preparation for hull painting.
Repair items
Problems with extras usually occur with these items, which include: hull structure repairs, pipe renewals, machinery overhaul/reconditioning, boiler repairs, instrumentation and control refurbishing, and electrical repairs.
The repair specification of items in this category often fall short ofthe above objective and sometimes even seem to be an obstacle to good communication.
A common example is an item such as 'open up for survey 2 in no. bilge pumps', to which the yard may respond 'to open up bilge pump for inspection h
(overhaul, reconditioning, replacing piston rings, grinding in valves, etc., extra). In such a case the shipyard may be faced at short notice with the need to supply new shaft sleeves, replacement impeller and casing rings, rebuild eroded casings or division plates, make and supply new couplings and coupling bolts.
Whereas, if this amount of work is expected the working specification for this item should list any owner's spares available, with sketches and descriptions of any new parts known to be needed, so that they can be made, rough machined, or obtained prior to the ship's arrival. In the case of piping renewals, a simple dimensioned sketch incorporated in the working specification aids identification and costing. The specification should also identify any equipment renewals in the way of the overhaul and the approximate dimensions of any access staging required.
The author has yet to know of a shipyard which issues guidelines on the preparation of specifications setting out how the specification is to be presented.
In some shipping companies the repair items are extracted from a defect list sent into head office by the ship's chief engineer. This defect list is seldom adequately dimensioned, may lack important descriptive detail and is usually assumed to be a communication between one expert and another. If such items are transferred directly to a dry -dock specification against which an estimator is expected to quote, it is no wonder that such important details as removals for access, staging and specific repair requirements are omitted. But the owner still insists on a firm price for the job.
Modification items
These items embody changes to the ship such as installation of: inert gas systems, major engine room or cargo system conversions, sewage plants and other 150 THE NAUTICAL INSTITUTE
mandatory equipment, and new automation and control equipment.
In these cases the specifications may include the equipment manufacturer's general arrangement drawings, but the ship repair y ard is faced with siting and connecting up services. The shipowner may need to consider sending the superintendent with the ship repair yard's own drawing office people to visit both the ship and the manufacturer to ensure that all the relevant detail will be included in the drawings attached to the specification.
The advantages of using the actual specification are:
(i) The time scale for yard selection can be much shorter.
(ii) By working from the actual specification the yard can review the specification with departmental managers and plan the workload ahead in more detail.
The disadvantages are:
(i) If the specification is inaccurate, or lacks detail, the opportunity for excessive extra charges exist (ii) Yard selection is carried out ship by ship during
the year and ties up shipowner's manpower analysing each bid.
(iii) The large shipowner does not have the same opportunity to use his purchasing power to obtain volume discounts.
(iv) The yard is prevented from planning its 'bread and butter' base workload throughout the yard.
(v) The yard cannot benefit from its employees' learning curve since it may only receive one ship and not a series ofsimilar ships.
Cost plus
The 'cost plus' approach has often to be adopted with damage repairs or when the condition of the ship is more or less unknown. The relationship between the owner's representative and the repair yard management can be fraught with problems, since the approach enjoins the owner's representative to monitor, to the best of his ability, the manhours and materials used by the yard.
The yard has to plan the work and allocate its resources so that minimum time and material are wasted by its employees. This responsibility also extends to each supervisor, which includes chargehands and the willingness of employees on the job. To be successful it requires good relationships and
communication throughout the yard.
Services by all repair yards
Any repair yard should be capable of supplying the following services:
Liability insurance.
Fire watchmen, normally two watchmen 24 hours a day, inc luding connection and disconnection of
fire hoses from dock to ship's fire main.
Electricity for power and lighting.
Tugs for shifting vessel.
Daily garbage removal.
Shore steam, including connecting and disconnecting steam hoses.
Supplying circulating water to the vessel's refrigerating plant, including connecting and disconnecting hoses.
Supply of compressed air and/or steam or electrical power as required for docking and undocking the vessel and to weigh anchor.
Supplying riggers and mooring men to assist vessel's crew in handling lines when shifting and securing vessel.
Installation of telephone on board and removal.
after repairs.
Wharfage.
Skilled support for sea trials; say, five fitters and two riggers.
Protective covering for accommodation alleyway floors.
Facilities for slop disposal.
Repair yard skills
Fuel costs forced ship operators to consider means of improving overall fuel consumption. Such means include improving hull performance by surface treatment by grit blasting to remove accumulated paint and rust to restore so far as possible the original surface smoothness of the hull; by applying sophisticated anti- fouling paint systems which also polish the hull surface through the action of the sea water; and by improving propeller performance by polishing/refmishing.
These items are labour intensive, requiring responsible supervision and carefully conducted work to ensure good long-term performance from the expensive surface coatings. For this reason specialist subcontractors are often employed.
Investing in new equipment such as improved steering gear control systems, heat exchanger anti- fouling systems, conversions to enab le cheaper fuels and fuel blending to be used, new automation systems, ship conversions to permit more cargo carried per tonne of fuel consumed, require drawing office staff and skilled craftsmen which are more likely to be found in a shipbuilding rather than a conventional ship repair yard. Also the coming into force ofSOLAS and MARPOL conventions requires repair yards to be familiar with the installation of inert gas systems, crude oil washing systems, oily water separators, and steering gear modifications.
Shipboard planning for dry dock
Prior to arrival at the yard, the responsibilities and tasks of the ship's officers and crew should be discussed and agreed with the repair superintendent, ship's master and chief engineer, including any administrative details for travel, accommodation, feeding, etc. The main supervisory objectives
delegated to the ship's officers and crew cover quality assurance, monitoring time and cost control, and ensuring the safety and security of the vessel, her people and equipment.
The ship's officers should clearly identify each repair item with the item numb er from the working specification and should also familiarise themselves with the specified work to be done in each case. It might also help ifthe appropriate ship's officers were also identified to the yard's supervisory personnel.
Where necessary the owner will supply additional expertise for supervision of steelwork repairs, corrosion surveys, application of special coatings, and for repair and servicing of specific items of equipment, such as electronic navigation equipment. The repair superintendent will normally delegate the responsibility for quality assurance and monitoring time and cost control to the chief engineer, whose department traditionally reports item by item on job progress, materials consumed and even approximate manhours observed (by trade).
Other tasks include witnessing tests and keeping track of spares and special ship's tools used by the yard. The deck department generally monitor paint and special coating applications, paying particular attention to surface preparation condition, material preparation and consumption, spraying pattern, degree of overspray and film thickness. In addition, the owner will require the repair manager to maintain a running check of additional expenditure incurred.
While the repair sup erintendent retains the ultimate responsib ility to the owner for security and safety in dock, the ship's master is responsible for ensuring that the ship is safely moored when afloat, and that safety and fire precautions are maintained.
The master is advised to prepare a safety ched<
list in accordance with the Health & Safety Acts.
Role of the repair superintendent
The role of the owner's representative (repair superintendent) is to coordinate these activities and closely to monitor costs and time out of service. For this purpose he will generally use a daily report meeting of the ship's staff to monitor progress and quality of the specified work, to identify where additional work has to be specified by a field work order (FWO) or where work is deviating from the original specification and why. He will normally arrive at the yard a day or two prior to the ship's arrival to get to know the yard's organisation and to review the work schedule.
In the author's company the repair sup erintendent is the only person authorised to issue field work orders, and before committing the additional work to the yard he must obtain and accept or negotiate a price for the work. Unfortunately this requirement can result in delays if the yard cannot or will not respond quickly with prices which are consistent with those quoted at the block bid or contract negotiation stage.