Mechanisms for Shipyard Project Management · Fisher Maritime Consulting Group Page 1 Mechanisms for Shipyard Project Management by Dr. Kenneth W. Fisher Fisher Maritime …

Fisher Maritime Consulting Group Page 1

Mechanisms for ShipyardProject Management

by Dr. Kenneth W. FisherFisher Maritime Consulting Group

Florham Park, New Jersey

The objective of this presentation is to lay out thefundamental objectives of the management of shipyardprojects -- for both the Owner as well as the Contractor --and to identify the mechanisms that are appropriate toachieving those objectives. It will be seen that most of themechanisms are suitable for ship repair, conversion andnew construction; and some of them are more appropriateto only one or two of those categories.

Presented at:Ship Production Symposium

Society of Naval Architects and Marine Engineers Fort Lauderdale, USA, October 2006


Slide 2Shipyard Project Management / Fisher

What is Management?

-- and what is NOT managementof large projects?

Analyses of many projects that have been contractualdisasters, as well as lots of successful projectmanagement experience, has demonstrated the need toidentify what constitutes Mis-management of shipyardprojects. Do not equate poor management with Mis-management. Poor management means you won’t quiteget to your ultimate objectives, but at least you are going inthe right direction. Mis-management is counter-productive,and sets the project off in the wrong direction. So, not onlydo we want to understand the objectives of appropriateproject management, we want to consider what is Mis-management so that when we see it starting to occur,corrective action can be taken.



How do you measure how wellyour team has done inmanaging the project?

Cost vs. Budget?

Actual vs. Planned Schedule?

These two comparisons are often mentioned in responseto the question. But, as we will see shortly, they aredefinitely not the correct answer. Those comparisons donot measure how well your team has managed the project.Those comparisons only reflect on some happenstance orquasi-random outcome determined by factors other thanproject management.



First:What is NOT management

of such projects?

By the time you have enough data to consider how farover budget the project has gone, it is too late to starttaking actions to control the budget. Of course, the reasonwhy the budget has increased is because there wereconsiderable change orders due to an understated initialdefinition of the project.Also, by the time it becomes evident that the projectcompletion will far exceed the contractually definedcompletion date, it is far too late to wrest control of theschedule. The unwarranted schedule extension may bedue to considerable change orders, or may result from thecontractor not having applied sufficient resources to theproject from the outset, or both.



Recording Project History(Costs, Schedule) isNot Management:

Management skills not needed forthat task if only recording history

Professionals in the maritime industry could, of course,easily record the actual costs and compare them to thebudget; but such a comparison could also be made by ahigh school graduate with no experience in the maritimeindustry. The obviousness of that statement serves toemphasize that such a comparison does NOT require anymanagerial skills. The same is true for comparing actualto planned schedules.



Mis-Management:

Making decisions that ultimatelywill NOT affect the outcome

Mis-Management is very attractive and very seductive ---but not the least bit helpful. The attraction orseductiveness of it is that it appears that by one simpleaction, the developing problems will be solved. The onesimple action might be to take no action, or to sign asupplementary contract with some entity that promises itwill look after your interest to address the problem. Whensubjected to bright light, it usually seems too good to betrue; and that’s what it is: too good to be true.



Mis-Management Example:

“That problem will correct itselfover the next few weeks.”

Never happens! Projects are notself-healing organisms

If a problem has arisen, before it can be corrected orresolved, the reason for its development has to beunderstood. Was it lack of appropriate engineering ordesign? Was it lack of application of resources on a timelybasis? Was it a poorly defined specification? Leaving aproblem alone will not suddenly result in appropriateengineering, or additional resources, or re-definedspecifications. Unless the underlying cause is corrected, itwill remain a problem for the life of the project, if not thelife of the ship. The cause has to be identified, and anappropriate mechanism has to be developed to overcomethat causative factor.



False Management:

Hoping that an outcome willdevelop is not a substitution forplanning and controls to make itcome about

Consider this example: I did not carry an umbrella with metoday; therefore it will not rain. Of course this makes nosense, because my decision to not carry an umbrella willnot influence the outcome. Yet often persons make whatthey think is a decision, but it really is just an expression ofhope, hoping the outcome will match the so-calleddecision, but really not influencing the outcome in any way.



Another Mis-Management Example:

“They understand what we want; wedon’t have to put it in writing.”

Even if they did understand, will theyremember it that way? … Why takesuch risks?

This illustrates mis-management, because the displayedcomment means that the person stating it recognizes thereis a potential issue developing, yet nothing is beingaffirmatively done to avoid the development of the issue.So the party stating this is hoping that the outcome will beas expected, but is doing nothing to ensure it will definitelybe as expected.



Management Example:

Navigating a ship to a destinationbeyond the horizon (old days,use sextant at same time eachday)

This is a tried and true form of management, namelymanagement of the course of the vessel. Consider theelements of this process and you will better understandwhat constitutes management of an on-going project,whether the project is to get a ship from one destination toanother, or to get a ship constructed from a paper conceptto tangible results.



Navigation Management:

At planned intervals, identifywhere ship is compared to whereit was expected to be at thattime; then alter course to ensureit gets to destination

The elements of management that we see here are these:First, there is a plan; that is, the expected course. Second,there is planned interval at which data or conditions aregoing to be observed. Third, there is a definition of whatdata or conditions will be observed; the exact location ofthe vessel. Fourth, there is a comparison of the observeddata or conditions with that which was planned. And fifth,when the observed conditions are at variance with theones that were expected at that same time, resources areredirected to get the project properly heading toward itsobjective; in this case, the port of destination.



Fundamental Principle ofProject Management:

Planned periodic review of wherethe project is, compared to whereit was expected to be, and then,where needed, re-direction ofresources to push it back ontotrack

The five elements of project management, then, are thesame as the elements of vessel navigation: (1) have a planor expectation of how the project will be developing on atime line; (2) have a predefined time interval at which theprogress of the project will be observed; (3) have a list ofthe forms of data that will be collected at each time ofobservation; (4) perform the observation and compare theactual status of the project with the planned status; (5) foreach significant set of differences, identify and redirect theresources that are appropriate to getting the project on acourse that will take it to a timely completion.



Five Parts ofProject Management:

Plan of ActionTiming of ObservationsForms of ObservationsPerform the ObservationsTake Action/Corrections

Sometimes the projects which are being managed are ascomplex as rocket science, if not more complex; that is,the project itself may require the finest engineering mindsand sophisticated technical analyses. But, the process ofmanaging the highly technical, complex projects definitelydoes not, itself, require such sophisticated analyses.Rather, the project management process requires only thedevelopment and application of a methodical approach tokeeping track of the numerous steps, milestones andevents that occur within each of the functional areas of theproject.



What is the measure of how wellthe contract is being managed?

How often data is assessed tocompare actual to planned statusof each functional area.

Thus, the measure of good project management is notsimply waiting to record the outcome after the project iscompleted. Rather, the measure of good projectmanagement is how often the comparisons are made anddecisions are made as to redirecting the use of resourceswhen necessary to ensure the project is completed on atimely basis.



Apply that fundamentalmanagement principle in each

functional area:

What is the status of eachfunctional area compared towhere we expected it to be at thistime?

Of course, simply trying to measure the status of acomplex project, such as ship design, conversion orconstruction, is not a simple task on a global basis. So,we break it down into functional areas in order to have adefined plan or time-based objectives against whichobserved comparisons can be made. We will see thattypically, for shipyard projects, there are about 15 - 20appropriate functional areas.



Examples of Shipyard ProjectFunctional Areas:

Drawing reviews by OwnerSchedule updates by ContractorChange Orders

(bigger list given later)

These are just three of 15 - 20 functional areas that may beappropriate to ship conversion or construction. Each of thesefunctional areas, while part of the overall project, can be sep-arately planned, on a time-line basis, and can be separatelymeasured or observed on a periodic basis. That is, we definethe functional areas to be semi-independent functional obliga-tions that have to be initially performed by one of the contract-ing parties, with each such functional area being susceptible totime-based targets and time-based measurements of comple-tion. Regarding Drawing Reviews, the shipyard knows inadvance the type and number of drawings it will have toproduce in order to give direction to the production depart-ment; and it will also know when those drawings have to beproduced to support the need for the information by the pro-duction department. This is typically described as the drawingschedule. So both the Contractor and the Owner can use thedrawing schedule, and updates to it, as the plan of actionagainst which their actual performance will be measurable.



Communications:

Every time a contractualobligation is fulfilled, there is acommunication across thecontract boundary.

Usually, the communication is written; but sometimes it isoral. Examples of written communications that originatewith the Contractor are updated schedules, meggerreadings, condition-found (open-and-inspect) reports, testresults, drawings, certifications, and many more.Examples of written communications that originate with theOwner are comments pertaining to reviewed drawings,acceptance of test results, approval of a proposed agendafor sea trials, responses to condition-found reports,installation manuals for Owner-Furnished Equipment, andmany more.



Key to Performance:

Every time one party fulfills acontractual obligation, the otherparty has a reciprocal obligation(which may be in a differentform)

In order to keep the project moving smoothly, both partiesmust recognize that they are not only having to performtheir direct obligations, but they must timely respond to acommunication received from the other party each time anobligation is fulfilled. Usually, the form of response isquite apparent, but sometimes the form of response issomewhat different. The important point here is that eachparty, upon receiving a communication from the otherparty, must ensure that it timely responds in order to helppromote the smooth continuation of the project.



Reciprocal Obligation Example:

Contractor sends detail drawingsfor review

Owner returns commentspertaining to the drawings

This is a fairly obvious form of response. During contractformation, the Owner’s organization knew that it would wantthe opportunity to review those detail drawings before theywere used by the Contractor’s production department, andthus put into the contract the requirement that the Contractorprovide such a review-and-comment period of time in theproject’s schedule. But this sets up a reciprocal obligation onthe part of the Owner; namely, the review and comments haveto be accomplished within the time allotted by per the contract.Note that the Contractor’s Drawing Schedule, developed earlyin the project, identifies for both the Contractor and the Ownerthe target list of drawings that will be subject to this reviewprocess, and also sets forth the approximate schedule of wheneach drawing has to be completed. By the way, a thoroughdiscourse on this subject of drawing reviews is contained inthe SNAME publication, Marine Technology, Nov. 1991 in thepaper: "Responsibilities Pertaining to Drawing ApprovalsDuring Ship Construction and Modification."



Another ReciprocalObligation Example:

Owner prepares Inspection-Quality Deficiency Report

Contractor advises that Deficiencyhas been rectified

Whenever the Contractor presents a completed aspect of theworkscope for the Owner’s inspection, the Owner will have todecide whether the finished work has been accomplished inaccordance with the contractually-defined requirements andstandards. In those instances when the Owner’s staff is notsatisfied with the accomplished work, the Owner’s teampresents an Inspection-Quality Deficiency report to the Con-tractor. Clearly, unlike the drawings to be reviewed, thenumber and timing of these Deficiency Reports is not know-able in advance. But it is essential that both parties maintain alist of these as the number of such reports grows so thateveryone can later look back to see if the Deficiency has beencorrected before delivery of the vessel to the Owner. Althoughthe nature of each deficiency is not knowable in advance, andthe timing of its observation is not predictable either, neverthe-less these reports constitute another functional area that mustbe subjected to decisions as to redirecting the use ofresources to ensure that each of those particular parts of theproject is satisfactorily completed on a timely basis.



Fundamental Mechanismof Management:

Spreadsheets listing eachcontractual obligation of eachparty, separated into functionalareas, with approximate dates

A number of different functional areas have already beenmentioned including drawing reviews, deficiency reports,updated schedules, megger readings, condition-found(open-and-inspect) reports, and test results, among others.The fundamental mechanism of dealing with each of thesestarts with a list. Sometimes the list is knowable in ad-vance, such as for drawings and open-and-inspect reports.And sometimes the extent of the list is not knowable inadvance, such as deficiency reports and change orders.Nevertheless, a list of them is essential so each party cankeep track of the status of whether and when the otherparty performed its responsibility regarding each of them,and whether and when your party performed its responsi-bility regarding each one of them. But since multiple bits ofinformation accompany each item on the list, the list be-comes a spreadsheet having multiple columns to show keyelements of the status of each entry on the spreadsheet.



Gather Data to Assess Statusof Each Functional Area

Compare to planned status forsame date

Do it regularly

The fundamental purpose of each spreadsheet – one perfunctional area – is to be able to quickly assess how welleach party is doing regarding the timely performance of itsobligations. The accomplishment of each obligation isfollowed, as discussed above, by a communication to theother party. By examining the spreadsheet for eachfunctional area, you can see what was the target date foraccomplishment of each element of that work— that is, theexpected date of receipt of the appropriate communication— and what was the actual date. Especially you can seewhether that element of work has not yet been completedor achieved by the target date. This is done for eachexpected communication and reciprocal communicationwhich comes about when a contractual obligation isfulfilled by either party.



If slippage is developing, takeaction by redirecting availableresources, or get supplemental

resources

When a review of the summary spreadsheet covering anyparticular functional area is performed frequently, you cansee how well your own organization is doing in timelyfulfilling its obligations (as well as seeing how well theother party is performing). If this review of the status offulfillment of contractual obligations is done on a frequentperiodic basis, it is not too late to take some correctiveaction. The corrective action is to either redeploy orreassign available resources, or add resources, so thatany insufficiency in the timely fulfillment of your obligationsis brought back to on-time performance.



Categories of Functional Areas:

DesignEngineeringOwner ActivitiesOverviews

MeasurementFinal DeliverablesOther project-specific

categories

There are nearly two dozen functional areas that may ariseduring complex projects. In order to deal with them in amethodical fashion, we first break them into majorcategories of Design, Engineering, Owner Activities,Overviews, Measurement, Final Deliverables, and otherProject-Specific categories. As we will see, no matter howtechnically complex the project may be, the developmentand updating of the spreadsheets in each functional areais fairly straight-forward, and certainly is not ‘rocketscience’ even if the technical aspects of the project areakin to rocket science.



Design Category:

general arrangement drawings

diagrams and schematics

detailed structural design

detailed piping design

detailed electrical & mechanical design

detailed HVAC design

detailed outfitting design

The Design category can be further subdivided intoseveral functional areas, the extent of which depends onthe nature of the project. For newbuilding projects, forexample, the individual spread sheets may focus on thecompletion of the drawings in each of the groups listedabove. The spreadsheets for each of these will list thedrawings that are necessary, the expected date ofcompletion, and the actual date of completion, andpossibly some secondary information. Thus a quickreview of each spreadsheet leads to an understanding ofwhich elements of the design process are on or behindschedule. It is important is that the information be sharedbeyond the boundaries of the drawing office, with theproject managers of both parties, so that any developingproblems and schedule impacts can be studied andaddressed as early as possible.



Engineering Category:

weight and stability reports

electrical load analyses

finite element and structural fatigue analyses

HVAC load analysesother project-

specific engineering analyses & reports

Similarly, the Engineering category can be further subdividedinto several functional areas, the extent of which depends onthe nature of the project. For newbuilding projects, forexample, the individual spread sheets may focus on thecalculations and assessments in each of the groups shownabove. Again, the spreadsheets for each of these will list theengineering calculations and assessments that are necessary,including some key intermediate check points, and also list theexpected date of completion of each, and the actual date ofcompletion. Thus a quick review of each spreadsheet leads toan understanding of which elements of the engineeringprocess are on or behind schedule. Of course, this is nothingnew – engineering managers have been doing this for manyyears. But what is important is that the information be sharedbeyond the boundaries of the engineering office, with theproject managers of both parties, so that any developingproblems and schedule impacts can be studied and addressedas early as possible.



Owner Activities Category:

purchase order reviews

drawing reviewsdelivery control of

owner-furnished information (OFI)

delivery control for owner-furnished equipment (OFE)

P.O.’s for secondary contracts

change orders

Clearly, the Owner’s staff has just a many obligations tofulfill as does the Contractor, though they are not asextensive in terms of man-power. Each of the data-baseslisted above merit spreadsheets that will enable theOwner’s staff to establish targets for its performance ofthose obligations, and to keep track of whether it is fulfillingthose obligations on a timely basis. Again, as with each ofthe spreadsheets, regardless of how technicallychallenging the work itself may be, the development andmaintenance of an updated spreadsheet is relativelystraight-forward. The power of these spreadsheets isremarkable, in that they enable the Owner’s staff to betterunderstand the importance of actively and timely fulfillingits obligations, and not just thinking that the Owner’s staffis only a passive observer in the project.



Overviews Category:

schedule updatingclassification reviews & approvals

regulatory authority reviews & approvals

progress payment invoices

These spreadsheets, initiated by the Contractor but sharedwith the Owner’s organization, assist both parties inunderstanding how the two parties perceive the overallstatus of the project at any given time, as reflected bycomparisons of target dates to actual dates of thenumerous activities in each spreadsheet. By frequentcomparison of targeted dates to actual dates, anyschedule slippage can be identified early, the two partiescan work together to identify the underlying causes of suchslippages, and together can then plan how to deal withsuch slippages without altering any contractualresponsibilities or incurring any significant costs. Waitingtoo long to look for developing schedule slippages willalmost certainly lead to otherwise unnecessary costs andcontract damages.



Measurement Category:

inspectionscondition

(open/inspect) reports

testing requirements

trials agendas inspection

deficiency reports

warranty items

Long in advance, the Owner knows which inspections willbe performed by its team, which condition reports toexpect, which tests it wants to witness, what it wantsincluded in the trial agenda. These spreadsheets assist inidentifying those obligations in a methodical fashion, andtracking its performance both in scope and timeliness.The spreadsheet for deficiency reports helps the Owner’sstaff assure that any noted deficiencies are resolvedbefore vessel delivery. The warranty spreadsheet,although not developed until after vessel delivery, assistsboth parties in methodically keeping track of the status andform of resolution of each warranty item that developsduring the contractually-defined warranty period.



Final Deliverables Category:

as-built drawings trial data and

resultssafety booklets trim, weight &

stability

other non-hardware deliverables

spare partsequipment data-basemanuals (paper &

PDF)certifications

In addition to delivering the vessel, the Contractor has todeliver many non-hardware items. Some of them arepaper-only, but most of them are electronic deliverables aswell. A thorough reading of the Contract Agreement andthe Contract Specifications leads to these lists which,preferably, should be compiled and agreed-upon asdeliverables as part of contract formation and execution.This way the Contractor can identify the non-hardwaredeliverables, and plan for their completion in a methodicalmanner. Similarly, the Owner’s team can better appreciatewhat reviews it may have to accomplish, and also usethese spreadsheets as a check-list to assure that theOwner receives all that has been bargained for andincluded in the Contract Price.



What do some of thesespreadsheets contain?

Here are some column listings forexample spreadsheets.

Many of the column headings for each spreadsheet will bedifferent, but the key ones – expected dates and actualdates – are always the key columns. Even within a singletype of spreadsheet, the column headings may changebetween different projects. But once your team hasdeveloped and used these spreadsheets for one project, itis easy to adapt them to another project. In order todemonstrate the variety of different column headings thatare appropriate for the different spreadsheets, we canexamine a few typical ones, as follows.



Drawing Reviews:

drawing numberdrawing

categorydrawing titledate received

reviewer’s namedate comments

returned Is revision

expected?

The origin of this spreadsheet is, in fact, the Contractor’sDrawing Schedule. Updates to that schedule should becarried into this Drawing Review spreadsheet. This onereflects three fundamental, related aspects of the detaileddrawings. In terms of dates, it reflects the target date(taken from the Drawing Schedule), the actual date ofdrawing issue, and the date on which the Owner’s teamprovided its comments pertaining to the drawing.



Benefit of DrawingReview Spreadsheet:

How well is the Contractor doing atgetting the drawings completed? (Ifnot well, why not?

How well is Owner doing at timelyreviews? (If not on time, addreviewer resources.)

The ‘power’ of this spreadsheet is that, as long as theinformation in the spreadsheet is kept up to date, bothparties can readily see how well they are doing atachieving their drawing-related objectives, and can alsosee how well the other party is doing at achieving itsdrawing-related objectives. When there is too muchdeviation from those objectives, the appropriate party canthen take action – namely, the re-assignment of itspersonnel – to get back on target as soon as possible.The reason why I chose this example as the initial one isbecause, if drawings fall behind schedule, the entireproject will unavoidably lag as well. So this spreadsheet isamong the few that are absolutely mandatory for goodproject management.



Condition Reports(open & inspect):

sequence number

reference specification

anticipated date

actual date rec’ddate of response Is follow-up action

needed?

During ship repair and conversion, the Owner oftenrequires, through the specifications, that the Contractoropen and inspect numerous items of equipment orcompartments, and report on the conditions found -- thefindings of such inspections. Often, too, the Contractor isobligated to state its recommended fixes and the cost ofdoing so if adverse conditions are observed. The basis ofthis spreadsheet should be the specifications, themselves.By methodically going through the specifications, inadvance of the actual work, the Owner’s staff can make alist of all the condition reports they expect to receive, andby correlating that work with the shipyard’s schedule, theycan identify the approximate date by which the conditionreports should be received from the Contractor.



Benefit of ConditionReport Spreadsheet:

Is Contractor on time for issuingcondition reports? (If not, why not?)

Is Owner giving timely responses? (Ifnot, why not?)

The first benefit of the Owner’s staff developing thisspreadsheet before the work commences is this. A reviewof the list may serve to indicate that one or more desiredinspections with condition reports were inadvertently notincluded in the specifications. Thus, the Owner would beable to arrange for that open-and-inspect item, withcondition report, to be added to the workscope beforecontract execution, or at least very early in theperformance of the work, thereby minimizing the cost andschedule impacts. The second benefit of thespreadsheet, obtained by maintaining it up-to-date, is tosee which condition reports were not timely provided byContractor, so that corrective action can be taken beforethe inspections and fixes get too expensive or interferewith the project schedule.



O.F.E. Delivery Control: Item No. reference

specificationvendor nameplanned order

dateactual order dateneed date

planned shipping date

expected transit timeexpected arrival dateactual shipping dateactual arrival datedelivery inspection

date

An understanding of the major problems with O.F.E. helpfocus on the objectives of the O.F.E. delivery controlspread sheet. The major problems with O.F.E. are that itoften arrives late , arrives in an incomplete or unexpectedform, or doesn’t arrive at all. The reason for theseproblems is that the personnel who actually order thebigger items of O.F.E. are not closely allied with theproject, but only with the Owner’s general organization.Thus, the sense of urgency disappears when the possi-bility of lower purchase cost arises. Also, the purchasingpersonnel sometimes perceive the specifications of theO.F.E. to be a wish list, as distinct from a hard and fastrequirement. These are the major causes of problemswith O.F.E. So everything must be done, especially theimplementation of a delivery control spreadsheet, tominimize the problems associated with O.F.E.



Benefit of OFE DeliveryControl Spreadsheet:

Has all the OFE been ordered? (If not, whenwill it be done?)

Will it arrive before the need date? (If not,Owner to advise Contractor to minimizeimpact.)

Did it arrive in installable condition?

Unlike most other spreadsheets which track variousaspects of the relationship between Owner and Contractor,this spreadsheet instead tracks the performance of theOwner’s purchasing department and the vendors fromwhom equipment is ordered. If maintained up-to-date, at aglance, this spreadsheet will convey the status of eachelement of the O.F.E. as well as, if included, the O.F.I.,information that the Owner has to deliver after the contractis signed, regarding the installation and testing of theO.F.E. The spreadsheet will convey whether each item ofO.F.E. has been ordered, when it is supposed to bedelivered, whether it is likely to be delivered on time, andconfirm that it has been delivered. When problems withthe timely ordering of it become evident from reviews ofthis spreadsheet, resources can be re-directed to minimizethe impact that will be incurred as a consequence of thoseproblems.



Change Orders: change number title of change reference

specification change request date change proposal

date change order or

cancellation date engineering hours

labor hours material costs subcontractor costs total cost of change contract extension days added weight v.c.g. and l.c.g. of added

weight added electrical load new total contract price new delivery date

This spreadsheet defines the status of the contract. Itkeeps track of the status of individual changes, as theyprogress from Change Requests made by the Owner, toChange Proposals returned by the Contactor, to eithernegotiated Change Orders, or cancellations of the ChangeProposal. This way, there is minimal likelihood of confu-sion about the status of individual contract changes interms of both cost and schedule impact. Also, then, thecumulative effect of the agreed-upon Changes is readilyidentified, as the new total contract price and the reviseddelivery date are observable from a review of this spread-sheet. The example of including weights and centers ofgravity on this spreadsheet would apply only if the vesselis very weight-sensitive; but need not be included in allChange Order spreadsheets. The electrical load columnsare similarly not needed if generating capacity is not near-critical.



Benefit of Change Order Spreadsheet:By how many labor hours and percent has

workscope grown?

By how much and percent has contractgrown?

Why is Owner allowing so much contractgrowth?

Is it reasonable to expect Contractor tofinish on time?

Have lightship weights and electricrequirements grown?

Consider that the first line of this spreadsheet indicates thecorresponding numerical values of the basic contract .Then, by keeping track of the numerical values for eachnegotiated Change, the cumulative effect of the changescan be observed. For example, if the basic contractworkscope included, say, 100,000 man-hours, and anumber of Change Orders cumulatively added 20,000additional man-hours, then it would be immediatelyobvious that the man-hour requirements had grown by20%. The agreed-upon growth, if any, of the contractperiod, in workdays, would also be obvious, but need notbe a direct correlation with the growth in man-hours.Similar observations can be made of the growth insubcontract and material costs



Addition to Change Order Spreadsheet:

Keep track of differences between proposedcosts & impacts and accepted costs &impacts

For Contractor, it may become obvious thatcommitments are tending to exceedcapabilities

For Owner, it may become apparent that on-time delivery is not likely, despite’promises’

Having observed the cumulative impact on man-hours andschedule of agreed-upon changes, each party is in aposition to consider the potential impact of a ProposedChange. For example, if the man-hours have alreadyincreased by 20% but the schedule duration has increasedby only 5%, it can be appreciated that the Contractor has toincrease the average daily manning by 15%, with the peakmanning increasing by perhaps 25% to 35%. Then, thereasonability of expecting the Contractor to offer to sellmore man-hours without a commensurate increase in thecontract duration can be the assessed to understand howlikely it is that the offered schedule commitment will beactually achieved. Also, if the each party keeps track of thequantities associated with Change Proposals, and com-pares them to the corresponding values of the negotiatedChange Orders, a trend may be observed as to how flexibleor rigid the other party is in the negotiation process.



Testing Requirements:Purpose is to identify all tests (components,

sub-systems, systems, dock trials, seatrials)

Separate ones that will be witnessed byClassification or Regulatory Authority

Separate ones that will NOT be witnessed bythird parties

Be sure that all of them are witnessed andsatisfactory

Without spreadsheet, some might getmissed

Before the specifications for shipyard services arefinalized, it is considered good practice to develop a list ofthe tests that are required by the draft specifications. Thislist is, of course, the beginning of a spreadsheet to trackthe accomplishment of the tests at the shipyard. But bypreparing the list before finalizing the specifications, itbecomes easier to see where there may be gaps orinsufficiencies in the testing requirements of the draftspecifications. Once the list is complete, the Owner usesit to keep track of the accomplishment and results of thetests, thereby increasing the likelihood that no tests will beoverlooked. The shipyard should also be maintaining acomparable spreadsheet, tracking the status of completedtests, to help assure that they are done on a timely basis inorder to minimize costs of corrections if the test results arenot entirely satisfactory.



Inspection Deficiency Reports:Purpose is to keep track of Contractor’s

response to each report

Does Contractor acknowledge it is adeficiency?

Has Contractor corrected it before vesseldeparture?

Without spreadsheet, some correctionsmight get overlooked

As the Contractor completes each aspect of its work, it advisesthe Owner that the item is available for final inspection andapproval. Sometimes, however, the Owner’s staff determinesthat the work does not quite satisfy the contractualrequirements, in which case an Inspection Deficiency Reportor Quality Deficiency Report is given to the Contractor by theOwner. A spreadsheet pertaining to these IDR’s or QDR’sassists both parties in keeping track of the status of thenecessary corrections. From the Owner’s perspective, thespreadsheet helps assure that all of the corrections have beenattended to before the ship departs the Contractor’s facility.From the Contractor’s perspective, the spreadsheet serves toidentify the need for last-minute corrective work that was notpreviously scheduled. Further, by giving the corrective work aseparate sub-account code, the Contractor can later see howmany man-hours were expended on that work, therebyidentifying potentially correctable areas of weakness in theproduction staff’s procedures.



Conclusion - 1: Maintenanceof the Spreadsheets is the

heart of Contract Management.

Why? Because …

Please recall the earlier example of managing thenavigation of a ship through the noon-time sextantdetermination of the actual position of the ship comparedto where it was expected to be at that time. Based on thatexample, you are reminded of the fundamental principle ofproject management as this: A planned periodic review ofwhere each functional area of the project is, compared towhere it was expected to be at that same time, and then,where needed, re-direction of resources to push it backonto track. The mechanism to make those timelycomparisons is through the advance construction of aseries of spreadsheets to establish the targets foraccomplishment of each specified work item, and to thenkeep track of how well both parties are doing at achievingthose targets on a timely basis.



Conclusion - 2:

Unless your team regularlygathers and assesses data onhow well each team isperforming all of its functionalrequirements, you cannot knowthe ‘health’ of the project.

If your team regularly updates and reviews thespreadsheets, you will know how well each team is doingat achieving those targets. If your team does not maintainthe spreadsheets, you cannot reasonably identify at anearly stage where the project is starting to experiencetroubles. Without maintaining the spreadsheets, thetroubles will become noticeable only when they beginhaving such adverse consequences that the project cannotfully recover from them, leading to costly overruns and/orunexpected schedule delays. The avoidance of such costand schedule impacts while achieving all of the intendedworkscope is the benefit of managing the shipyard projectthrough the continuing use of these spreadsheets.


Mechanisms for ShipyardProject Management

by Dr. Kenneth W. FisherFisher Maritime Consulting Group

Florham Park, New Jersey

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Mechanisms for Shipyard Project Management · Fisher Maritime Consulting Group Page 1 Mechanisms for Shipyard Project Management by Dr. Kenneth W. Fisher Fisher Maritime …