COST MANAGEMENT IN SHIPBUILDING

Case Studies Software System "CostFact"

Develop new ships at competitive costs.

Combine engineering know-how and costing
NSRP Joint Panel Meeting
experience to ascertain the real costs
of new vessels and generate reliable
San Diego, CA, USA
quotations very quickly. December 8, 2015

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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.

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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.
ERP Consumptions
Spreadsheet System Data (Material,
Calculations Labor Hours)
Product
Breakdown
Cost Rates Structures

Previous Projects
with all relevant
information
PROJECT 4713
PROJECT 4711

PROJECT 4712

Technical
Parameter

Specification Manual
Supplier Cost Inputs
Proposals Escalation

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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
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

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

Project Phase Reference Sources

Initial Design Ship Projects of Comparison

Detail Design
Building Groups Manual Calculations
Engineering
Components ERP-System
Manufacturing

In-Service - Life Cycle Costing -

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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)

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Parametrical Cost Estimation with CostFact

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Overview CostFact Structure
Current Project Previous Projects
PROJECT 4713

SPECIFICATION
PROJECT 4712

DIRECT INPUT PROJECT 4711

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
OF NORMS DIRECT
INPUT

POOL "NORMS"
REGRESSION ANALYSES
ACTUAL COST

CALCULATION
ANALYSES

Not shown: Life Cycle Costing

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Selected Software Features Presentation

Current Project Previous Projects

PROJECT 4713

SPECIFICATION
PROJECT 4712

DIRECT INPUT PROJECT 4711

OF COST ITEMS

BASIC
STRUCTURES CALCULATION
& SETTINGS CALCULATION INDEXATION TABLE
DIRECT
INPUT
COST RATES & COST RATES &
PRICE LISTS PRICE LISTS

PROPOSALS POOL "PROPOSALS" PROPOSALS

EXTERNAL
SOURCES DIRECT
INPUT
DIRECT INPUT
OF NORMS DIRECT
INPUT

POOL "NORMS"
REGRESSION
REGRESSION ANALYSES
ANALYSES
ACTUAL COST

CALCULATION
ANALYSES

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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

2 – MACHINERY 4 – COMMON
CONTAINMENT 5 - SHIP
1 - HULL AND SYSTEMS AND
AND HANDLING GENERAL
PROPULSION COSTS
EQUIPMENT

TOTAL COST

(See Haakon Shetelig: “Shipbuilding Cost

PRICE Estimation – Parametric Approach”)

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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 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
Variant 1: by regression analyses
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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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

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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

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

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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
on 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

Loosing contract
Market Price
Earnings + Earnings + Risk
Risk Premium Premium

Calculated Allowed Production

Production Costs Costs Target Costs

Loosing Money
(See also Haakon Shetelig:
“Shipbuilding Cost Estimation
Bottom-up Pricing Top-down Pricing – Parametric Approach”)

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Capability costing identifies approaches for cost reduction

Sales Department: CostFact:

1. Defining capabilities Calculating the cost
2. Analysing the value of a capability
of each capability

Capability’s Value Contrasting

Capability’s Cost
for the Customer 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

OFFENSIVE EFFECTIVENESS
40%

Example Survivability:
Current Cost Share 20%:
20,672 TEUR Capability Cost /
C U R R E N T C OS T S H A R E

30%
101,661 TEUR Total Cost
Share Total Target Cost 28%:
Estimated share of customer’s
MOBILITY total value
20% SURVIVABILITY

SURVEILLANCE

10%

STANDARDS

10% 20% 30% 40%

SHARE TOTAL TARGET COST - Schematic representation for confidentiality reasons -

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Control of target cost achievement

- Schematic representation for confidentiality reasons -

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