Saturday, September 28, 2013

Major Refits: Dealing with Emergent Work

Your yacht is headed to the shipyard for a major refit. You’ve had a pre-job inspection completed, and all items identified for repair or replacement are covered under a firm fixed-price agreement. The project is planned, budgeted, and all wrapped up. Well…maybe not. Not if you haven’t considered "emergent work" and how it is to be handled once the refit begins.

Emergent work is critical work that needs to performed, but the need for which is discovered only after a refit has started. It can involve anything from corroded piping or electrical connections to tank leaks or even structural issues that were not visible until, for example, certain interior joinery panels were removed as part of the planned refit. The important point to understand is that, as any candid shipyard manager will tell you, emergent work is often the icing on the refit yard’s cake, when it comes to profit.

The reason is pretty clear. Once a build or refit is underway, the shipyard no longer finds itself subject to the same competitive pressures it felt leading up to the original contract. Consequently, if your refit agreement doesn’t detail how emergent work. and change orders related to it, will be handled and priced, your agreement has a hole in it big enough to pilot a superyacht through.

Unless a procedure governing the acceptance, pricing, and effect on schedule of emergent work is incorporated into your refit agreement, you are open to finding yourself paying for emergent work at a unit rate much higher than in your original contract. Moreover, you may be forced to accept unreasonable delays to the scheduled completion/delivery date. And if that scheduled completion/delivery date is linked to plans for a date-sensitive cruise or charter, the true cost of the refit may end up to be much more expensive than you anticipate. So what to do?

The original refit contract should specify clearly an all-inclusive hourly shop rate that is to be applied to emergent work and related change orders. The original contract should also lay out clearly a reasonable and mutually acceptable procedure for calculating any schedule changes that are to ensue as the result of the yard’s accepting the emergent work. And there should also be a detailed procedure for pre-submission of pricing quotes and proposed schedule modifications to the vessel’s owner or his/her representative. Such detail should include specification of definite time periods to be allowed for submission, review, and approval/rejection of change orders related to such emergent work.

Dealing effectively with emergent work requires that both the shipyard and the yacht’s owner act reasonably and in good faith. To avoid unnecessarily delaying a project in mid-stream, consideration should be given to incorporating provisions in the refit agreement to the effect that, in the event of a disagreement over emergent work, the shipyard's work on the yacht will proceed as originally schedule, subject retroactively to any pricing and schedule modifications ultimately awarded by an agreed upon arbitration procedure. If nothing else, this sort of provision brings significant pressure upon all parties to achieve a negotiated resolution to any disputes involving emergent or change-order work. It also avoids unnecessarily delaying the progress of a refit due to a disagreement about the pricing and timing of emergent work.


Monday, October 8, 2012


So, you’re having a yacht built…or perhaps, undertaking a major refit and repowering of an older vessel. And you’re naturally considering not only which engine make and model to choose, but grappling with the decision as to selection of power rating.
Well, let me tell you that a significant percentage, if not all of the advice that you will commonly receive may be misinformed or misguided. One of the most common “old wives’ tale” you will be exposed to is:
 “Higher HP engines always consume more fuel than those with lower ratings.”

Fuel consumption is directly related to power production. An internal combustion engine only produces power in response to a load. All other factors held constant, an engine with a higher HP rating will not produce any more power than one with a lower HP rating, when both engines are faced with the identical load, provided that each engine is sufficiently powerful to adequately respond to the load in question.
Horsepower is a measure of work accomplished. As such, it is the product of torque and engine rpm. Torque is produced by combustive force in an engine’s cylinders acting through its chain of pistons, connecting rods and crankshaft. Assuming similarly efficient fuel burn between different engines (a reasonable assumption in most cases), combustive force is determined by the quantity of fuel burned. The upshot is that for a given load — or we may say, for a given application in a specific yacht — the fuel consumption of two engines with different HP ratings will be effectively the same. 
For this reason, in terms of fuel consumption and range, choosing an engine with a lower HP rating may not be advantageous. If anything, it is likely that, of two engines able to handle the load that will be placed upon them, the one with the lower HP rating will have a lower first cost. Thus, if you need, say, a 500 HP engine, selecting one with a similar weight, but a maximum 700 HP rating will probably cost more — although not ultimately in terms of fuel consumption.
Against that, however, you need to consider the effect of maximum HP rating on longevity or MTBF (mean time between failure). If you run an engine consistently for long periods of time at 95% to 100% of its rated horsepower output, you are almost certainly going to seriously reduce its operating life. So the idea is to select an engine or engines with power ratings which assure that the bulk of your operating hours will be at 80% to 85% of maximum rated output. For by increasing MTBF, you will actually be reducing the ultimate cost per hour of running time of your engines.

You should also consider that no yacht ever loses weight as it ages. What we refer to in the industry as “weight gain” is a never-ending, never-reversing process that begins when the vessel moves from design and engineering to actual construction, then to outfitting and commissioning, and finally to and during real-world use. This life cycle is always, yes always, accompanied by a growth in the overall, loaded weight of a vessel, and consequently with an increasing load for her propulsion engines to face. All due to the fact that we always put things onto and into a yacht — tenders, jet skis, dive tanks, air compressors, and all other manner of gear and equipment — but we rarely, if ever take anything off.

If the engines you select start out life in an application that is initially projected to see them loaded to 95% or more of their rated power, you can almost certainly expect that somewhere during their life in the yacht in question, they will end up running overloaded, that is, producing power at levels above their rated maximum. This will mean accelerated stress, wear, and tear; decreased MTBF, and ultimately higher cost per hour of running time than if you had specified and initially paid for engines with a higher power output rating.
But that’s not the only problem with engines whose power production ratings are only marginal for the application at hand. My experience in yacht construction is that a significant number of vessels specified with engines whose rated maximum power output is very close to the design loads initially projected, end up underpowered for their performance targets, by the time their construction is completed.

As construction and final engineering progress in a yacht build project, previously unanticipated weight growth may force you to accept lower vessel performance than originally targeted. In such cases, there may be remedial steps that can be taken while the build is still in process. For example, one might be able to boost projected thrust by upsizing the vessel’s propellers. However, because of the higher loading produced by such larger propellers, this kind of move will only be successful if the engines selected at the early stages of project development and specification have a sufficient margin of reserve power available.

In my experience as a yacht builder,  it is prudent to select engines whose power production ratings are 10% to 25% higher than the designing naval architects and engineers originally anticipated would be necessary. Provided you watch to see that the overall weight of the higher powered engines is not significantly higher than those originally specified (and in many cases they won’t be), you can provide for a margin of reserve power, without incurring and penalties in terms of fuel consumption and range, if it turns out that the additional power is not required. A bonus will be that the engines with the higher power ratings, when run at a lower percentage of rated maximum power, will last longer and be more reliable.
My next post will deal with why total fuel consumed provides a better basis than engine hours for scheduling maintenance.