J M ar Sei Technol (2012) 17:216-230 DOI 10.1007/s00773-012-0163-4

O R IG IN A L A R TIC LE

Towards a short time “feature-based costing” for ship design

J.-D. Caprace • P. Rigo

Received: 28 April 2011/Accepted: 18 February 2012/Published online: 4 March 2012 © JASNAOE 2012

Abstract Cost is perhaps the most influential factor in the outcome of a product or service within many of today’s industries. Cost assessment during the early stage of ship design is crucial. It influences the go, no-go decision concerning a new development. Cost assessment occurs at various stages of ship design development. Economic evaluation as early as possible, in the design phase, is therefore vital to find the best pricefunction compromise for the ship projects. The authors have developed a feature- based costing model for cost effectiveness measurements intended to be used by ship designers for the real time control of cost process. The outcome is that corrective actions can be taken by management in a rather short time to actually improve or overcome predicted unfavourable performance.

Keywords Feature-based costing • Shipbuilding • Cost assessment • Cost • Ship production • Cost effective design • Life cycle cost

1 Introduction

Cost is perhaps the most influential factor in the outcome of a product or service within many of today’s industries. More often than not, reducing cost is essential for survival. To compete and qualify, companies are increasingly

J.-D. Caprace ( H ) • P. RigoANAST, University o f Liège, 1 Chemin des chevreuils, 4000 Liège, Belgium e-mail: jd.caprace@ulg.ac.be

P. Rigoe-mail: ph.rigo@ulg.ac.be

required to improve their quality, flexibility, product vari­ety, and novelty while consistently maintaining or reducing their costs [1],

In short, customers expect higher quality at an ever- decreasing cost. Not surprisingly, cost reduction initiatives are essential within today’s highly competitive market place. Concurrent engineering is one of these initiatives. Since cost has become such an important factor of success, project development needs to be carefully considered and planned. It is essential that the cost of a new project development is understood before it actually begins. It could mean the difference between success and failure.

Cost assessments during the early stages of ship devel­opment are crucial. They influence the go, no-go decision concerning a new development [1], If an estimate is too high, it could mean the loss of a business, for the benefit of a competitor. If the estimate is too low, it could mean the company is unable to produce the ship and make a rea­sonable profit.

An ability to perform effective, detailed, and reliable ship cost assessment could finally create a change in the way the shipyard is able to negotiate its contracts [2], Moreover, the importance of a good cost assessment par­ticularly at the early level of design can be crucial when comparing different design proposals. A greater under­standing of the factors that drive costs can hopefully lead to a decrease in cost overruns for two reasons:

1. designers will be in a better position to quickly perform trade off studies and therefore develop a better understanding of how their designs affect cost

2. with an ability to perform reliable cost assessments at the preliminary level, the shipyards will be able to negotiate more favorable contract terms that could decrease costs.

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2 State of cost assessment in shipbuilding industry

The usual methods of cost assessment are various and diversified. Large volumes have been written on this sub­ject; many books for each class of the construction industry [3-5], but very few about the shipbuilding industry.

To succeed commercially, shipyards must be able to accurately assess costs. Cost assessment is necessary for the bid process, to change orders, and for trade-off studies. Numerous cost assessment approaches exist. They can be based on extrapolations from previously-built ships, detailed parameters, or integrated physics-based analyses. The solution for the production cost assessment differs in the required information (input data). The less information is needed, the earlier a method can be employed in the design process. The more information is used, the finer differences between design alternatives can be analysed [6].

The methods for estimating production cost are classi­fied into:

• Top-down (macro, cost-down or historical, weight- based) approaches (empirical, statistical and close-form equations, etc.)

• Bottom-up (micro, cost-up or engineering analysis, process-based) approaches (direct rational assessment)

• Life cycle approaches (holistic, from the birth of the ship to her dead).

2.1 Top-down

The top-down approach is a parametric cost assessment methodology which uses empirical relationships between product parameters and costs as a means to estimate the cost of new ships [7], In this case, the top-down method means that the ship cost is predicted from its higher level specifi­cations, instead of its detailed design which may not be available at the time of estimation. Parametric relationships are estimated by using statistical regression techniques from a historical cost database. A parametric estimating system can then be continuously refined and re-calibrated.

The top-down approach, also called weight based approach, determines the production cost from global parameters such as the ship type and size, weight of the hull, the block coefficient, ship area, and complexity. The rela­tionships between cost and global parameters are found by the evaluation of previous ships [8], Thus, the top-down approach is only applicable if the considered design is sim­ilar to these previous ships. Also, the cost estimation factors in the approach reflect only past practices and experience.

Cost reductions resulting from newly adopted and developing shipbuilding technologies and production methods can not be reflected in the existing historical based

cost estimating techniques [9], Advanced shipbuilding technologies typically involve a modular, product oriented approach which cuts across elements of the existing ship work breakdown structures (SWBS). Moreover, these weight based cost assessment approaches do not reflect improvements that may occur in the production process [10, 11]. For instance, if a new welding technique is used which takes 25% less man-hours per meter of weld, no change would be reflected in cost, because there is no change in the weight of the ship. Therefore, if a change in design or production process has no impact on weight, then the cost assessment will not change.

However this approach is often used for its ease of use at the very early design stages due to the fact that it is easier to apply and obtain quicker “results” , and does not require many design details. Weight is often used as the primary driving factor for cost assessment as it encapsulates the amount of material and to some extent the work associated with an item. Weight is an important characteristic to establish early in the design of any vessel and there are several parametric rules such as shown by [12-16], which can be used to estimate weight based on such minimal information as the main dimensions and hull form coefficients.

2.2 Bottom-up

The traditional cost assessment top-down method using system-based, weight-driven cost models are not always sensitive to changes in production processes and advanced manufacturing techniques [11]. Thus, the need exists for a cost model which can better relate to design, construction product and process issues, to enable cost conscientious decision making and more affordable ships.

The alternative method to compute the product cost is called bottom-up approach. This engineering analysis cost assessment approach breaks the project down into smaller and smaller intermediate products until the most basic product (e.g. plate) is described. All costs for machining, tracking, coating, assembling this product, along with its associated intermediate products, into the next, more mature intermediate product are estimated. The estimated cost of each layer intermediate product is summed up with all preceding layers, thus obtaining an aggregated cost which reflects an engineering analysis of the building process [7, 8], In fact, the bottom-up approach breaks down the project into elements of work and builds up a cost estimate in a detailed engineering analysis. Southern [17], Moe and Lund [18], Winkle and Baird [19], and Rigo [20, 21] developed simplified cost models based on direct cal­culation using quantities and unit cost to assess the global production cost. Taking the technology of plate welding as an example, there are many factors affecting the project

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time and working hours such as welding length, plate thickness, welding type, welding position, bevel type and welding accessibility.

The major advantage of this technique is that it specif­ically considers the actual work content of the product and provides a realistic cost estimate for the construction effort.

The bottom-up approach requires more effort and detailed information than the top-down approach, but unlike the top-down approach, the bottom-up approach captures differences in design details and is thus suitable for scantling and shape optimisations [22, 23], Changing the local hull geometry influences the number of frames which require bending, the effort in plate bending, and the degree of weld automation which depends on the curvature of the weld joints. All these effects are reflected by an appropriate break down of the total work process into its individual components. At present, such an approach is not yet available in most shipyards; and neither are historical databases from which it could be developed. It is thus necessary to develop an appropriate approach, and collect the data required to use the approach. An advanced opti­misation application in this field is the work of [24-26] for ship structures using the LBR5 system.

2.3 Life cycle

In order to improve the design of products and reduce design changes, cost, and time to market, life cycle engi­neering has emerged as an effective approach to address these issues in today’s competitive global market. As over 70% of the total life cycle costs of a product is committed at the early design stage [27], designers can substantially reduce the life cycle cost (LCC) of products by considering the life cycle implications of their design decisions.

People are always concerned about product cost, which encompasses the entire product life from conception to disposal. Manufacturers usually only consider how to reduce the cost of materials acquisition, production, and logistics. In order to survive in the competitive market environment, manufacturers now have to consider reducing the cost of the entire life cycle of a product, called the LCC [28], In the case of a ship, it consists of the fabrication phase in the shipyard, such as design and assembly, and a maintenance phase in service, such as inspection, repair and painting, as well as disposal costs. The findings in [29- 31] have recently implemented methods for the investiga­tion of economic and environmental costs within a marine system. The LCC assessment approach is a promising future holistic methodology in order to maintain the effectiveness of ships dining their overall life. But all the authors are unanimous concerning the difficulties due to the variety of levels of production and maintenance.

3 Challenges of cost assessment

The organisation of a production control and cost control system in a shipyard is not an easy task for different rea­sons [32],

3.1 Disconnection between decision and cost

Cost assessments are typically not available at the point when a decision needs to be made. Any cost estimate (be it high or low quality) is typically not available until after the part is sourced or in production. Indeed it is a well-accepted fact that 70-90% of product costs are decided in the first 20% of the product development cycle [33-35],

3.2 Inaccuracy of the cost assessment

Cost assessments (especially early ones) often lack suffi­cient rigour and thoroughness to be used reliably in deci­sion-making. Because historical costs lag behind the point in time for decisions to be made, the shipyard is forced to make rough estimates from the fragmented information as it can gather.

3.3 Cost evaluated only once

Once a cost assessment has been created, it typically doesn’t change or get updated as new information becomes available. If an employee is lucky enough to be provided with a cost estimate early in the development process, this estimate is likely not included in the enterprise resource planning (ERP) of the shipyard. Therefore, if new or better information becomes available to help the user refine the cost assessment and increase the quality of the cost num­ber, it is an arduous process to take advantage of the new information and recalculate the cost assessment.

3.4 Multiple versions of the cost

Multiple cost assessments exist which have been created from different sources (i.e. different quantity, at different times, etc.). Because most cost assessments are generated by itinerant spreadsheets or from systems used only by cost experts and are off-line from the people that actually make the design, different costs start appearing. Sometimes this is because not everyone has received the latest quantity from the designer or they have an old version of the spreadsheet. At other times this occurs because different people in the shipyard have separate methods for calcu­lating the same cost.

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3.5 Measure of real costs

To ensure the effectiveness of any cost model, a basic requirement is that the measurement of the real cost has the same breakdown structure as the model. Within the cost assessment the estimator is bound to use some “standard” of comparison, not a fixed or immutable standard, but nevertheless a standard, whether such a standard is the written record of actual previous costs of identical or similar products. Good estimates are made by accurate comparison with the previous costs, allowing for any spe­cial changes in equipment or method, and hence a good estimate becomes a standard with which to compare the actual cost when the production is completed, and thus shows any increase or reduction in the efficiency of the shipyards in respect to the particular product.

3.6 Uncoupling between design and cost engineering

Cost is often a secondary consideration for the engineers concentrating on delivering the technical aspects of a new design [36]. Indeed, cost evaluation can only be per­formed once the technical details have been resolved. Moreover, after that, it is possible to review the compo­sition of the design. This two stage process results in a degree of separation between technical and cost engi­neering departments working on the project and creates the situation where there may be a need for further design iterations. While these two engineering groups (design and cost engineers) operate separately there may be little opportunity to go through an optimisation process to improve cost.

3.7 Cost assessment in early design stage— a real challenge

New production technologies and organizational improve­ments in shipyards have resulted in a continuous reduction in man-hours/ton over time especially inside the dry dock. In general, the nature of the shipping business leads to situations that place an excessive difficulty on effective cost estimation even for the most experienced ship cost estimator.

In most cases ship construction contracts are signed before the completion of a detailed design. The reason for this is that detailed designs with a detailed cost assessment are very expensive and excessively time consuming [8], Shipyard work in terms of work specifications is difficult to formalize and predict directly from intricate detailed ship designs. This induces a very large risk to both the buyer, who might end up overpaying for a ship, and the seller, who might have to incur exorbitant costs due to the lack of a clear definition of the work.

3.8 Specificities of the shipbuilding industry

Cost assessment and production simulation allows man­agement to predict the effectiveness of processes in the shipyard. These methods are most frequently used in industries involved in mass production. This is not the case for European shipbuilding, which can be characterized by:

• small series production,• short time to market,• many different work disciplines,• large number of different work tasks,• high complexity,• high degree of manual work,• difficult working conditions,• work activities that are very difficult to identify and

quantify.

Thus, with production processes more complicated, and production parameters more difficult to quantify, produc­tion simulation and cost assessment are not as used in the shipbuilding industry as in certain other industries such as the automotive industry.

3.9 Intricate control of schedules and costs

The importance of planning and control to ship construc­tion is generally, if not universally, accepted. Management of work is synonymous with management of costs [32, 37]. The preparing of detailed schedules for every piece of material that enters into the ship is required, so as finally to ensure that the various groups or sub-assemblies of mate­rials will arrive at the building sites or at the outfitting quay in the proper way and without any missing pieces. The first thing to remember is that the objective is to gain and keep control of the project. That is, the plan must be produced enough to be used as an actual driving force and the control system must give enough information to permit corrective action when necessary. Hierarchical planning is essential. This typically gives three levels of planning, which cor­respond to different time horizons and levels of detail. Typically these will be:

• Strategic: covering all project or development with a time horizon of years

• Tactical: covering a project or development with a time horizon of months

• Operational: covering work stations with a time horizon of weeks

3.10 Cost variation factors

Worldwide competition and an increase of the costs of materials place massive pressure on shipyards to release a

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cost linked to design. However, capturing construction cost during the design of a new ship is one of the most difficult parts of the design process [2, 35, 36], Construction costs must be tracked during the design process to ensure that the project remains viable to both yard and customer particu­larly as late changes introduced into the design can have considerable cost impacts. The factors that cost depends on are always changing and only once the production design is finalised is it possible to make a direct evaluation.

The main factors that could result in cost changes are:

1. Technology change:

• New production processes• New materials• New designs

2. Social, economic and political situation:

• Changing workforce (productivity)• Economic downturn and unrest

3. Shipyard backwardness:

• Intense backwardness causes confusion• Few orders results in loss of skill

4. Labour rates:

• Different for each shipyard• Effect of learning• Unpredictable changes

5. Material cost:

• Vendor base changes• High fluctuation of steel rate

6. Regulation:

• New rules

7. Inflation:

• Fluctuates unpredictably• Different rates for each item

3.11 Increasing costs

For the last two years, all shipbuilding costs have contin­uously increased all over the world. These costs include the cost of building materials like steel and non-ferrous metals (copper, nickel and aluminium), the cost of marine equip­ment and supplies and, last but not least, labour costs [38]. In principle, most marine equipment markets can be con­sidered as global with similar conditions for shipyards around the world. Nevertheless, yards are also in some areas confronted with specific local market conditions. While generally benefiting from a tight network of highly

specialised quality producers in Europe, the example of steel plates for shipbuilding is quite illustrative of a major competitive disadvantage.

3.12 Data and DB management problems

The quality of cost assessment which requires accurate, reliable, repeatable and understandable results depends mainly on the quality of the input data. Moreover, the implementation of cost assessment models necessarily involves the manipulation of large amounts of data from both the ship and the manufacturing environment. It fol­lows several types of problems, often very cumbersome, tedious and time consuming to solve. Here are presented the major problems that we may encounter [39, 40]:

• Lack of available data• Insufficient data definition• Inconvenient data format• Unknown validity of data• Inaccessibility of data• Quality of the data• High quantity of data• Data integrity• Data temporal heterogeneity

Consequently, without disciplined capture of cost data and full support for this activity from management it is very difficult for any cost assessment process to function adequately.

3.13 Aggravating factors

Cost assessment in ship production is complicated by the fact that:

• there is insufficient cost data and the quality of this information is often quite low in these early phases

• the data is usually distributed on different ERP and CAM systems which are complicated to handle

• sometimes the required cost information exists only in printed tables, or even in the knowledge of a single expert

• the production processes are changing continuously in a shipyard so that the historical cost database cannot be used for a long time

• different types of ships induce different types of cost and it is often impossible to compare their relative cost data

• the cost information always subject to high level of confidentiality and protection to avoid leakages

These circumstances produce different difficulties:

• Estimating and planning the ship costs takes a lot of time for manual system queries and following cost

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aggregations. The pressure on time makes the assess­ment of exact and robust cost information difficult.

• The possibility of cost estimating belongs to a few experts. Besides this fact, the quality of estimations, based on the knowledge of experts, differs widely (variation on average ± 30%).

• The existing database, generated from past projects, is far from being complete, due to the lack of an integrated system for managing and providing the cost information.

4 Cost estimation methods

Cost assessment occurs at various stages of ship design development. Economic evaluation as early as possible, in the design phase, is therefore crucial to find the best pricefunction compromise for the projects or product. However, economic evaluation during the design phase is not easy. It is very different from assessment when the product/process design is complete and detailed which allows the cost of all optimisation choices to be taken into account. In the design phase, the project or product is never completely defined. It is necessary in this phase to imple­ment rapid and more or less precise cost estimation methods (depending on available data) allowing the designer to select one solution in preference to another on economic grounds.

In general, cost-estimating approaches can be broadly classified as intuitive, parametric or statistical techniques, and analytical models. However, the most accurate cost estimates are made using the analytical approach. Among the many methods for cost estimating, at the design stage, are those that are knowledge based, features, operations, weight, material, physical relationships, and similarity laws[41]. In this paper we present a development that is a feature-based costing (FBC) method.

4.1 Feature-based costing

Feature-based costing is a method for estimating the cost of a product based on the analysis of a series of its elementary characteristics, called product features. Products can essentially be described as a number of associated features such as holes, inner contour, outer contour, welding length, welding position, cut-outs, and bevels. It follows that each product feature has cost implications during the product life, since the more features a product has the more man­ufacturing, planning and maintenance it will require. The growth of CAD/CAM technology and that of 3D model­ling tools have largely influenced the development of FBC[42]. With this approach, it is possible to evaluate the

consequences including or excluding the feature will have on the costs of a single component, but also on the system of costs of the entire life cycle of a product consisting of several components.

4.1.1 Principle and process

This approach allows the evaluation of cost from a breaking down of the required work into elementary tasks and relies on detailed engineering analysis and calcula­tions. To apply this approach, the cost analyst needs detailed design and configuration information for system components and accounting information for all materials, equipment, and labour. This method assumes its usefulness when costing information for workshop processes is readily available. Given sufficient design detail, this method can make very accurate cost estimates. However, it is very time-consuming and does require detailed knowledge about the product being designed and the relevant processes.

One of the prerequisites of this approach is that the product model needs to be detailed enough to allow materials and production labour to be established. This means that the structural definition, systems and equipment need to be defined and may rule out this approach being used in the earliest stages of design [36]. However, as ship design tools are continuously improved, it is becoming easier to add preliminary production details at the start of the design so that production considerations can be incor­porated in the design process. Consequently, this technique may be employed shortly after the initiation of a design project.

4.1.2 Strong points and drawbacks

The advantages of this approach are evident [36, 42, 43]:

• a clear link between the design choices and their implications in term of cost, and as a consequence an increase of the potential capacity for correcting and optimising the design;

• easy to use compared to other approaches, by virtue of a simplification of data collection to calculate the cost of a product;

• the transverse nature of the main feature typologies and the resulting possibility of applying the method even when no similar studies exist and no previous data are available.

Other reasons for using FBC are that the same features appear in many different parts and products; therefore, the basic cost information prepared for a class of features can be used comparatively often (for instance for welding features). Furthermore, manufacturers will have numerous

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past geometric data that can be related to features. Another reason developers explore whether costs should be assigned to individual design features is that it would provide the designer with a tool to visualise the relation between costs, and aspects of the design that can influence the production in short time.

Moreover, this approach will capture enough details to allow the effectiveness of production processes to be eval­uated and potentially optimised. In the past, extracting the information from the design to perform this kind of analysis would have been very laborious because the cost engineer would have to measure production details directly from plans. However, with modern ship product modelling soft­ware, the identification of parts and junctions can be auto­mated, providing the cost engineer with a full breakdown.

The approach presented in this paper will be more efficient in the near future because the strategy of most of the modern ship modelling software is to integrate more information at the basic design stage while, by now, too much design parameters are chosen late in the design process.

5 A feature-based costing for ship design

5.1 Introduction

As shown previously, cost assessment can be frustrating for shipyard personnel. Cost estimators may lack timely technical information and face data inconsistencies. Ship engineers and naval architects commonly lack feed-back on the cost impacts due to their technical decisions. Man­agers often lack information denoting the level of confi­dence in cost assessment when they must make business decisions.

Furthermore, many approaches to cost assessment are mysterious and not formally validated (each cost estimator has their own black book), complicated (too time con­suming to be of use to decision makers), difficult to use, or too simplistic (based on the ship weight). Thus, the typical cost estimation techniques used during early design have become increasingly inefficient and ineffective, taking days to generate cost estimates often based on historical data, and that become instantly out-of-date every time a design, manufacturing or procurement assumption changes.

To overcome these shortcomings, we have implemented a FBC prototype by integrating all the design criteria and the production parameters. Beside the opportunity of sav­ing time for the cost assessment itself, this tool provides the following capabilities and benefits:

• Assesses production cost for ship steel structure• Assesses cost by product and/or process

• Offers electronic imports, aggregates, and stores return cost data

• Provides multiple views of cost by products or processes

• Reduces the time and increases the accuracy of developing assessments of production planning by the reduction of all manual statements (risks of omissions, typing errors, inaccuracies, etc.)

• Identifies cost drivers and their impacts so that design­ers can design ships which are easier and less costly to build

• Provides meaningful information for production pro­cess improvement

In this application, attention will be especially devoted to estimating the cost of steel hull manufacturing. Esti­mating the cost of material presents no major difficulty for an experienced estimator having a complete list of the required material. Therefore, the material costs have not been taken into account in the techniques presented herein.

5.2 Cost structure

A key difficulty in developing an effective approach to design for production is the selection of a common factor which links the variable parameters of design with the parameters affecting production costs. Decisions concern­ing the blocks and unit breakdown of the ship are made at a reasonably early stage in the design process. It is the first obvious stage at which information is generated by the designer considering the relevant production constraints. This information includes all the significant parameters in the design which might be considered as variables in a production costing and is therefore suited to modelling design variables. It is also clearly an excellent mechanism for estimating production costs since it deals with a key unit of output from the fabrication shops and the basic unit at the assembly stage. Thus, the large majority of produc­tion costs can be directly and accurately related to the production unit and blocks itself and the details of its construction.

In this paper the cost work breakdown structure (CWBS) is composed of three structures:

1. Ship work breakdown structure (SWBS): The modular concept technology leads to breaking down the ship into definable sub-products with a path like Ship- Blocks-Sections-Assemblies-Sub Assemblies—Parts. The present definition of the hierarchical structure containing six main levels has been retained for this study.

2. Hierarchical work stages: The hierarchical work stage is composed of three hierarchical levels (shipyard

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sectors-workshops-process stages), e.g. the block erection sector relies to the dry dock workshop.

3. Hierarchical work types: The hierarchical work type is composed of two hierarchical levels following the levels of the hierarchical work stages (operation- nature) in order to form the complete path (sectors- workshops—stages—operation—nature). Operations can be seen as basic work tasks while natures describe the type of the tasks. An operation can contain different natures e.g. the continuous welding of longitudinal members consists of various kind of natures such as machining, preparation, welding, tracing.

5.3 Cost evaluation relationships (CERs)

Equation 1 gives the expression of the labour cost for a simple manufacturing activity, e.g. the welding of two assemblies, the tacking of steel profiles.

CO = CQ X CU X CK X CA X CW (1)

where CO is the labour cost (man-hours), CQ the quantity (welding length, number of brackets, etc.), CU the unitary costs (cost-per-unit), CK the corrective coefficient used to calibrate the unitary costs, CA the accessibility/complexity coefficient, CW is the workshop coefficient.

5.3.1 Basic cost relation: CQ x CU

The CER provide the basic means for assessing the cost (see Eq. 1). It is the formula (CQ x CU) relating the cost of an item to the item’s physical or functional character­istics or relating the item’s cost to the cost of other items or groups of item. These relationships are typically developed directly from a measurement of a single physical attribute such as dimensional data (plate thickness, profile length, profile scantling, welding length, welding throat, etc.) or quantitative data (number of profiles, number of brackets, number of cut-outs, number of holes, etc.) for a given shipbuilding activity (CQ), and the unitary cost of carrying out the activity (CU). For instance:

• labour for steel block assembly at n man-h/ton,• material cost for a steel profile at n euro/m.• labour for welding in a vertical position at n him,• labour for block painting at n h/m~.

Usually a shipyard uses the same attributes for the same activities for each ship it builds. Then, they compile a database of cost-per-unit of measure for each of its dif­ferent activities. This cost assessment methodology can be used to determine a variety of costs and cost-related parameters, including labour hours, material costs, over­head, weight, number of items, etc. The equation

coefficient and exponent values are shipyard dependent and are linked to the shipyard production facilities, tools and equipment employed, skill levels of the work, etc.

The unitary costs (CU) vary according to the type and the size of the structure, the manufacturing technology (manual welding, welding by robot, etc.), the experience and facil­ities of the construction site, the country, etc. Usually, unitary costs are defined as a function of one or more design variables like plate thickness, welding throat, welding type (butt or fillet), welding position, bevels, profile scantling.

5.3.2 Main corrective coefficient: CK

The catalogued cost scales (cost-per-unit) available do not always accurately reflect the expected costs for the cost assessment. Therefore, we can modify these cost scales thanks to the definition of an appropriate adjustment factor (CK). This procedure has the double advantage of pre­serving the cost scales for control purposes and allowing the impact simulation of a facility or technology invest­ment on the cost.

This coefficient can take into account the following adjustments:

• catalogued cost-per-unit adjustments,• production facilities improvements and productivity

adjustments,• learning effect adjustments (CL),• economic inflation adjustments (Cl),• high volume business material savings,• material waste adjustments,• other adjustments not already accounted for.

5.3.3 Learning effect coefficient: CL

Modularity and increased specialization reduces average construction costs as more similar ships are produced. This is because ship construction labour decreases with experi­ence as build strategy, manufacturing and production strategy, and management coordinate their efforts with a more efficient outcome. The learning effect or the series effect corresponds to the reduction in man-hours required to build successive ships in a series. This basically means that to build a first ship in a series demands more man hours than it does for the second ship of the same series, and so on.

Therefore, the CER used for the original ship have to be modified to take that effect into account when a series of several sister ships is constructed in sequence [2].

5.3.4 Economic inflation coefficient: Cl

Costs are influenced not only by various performance factors within the shipyard, but also by factors outside the

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shipyard. Costs can be influenced by inflation/deflation and these effects change over time. In a free market economy, increased costs are caused by inflation and usually occur when demand overtakes supply. Decreased costs are caused by the opposite, called deflation, and are caused by supply being greater than demand.

For cost assessment purposes, costs relevant dining one period of time can be used as costs relevant to another period in time. However, these costs need to be adjusted to reflect the economic conditions of that other time period. The increased or reduced change in cost is usually treated as a general percentage, e.g. if inflation has increased by 2%, then on average, goods and services have increased in cost by the same amount.

5.3.5 Workshop productivity coefficient: CW

The productivity changes from one workshop to another. Usually shipyards wish to take account of this type of change in their costs assessments. For that purpose we use another adjustment coefficient that reflects certain gains or losses in productivity within specified shipyard activities, such as in which workshop the product is assembled. This coefficient also gives the possibility of modelling the variation of productivity due to a change of personnel.

Additional information can be obtained on the relative increases in productivity that can be expected by imple­mentation changes (modem precess equipment) in the shipyard facilities and operating practices.

5.3.6 Accessibility/complexity coefficient: CA

This additional coefficient is introduced to adjust manu­facturing cost assessments for an increase or a decrease in the relative accessibilities/complexities of the ship or their sub-assemblies (ship, blocks, panels, etc.). The more the structure is dense, difficult to reach and complex, the higher the manufacturing cost will be. The accessibility/ complexity coefficient should be sensitive to the level of the ship hierarchical structure. For instance, the manu­facturing of steel parts for a specific ship area may not be affected by the accessibility/complexity coefficient, but the assembly of these parts in the ship area may be affected by the accessibility coefficient, such as the engine room.

Table 1 shows typical accessibility/complexity coeffi­cients for new construction working areas of passenger ships. These coefficients are used by shipyards in order to take into account the added difficulties when the work is performed on board the ship. The complexity factor should be sensitive to the level of the ship work breakdown structure (SWBS) hierarchy.

Table 1 Typical accessibility/complexity coefficient for passenger ship working areas [44]

Working area Accessibility/complexity coefficient

Inside a workshop 1

On passenger deck 1.05

Double Bottom 1.25

Superstructure 1.25

Engine or pump room 1.5

5.4 Extracting the required data

The implementation of a feature-based costing (FBC) prototype requires a connection to the database which contains all the design parameters of the ship. Basically, two solutions exist to access this kind of data.

The first solution is to access the production database (often the ERP system) which collects data related to entities and assemblies to be manufactured. This solution was not adopted for the simple reason that it is too late at this time for the evaluation of the cost. Whole production parameters are fixed, freedom to move the design variables is zero so that cost analysis must be introduced during the earliest stages of the design process.

It is the reason why we have chosen the second solution which consists of accessing directly the CAD/CAM tool database. The ship model is often stored inside an object oriented database. For design purposes it is the most appropriated solution because of the hierarchical structure of the product (e.g. Scheme —> Plates —> Holes). Never­theless, for general-purpose queries on the same informa­tion, pointer-based techniques will tend to be slower and more difficult to formulate than relational databases. In fact there is an intrinsic tension between the object encapsula­tion, which hides data and makes it available only through the interface methods of the CAD/CAM tool. Thus, the extraction of the data from the CAD/CAM tools to a tra­ditional relational database is required for cost assessment purposes. It is a time consuming task mainly because the extraction of the data pass by the implementation of macro using the specific export modules of the design tools. Another drawback to accessing directly the data inside the CAD/CAM tool is that whole shipyard data controls and correction procedures are skipped. Moreover, some com­puted fields specific to the shipyard and required for the production are not available.

Figure 1 shows the implemented solution of the data extraction procedure used for the feature-based costing (FBC) prototype. The geometries and data extraction from the object oriented CAD/CAM database are triggered after the quality control has been done by the designer/manager. Afterwards, the computation of additional fields starting

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Production

CAD/CAM data extraction process \

Extraction Computation •«- ControlCreation Queues

D ata ExtractionInternal Network

G eom etry Extraction

CAD/CAMOBJECT

DBMQ Series transfert

(XML messages)

CAD/CAMRELATIONAL

DB

Feature Based Costing Prototype

Fig. 1 Data extraction from the CAD/CAM object database

from the production rules can take place through the engine interpretation. This task is required to complete the design for production, e.g. the computation of the manufacturing place of assemblies starting from properties like weight and size. Control, filtering and correction of the data were also implemented to extract only relevant and accurate data. For instance, we avoid extracting some items like steel support, methodological entities, fictitious entities, and not pro­duced assemblies, described in the model but not useful for our study. In the same way, some processes have been implemented to assess value of some features in case the data are partially available, e.g. if the position of the plate seams is not yet integrated in the model, a default plate size is used to assess the welding length.

After the extraction of each section of the ship, xml messages are created and sent through the MQ series system to the CAD/CAM relational database. This solution allows a progressive feeding of the relational database during developments with a data follow-up during the evolution of the model i.e. data are stored at different design maturity of the project. Another interesting point is that the relational database can be fed by several sources of CAD/CAM object databases provided by various subcontractors.

5.5 Computing the costs

Figure 2 shows the flow diagram of the developed prototype. The software is built around several sub-modules and dat­abases: an encoding module (EncodeCost), a computation module (ServerCost), a graphical visualization module (ViewCost). a data-warehouse module (DatawarehouseCost),

the CAD/CAM database which stores the ship work break­down structure (SWBS) and finally the cost database storing the cost structure. The complete data which are required for the cost assessment as well as the results are stored in the relational cost database.

5.5.1 Encode cost

This module is designed to introduce the inputs cost data. A hierarchical work breakdown structure consistent with specified scheduling requirements has been used to define work scope and to subdivide the work into logical tasks. This structure is organised in a hierarchical tree structure where each node is ready to return a computation cost result. The project work scope will be broken down into manageable and relatively small work task elements to facilitate the productive effort. Actual cost data are col­lected at the work task element level.

5.5.2 Server cost

This module is an independent module which consults the CAD/CAM database, the cost database as well as the scheduling database and the production rules database to perform the evaluation of the cost. Within a few seconds after the geometry on a 3D ship model is altered, the cost processing module updates its assessment to provide an accurate product cost, allowing designers to investigate the cost impact of design changes much earlier in the devel­opment cycle, when changes are exponentially less expensive.

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Feature Base Costing Prototype

Internal Network

SCHEDULING . DB

COSTDB

CAD/CAMRELATIONAL

DB

ENCODECOST

VIEWCOST

RULESDB

GUI GUI

SERVERCOST RULES ENGINE

GUI DATAWAREHOUSECOST

GUI

Fig. 2 Workflow architecture o f the FBC

5.5.3 View cost

The display module collects the assessed data from the cost database and shows the results according to the user requirements.

A major innovation concerns the cost that can be cal­culated for any sub-assemblies of the ship, from the smallest up to the largest. The highest levels of the cost hierarchy are both the ship and the shipyard. The aggregate total of the lower level budgets linked to the ship break­down structure and to the cost breakdown structure will be traceable to the project budget.

5.6 Utilization

Within an analysis concerning the production cost of a project, the FBC prototype can help the designer or the manager to determine the cost drivers that have the biggest influence on these costs. When the accumulated actual costs during the building of the ship are stored, the proto­type could be used for a comparison between the planned and actual data with reference to different levels of the ship structure at any time of the project. Thereby possible cost variances can be identified. When we can assess indicators for inefficient manufacturing, controlling measures can be taken to minimise the cost overrun. Cost performance is measured by comparing actual costs for work performed with planned costs at the work task element level and at

appropriate higher levels. Cost data and cost performance data are aggregated to upper levels of both the cost work breakdown structure (CWBS) and the ship work break­down structure (SWBS).

The FBC prototype supports the cost analysis by a number of performance features:

• Several cost filters enable the user to deduce the different cost components separately, so that he can get an overview of the cost structure at different structural levels and the analysis will have a high relevance to the problem at hand.

• The shipbuilding structure included in the cost evalu­ation prototype leads to a standardisation that enables cost benchmarking of even different elements of similar ships. Thereby similarities can be sought or in-house benchmarking can be carried out.

• A cost driver analysis shows the main cost focus: after determining a cost limit by the user, the module marks those cost items on every level of the cost structure that exceed this limit cumulatively, relating to the next level. For example, if the cost limit is fixed at 80%, the most expensive cost items, which share 80% of the total cost amount of the superior level were accentuated. Thereby the objects causing the highest costs can be detected immediately at each structural level and for each building group, and looking for cost reduction opportunities will be very efficient.

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5.6.1 Data-warehouse

The data-warehouse module is designed to consult the repository of the cost database and facilitate reporting and analysis. The use of several connected databases consid­erably enriches information which the user can obtain on each ship element. Formerly it was necessary to consult several databases. Today, the system is designed so that whole users can have access to the same information. Moreover, it will be possible to follow the evolution of the ship design, since the databases are gradually fed during the project. Some advance functions to retrieve and analyse data, to extract, transform and load data, and to manage the data dictionary are also implemented inside this compo­nent. One of the main objectives is to follow the cost evolution along the project time line of the project.

• The accuracy of welding data is not very good. Low accuracy leads to relatively large errors when the complexity of the section is large. Some welding errors like missing welds, bad welding position or double welds have a large impact on the cost results (see Fig. 5).

• The functional identity of steel parts and assemblies (e.g. deck, brackets, transversal frame, pillar, etc.) is not always well defined by the designers. The main issue is that this field is not used for the same purpose in the shipyard. This may cause conflicting problems for the FBC module. For instance, the author found that some brackets have been declared as transversal frames. Unfortunately, the unitary cost by meter length is absolutely not the same for these two functional entities which can cause serious miscalculations.

6 Analysis and results

The FBC module has been validated over 37 sections of a real passenger ship vessel. These sections have been gathered according to their complexity structure as shown on Fig. 4. Moreover, Fig. 3 shows the sections considered for the validation.

For each work process the number of man-hours is computed by multiplying the average man-hours per unit with the number of units for this work process. Units for a work process could be: “number of frames and plates requiring bending” , “welding length” , etc. The total number of necessary man-hours is then the sum of all man- hours for the individual work processes. The sum of all work processes gives the total labour cost.

Table 2 shows the results of the FBC calculation of the labour cost for hull production. It presents the error between the total labour cost assessed manually and auto­matically with the FBC module. Results show that average errors are largest for complex sections (—22.3%) than for simple ones (1.7%). A thorough investigation revealed the following points:

After a manual correction of the input data, results shown in Table 2 highlight that the average error can be confined to below 2% whatever the level of section com­plexity and the maximum error can be confined to below 5%.

7 Conclusions

Most people tend to view ship construction from a technical perspective: requirements, design, engineering, analysis, production planning, and production. What is sometimes forgotten by engineers is the fact that ship construction is a business venture and must succeed financially as well as technically.

Cost assessment carried out for each individual opera­tion as presented in this paper takes considerable work. Moreover, the few extra people to do this work are often required to gather all the data needed. Considering the extra cost of this method, it may be asked: does it pay? According to our opinion we can answer that there is always a total net savings in every job properly planned and scheduled.

C om plex Medium S im p le

Fig. 3 Sections selected for the validation

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The FBC prototype provides:

a true return-on-investment by enabling organizations to identify quantifiable savings in labour while evalu­ating alternative designs and processes, the ability to generate cost assessments in a limited time period which significantly speeds up the

a Complex

b Medium

c Simple

Fig. 4 Relative complexity of ship sections

development process, because designers, manufactur­ing planners, and sourcing professionals never have to wait for cost information.

• elimination of the time-consuming task of providing hand calculated in-house cost estimates, and releases cost experts for higher-value tasks such as finding cost reduction opportunities.

• the ability to generate cost from the first design stage, which allows what-if alternative designs and engineer­ing changes to occur very early in the design process, when they are exponentially less expensive to make.

• the ability to monitor productivity by the comparison between the real cost and the planned cost.

The author considers that the methods presented herein are straightforward and easy to use. The validation tests have yielded results that are consistent with the findings of the shipyards from which the designs were obtained. The time taken to make a comparative determination of the effects of a change in design and its consequent impact on cost has been reduced. The accuracy of the cost assessment approaches a detailed engineering estimate without the incurred cost and time lost to carrying out studies. It also gives ship designers a better understanding of the cost implications of the design decisions that they make and ultimately results in producing lower cost vessels. Nevertheless, some additional work must be carried out to speed up the estimation process time and also to improve the accuracy of the input data.

After 20 years of high activity and good earnings, the shipbuilding and shipping industry is today facing the con­sequences of a world economic recession and financial cri­sis. The above developments are expected to lead to a consolidation of the maritime industry and increase pressure towards sustainable development and competitive products and services. The ability of a shipyard to compete effectively on the increasingly competitive global market is influenced to a large extent by the cost as well as the quality of its ships. A wider understanding of the methods and problems of cost assessment will result in clearer specifications, more eco­nomical and prompt performance, and a consequent saving of time, effort, and money for both the operators of ships and the shipyards that build and repair them.

Systematic and objective analysis of cost effectiveness and complexity in ship design are important for several

Table 2 FBC validation results respectively before and after data correction— negative and positive means respectively below and above the average

Number of Section

Average error Maximum error

Before data cor. ( % )

After data cor. ( % )

Before data cor. ( % )

After data cor. ( % )

Complex 16 -2 2 .3 - 1 .6 - 2 8 - 4

Medium 8 -9 .2 -0 .8 - 1 4 5

Simple 13 1.7 1.7 3 2

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a Double welds Missing weld

\

c Missing weld

Fig. 5 W rong detection of welds

reasons. First, it helps design engineers to develop a better understanding of various aspects of complexity and thereby evolve toward simpler design solutions. Second, it enables design automation tools to systematically evaluate different design alternatives based on their inherent complexities.

Finally, with these tools, the designers should obtain well-defined and unambiguous metrics for measurement of the different types of cost effectiveness and complexities in engineered artefacts. Such metrics help the designers and design automation tools to be objective and perform quantitative comparisons of alternative design solutions, cost estimation, as well as design optimization.

8 Future work

The research study has been confined to a ship’s structure (i.e. mainly steel parts and not outfitting). In the near future

the authors will extend the current development to outfit­ting processes such as piping, heating, ventilation, air conditioning and electricity. It is obvious that these pro­cesses are preponderant for passenger ships focused on in this paper.

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