Chapter 19
Completion and Evaluation
Done is better than perfect
—Sheryl Sandberg
Your most unhappy customers are your greatest source of
learning
—Bill Gates
After the completion of any project, including a ship, the final activity should be
to make an evaluation of how the work was conducted. The project will continue
to the end of the warranty period after delivery, during which any issues with the
owner will be resolved and any defects remedied. The evaluation of the shipyard
work though can be largely carried out at the time of delivery to provide feedback
to future projects.
Ultimately the success of a shipbuilding project is determined by whether the
financial targets for the ship construction were met, and ideally a profit made.
However from the view point of the shipyard, it is also important to determine
whether the ship was completed to timescale as defined in the baseline plan, whether
the completion was within the budget and whether the correct quality was achieved
efficiently. A number of questions can be asked as a basis for the comparison of the
initial project management plan with the actual outcome. The project outcome can
also be reviewed from the perspectives of the different stakeholders. Some projects
are not good for perhaps a contractor, but others engaged in the same project regard
the outcome as very satisfactory.
A project may have been completed within the budget set, but this should not
simply be accepted at face value. The discussion of earned value demonstrates that
the budget should include contingencies and reserves. If these were used there still
may have been opportunities which were missed to save costs. The budget structure
set up at the start should be reviewed to see to what extent the performance target
was achieved, or the management reserve used. Even if they were not used a more
detailed review of the expenditures may show opportunities for future costs savings.
If the project went over budget then there is likely to be more urgency in assessing
where and why the cost overruns occurred. Ideally potential overruns should have
been identified much earlier during the project monitoring process and the lessons
found should have been applied.
© Springer Nature Singapore Pte Ltd. 2021 209
G. Bruce, Shipbuilding Management,
[Link]
210 19 Completion and Evaluation
Total
100%
Steel Outfit
Number
of
Workers
0% Time
100%
Fig. 19.1 Labour utilisation for a project
There may be a strong temptation to see a completed ship as a final stage of
the contract, making due allowance for the warranty period. This is a mistake. A
commercially successful project may conceal work completion later than planned,
provided the contract was such that the lateness was acceptable. If the lateness was
due to some shipyard problem, this should be fully understood and plans made to
avoid the same in the future. If the lateness was down to some acceptable, external
factor then this should be evaluated as a risk which occurred, and steps taken to avoid
the same risk in future. Even if the work was all to plan, opportunities to save time
may have been missed and future planning for ships can take this into account in
order to save time in the future.
Figure 19.1 is an example of the information which can be taken from an evaluation
and then used for future project planning. The figure shows the weekly total number
of workers engaged on the project over its duration. The number rises then falls during
the project, and is the same information as in an S curve. If the data is normalised
then the curve can be used to predict the numbers of workers who will be required
for a new project. Applying the estimated total hours and the timescale to the curve
will allow weekly totals to be estimated.
The figure also shows the total divided into steel and outfit workers, which can
give further information, and a more detailed division can be made. An unplanned
increase in resources near the end of the project will show and be a subject for
investigation. This provides a good starting point for a new project, as an accurate
baseline, even when the expected ratio of different disciplines is likely to change.
The quality of the project work is determined largely by acceptance of the ship on
behalf of the customer and the relevant regulators and inspectors. Beyond the major
issues, such as the speed and capacity of the ship, and the safety requirements, there
are many smaller aspects which might result in discussion and potentially argument.
19 Completion and Evaluation 211
The technical requirements for the ship should have been set out in the specification
for the ship, and thus formed part of the contract. Any actual or potential problems
will usually be identified and fixed during testing and trials of the ship.
However when discussing quality, it was made clear that finding and then fixing
quality problems will result in a satisfactory ship, but at extra cost and probably time.
The ability to deliver a complex ship which operates as specified should never be
confused with the ability to run a successful project. The technology of the product
can conceal failings in the technology of the shipyard. So it is necessary to review
quality issues on a project and identify how changes in the processes used in the
shipyard can be amended to prevent future occurrences.
The evaluation is not confined to the end phase of the shipbuilding project. Basi-
cally, as the work progresses, the shipyard should identify any good or bad aspects
and record them for future reference. At a detailed level, in workstations, it can
be possible to find and implement improvements during the progress of a specific
project.
Repeating mistakes or failing to take up good ideas are depressingly common
happenings. Avoiding these errors is essentially part of good quality assurance proce-
dures. The shipyard uses the evaluation process to identify ways in which the future
management of similar projects, and the on-going management of specific activities
in the shipyard, might be improved for the organisation.
It is also important to evaluate the way in which the project was managed, again
as a basis for improvements in the future. Sadly in some cases the evaluation leads to
dismissal of a project manager, which is not a good way to promote open evaluation
or learn lessons for the future. Having reviewed a project critically, it should be
possible to identify how improvements might be made in the future.
The project review will basically cover all the work done in the design, work
preparation, purchasing and production to deliver the ship. The focus will be first
on what went wrong, rather than any congratulations on what went right. It is the
errors that result in cost and time overruns. Then the review can move onto what
went well but could have been better. Congratulations should come last. There is a
problem here, in that by the time work is completed and the data for evaluation has
been obtained, the people responsible will usually have other concerns about new
projects.
Quite correctly, those responsible for completing their part of the of the ship
construction project will focus their efforts on their current and next tasks. That
is unless there is an underlying problem in a work station which does need urgent
attention. So it is necessary to have procedures to collect information on what happens
during the project and to retain that information so it is made available as input to
the planning and preparation of future projects. Basically, that is when the people
will have their attention on those aspects of the new project where the potential for
improvement has been found.
The final stage in a project is to complete the work and agree closure with all the
parties to it. Reaching and agreeing completion can be sources of disputes. Despite
this, the issue of deciding what is complete should not really cause any problems for
the construction of a ship. The specification and contract will have defined what is
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to be produced and the delivery to the owner will be agreed on that basis. There may
well be changes to the specification during the life of the project, hopefully carefully
managed, but the completeness should still be easily agreed.
Prior to delivery of the ship, the following are normally checked and confirmed as
being correct. All the instruction manuals for operation and maintenance of the ship
should have been received by the owner. The planned maintenance program must
have been initiated, all owner’s supplied items, consumables and other operating
requirements have been received and stored safely. Finally any necessary items for
a delivery ceremony must be readily available, for example flags, emblems and
uniforms.
Depending on the complexity of the ship, some crew may be standing by the ship
for a considerable period. This is particularly the case for military ships, where there
may be considerable quantities of stores and other items to be looked after by the
shipyard prior to handover of the ship to the owner.
Delivery of the ship can be made after completion of all the site inspection and
construction supervision. The chief inspector will ensure that all approved plans have
been evaluated and corrected in compliance with the ship as-built. Once delivery of
ship is accepted and the authorised person has signed the necessary protocol on behalf
of the owner, a number of documents must be submitted for any financial institutions
and for the flag state administration.
Unless there is a major failure to meet the specification, for example if the speed is
inadequate or the cargo capacity is below that which was specified, then the ship will
be accepted as meeting the owner requirements. If there is a major failure then the
shipyard has not managed the project correctly at some point. If the owner will take
delivery of the ship after deduction of whatever penalty was specified in the contract
then the shipyard will have to accept this. Also if the owner enforces a right to reject
the ship then the only recourse is to return the payments made and perhaps try to
re-sell the ship. The shipyard might be able to pursue a sub-contractor or supplier
who has caused the failure, but will not be able to have any compensation for the
whole consequential loss.
Even if there is no major failure, there may still be some dispute, for example over
the quality of the ship. If there is such a dispute this is when the initial specification
and the related contract really matter. If the specification was complete and detailed,
then confirming that the ship complies with it should be easy. If the contract is unam-
biguous, for example with clear references to the appropriate standards which apply
and the shipyard has complied, then acceptance of the ship should be straightforward.
However anything left vague in either contract or specification will be a source of
potential conflict.
Practically, no ship is going to be perfect and as the discussion earlier in the book
mentioned, where defects or other problems are identified the actions to be taken
must be agreed. Again, these should be covered by the contract conditions, so that
the actions are agreed quickly and easily. In some cases a shipowner may want to
delay completion because of his cash flow or a poor market for shipping. The issue
of distortion of steelwork is one which has been mentioned earlier and sometimes it
may be difficult to agree when the structure is in a suitable condition.
19 Completion and Evaluation 213
Assuming that all parties are being reasonable, then decisions have to be made
about closing the contract in an acceptable way. If the project has been managed
well, then the earlier inspection delivery reports for nearly-complete work should
have picked up any potential problems in good time. All the progress monitoring
and inspections of work in progress were designed to find problems and their solu-
tions to ensure there would be no impact will occur on the construction schedule or
the eventual performance of the ship. All the tests and inspections will have been
documented.
In closing out the contract, some technical requirements are for the owner to
receive certified completion of scope of work, including variations, performance
analysis after a period of operation and performance improvement initiatives during
the warranty period. All auditable documents must be agreed and signed, tech-
nical information complete and passed over, including operating instructions, as-
built drawings and test records. What triggers the warranty period and when is
agreed, residual materials are transferred to stock or disposed of and customer-owned
property is accounted for and properly disposed of.
Commercial questions to check are whether all bills have been paid, have all
outstanding disputes been handled satisfactorily, are the terms and conditions of
the warranty understood, is the close out report agreed and are residual bonds and
credits cancelled. Any claims and disputes must be resolved or recorded, potential
claims and disputes eliminated, fees or royalties due under licence agreements paid,
internal order numbers closed so that no further costs are allocated to the project and
obligations with respect to offset arrangements fulfilled.
The owner’s project manager will have clear acceptance arrangements for inspec-
tions, tests, trials and reports. Final tests and trials often require a surprising amount
of time and effort to prepare for and carry out. Any deficiencies that prevent tests
and trials from proceeding will have been corrected, possibly only as short-term,
expedient quick-fixes. In this case there is residual work to be done so that the
proper solution is implemented later. Potentially this will be after delivery within the
warranty period, provided the ship is safe to sail. These are outstanding inspection
reports agreed not to be closed out, but for which a price adjustment will be made.
Also inspection reports that the shipyard agrees to correct within the first half of the
warranty period, and against which the owner has withheld some payment. Inspec-
tion reports in dispute where some payment may be withheld against these items
subject to post-delivery negotiation or arbitration or litigation are listed.
There will also be a review of non-hardware deliverables prepared by the shipyard.
These include as-built drawings which will show the final arrangements and confirm
design changes are as agreed. All certificates, operating manuals and other documents
required by international or national regulations will also be confirmed.
The project manager will have to approve spare parts lists and arrange for their
timely arrival. Another need is to develop documentation for delivery, including three
lists.
Management will identify warranty items according to contract procedures.
Warranty items should not be confused with outstanding deficiencies. The contract
will have set out the procedures, rights and responsibilities of each party in respect
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of the timing, notifications, correction of warranty defects, costs and withheld sums.
The burden is on the owner to prove that there is a valid warranty matter and is if
there is then it must be managed in a timely way.
A guarantee period is part of the contract, and this is provided for as a means
of ensuring any small problems with the ship which do not prevent its acceptance
by the owner are corrected. The owner will usually have an immediate need for the
ship and will not delay acceptance provided deficient items are fixed. The guarantee
period also provides for the correction of any problems which occur once the ship
is in service. These are usually minor, and can again be fixed quickly, by shipyard
staff or an appointed shiprepair company.
Occasionally large scale problems occur, which can be a problem because if the
owner cannot operate the ship then there will be a loss of money and the owner will
want the shipyard to pay. The shipyard will usually then wish to pass the solution of
the problem on to a sub-contractor or the supplier of the relevant equipment. Such
problems are generally equipment related, and resolution can result in argument and
sometimes legal action.
There is potentially a positive note to the guarantee period. If a purchased item
works properly, then this will not usually cause much comment, after all it is what
was expected by the owner. If there is a problem which leads to distrust of the
supplier shipyard, or even to a legal argument, then the owner is likely to make a lot
of comments, for example if asked about the reliability of the shipyard. If however
the ship develops a problem and this is fixed quickly and effectively by the shipyard,
this is likely to result in positive comments. Shipyards which have been recently
developed, and employ a labour force which is new to industry, are likely to make
mistakes and have post delivery quality problems.
This was a feature of some new Asian shipyards in past decades. The reaction was
to accept these problems as likely and then to provide a serious after sales service,
with guarantee engineers aboard the ship as it operated, tasked with problem solving.
South Korea in particular developed this procedure into a well known and appreciated
service and gained a good reputation, in addition to offering ships at low prices which
was always the main incentive for owners.
This neatly returns to the initial activity described in this book, the importance of
the marketing of the shipyard. It is generally recognized in marketing any product that
a current or recent customer who needs more of that product is the easiest opportunity
for more work for the supplier. So the provision of reliable ships, but also and the
rapid solving of problems, is a very effective marketing tool. As the first requirement
of shipbuilding management is to obtain orders for ships to build, this emphasizes
the importance of carful closure of a ship construction project, evaluation of the
production process for each ship built and actions to improve for the future.