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COST MANAGEMENT IN SHIPBUILDING
Case Studies Software System "CostFact"
NSRP Joint Panel Meeting
San Diego, CA, USA
December 8, 2015
Develop new ships at competitive costs. Combine engineering know-how and costing experience to ascertain the real costs of new vessels and generate reliable quotations very quickly.
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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 incorporatedinto the system, covering all of a shipyard’s calculation demands.
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
CONTENTS
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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.
Cost Rates
Spreadsheet Calculations
ERP System Data
Consumptions (Material,
Labor Hours)Product
Breakdown Structures
Technical Parameter
Cost Escalation
Manual InputsSupplier
Proposals
Specification
PROJECT 4713
PROJECT 4712
Previous Projects with all relevant
information
PROJECT 4711
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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
PROJECT 4713
Incorporation of technical parameters forcost prognoses and project comparisons.
Previous Projects
PROJECT 4710
PROJECT 4712
PROJECT 4709
PROJECT 4708
PROJECT 4711
Regression Analysis Cost Forecast Current Project
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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
- L i f e C y c l e C o s t i n g -
Manual Calculations
Projects of Comparison
ERP-System
Continuous cost planning and controlling accompanying the design and production process, up to the entire life cycle.
Project Phase
Building Groups
Ship
Components
Reference Sources
Initial Design
Detail Design
Engineering
Manufacturing
In-Service
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Trouble-Free Integration
Easy integration of CostFact in the existing system landscape.
“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)
AVEVA MARS
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Parametrical Cost Estimation with CostFact
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CALCULATION
Current Project
Overview CostFact Structure
Not shown: Life Cycle Costing
CALCULATION ANALYSES
Previous Projects
PROJECT 4713
PROJECT 4712
PROJECT 4711
DIRECT INPUTOF NORMS
POOL "PROPOSALS"
POOL "NORMS"
DIRECTINPUT
PROPOSALS
INDEXATION TABLE
PROPOSALS
BASICSTRUCTURES& SETTINGS
EXTERNALSOURCES
ACTUAL COST
SPECIFICATION
DIRECT INPUTOF COST ITEMS
COST RATES &PRICE LISTS
COST RATES &PRICE LISTS
CALCULATIONDIRECTINPUT
DIRECTINPUT
REGRESSION ANALYSES
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Current Project
CALCULATION ANALYSES
Previous Projects
PROJECT 4713
PROJECT 4712
PROJECT 4711
DIRECT INPUTOF NORMS
POOL "PROPOSALS"PROPOSALS PROPOSALS
BASICSTRUCTURES& SETTINGS
EXTERNALSOURCES
ACTUAL COST
SPECIFICATION
COST RATES &PRICE LISTS
DIRECTINPUT
Selected Software Features Presentation
CALCULATION
POOL "NORMS"
DIRECTINPUT
REGRESSION ANALYSES
CALCULATIONINDEXATION TABLE
COST RATES &PRICE LISTS
DIRECTINPUT
DIRECT INPUTOF COST ITEMS
POOL "NORMS"REGRESSION ANALYSES
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Relation between cost drivers and technical groups (examples)
(See Haakon Shetelig: “Shipbuilding Cost Estimation – Parametric Approach”)
DWT
LOA
DECK AREA
SPEED
POWER
DYNAMIC POSITIONING
CLASS
CARGO PUMPS
TANK CAPACITY
ACCOMO-DATION
1 - HULL2 – MACHINERY
AND PROPULSION
3 – CARGO CONTAINMENT AND HANDLING
EQUIPMENT
4 – COMMON SYSTEMS AND
COSTS
5 - SHIP GENERAL
TOTAL COST
PRICE
CO
ST D
RIV
ERS
GR
OU
PS
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Sources of (cost) norms: Quantifying the relation
Existing Knowledge
Regression Analysis of Previous Projects
“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 by regression analysesVariant 1:
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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Model Data Cost Rates
Automatic cost calculation by integrating CAD and ERP data
CAD-System ERP-System
Function y = f(x)
Quantity ofCost Element
Cost of Object
CostFact
Model Data (x) Cost Rate
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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
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 column “Usage” shows the number of different cost items, calculated based on the respective parameter.
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
(See also Haakon Shetelig: “Shipbuilding Cost Estimation – Parametric Approach”)
Earnings + RiskPremium
Allowed ProductionCosts
Market Price
Bottom-up Pricing
Earnings +Risk Premium
Loosing contract
CalculatedProduction Costs
Top-down Pricing
Loosing Money
Target Costs
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Capability costing identifies approaches for cost reduction
CostFact:
Calculating the cost of a capability
Capability’s CostCapability’s Valuefor the Customer
Sales Department:
1. Defining capabilities
2. Analysing the value of each capability
Contrasting 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
S H A R E T O T A L T A R G E T C O S T
C U
R R
E N
T
C O
S T
S H
A R
E
20%
10%
20%
30%
OFFENSIVE EFFECTIVENESS
SURVIVABILITY
SURVEILLANCE
MOBILITY
STANDARDS
- Schematic representation for confidentiality reasons -
30%10%
Example Survivability:
Current Cost Share 20%:20,672 TEUR Capability Cost / 101,661 TEUR Total Cost
Share Total Target Cost 28%:Estimated share of customer’s total value
40%
40%
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Control of target cost achievement
- Schematic representation for confidentiality reasons -