Delivering naval shipyard investment outcomes

Investment in naval shipyards can be initiated by either private investment seeking a return or a strategic requirement funded by public investment. In both cases, approval requires demonstrating value for money. For public investment, the process can be onerous. 

As approvals can be challenging to achieve, a robust design process should be used. This will demonstrate an optimised CAPEX and improve the likelihood of the shipyard achieving its performance objectives alongside a financially viable outcome. Key areas the process should focus on are:

• Integration into a national strategy
• Development of long-term plans
• Identification of the right site / location
• Optimisation of the layouts to reduce CAPEX and OPEX whilst meeting performance objectives
• Adopting the right processes and practices for success
• Demonstrating and derisking the concept 

This article provides more insight into these key areas.

No shipyard is an island

Justifying a substantial investment in a new or upgraded naval facility requires an understanding of the increased capability in a national context.  It is also helpful to have a national strategy that addresses how the industrial development and cooperation satisfies strategic aims by minimising CAPEX and optimising industrial effectiveness. To do this requires an understanding of the capability and capacity of all naval shipyards and their expected levels of utilisation against the current and future fleet requirements for new construction or sustainment. 

To develop national strategies, First Marine International (FMI) has created a national capacity model. This is a digital twin of the industry where simulations can be run to understand the optimal way to allocate facilities and resources. Through this approach, the requirement for the investment is validated at a national level by showing that it best serves the long-term needs of the nation.

No investment is an island

Instead of identifying investments for individual programs or markets, investments identified as part of a strategic shipyard plan allow returns to be calculated over longer periods. Taking a longer-term view encourages flexibility to be considered in an investment’s specification and positioning on site. This, in turn, helps to mitigate against costly redevelopment or additional investments being required.

FMI develops phased long-range facilities plans which examine different future demand scenarios and then produce a development roadmap to meet different and sometime conflicting long-term requirements of the site.

The right shipyard site and location is key

Selecting the right shipyard site has the potential to halve the required CAPEX and improve OPEX. This can be achieved through identifying the site with the lowest non-value-added costs (dredging etc.) and choosing a local area where existing capability can be leveraged (workforce, supporting industry etc).

To achieve this, FMI uses a proprietary site selection tool with established criteria and a weighted scoring system. This allows multiple sites to be evaluated quickly and provides traceability and justification of the decisions made.

Optimising shipyard layout to reduce CAPEX and OPEX

An optimised waterfront and landside layout will reduce initial capital expenditure and long-term operational expenditure whilst meeting performance objectives. It is important to try and leverage a site’s natural characteristics when refining overall shape and orientation. These factors are also considered in the positioning, sizing, and flow of the production facilities.

The right solution can also help to reduce risk and deliver savings throughout a shipyard’s operational lifetime. An optimal design solution has the potential to save the operator money and enhance productivity over a period of 40 years or more.

At FMI, we use our expertise and proprietary tools to develop our own layouts and review third party layouts and adapt them to reduce CAPEX while increasing capacity and revenue. In our experience, such reviews provide reassurance that a facility is well designed or, where significant optimisation is possible, savings of up to 25% of the CAPEX have been achieved.

Adopting the right processes and practices for success

To ensure that the shipyard can achieve the target level of performance, the entire design, including its production and pre-production process and practices, must be optimised from the outset. A well-structured operational framework optimises productivity and ensures the optimal use of the shipyard’s facilities and resources. 

Optimising shipyard performance to achieve market success requires the adoption of industry practices that are carefully aligned with the shipyard's specific characteristics and requirements.  

Through target ship cost structure analysis, and by leveraging its proprietary benchmarking and capabilities assessment tools, FMI identifies and recommends the most suitable industry practices.  These include its cost base, product mix, throughput, and the size, skill level, and experience of its workforce. In addition to facilitating market success, this approach ensures sustainable improvements and long-term operational competitiveness.

Proof of concept, optimisation and on-going analysis

A digital twin of the shipyard provides a means to test the shipyard design before construction starts. Although the FMI design tools form a deterministic digital model of the shipyard design, it is often useful to test the effect of variability by incorporating a Montecarlo simulation into our models.  A graphical interface illustrating how the shipyard operates can also be a useful aid assisting approvers understand the shipyard’s processes. We provide all of these in partnership with out in-house specialist team using our own simulation software called Witness.     

Learn more about shipyard design and development at Haskoning or get in touch with our experts to discuss your particular needs, today.