EFFECTIVE MANAGEMENT OF SHIPBUILDING PROJECTS

Presented at SORTA 2002

15 International Scientific and Professional Congress
THEORY AND PRACTICE OF SHIPBUILDING
th

Trogir, Croatia
15th November 2002
By Ian Paul Edwards

Authors: Torstein Dehn, Ian Paul Edwards and Hans Gerhard Wagner
Nordic Maritime Services AS, Hamangskogen 60, 1338 Sandvika, Norway
Tel. (+47) 67 52 19 00 Fax (+47) 67 56 83 66 Email nms@nordic-maritime.no
Abstract: The paper presents concepts for effective management of shipbuilding projects developed through the
accumulated experience of the authors mainly through their work for Nordic Maritime Services; a successful
marine consultant and ship management company who have implemented project procedure manuals based on
the ISO 9000 standard. The objectives in management of shipbuilding projects on behalf of ship-owners are
outlined and the methods used to achieve these objectives are described. An example of how a project
organisation can be formed is detailed, including a brief description of the responsibilities of the different
personnel. The project initiation stage is outlined, covering tasks such as budgeting, preparation of project
procedure manual and project planning meeting with the shipbuilder. The aims of plan approval are presented
and procedures applied to the plan approval activities are described. The selection of makers of major
equipment and machinery is highlighted as an important aspect of the shipbuilding process, and the objectives of
such are outlined. Important aspects that should be evaluated when selecting makers for a shipbuilding project
are described in detail. An outline of the principles behind site inspection and construction supervision at the
shipbuilders premise is presented. The different types of inspections are categorised and the procedure for
follow up of inspection comments is detailed. Last but not least, the paper highlights the importance of reporting
and documentation of the management work and outlines, among other things, the structure of the reporting
system, and how computerised document and project control systems can benefit shipbuilding management.

2002 Nordic Maritime Services AS

No part of this document may be reproduced, utilised, stored in any retrieval system or transmitted in any form or by any means,
electronic or mechanical, including photocopying, recording or by any information, storage or retrieval system without the
permission of Nordic Maritime Services.

1. INTRODUCTION
The objective of this paper is to present the concepts developed by Nordic Maritime Services; a successful
marine consultant and ship management company, for the management of shipbuilding projects with regard to
technical quality, use of resources, economy and schedules. The concepts form the basis of Project Procedure
Manuals, based on the ISO 9000 standard, that are prepared by Nordic Maritime for each shipbuilding project
under their management.
Management of shipbuilding projects on behalf of ship-owners is carried out in order to verify that the new ships
are designed and built in compliance with shipbuilding contracts and specifications, maritime authorities
requirements, classification regulations, charterers requirements and the ships meet the ship-owners quality
objectives, and, moreover:
That the ships comply with the approved plans, and that specified equipment and materials are used
That the materials and components have been selected with the aim to attain the most reliable operation
mode and that such materials and components are certified in accordance with the specifications.
Therefore, the Management can be defined herein as covering the planning, execution, reporting and
documentation of plan approval, selection of makers of principal equipment and machinery, supervision of
fabrication and construction and test and trials of the new ship. The Management normally commences when the
shipbuilding contract becomes effective and ends when the ship has been delivered to the ship-owner and is
generally divided into the following main tasks:
Project Management
Project Initiation and Planning
Plan Approval
Selection of Makers
Site Inspection & Construction Supervision
2. PROJECT ORGANISATION
The Project Organisation carries out the Management and consists of a team of personnel who are provided with
clearly defined communication/reporting lines, responsibilities, tasks and work steps required to perform the
work. The personnel making up the Project Organisation will normally consist of the following, organised as per
Figure 1.
Project Manager (PM)
The PM is appointed by the ship-owner and acts as the ship-owners representative for the management
and execution of the shipbuilding contract, has authority to act for and on behalf of the ship-owner and
has overall responsibility for the Management. The PM is responsible for ensuring that the Management
is planned in sufficient detail to reach the aim in a cost-effective way and that the work is carried out by
qualified and experienced personnel in accordance with applicable instructions and procedures. The PM
also monitors and ensures that the work is verified, properly documented and made at the agreed time
and price.
Project Supervisor (PS)
The PS is appointed by the PM to ensure that the specified quality and optimum use of resources is
obtained and to support the Site Chief Inspector (SCI). The PS is the contact person towards the PM for
the Management work. The PS reports to the PM.
Project Co-ordinator (PC)
The PC is appointed by the PM and acts as the co-ordinator of approval work and regular progress
reporting to the ship-owner.

Site Chief Inspector (SCI)

The SCI is appointed by the PM prior to commencement of construction and acts as the ship-owners
representative on-site and the official contact between the shipbuilder, Project Organisation and the shipowner.
Project Task Members (PTM)
The PTMs are appointed by the PM and receive written work assignments from the PM containing
information about their task and scope of work, start and termination of the task and reporting
procedures. The PS has discussions with the assigned PTM before any work is allowed to start in order
to clarify each main step in the scope of work and ensure common understanding of the task to be
performed. Self-checking of own work is carried out by the PTM and all tasks are verified in sufficient
detail.

Ship-owner

Project Manager
(PM)

Project Supervisor
(PS)

Project Co-ordinator
(PC)

Site Chief Inspector

(SCI)

Project Task Members

(PTM)

Project Task Members

(PTM)

Plan Approval

Site Inspection &

Construction Supervision

Admin. Manager

Administration

Figure 1 Typical Project Organisation

3. PROJECT INITIATION AND PLANNING
The aim of Project Initiation and Planning is to identify the activities and resources required to obtain the desired
quality and to describe the procedures used to control and execute the work. Additionally, the intention is to give
factual information about the project and to ensure that the entire Project Organisation is properly informed
about major project aspects. A Project Procedure Manual is usually prepared at this stage.
3.1 Project Plan

The Project Organisation consists of several members who are involved in carrying out the work (see Chapter 2).
A Project Plan that defines the division of work, responsibilities and budgets is prepared by the PM covering:
Budgeting
Project Planning Meeting with Builder
Plan Approval Administration
Site Inspection Administration
3.2 Budgeting
An estimate of the man-days and other expenses for the total scope of work is prepared. Separate cost budgets
are prepared for Project Management, Plan Approval and Site Inspection & Construction Supervision work as
applicable. Budgets reflect the estimated cost necessary to comply with quality criteria, established procedures
and what ever is specified in the shipbuilding contract and agreement with the ship-owner.
3.3 Project Planning Meeting with the Shipbuilder
The aim of the Project Planning Meeting is the prevention of mistakes and substandard work by reviewing and
establishing sound procedures and practices for all activities that may influence the quality of the ship. The
agenda of the Project Planning Meeting is prepared so that each main step in the shipbuilding project is
discussed systematically. A successful Project Planning Meeting ensures that a common understanding of the
Plan Approval, Site Inspection & Construction Supervision and completion of the supervision is obtained.
The Project Planning Meeting covers, as a minimum:
Shipbuilders organisation, schedule, subcontracted works
Procedures for modification of specifications where applicable
Communication lines
Plan approval procedures, list of plans for approval
Selection of makers and purchase procedures
Inspection during construction
Commissioning, test and trials
Delivery
4. PLAN APPROVAL
The purpose of Plan Approval is to evaluate the Plans (drawings and documents used in the design and
construction of the ship) to ensure that they comply with the shipbuilding contract and specification, maritime
authorities requirements, classification regulations, charterers requirements and the shi-owners operational
patterns (collectively known as the Requirements). In addition, the evaluations should consider whether proper
and cost effective maintenance and repair work can be made throughout the ships life time.
The Plan Approval personnel, principally the PS, PC and PTMs, shall review Plans submitted and approve them
if found to comply with the Requirements. A stamp and signature is used to identify approved Plans. The stamp
is complemented with the signature(s) of the approval personnel and the date of approval. When such Plans do
not meet the Requirements, the shipbuilder is advised in writing. Conditions and limitations of the approval may
be stated on the Plan and/or in the accompanying letter in the form of comments.

Comments relating to approved Plans are marked in red ink on the Plans for easier identification.
4.3 Shipbuilders Correction of Approved Plans
The shipbuilder normally corrects the plans to comply with comments from both the ship-owners representative
and the classification society and submits such revised plans to either the Plan Approval Office (the office where
plan approval is carried out) or Site Office (the ship-owners representatives office at the shipbuilders
premises) for verification that comments have been implemented on the final drawings. In case of a large amount
of comments, resubmission of the subject plan to the Plan Approval Office may be requested.
4.4 Design Changes
Design changes requested by the ship-owner or shipbuilder during plan approval and construction affecting the
contract price, compliance with Requirements or delivery time are always advised to the PM for evaluation and
approval. All such design changes are recorded in writing and include:
Relevant section of building specification
Affect on contract price for the change
Affect on delivery time
When changes are approved by the PM, the shipbuilder is then informed in writing.
5. SELECTION OF MAKERS
The aim of selection of makers of principal equipment and machinery is to select only those materials and
components that have been evaluated and found to be of high quality with recorded good reliability, designed for
cost-effective operation and planned maintenance routines.
The shipbuilder has all commercial contacts with makers and evaluates their quality and delivery capability.
Normally, the shipbuilder has the right to propose three technically equivalent solutions and propose their
preference to the ship-owner. However, the shipbuilder and maker should ensure and be able to verify that the
following conditions are met by their proposed components and/or materials:
Functionality
The proposed component/material must be suitable for the function required and:
The material, capacity and performance shall comply with the Requirements
The component shall be designed with respect to the loads and ambient conditions which are expected to
occur during normal service/operation.
Maintenance tasks normally expected to occur at short intervals during normal service/operation can be
carried out without interruption
Reliability
Components and systems should have reliability as required in the classification rules and arranged in the way
that a single failure in a sub-component will not cause loss of main function for a longer period of time, defined
by the time required to restore the function as follows:
Critical component (the function to be maintained by a redundant component)
Main component, the function to be re-established within 10 minutes
Sub component, the function to be re-established within 3 hours

Where classification rules do not specify redundancy type, it is normally specified by the PS. Generally
recognised methods and formulas are used in the calculation of reliability, availability and related parameters.
Where numerical calculations cannot be performed due to insufficient data, the reliability and availability
evaluation is based on qualitative failure analysis of the component or system. Operational experience with
components and materials from other ships may be used as a basis for the availability calculations and makers
evaluation. Use of novel and non-conventional (prototype) components and materials shall generally be avoided,
and if considered, an in depth evaluation of the reliability and availability should be performed by the
shipbuilder.
Maintenance
The components should be able to be maintained/repaired in a cost effective way. An evaluation on the
availability of service engineers and spare parts for all main components should be prepared by the shipbuilder
or maker covering:
Availability of service engineers in the vessels main trading ports/areas
Cost of service engineers
Availability of spare parts
The instruction and maintenance manuals provided by the makers should be evaluated by the shipbuilder (and
the Project Supervisor where applicable), based on:
Content of operation instructions
Coverage of maintenance repair instructions
Spare part list, including reference system for purchase orders
Information required for Planned Maintenance System (PMS) input
For main components, it is preferable that the makers provide the operation and maintenance manual in
electronic format for use on ships internal computer systems. For all components, the instruction manual shall at
least contain:
Component description
Cross section drawing
Maintenance instructions
List of spare parts
6. SITE INSPECTION & CONSTRUCTION SUPERVISION
The aim with Site Inspection & Construction Supervision at the shipbuilders premises during construction, test
and trials is to ensure that the materials and components are installed and tested in a manner that ensures the
functionality and reliability required for trouble-free ship operation and to verify that the ship complies with the
approved Plans, and Requirements (as defined in Chapter 4). The site inspection period will generally be from
the steel cutting event until delivery of the ship with a scope of work, depending on the type of ship, covering:
Hull construction
Surface preparation & anti-corrosive coating application
Machinery installation
Electrical/automation installation
Cargo system installation
Outfitting
All inspections and attended tests are properly planned, documented, and the results recorded in an inspection
record that is signed by the SCI or attending Project Task Member (hereafter referred to as the Inspector) and
the shipbuilders representative. The SCI plans and coordinates the site inspection tasks in accordance with the

shipbuilders production schedule and agreed quality plan. The following inspection methods are normally
applicable:
Scheduled inspections
Unscheduled inspections
Inspection of incoming materials and components
Inspection at subcontractors
Scheduled inspections are performed upon request of the shipbuilder according to the agreed scope and list of
items to be inspected by the ship-owner.
Unscheduled inspections are carried out at random by Inspectors and mainly directed at problem areas identified
during the plan approval and construction phases. Reports from unscheduled inspections are normally reported
in writing and may, at the discretion of the SCI, be submitted to the shipbuilder upon completion of the
inspection.
For inspection of incoming materials and components, the controlled items can be either shipbuilders or shipowners delivery items. The inspection is made with reference to the specification, ship-owners purchase order
or order confirmation, product description or instruction manuals and reported to the shipbuilder or supplier
through the party who ordered the goods. The shipbuilder normally handles non-compliances in equipment
supplied by the shipbuilder in a similar way, and the Inspector will only follow up necessary corrective actions
by verifying any non-compliance recorded by the shipbuilder when their inspection has revealed irregularities on
received goods. Such non-compliances can include:
Damages
Incorrect dimensions or quantities
Incorrect quality or standard
Surface/paint condition
Incorrect storing by the shipbuilder
The Inspector ensures that the storing of materials and components is safe and dry and in ventilated spaces
according to good ship building practice and any special requirements which might be specified. The SCI can
always seek information about storage-procedures from suppliers of major machinery and components sensitive
to environmental conditions. Any shortcomings in this respect are reported as a non-compliance and corrective
actions followed up.
6.1 Comments during Inspection
During the inspection or tests, the Inspector is obliged to inform the shipbuilders representative of any
conditions which need improvement, defects, deficiencies, or observed non-compliances with the Requirements.
The Comments will normally fall into one of the following three Categories:
1) Comments that shall be corrected by the shipbuilder before construction work proceeds
2) Comments that shall be corrected by the shipbuilder before final acceptance of the inspection task is
given
3) Observed non-compliances with the Requirements
The shipbuilder should implement procedures for identification and handling of all comments. Comments are
documented by the Inspector and normally presented to the shipbuilder on an inspection record. As far as
practical, the shipbuilders standard format is utilised for this purpose.
For control and follow up of comments, the following procedure is normally adopted:

Comments are always given in writing with proper reference to work failure, standard, specification or
rules and regulations.
The shipbuilder generally corrects or responds to the comments within 7 days
Where the shipbuilder does not correct or respond to the comments, the SCI issues a reminder to the
shipbuilder with request for immediate response
In the case of Category 1 and 2 Comments, if no response is received within 7 days, the SCI issues a
Non-Compliance Report

6.2 Non-Compliance
Category 3 comments or failure to reply to category 1 and 2 comments as per the above requires immediate
issuance of a written Non-Compliance Report (NCR) to the shipbuilder by the SCI. Where an NCR is issued,
reference is made on the inspection record to such NCR number. The NCR contains a request for corrective
action by the shipbuilder and such corrective action must be approved by the Project Manager who is the only
member of the Project Organisation who has authority to permit deviations from the building specification. All
Non-compliances must therefore be reported to the Project Manager (PM) and Project Supervisor (PS). When a
fully completed NCR has been received, the shipbuilder should respond within 7 days.
A corrective action contains at least:
An analysis of the cause
Planning of corrective actions, including deadlines for implementation
Implementation and follow up inspection
Non compliances, cause analysis, corrective actions and the outcome of these are properly documented in the
form of an NCR Register. The SCI verifies that corrective actions have been taken before signing off the NCR.
6.3 Tests and Trials
By attending the test and commissioning of machinery, equipment and complete systems, the Inspectors ensure
that installations meet with the specified Requirements. The scope of work generally covers the following tasks:
Shop test of machinery, equipment and systems
Tank structural and tightness tests
Dock test and trials
Inclining experiment
Sea trial
Cargo tank cleanliness test (where applicable)
The shipbuilder or subcontractor should prepare a test procedure for approval well before the various items are
tested covering:
Test procedure to be carried out
Reference standard/acceptance criteria
Performance data as per specification
The supervision team are obliged to check that the shipbuilder has implemented a system for:
Quality control and approval body
Procedure for calibration of any measuring equipment
Standard procedures for test to be carried out

6.4 Delivery
The actual procedures during delivery and registration are normally attended by the PM and SCI, where one or
both have a Power of Attorney to sign protocols and other documents related to the ship-owners acceptance of
the ship and transfer of the ships title and ownership.
Prior to the delivery the following is normally checked and confirmed in order:
Crew is mobilised and in place for operation
All operation and maintenance instruction manuals have been received
Plan maintenance program is initiated
Owners supplied items, initial suppliers, consumables, stationary and books, etc. are received and stored
safely
Necessary items for the delivery ceremony are readily available such as flags, emblems, uniforms etc.
The ship-owners participation during the delivery ceremony is established
Upon completion of the Site Inspection & Construction Supervision, the SCI ensures that all approved plans
have been evaluated and corrected in compliance with the ship as-built. Such plans are stamped As Built in
accordance with the established routines.
When the delivery condition of the ship has been accepted by the ship-owner and once their authorised person
has signed the protocol of delivery, a variety of documents are submitted to the ship-owner with a copy to the
PM, required for closing with any financial institutions and/or flag state administration upon taking delivery of
the vessel.
7. DOCUMENTATION AND REPORTING
The supervision reporting system should in a systematic manner document that the work is carried out based on
the established procedures and in particular that the fabrication and construction complies with the approved
plans and that the inspection, test and trials have been carried out to the extent and in the manner as agreed with
the ship-owner.
In particular, the Site Inspection & Construction Supervision reporting system enables the identification of
inspections and tests carried out, performance of inspection work, recorded comments, non-compliances and
corrective actions implemented. The reporting system can be structured in three levels. Starting with the
inspection report and ending with the monthly report to the ship-owner:
Inspection Checklist/Report
Inspection Progress Report
Inspection Summary Report / Monthly Report to the Ship-owner
The reporting system can therefore be structured in accordance with the example shown in Figure 2.

HULL
Block Construction
Block Outfitting

OUTFITTING

MACHINERY

Deck outfitting

ME instal. report

Cargo pump instal.

Block Painting

Hull constr. / outfitting

progress report

EL/AUTOMATION
Electrical instal.
Automation test

Tank outfitting.

ME system test

Outfitting/ installation
progress report

Machinery installation
progress report

Generator test

EL / automation
installation progress
report

MONTHLY
REPORT TO
CLIENT

Figure 2 Example of the 3-Level Reporting System

7.1 Inspection Checklist/Report
The Inspection Checklist/Report is primarily a tool for the Inspector, specifying main steps, areas of importance
and which parameters are to be recorded from inspections, test and trials. The Inspection Checklist/Report is
developed in such manner so that verification of inspection work performed is as far as possible built into each
work step/stage. For practical reasons the inspection checklist and report can be combined into one document.
7.2 Inspection Progress Report
The intention with the Inspection Progress Report is to specify inspection areas and items, enabling evaluation
and preparation of actual inspection work progress. Therefore the Inspection Progress Reports normally include:
List of items to be inspected
Inspected date and status of inspected item
Summary of comments
7.3 Monthly Report to the Ship-owner
The intention with the Monthly Report to the Ship-owner is to summarise the progress in the shipbuilding
project. At the end of each month the PS evaluates the progress in plan approval, maker selection, inspections,
test and trials and prepares a report to the ship-owner covering:
Status of Plan Approval
Progress of Plan Approval
Maker Selection

Accepted component makers

Status & progress of Site Inspection & Construction Supervision
Observations & corrective actions
Matters effecting progress and delivery schedule
Milestones during reporting period
Matters effecting contract price
Maters of dispute

7.4 Document & Project Control

Considering the large quantities of Plans, documents and correspondence accruing during a shipbuilding project,
Nordic Maritime has developed computerised systems for document and project control. These include software
to keep track of drawings, status of plan approval, comments given to each plan and comments implemented,
giving an accurate real time status of plan approval. This is a vital tool for ensuring that all comments given
during the plan approval stage are implemented within the construction drawings and actually built into the
vessel.
These systems are being further developed, enhanced and integrated to create a fully comprehensive, web based
project control system giving access to all members of the supervision team any where in the world. Access to
shipbuilders is also being considered as this would considerably speed up the plan approval process and enable
better control of comments to plans and drawings.
8. CONCLUSIONS
By implementing the concepts presented within this paper using a Project Procedure Manual, the Management of
shipbuilding projects can be executed in accordance stringent quality control procedures. This combined with the
application of a regular audit programme to assess all aspects on the Management work enables a system to be
established based on the ISO 9000 standards. The benefits to ship-owners include cost effective, properly
documented supervision carried out in line with a well established industry standard. Such Management of
shipbuilding projects not only ensures that ships are built to the highest levels of safety, quality and reliability in
accordance with the specifications but assists the shipbuilder in delivering ships on time and budget by
identifying and proposing solutions to problems before they affect cost and delivery schedule.