cost estimation - orv sagar kanya generalised
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COST ESTIMATION TECHNIQES IN SHIPBUILDING
IMU-VISHAKAPATNAM CAMPUS Page 1
REPORT ON COST ESTIMATION OF
O.R.V SAGAR KANYA
SCHOOL OF NAVAL ARCHITECTURE AND OCEAN ENGINEERING
INDIAN MARITIME UNIVERSITY
VISHAKAPATNAM CAMPUS
PROJECT GUIDE SUBMITTED BY
Sri U.S RAMESH PRAMOD K.B
CHIEF MANAGER,SMDR M-TECH (NA-OE)
VISHAKAPATNAM 2011-13 BATCH
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OBJECTIVE:
The main objective of the project is to estimate the cost of construction of the
given vessel from the empirical formulae recommended by J Carreyette. and analyse for an
optimal technique of cost estimation during design stage of a Ship.
Name of Vessel : O.R.V SAGAR KANYA
Operator : National Centre for Antarctic and Ocean Research (NCAOR)
Owner : Ministry of Earth Sciences ,Government of India.
Date of commission : March 1983
Year of Estimation : 2009
Constructed by : Germany
Vessel Parameters
Length over all 100.34 m
Length ,LBP 89 m
Breadth overall 16.39 m
Depth to main deck 9.8 m
Draught 5.6 m
Mass displacement 1554.5 tonnes
Gross Tonnage 4209 RT
Net Tonnage 1029 RT
Vol.displacement 1516.585 m3
Engine Electric propulsion 2x1230 kw
Speed 14.25 knots
Endurance 45 days/10,000 nautical miles
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Introduction
In recent years, there is severe competition in the shipbuilding industry due
to the increased shipbuilding capacity compared with demand. The
shipbuilding yard has to deal with a highly variable product that makes bid-
ding on contracts very difficult. The pricing for new shipbuilding could have a
high risk especially with minimal profit margins and precious little time
available. To reduce such risk in estimation, there should be a quick and
accurate means to accomplish reasonable and reliable cost estimate method.
Cost is concerned with how much money the shipbuilder will pay for
shipyard labour to build the ship ,subcontractors to assist ,all materials and
equipment contained in the completed vessel, miscellaneous services and
establishment charges.
J Carreyette presented a paper in 1977 at RINA where he suggested a simple
parametric approach of cost estimation of merchant ships in early stages of
design. System and subsystem costs are characterised as a proportion of ship
particulars like length, volume, displacement, propulsion power etc. Using
regression and other statistical methods Cost Estimating Relationships(CERs)
were developed based on following methodology.
Methodology
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Total cost of Vessel (Carreyette's Method)
The total cost of ship is defined as follows:
Total cost = Total Labour cost + Total material cost
Where
Total Labour cost = Direct Labour cost + Overheads +Profit
And
Total Materials cost = Suppliers’ cost + Handling and wastage + Profit
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This Formulae of Cost Estimation is based on productivity of a shipyard in
Britain during 1977.So changes in productivity over the last three decades has
to be incorporated in the calculations. One of the main disadvantages of
Carreyette's approach is that it does not take into account the impact of any
progress and development in ship production man-hours which has
happened in last two decades of 20th century due to various advancements in
production like
numerically controlled machine tools
robots
automated process control equipment
computerized flexible manufacturing systems
associated computer software
Some of the novel techniques and processes ,listed below, have improved
shipbuilding quality, productivity, practice and promoted sustainable
development
quality assurance
concurrent engineering
continuous process production technology
energy efficiency
waste minimization
design for recyclability or parts reuse
inventory management
upgraded worker skills
communications with customers and suppliers
The productivity metric man-hours/Compensated gross tonnage (MH/CGT)
can be considered as a good indicator of productivity in a given shipyard. The
change in (MH/CGT) from 1977 to required year of construction can be used
to make a correction factor(Cpr) which can be included in cost check equation.
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From above figure productivity in US shipyards have gone up from 70
MH/CGT to 28 MH/CGT from 1990 to 2004
Cpr = 28/70
Cpr= 0.4
This correction factor can be multipiled with labour costs to account for
improvements in productivity and to get closer to an accurate estimate of
labour costs.
Also Carreyettes's methed has been based on general cargo vessels which are
less complex in construction when compared to NCCV. This variation in
complexity of construction can be incorporated in cost chech equation by
using Compensated Gross Tonnage, CGT as a parameter reflecting complexity
of vessel.The Compensated Gross Tonnage, CGT, is considered as a worldwide
yardstick for shipyard output in commercial shipbuilding replacing the
traditional measures, man-hours/tonne steel weight .The organization of
Economic Co-operation and Development(OECD) in 1984 published and
adopted the CGT system as a parameter on which to base national
shipbuilding output comparison. This coefficient reflects the amount of work
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necessary to produce that particular type and size of ship. One gross ton of a
passenger ship, for example, with its sophisticated accommodation and public
spaces, contains a significantly greater level of work content than one gross
ton of a bulk carrier which is effectively little more than a large steel box with
an engine on the back. One CGT of either ship on the other hand should
contain roughly equivalent work content. The system has now been highly
developed and is fundamental to the analysis of shipbuilding activity.
For a General cargo vessel - OECD 2007
CGTCARGO = 27* (4209^0.64)
= 5634.278
For Research vessel (NCCV) - www.worldyards.com
CGTR.V = 46* (4209^0.62)
= 8123
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Research vessels come in the category of NCCV (Non cargo Carrying Vessels)
CCGT= CGTCARGO/CGTNCCV
CCGT = 8123/5634
CCGT =1.45
Dividing both we get a factor of 1.45 which is multiplied with steel and outfit
labour costs respectively to get corrected values for research vessel..
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1) Labour costs
The estimation of labour man-hours for ship production is
considered an important item during the early stage of negotiation
before signing the contract. With few information about the ship
during the preliminary design stage, it is necessary to apply a good
prediction method for estimating the ship production man-hours
a) Steel work labour cost
If Rh -actual man hours per tonne of net steel
Cb -block coefficient at laden summer draught
Ws -net steelweight in tonnes
L -LBP in metres
A' -factor from table 1
Rh= A' / [Cb(Ws/L)1/3]
Table 1
Average wage rate Overheads
of direct labour £/hr 75% 100% 125%
1.6 700 800 900
2 875 1000 1125
2.4 1050 1200 1350
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A plot of' A' for different wage rates
a) Labour cost 1977
Assuming overheads as 100% , value of A' was plotted as shown and for a
wage rate of 2 £/hr, A' was obtained to be 1000
Total steelwork labour costs
H = RhWs = A'*Ws2/3L1/3 *CCGT / Cb
= 1000 × 1.45 ×25722/3 × 891/3/ 0.5798
= 2200432.62£
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b) Labour cost 1983
Corresponding to wage rate of 7.14 £/hr - A’ is taken as 3587
Total steelwork labour costs = H * Labour average rate * Overheads * Profit
= 3587 × 1.45 ×1.071×25722/3 × 891/3/ 0.5798
= 7801172.81£
= 12.08 million USD
(Accounting for 7.1% error)
Determination of block coefficient , Steel weight, outfit weight and machinery
weight is given in APPENDIX 1.
2) Outfit labour cost
Assuming no subcontracting, We have
Co1=C'Wo2/3
Where Co1-total cost of outfit labour
C'-factor given in table 2
Wo-outfit weight, tonnes
Taking into account CCGT and productivity correction factor (Cpr) modified
equation becomes
Co1=C'*CCGT*Wo2/3
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Table 2
Average wage rate Overheads
of direct labour £/hr 75% 100% 125%
1.6 8350 9550 10750
2 10425 11925 13425
2.4 12500 14300 16100
plot of' C' for different wage rates
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Outfit cost 1977
Corresponding to wage rate of 2 £/hr - C’ is taken as 11925
Total outfit labour costs = 11925 × 1.45 × 1.07 ×628.09 2/3
= 1356802.38 £
(Accounting for 7% error)
Outfit cost 1983
Corresponding to wage rate of 7.174 £/hr - C’ is taken as 42760
Total outfit labour costs = 42760 × 1.45 × 1.07 ×628.09 2/3
= 579412.9 £
(Accounting for 7% error)
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3) Machinery Installation labour cost
Assuming no subcontracting, We have
CM1=F'*CCGT * P0.82
CM1-total cost of Machinery installation labour
F'-factor given in table 3
P-Service propulsive horsepower
Table 3
Average wage rate Overheads
of direct labour £/hr 75% 100% 125%
1.6 323 369 415
2 404 461 519
2.4 485 553 622
A plot of' F' for different wage rates
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Machinery installation cost 1977
Corresponding to wage rate of 2 £/hr - F’ is taken as 461
Total outfit labour costs = 461 × 1.15 ×1.075× 2460 0.82
= 423449.12 £
(Accounting 15% increase for twin screw ships & 7.5% ERROR .)
Machinery installation cost 1983
Corresponding to wage rate of 7.174 £/hr - F’ is taken as 1653
Total outfit labour costs = 1653 × 1.15 ×1.075× 2460 0.82
= 1518978.39 £
(Accounting 15% increase for twin screw ships. & 7.5% ERROR )
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2) Material costs
a) Steel material costs
Csm=B'*CCGT * Ws
Csm - total steel material cost
B'- factor given in table 4
Ws - net steel weight ,tonnes
Table 4
Average price of Wastage +welding rods
shipbuilding steel £/tonne 8% 10% 13%
150 178 182 186
200 237 242 248
250 296 303 310
A plot of' B' for different prices of steel
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STEEL MATERIAL COST 1977
From corresponding steel rate of 200 £/tonne and assuming 13% wastage -
value of B'=875.08
Total steel material costs = 248× 1.45×1.0375×2572
Total steel material costs = 976794.73 £
(Accounting for 3.075% error)
STEEL MATERIAL COST 1983
From corresponding steel rate of 146.55 £/tonne value of B'=181.22
Total steel material costs = 181.2× 1.45×1.0375×2572
Total steel material costs = 703298.68 £
(Accounting for 3.075% error)
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b) Outfit material costs
Com=D'Wo0.95
CoM-total steel material cost
D'-factor given in table 5
Wo - outfit weight,tonnes
Table 5
DATE D'
Jun-75 1500
Jun-76 1725
Jun-77 2011
OUTFIT MATERIAL COST 1977
D'= 2011
Total outfit material costs = 2011*1.45*1.05*(628.09 ^(0.95))
=2459813.99£
(Accounting for 5% error)
OUTFIT MATERIAL COST 1983
Taking linear extrapolation in march1983
D'= 3550 Total outfit material costs = 9931.5*1.45*1.05*(628.09 ^(0.95))
=900173.83 £
(Accounting for 5% error)
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c) Machinery cost
CM=G'P0.82
CM-total cost of Machinery
G'-factor given in table 6
P-Service propulsive horsepower
Table 6
DATE G'
Jun-75 735
Jun-76 845
Jun-77 980
Machinery Cost 1977
F'= 980
Total Machinery Installation costs = 1.15*980*1.1075*(2460^(0.82))
= 900173.83 £
(Accounting 15% increase for twin screw ships & 10.75% error)
Machinery Cost 1983
Taking linear extrapolation in march 1983
F'= 1800
Total Machinery Installation costs = 1.15*1800*1.1075*(2460^(0.82))
= 1653380.51 £
(Accounting 15% increase for twin screw ships & 5% error)
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3) Additional cost
a) Thrusters
CT=£48000+35000Tt
CT-cost at mid '77 rates£
Tt-thrust in tonnes
1977 Thruster costs
Total thruster costs = 48000 +35000*167.763*0.9
= 325025£
1983 Thruster costs
Total thruster costs =(48000+35000*(7.91))*1.3
= 422305£
(Assuming 30 % escalation)
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b) Stabilisers
CST = £331Δ3/4
CST-cost at mid '77 rates(£)
Δ-Volume displ. In tonnes.
1977 stabiliser costs
Total stabiliser costs = 331*4855^0.75
= 481293£
1977 stabiliser costs
Total stabiliser costs = 331*4855^0.75
= 481293£
=681992 USD
(Assuming 30% escalation)
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Total cost of Vessel
The total cost of ship is defined as follows:
Total cost = Total Labour cost + Total material cost
Where
Total Labour cost = Direct Labour cost + Overheads +Profit
And
Total Materials cost = Suppliers’ cost + Handling and wastage + Profit
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Total cost = 13.31 million USD 1 GBP= 1.714 USD approximately (1977 march rate)
SOURCE-(www.research.stoulfield.com)
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Total cost = 32.26 million USD
1 GBP= 1.55 USD approximately (1983 march rate)
SOURCE-(www.research.stoulfield.com)
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Assumptions
Vessel is built with 75%-85% Grade 'A' steel and remaining
B,E,AH,DH or EH.No other material like Aluminium is accounted
for.
No part of the ship is built by subcontracters
Overheads are taken to be 100% and profit as 10%.
Complexity of construction in steelwork is neglected.
This estimate does not take into account research equipment
onboard or special cargo handling devices,winches etc.
No life cycle costs have been considered.
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Clarksons shipbuilding index
The cost estimates produced by carreyette for the year 1983 are
extrapolated to 2006 using clarksons shipbuilding index to compute
cost at 2006 level .
YEAR INDEX
1983 135
2006 168.1
2008 176.5
Cost of construction 1983 – 32.26 million USD
So cost of construction in 2006 is
32.26 × 168.1 / 135
=40.169 million USD
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PODAC MODEL COST ESTIMATION
Product-Oriented Design And Construction Cost Model (PODAC) was
forformulated by US navy in 1997 as an effective tool in cost
estimation.It uses a PWBS system to define costs.the work is defined
using three types of information:product structure,process and work
type.
Emperical CERs of PODAC model provide a top down approach for
estimating Basic construction costs at the concept,Preliminary and
contract stages of design.
Concept design level cost based on complexity
factor,displacement and speed
Preliminary design level cost based on complexity factor and
system based weight at various levels
Contract design level cost based on complexity factor and system
based weight.
The last two levels are overlooked because of lack of data and concept
level estimation is carried out as follows.
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Vessel Particulars-Sagar Kanya.
Length L= 89 m
Breadth B= 16.39 m
Depth D= 9.8 m
Draught T= 5.6 m
Mass displacement= 4855 tonnes
Vol.displacement= 4736.585 m3
BHP = 2460 kw
Speed= 14.25 knots
Cb= 0.57984
Cost Estimation
Price = complexity Factor *(752*displ (0.835)*speed1.24)
complexity factor= ship type factor *size factor.
size factor = 32.47*displ (-0.3792)
displ = full load disp in tons.
=4736×1.10231
=5351.715 tons
speed = max sustained speed in knots.
=14.25 knots.
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ship type factor from table below
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Selecting Naval Resarch vessel ship type factor - 1.25
size factor = 32.47*5351.75^(-0.3792)
=1.252
complexity factor= 1.252 * 1.25
=1.56512
Price = 1.56512 *(752*5351.75^(0.835)*14.25^1.24)
=41.189 million USD
(2006 year of construction)
This estimate varies with Carreyettes cost extrapolated using clarksons
index by 2.47 % which is an acceptable account.
Any estimation of cost beyond 1983 using Carreyettes method would not
be accurate as the constants used in cost equation would have to be
extrapolated to infitisibaly big values therby compromising on accuracy.
Instead computing 1983 cost of construction and extrapolating using
indices would yield a good estimate.
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APPENDIX 1.
Determination of block coefficient Cb
We Know Mass Displacement
Δ =L×B×T×Cb×ƿ×1.005
So
Cb =Δ/(L ×B×T ×ƿ×1.005)
= 4855/(89×16.39×5.6×1.025×1.005)
= 0.5798
Steel Weight: Watson & Gilfan.
= 2400 tonnes
= 2479.92 tonnes
Where K- constant for different vessels
E- Hull numeral
k= 0.045 for research vessels.
E=L(B+T)+0.85L(D-T)+0.85(l1*h1)+0.75*(l2*h2)
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= 3063.34
(l1= 45.65,h1=2.34 m ,l2=4.97 m ,h2=2.77 m )
(from GA of the given vessel)
=0.6358
Optimising. and taking 15% margin for scrap weight.
Wst= 2618.156 tonnes
Machinery Weight:
Wm = (0.98) BHP / 10 + 200 - Munrosmith
=437.08 tons
= 414.27 tonne
( Taking 10% more for twin screw engines.)
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Total Outfit Weight: Outfit weight is divided into outfit and hull equipment weight
outfit weight is calculated as follows
WO = Co (CN/1000)0.825
where Co = 2103 (A constant between 2103 & 2412) H. Benford
CN - cubic number = (L×B×D/1000)
= 422.54 tonnes
Hull equipment weight is calculated as follows
WHE = CHE(CN/1000)0.825
where CHE = 1023 (A constant between 1023 & 1196) H. Benford
CN - cubic number = (L×B×D/1000)
= 205.54 tonnes
Total outfit weight= 628.04 tonnes
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REFERENCES
1) Carreyette J- ‘Preliminary ship cost estimation’,RINA,1977
2) Mishra S.C - ‘Preliminary Ship Design’, IMU-Visakhapatnam
3) Ahmad .M.Rashwan – ‘Estimation of ship Production man hours’,
Alexandria university, Egypt.
4) Watson ,D.G.M and Gilfillan, A.W., ’Some Ship Design Methods’. Trans.
RINA, Vol. 119,1977,p 279.
5) R. Munro-Smith –‘Elements of shıp desıgn’, (1975-1995)
6) H. Schneekluth and V. Bertram- ‘Ship Design for Efficiency and
Economy’,1998.
7) www.research.stlouisfed.org
8) Compensated gross ton(CGT) system-OECD 2007
9) Harry Benford - 'The Practical Application of Economics to merchant ship
Design'
10) Bureau of census, Annual survey 0f manufacturers-'Earnings in
shipbuilding', September 8,2011.
11) www.valuewalk.com
12) Dorel Paraschiv, Andreea Caragin, Ana Maria Marinoiu-"Going
Global. Focus Shipbuilding Industry in Romania".
13) "Delegation of Estonian shipbuilders in Germany"-Overview
by Heinart Puhkim-BLRT GRUPP AS
14) Laurent Deschamps and Charles Greenwell-'Integrating Cost
Estimating with the Ship Design Process'-SPAR Associates, Inc.
15) PODAC cost model-SNAME, 1997.
16) Clarksons Shipbuilding index.
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