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Titeldia

Asset Management, Ports & Fairways

André van Hassent

DREDGING CONTRACTS

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Dredging Contracts

Contents:

1. Short introduction to the Port of Rotterdam

2. Asset Management

3. Basic dredging capacity vs. peak demands

4. Marketing and type of contract-choices

5. Risk-distribution

6. Performance measurement

7. Sustainability in dredging contracts

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Custom (Wit)

Port and industrial area

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Over 40 km!

Afbeelding (XL)

Port development

1400 - 1800

1800 - 1900

1906 - 1922

1934 - 1946

1929 - 1949

1948 - 1957

1960 - 1970

1970 - 2008

2008 - 2030

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Tekst + afbeelding (S)

Port in figures

Port of Rotterdam engine of the economy

• Total port area 12,500 ha (net 6,000 ha)

• Total employment 180,000 people

• Total added value € 21 billion (3.2% GNP)

• 3,000 companies

• Largest port in Europe, 8th port worldwide

• Throughput approx. 465 million tons;12 million TEU (containers)

• Depth up to 75 ft (= 24 m)

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Employment

Object (XL)

Top 20 world ports

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Custom (Grijs)

Organisation chart Port of Rotterdam Authority

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Afbeelding (XXL) + Tekstkader (Linksboven)

26 november 2015|8

Mission:

The Port of Rotterdam Authority createseconomic and social value by workingtogether with clients and stakeholders on the realisation of sustainable growth in Rotterdam’s world-class port.

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Asset Management

• A management paradigm and a body of management practices

• That is applied to the entire portfolio of assets at all levels of the organization

• That seeks to minimize the total cost of acquiring, operating, maintaining and renewing the assets

• Within an environment of limited resources

• While continuously delivering the service levels customers desire and regulators require

• At an acceptable level of business risk to the organization.

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Object (XL)

Asset Management

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• Expected/agreed Performance

• Acceptable Costs

• Without predicted Risks

Object (XL)

Asset Management System

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Grafiek onderschrift


Sedimentation: a natural process

Is a result of natural and therefore unpredictable process

Occurs at low current velocity

Typical for fluvial delta’s

Influx of marine sediments from tidal pumping, storms

Sedimentation takes place in almost every port

Object (XL)

Basic dredging capacity vs. peak demands

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Totaal Regio's

Maasvlakte

Europoort

Botlek

Pernis

Fruitport

Eem-Waalhaven

Stadshavens

2e Maasvlakte

Dordrecht

Annually dredged quantities 1982 - 2016

Object (XL)


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-

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Weekly dredged volume

m³ volume

Average

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• Basic dredging capacity:

• Long-year contract for minimum demand (> 3-5 years)

• When possible divide in different lots for different contractors

• Keep possibilities for additional works open

• Flexible shell:

• Use long-term contractor(s) for extra deployment (first refusal)

• Framework contracts with fixed hourly rates

• Framework contracts for additional equipment (plough, wid, cranes, barges)

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Basic capacity contract:

• When tendering:

• Define mimimum purchase level (amounts guaranteed)

• Share historical information about annual quantities

• Set demands for “quick response time” (incident management)

• Imply the right of first refusal in case of extra demands

• After granting:

• Agree on basic deployment schedule (allowing for mutual flexibility)

• Set up an “early-warning” and alternative deployment

• Agree on process for first refusal


Marketing: Supply profile

Total marketvolume worldwide €11 billion, Europe €1,8 billion

Active on (Western-European) Dutch market:

2 large Dutch parties (Boskalis, Van Oord): strong international focus (90% of turnover abroad). Large

fleet with both large and smaller dredgers. PoR position BCG matrix: dog, but interesting because of

image, spin-off, and home-market

2 large Belgian parties (J. de Nul, DEME):. strong international focus, limited activities in Dutch market.

Large fleet with both large and smaller dredgers. PoR-position BCG matrix: dog, not a lot of competitive

offers

2 smaller Dutch parties (vd Kamp, Dutch Dredging) limited fleet of smaller dredgers. PoR-positie BCG

matrix: cash cow

Outsiders: Danish company Rohde Nielsen fleet of smaller to medium-sized dredgers, and Van den

Herik (NL) 2 smaller dredgers

Market Characteristics:

Homogeneous oligopoly: limited number of suppliers with an equivalent product

Limited number of clients: (port) authorities) like Rijkswaterstaat, other seaports, water-controlboards

Motivations of suppliers:

Maximization of occupancy

Combining different contracts (flexibility in project-planning is important)

Tabel markt & BCG

Bedrijf Omzet 2013 Omzet 2012 Werknemers FTE 2013

Winst 2013 Winst 2012

Boskalis (NL) € 3,5 miljard € 3,1 miljard 13.832 € 366 mln. € 250 mln.

Van Oord (NL)

€ 1,641 miljard

€ 1,715 miljard

4.195 € 130 mln. € 118 mln.

Jan De Nul (B)

€ 2,124 miljard

€ 2,114 miljard

6.173 € 123 mln. € 116 mln.

Van der Kamp (NL)

DEME (B) € 2,53 miljard

€ 1,92 miljard

+/- 4500 € 109,1 mln. € 89,43 mln.

De Boer (NL) € 60-70 mln.

Rohde Nielsen (DK)

€ 113,5 mln. 137,0 mln. 37 € 5,8 mln. € 10,5 mln.


Marketing: Demand profile

Continuous demand

Large area, with high annual quantities

Combined demand with RWS for larger marketshare

Payment method “ex-situ” (i.e. in means of transport)

Guaranteed minimal workload (working-hours)

Client with good facilities, contractmanagement, ICT-tooling, Dredging Desk, hydrographic capacity

Combined with sandmining

Flexible demand

Dynamic area, with unpredictable sedimentation-patterns

Need for quick actions/response-times

Different types of dredgers needed (grabs, bed-levellers)

Framework contract for on-the-spot demands


Marketing: Kraljic and strategy

Kraljic strategic quadrant, this theory gives options for strategy:

a) Reduction of demand

D.IY.;

Researching for different product specifications (maintenance concepts)

Develop alternative suppliers

b) Intensify cooperation with suppliers

Long-term contracts

Develop common programs with supplier

c) Cooperate with other clients to increase puchasing power.

Kraljic matrix


Marketing: Lessons learned

From maintenance contracts:

Freedom in planning/ combining other contracts is very important for contractor

Advantage sitting contractor: proper knowledge of area also an important factor for contractor

Negotiating terms can be profitable for both parties

Allocate risks very carefully.

From projectcontracts (capital dredging)

Clear terms about survey methods, including presentation and payment

Clear terms about tolerances, interfaces with other works/area’s

Small projects

Reserve “flexibilty” in contract (and execution-period) for smaller extra projects

Methodiek Category plan

Richting voor Category plan

Leerpunten: plannings-

vrijheid, kennisdeling, samenwerking

Kraljic: afbouwen

behoefte en partnering

HbR inkoop-strategie:

Partnering en

flexibiliteit

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Marketing: recommendations

Basic capacity

Intensify cooperation with RWS and projects dpt.

• Share knowledge about market, area, defenitions, execution methods etc.

• Work together on sharing supervision, planning, tooling, etc.

• Better understanding of each other’s interests

Tender for long term contract(s), to ensure continuous supply with flexibilty

• Allow for contractpartner to rely on “agreed flexibilty” vs. Response-time

• Collect and secure knowledge of total port-industrial area

• Consider setting up a “market-place” for flexible demands

Framework contract for additional dredging

• Shorter tendering-phases, possiblity to negociate, no “Alcatel”

• Apply for smaller modification works, or peak sedimentation

• Quick, flexible deployment because of pre-concluded contract, based on fixed tariffs.

Tekst + Object (S)

Risk management

Client Contractor Cost impact

•Siltation quantitiesX €€€€€

•Siltation ratesX €€

•Soil typeX €€€

•Sediment quality (contamination)X €€

•Infrastructural modificationsX €

•Sailing distanceX €€

•Production ratesX €€€€

•Efficient dredger typesX €€

•Availability for Maintenance/Response timeX €

•Traffic intensitiesX €

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Risk management

Choice for best contract types based on:

• Putting the risks with the party that is best equipped to manage/mitigate them

• Compliancy with strategic vision of port authority, e.g. responsibility for contractual depths

• Organizational know-how of contractmanagement

• Organizational manpower for contractmanagement

• Do things right and do the right things

• A combination of the above

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Joined contract with RWS

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Percelen:

•H = Nieuwe Maas / Waterweg +

aanliggende havens

•G = Maasmond + Calandkanaal +

Beerkanaal

•Z = Hbr (Maasvlakte+Europoort)



Motivation for joined contract

• Maintenance area’s of RWS and PoR share large borders, sediment dynamicsand –risks

• Maintenance dredging is carried out for the same system of ports, rivers andfairways

• Maintenance dredging is carried out with the same equipment.

• Combining the dredging assignments in one campaign will be more efficient forboth contractors and clients

• Directional contract type more appropriate for this type of maintenance areas(not performance-based)

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Tekst + Object (S)


Contract characteristics combined tender

• Contractors are guaranteed minimum working hours, not exclusivity

• Divided into 2 parcels: Parcel G and Parcel H

• Payment per dredged volume:– M³s - 1,2 t/m³ (PoR)– TDS (RWS)

• Additional combined sandmining:– Included in assignments PoR– Contractors own responsibilty in assignments RWS

• Additional services:– Surveying of maintenance area in parcel H (RWS)

• MARS (2) System applies on all parcels

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Tekst + afbeelding (M)

Sustainability

• Company goals or social responsibility?

• Minimal tresholds for reducing:

• CO2, Sox, Nox, PM ?

• How to weigh effect when tendering?

• How to include incentives in contract?

• PoR: rewarded “proposal with significant reduction” with contract extensions!

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Performance measurement:

Ex-situ (hopper volumes):

− Sounding lead, TDS systems, etc.

− Relatively easy to accuire

− Executed by client, contractor or third party

− Requires manpower for measuring or managing the system (IT)

− Not nessecarily a measure for performance on harbour-bed

In-situ (echosoundings)

− Mulitbeam echosoundings

− In-situ density and/or shear stress measurements

− Executed by client, contractor of third party

− Influenced by bulking-effect, currents/tides, shipping, other dredging activities

• Exact relation between the two is often hard to find

• Requires in-depth knowledge of matter


Performance measurement:

Quality management demands:

− System assessments (ISO)

− All the required certificates and logs up-to-date

− Compliancy with local regulations (permits)

− Health & Safety management

Specific performance measurements

− General “report-grades” for reporting, communication

− Evaluate process-data

− Task analasys

Client-interaction performance

− Response to incidents/disruptions

− Non-conformities and issue management

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Dredging contracts

Conclusions/recommendations

• Every contract starts with:

• Assessment of your own situation: risks, needs, mandate, legal frame

• Assessment of the market situation: supply / demand profiles, availabilty

• Assessment and development of opportunities for coorporation with other clients/stakeholders

• Every contract should include:

• Balanced risk distribution that is more than insurance

• Clear scope, management of expectations

• Definite terms where needed, flexibility when possible (or needed)

Custom (Geel)

Dredging contracts…

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dredging contracts - htg-online · rotterdam’sworld-class port. ... por position bcg matrix: dog,...

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