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Shipyard Consulting
Services
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C O N TA C T P E R S O N S
HypoVereinsbank
Dean Domazet
Phone +49 89 32 19 58 61
Fax +49 89 32 19 58 63
E-Mail: dean.domazet@bda-consulting.de
B A C K G R O U N D I N F O R M AT I O N pre-financing allowing for the disburse-
ment of funds at an earlier stage.
Shipyards in Europe vs. Shipyards World-
wide In shipyards, the disbursement of pay-
ments once transferred by the ship owners
In view of labour cost differences (inclu-
is less transparent; the payments are not
ding indirect labour costs), worldwide
always used for the project in question.
shipyards continue to benefit from cost
advantages in comparison with their
Western European counterparts. In most Investors looking to purchase shipyards
cases, the quality of vessels built is similar.
Investors are now presented with the
Increasingly, rating problems are leading to opportunity to take part in the privatisation
delays in the completion of new vessels of shipyards. Even though many yards in
as supplies and wages are no longer able Eastern Europe (with the exception of the
to be pre-financed. As a result, problems former East Germany) face bankruptcy,
ensue with the timely delivery of new many are waiting for the chance to be pri-
vessels. vatised.
Some potential investors may have a lack
Vessels built outside of the core shipping of knowledge regarding shipyards.
markets
In order to help the yards with their cash
flow, ship owners and their banks are
being confronted with a higher volume of 2
Resulting Deficits Our Involvement
Financing banks are more and more often We offer competent support and sound
the risk takers. Should a new contract advice in the following areas:
be cancelled, the bank as well as the ship • accurate evaluation
owner are in for a loss of business. The • risk reduction
problem lies in having little influence on • coordinating the various business aspects
the distribution of capital once the bank • optimising solutions
has approved a loan and transferred the
money to a shipyard. Is the money used
HypoVereinsbank (HVB) specialises in solving
on the project for which it was intended
problems related to shipbuilding and ship-
or for other purposes?
yards. Once the key players have been
Most banks, ship owners, and investors chosen, we help to orchestrate the complex
do not usually have the necessary insider relationship among banks, ship owners,
know-how to properly evaluate a shipbuil- public authorities, and investors, worldwide.
ding facility. Therefore, it is difficult for Our clients continue to enjoy the benefit of
them to evaluate and assess risk. our knowledge in the industry.
W H AT W E P R O V I D E
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Monitoring the shipbuilding process not only The liquidity gap in respect to the vessel
ensures timely delivery but also minimises shown below was caused by considerable
the risk of increasing costs. delays during its construction as well as by
higher costs than originally were expected.
Example: Project »Liquidity Gap«
Under these circumstances, a timely delivery
For the future liquidity assessment of new of the vessel was certainly not possible. How-
ship construction, the ship owner’s instal- ever, after having ascertained the causes for
ments generally formed the basis for the the delay, it was still possible to expedite the
corresponding forecast. However, should vessel’s delivery earlier than what one was
miscalculations of costs have occurred at beginning to fear.
the beginning of a project, liquidity deficits
can easily follow not only for one vessel but Subsequent to the investigations carried out
can also start to accumulate from one ship by HVB, negotiations were conducted leading
to the next. to the ship owner’s agreement to making
scheduled instalments at a later date and to
allowing for state entities to provide loans.
The delay in instalments allowed for better
tracking of the distribution of capital, and the
state loans helped to avoid future delays in
the shipyard.
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Evaluation of the technological and econo- A survey on the premises of the yard, ana-
mical standards of shipyard production for lyses of the regional yard’s capacity, and dis-
banks intending to finance a yard cussions with representatives of potential
clients led to the conclusion that, from an
Example: Project »Ship repair yard« economic point of view and under certain
A repair yard is heading for insolvency. A preconditions, it would be justifiable to
technically complicated project could not be continue the development of the shipyard.
finalised. Mismanagement led to high liqui- Furthermore, an analysis of the assets of
dity losses during the shipbuilding process the yard showed that there was sufficient
which were not compensated by the client. collateral to allow for a restructuring pro-
Simultaneously, debt increased arising from gramme.
the need to finance an ambitious expansion Concentration on the main areas of a busi-
programme. ness is advisable and offers better survival
A detailed restructuring plan is dependent on chances.
economic forecasts, and, accordingly, on the The services provided by HVB assist banks in
survival chances of the yard. analysing risk factors and the chances for an
eventual restructuring programme.
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Evaluation of technical and organisational
quality standards of shipyards prior to finan- Projectphases 001 Productivity hrs./CGT
cing a vessel
Assumption for offered price 32,1
Example: Productivity Analysis Yard standard for 2001 48,6
Ex-Post calculation (02.05.2002) 76,8
Based on a comparison of the productivity
development and the corresponding recalcu-
lations, it is possible to forecast the expected
cost development and, therefore, the future technological and organisational competence
level of the yard’s liquidity. of a yard even before shipbuilding orders
HVB has the financial tools to make precise have been placed. Such information is
forecasts both as far as the general develop- obviously of great interest to a financing
ment of productivity and also the planned bank.
individual yard productivity in respect to After HVB had discovered the reasons for
vessel manufacturing. The factors which the drastic fall in productivity regarding the
play an important role are the level of used vessel in question, the shipbuilding contract
capacity and the degree of difficulty in the was, in fact, not cancelled, and the vessel was
construction of a vessel. delivered. It had later become apparent that
The influence of productivity on cost as well the particular problem experienced with this
as the influence of liquidity on the timely deli- vessel was exceptional for the shipyard and,
very of a vessel allow for the evaluation of the therefore, not typical.
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Handling of technical controlling and As the nature of modern shipbuilding lends
project management in regard to ship- itself towards »per-project« employment, it
building projects could make more sense to employ qualified
managers on a temporary rather than on a
Example: Controlling permanent basis.
Instalment payments transferred from the
Example: Restructuring a Yard
ship owner to the yard may only partly or not
at all be used for the project in question as HVB is in a position to arrange for the entire
general liquidity problems arise. A controller technical and organisational work processes
from HVB appointed by the ship owner over- and eventual restructuring of a yard; HVB can
sees the task of ensuring that payments are also handle legal coordination, if required.
used according to plan.
HVB has a network of first-class experts from
Example: Project Management leading management positions within the
Coordination shipping industry and, therefore, has the
necessary experience and expertise to ensure
The multi-tasking involved in overseeing complete project quality.
complicated shipbuilding projects requires
the talent of an experienced and competent
team. We, at HVB, provide a network of pro-
fessionals who can dive in to any necessary
positions that may need to be filled.
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S H I P YA R D C O N S U LT I N G – W H AT Y O U C A N E X P E C T F R O M O U R S E R V I C E S :
S H I P YA R D A S S E S S M E N T F O R B A N K S / O W N E R S
Our objective is to assess the following targets:
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Quality Focus on the agreed quality
Quality assurance using flexible internal standards
Supervision /Quality Verification as required
Timely Delivery Adhering to the agreed Milestones and Deadlines
Optimising the overall flow of Deliveries
Incorporation of Contingencies in regard to Planning
Keeping the Budget Identification of potential Cost Overruns
Implementation of Budget System
Control of Cash Flow
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A D D R E S S E S A N D C O N TA C T S