Observation and Comment After 30 Years in the Marine Business
Friday, August 6, 2010
The Non-Legal Fine Points of Contract Negotiations and Management
New-build and major refit contracts can be bulletproof from a legal standpoint, yet still fail to result in successful project completion.
There are a number of critical non-legal issues which need to be handled correctly, if a project is to be brought to a conclusion that is ultimately satisfactory to both the boatyard and the vessel's owner. These include:
- Defining the Scope of Work
- Setting project schedules
- Estimates vs. quotes
- Time & Materials vs. fixed-price
- Comparing quoted pricing
- Emergent work and change orders
- Milestones and progress payments
- Surveys, classification, and industry standards
- Engineering and specifications
- Inspections and final acceptance
In this course of this post and several to come, I'm going to talk about these issues from both the standpoint of a yard owner/manager, and that of a yacht owner/captain. And I'll introduce you to some real-world examples that illustrate critical do’s and don’ts in these areas.
Along the way, if you have particular questions you'd like to raise and discuss, just drop me a line.
With 30 some years in the marine industry, I've worked variously as a yacht designer, boat builder, marine business manager, yacht surveyor, consultant, yachting writer and editor, and industry educator. I am trained and experienced in interest based negotiating. In a previous life, I taught logic and philosophy at university.
GIGO (garbage-in-garbage-out) persists in the marine industry, just as much as it does in other business sectors. Too often narrow minded, wrong-headed, and self-impressed thinking masquerades as expert opinion. When you're looking for information and advice, ask pointedly from whence it comes. Keep in mind that experience always matters, because it is only from experience that true perspective is gained. And in the marine business, perspective is everything.
THE AUTHOR'S PROFESSIONAL BACKGROUND
My most recent consulting work includes the planning and management of naval engineering projects, the planning and supervision of shipfitting for composite fast patrol vessels, and the start-up planning and management of prototype construction for a new line of 65-foot high performance catamaran motor yachts that incorporate patented active air-lift technology. I also recently handled the start-up planning and operations management of a marine joinery firm that specializes in the pre-fabrication and installation of high-quality, ultra-light yacht cabinetry and furniture.
As president and CEO of world-class megayacht builder, I was responsible for executive management of a group of companies with annual gross revenues in excess of $100 million and nearly 600 employees across the country. Under my direction, the company developed and sold several hundred million dollars in new yacht construction and major refit work, and built and delivered a dozen luxury megayachts in the 30- to 60-meter range utilizing Critical Path Planning and Management techniques introduced by me to the company.
As a consultant, from 1984 to 2000, I provided a broad range of marine-related technical, marketing, and business consulting services to a wide array of clients that included yacht owners, boatbuilders, marine manufacturers, and aerospace companies, as well as advertising and public relations firms.
Prior to that, I was VP-Operations and CFO for a multi-location yacht dealership and chain of boatyards employing 150 craftsmen and trades people in the maintenance and refit of luxury yachts. I've also operated my own custom boatbuilding shops, and through the years maintained an active design, survey, and marine consulting practice. Numerous yachts have been built to my designs in various parts of the world; and several of these have made successful trans-oceanic passages.
As boating writer/editor, I tested and evaluated hundreds of yachts worldwide. I've published more than 600 articles on yacht design, construction, repair, and maintenance; and I'm the author of the electrics and electronics chapters of later editions of Chapman’s Piloting, Seamanship, & Small Boat Handling, considered by many to be the bible of recreational boating. My articles have appeared in Power & Motoyacht, Professional Boatbuilder, Boatbuilding, Boating, Motorboating & Sailing, Yachting, Sail, Marlin, Boating World, Motorboat, Canadian Yachting, Pacific Yachting, Canadian Power Illustrated, Sailing Canada, Small Boat Journal, Motoryacht International, and other marine publications.
On a more theoretical plane, I created the curriculum for, and directed the Marine Industry Management Program at Humber College of Applied Arts & Technology (Toronto), where I also taught boatbuilding and design. I'm proud to say that I was among the first people in the industry to apply computerized P.E.R.T. Analysis and Critical Path Management (CPM) to the construction of yachts. In the early 80's, I was awarded a grant by the Canadian National Research Council for my work in developing computerized specification programs for building small commercial fishing craft.