How do you create the best possible cruising yacht? Read on and we’ll share our formula.
We have retired from the business now, have a bit of time and are happy to share a few pointers about what has worked for us. This is the third and final post in this series. Part one, covering the early days through our last sailing yacht, the 78′ ketch Beowulf, is here. Part two on the FPB series is here.
We want to start by emphasizing that the comments which follow are personal, based on our experience in boat yards around the world and many thousand miles at sea. While the approach we have used has worked for us you should evaluate this in the context of your own experience, your own goals, and the skills of your build team. A large part of what drives us is a compulsion to minimize issues which impact our safety as well as the frustration that accompanies sub-optimal outcomes, and an extreme dislike for maintenance headaches and lack of reliability. The majority of what we do is based on lessons learned in the real world, most the hard way.
It is in our nature to set the bar high and to push the design envelope. This is a Hobson’s choice: shooting for the best possible outcome forces us into a more difficult modes of execution. There is less room for error than would be the case if we backed off a bit. We do not recommend this all consuming approach to anyone. It is hard on family, coworkers, and on our bodies and psyches. If you leave a bit of performance on the table, and back off a notch on quality the process will be much easier. You may also have a better overall product as well.
Whether you are on the build or ownership side of this game the very best thing you can do to prepare yourself is go cruising, cross a couple of oceans, live aboard for six months or a year. We guarantee this will change your outlook in ways you cannot imagine.
Before we get into the nitty gritty we need to tell you that it is almost always better to buy an existing yacht than to go through the expense, frustration, quality problems, and late delivery that is the norm of building new. If you are among those who simply have no choice and are compelled to involve yourself with the process of creating yachts lets start with a few comments about how the yachting design and construction industry normally works:
- Designers usually do the hull shape, basic layouts, and sometimes structure, although it is very common these days to sub this last out.
- The builder is then expected to take the contract specification along with a basic set of drawings and create a yacht.
- Integration of the needs of the various trades in advance, for example hull builders, engineers, electricians, air conditioning, plumbing, is extremely rare. The process is typically linear with the problems of each solved as they come up, rather than at the beginning.
- Scheduling and pricing is rarely accurate. If “management” asks each department what it will take to complete their side of the project, the sum of those parts will rarely be sufficient. Someone needs to understand the ingredients and allow for the inevitable issues that are part of the game
- If you have been successful in business, have good management skills, and have used these across a variety of industries understand that what has served you well in the past will rarely suffice when you take on the complexity that is the yacht construction. The shibboleth “if you want to make a small fortune in yachting…start with a large one” applies to 95% or more of the real world examples we have seen.
- In order have a rational approach to the thousands of decisions that go into a finished product real world experience crossing oceans and living aboard for extended periods is an obvious necessity…but extremely rare to find.
- The norm in this business is to tell the customer what you think they want to hear. Advising a customer against a particular approach is rare, even when the end result of their desired outcome is likely a disaster.
- The preceding, along with the complexity of components, make yachts inordinately expensive. A piece of furniture that you might purchase for $3000 in a department store will likely cost five to ten times this amount in the boat yard. And the retail establishment will have a better financial outcome.
- Changes to the specification and layout that occur past an early point in the build cycle disrupt the entire work flow, and absorb substantial quantities time for shop foremen and management. This means their focus is not on other areas that also need attention. The net affect is that the direct labor hours typically represent around 20% of the actual costs of changes. Unless the builder charges on a basis of five times their actual cost, they are going to lose money. Too many change orders and the builder goes out of business, if not on your project, then the next, or the one after that.
- Unless a builder has multiple business lines in addition to their yachting gig the odds are they will inevitably fail, and someone or a group of owners will be left holding the bag. It is not unusual for deposits on new builds to go towards the historic losses rather than your own project.
- From the builders standpoint, they need to be guaranteed sufficient cash flow so that if the buyer fails to complete their part of the bargain, the builder is covered. Builder and owner need to understand that once a building slot is committed, if the owner walks, it will often take six months to a year until the work force has a project on which to work. The costs of this ripple effect are huge, and unlikely to be recovered unless the payment schedule is front loaded. But then front loading the cash flow exposes the owner to substantial risks.
- With management (I know, this is an oxymoron) being thin at best, what happens if key team members are unable to participate? Key man insurance is typically not available.
- Quality control in a formal sense is rarely practiced. Systems testing rather than an ongoing process is usually left to the end.
- Projects are often moved from the shop to the water before completion due to scheduling pressure. It takes a minimum of four times as many hours to do something in the water as it takes in the shop.
- Builders almost always under estimate the man hours left to go at the end, and how long this will take. There is a ripple effect throughout the facility as shop supervision and the best workers are tied up longer than expected causing delays in subsequent projects.
- The monthly fixed costs for the builder do not slow down or stop just because the schedule slips.
- Most owners are so upset with their outcome when they finally get away from the dock that it takes two years for them to get over the heartburn.
The preceding list is by no means complete.
For those of you wanting to get into the design or construction side of the business we suggest taking your skills elsewhere. If you are on the acquisition side of the equation we reiterate purchase a good used yacht. But if you have the fever, and there is no other way to slake your thirst, we offer a few suggestions about the methodology we have developed to mitigate the previously mentioned industry shortcomings.
We will divide this into four sections: design cycle, working drawings, construction, and business. Starting with the design cycle:
- Be realistic in design goals.
- Keep in mind the proven capabilities of builders and operators.
- Set targets based on known parameters.
- When investigating new concepts take care with “data” from interested parties. “Experts” are typically parochial in their outlook, and their definitions focused narrowly rather than universally applicable.
- Get second and third opinions.
- Avoid second hand data.
- When pushing boundaries limit the areas so as to minimize unanticipated negative correlations.
- With safety factors allocate these in detail rather than holistically. This applies to mass, budget, volumes, centers of gravity ,etc. It allows isolation of data that is easily easily validated from that which carries higher risk factors.
- Under predict performance, range, tank volumes, etc. This fudge factor will eventually get used in any event.
- Have a fallback position in mind if major roadblocks are discovered.
- Be realistic about the risk/reward ratios and be prepared to change course early rather than getting so far down the path that it is too late..
- Remain alert to unintended consequences that may present themselves as the process matures.
- Avoid forcing singular requirements into the design that have numerous potential negative consequences associated therewith.
- Continuously review prior baseline decisions, tradeoffs, and goals as the design evolves.
- Avoid accepting the present state of affairs based on familiarity or habit. TThere is almost always a better way.
- Approaches requiring numerous factors to work out in order to be successful rarely end up as desired.
- Assuming this is a serious cruising yacht heavy weather capability, comfort at sea, steering control, and speed trump all other design aspects.
- Adhere to the KISS principle.
Working drawings take the design and make it buildable. These include structure, engine room, interior, electrical, plumbing, air conditioning and plumbing, deck details, and speciality items. In the ideal world all, or most of the working drawings are completed prior to the start of construction. In reality this often does not happen. The more of this that is done in advance the better the final outcome. Although not mandatory the integration of 3D modeling with this process can be very beneficial.
Depending on the overall goals and the quantity of yachts to be built, the cost of detailed working drawings may be seen as an unnecessary expense and delay.We feel strongly that properly integrated working drawings will save the builder time and money, and result in a much better organized product, with which the owner will have an easier time maintaining.
A few specifics:
- Take a holistic (integrated) approach to working drawings. Consider all aspects together rather than drawing in linear fashion one trade at a time.
- Frequently review with the various trades as to their requirements, and what could be done better from their perspective. Challenge them to think outside the box to improve.
- Maintenance access must be at the forefront of every decision.
- Strive for simple, easy to execute, and efficient building.
- Watch out for design details that become overly complex where the draftsmen/detailer/engineer gets wrapped up in their creation and looses the thread of what gets the job done in the simplest manner.
- Fight every unnecessary item that is not essential to the critical path. Complexity and its negative impact on cruising enjoyment is vastly under-appreciated.
- Allow a minimum of twice the electrical wire and three times the plumbing volume and weight as initially thought sufficient.
- Maintenance in general and operation of back up systems must be considered in the context of an adverse sea-state, poor visibility, and a non-technical owner/crew.
- Make allowance for the future, in particular the running of new wires as systems change.
The complexity of modern yachts, even “simple” ones, makes the construction process difficult to predict, manage, evaluate, and control cost. This is applies to experienced yacht builders, and even more so to those trying to rationalize and manage the process, be they highly successful in other industries, or having grown up in the yachting business. Negotiating this complex situation requires sufficient experience, including many lessons learned the hard way, so you can walk through a project and know on a gut level what its status is. This skill set is rare. Over the years we have worked with just two builders who had this down.
The comments below for the owner and builder may (or may not) help you towards the goal of building a yacht that does not drive you crazy nor break the bank during the build phase.
- Tracking progress is without a doubt the most difficult of the tasks enumerated in this post. There are few, if any, objective standards that assist, until an area of construction is complete, which time you can be sure that there are no more construction hours to be billed against this aspect of the project. Our preference is to break the project into as many aspects as possible, assigning direct labor hour and time projections to each, and then track these as the build progresses. This process will often be wrong, but it does provide a small amount of discipline in the process and allows owner, designer and/or boat builder to develop a sense of how things are trending.
- Monitor baseline assumptions variance and update as data changes. Preliminary design and construction cost projections will include various rules of thumb. For example, you might estimate that internal, non-structural bulkheads weigh eleven pounds per square foot. But then it is decided to add a layer of decoupled mass to the bulkhead interior to further reduce sound. This decision needs to be reflected in the control spread sheet.
- Verify mass and center of gravity with several weighings of the entire vessel.
- Change orders are to be avoided. They create scheduling chaos, have a ripple impact up and down the production line, and can demoralize the build crew. As we stated earlier, a break even cost is typically obtained by multiplying actual shop hours times five.
- Quality is difficult to evaluate during the build as systems and interior are covered to protect from damage once installation is complete. You will not know what the visual quality is until the very end when those protection covers are removed. In the end, you are relying on the reputation of the folks with whom you are working.
- Quality control needs to be managed by someone other than the crew doing the work. Think of this as editing a book. It takes a fresh set of eyes to do a proper edit. The author will miss too many things.The same holds true for the QC of a yacht. Ideally the various trades work as a team, and the cabinet makers speak up when they see something done by the HVAC crew that is going to cause problems down stream.
- The level of fit and finish has a major impact on cost and build time. Having samples of the standards is important for builders and owners. Everyone needs to understand what the standards are throughout. Understand that as you approach perfection costs and time increase in geometric fashion. Getting that last five percent will double the costs.
- By definition schedules are going to slip. Owners pressure the builders for launch dates so they can arrange their own time and that of friends and family to attend the blessed event. The builder makes his best guess, and when this proves to be overly optimistic, most builders will move the yacht from the build shed to launching before it is ready. This adds greatly to cost, and slows the project down to the detriment of all. Never move a yacht out of the shed until it is completed.
- Test systems before leaving the shed. Verify early that systems are working as expected. There will always be infant mortality, and items which are incorrectly installed. Catching these in the shed is much better than at the dock.
- Pay attention to the work flow of the various trades and the impact on other aspects of the project. There are going to be situations where judicious use of overtime for one trade may have a large benefit to the overall project.
- Avoid excessive periods of overtime. This is costly, and the efficiency of the rest of the work suffers as a result of fatigue.
- Owner visits are necessary but also disruptive. There should be an understanding in writing about when these are available.
- The owner should never be allowed to move aboard before sea-trials are complete nor any . of their personal gear. Not even one small box. Once you break this rule that one small box becomes a container load. Access is blocked and chasing the inevitable gremlins that become known in sea-trials is much more difficult. Everyone needs to understand that regardless of the build schedule, having the owner’s gear aboard significantly slows sea trials and getting the yacht completed. This rule is in the owner’s interest as well as the yard.
- We recommend an outside surveyor be used for periodic inspections. This protects both builder and owner.
- Be wary of owners reps.They can be helpful, or a disaster.
- The project is always going to have changes from the original drawings and schematics. Updating as built data is important.
The business side of this needs to be handled in a business like fashion. That statement sounds sophomoric on the face but typically builders are not good at the administration side of things.. A brief check list follows of items worth considering :
- Contract docs should be clear, not overly lawyered, but but at the same time spell out in writing all aspects of the deal.
- Ownership should pass with payments so that in the event of a bankruptcy event title is clear.
- Specifications level of detail depends on the project but at a minimum define for both parties what is to be supplied in sufficient detail that there are no later surprises.
- Progress payments, tied to certain milestones are better than paying a given percentage each month. Expect that the milestones will need adjusting as it is rare that the project will go as planned.
- Quality standards should be carefully spelled out with samples or other projects as comparables.
- Both builders and owners trials need to be defined. We think 50 hours off the dock and at least one gale are a minimum for builders trials.
- Who are they key people on the build side and what happens if they are indisposed?
- What is the financial condition of yard and client?
- What is the fallback plan in the event of bankruptcy or a force majeure event?
- What are the political risks?
- Can the project be contracted against a letter of credit or with some form of third party guarantee.
- Who bears tax and duty risks or is the project local tax and duty exempt?
- What are the rules regarding tax and duty exemption in terms of paperwork, bonding, and time frame after hand over to the owner before the yacht must leave the country?
- Currency risks: buying forward, or going bare?
As hard as all of this is, we also have to say that once the project is completed, the bugs sorted, and the yacht is off cruising there can be a wonderful sense of accomplishment and pride in the outcome. It is what kept us coming back again and again.
We would like to leave you with this thought. Above all else try and maintain a holistic approach to design and construction. Think through how each decision works or interferes with everything else. If it does work well thats usually a sign to try a different approach.
We look forward to sharing an anchorage one day.