Do you focus on the right thing?

Many people in the dredging industry are focused on wrong things, usually either lower costs or higher production. But what should they focus on? Unit rate! or €/m3.

The unit rate is cost of removing a single cubic meter of material. A low unit rate is the ultimate goal of all dredging operations and everything should be centered around this. In the end dredging projects need to be finished with the lowest costs. So the total volume has to be removed at the lowest cost, which means that each individual cubic meter should be moved at the lowest cost or lowest unit rate.

The unit rate involves both the costs and the production, but the perfect balance between those two has to be found, see below graph.

Unit rate balance

A low investment in equipment, people, maintenance and organisation will result in such a low production that the unit rate will actually increase, this is on the left side of the perfect balance. On the other hand, if too much is invested without resulting in higher production the unit rate will also increase, this is on the right side of the perfect balance.

The perfect balance has to be found in investing and production. Often dredging companies are focused too much on costs, so they are on the left side of the graph. By increasing their investments wisely they can actually decrease their unit rate and become more competitive in the dredging market.

Often the questions raised are: “How to save costs?” or “How to increase production?”. But they real questions is: “How do we lower the unit rate?” and this might result in increasing costs.

So ask yourself: “Do I focus on the unit rate in my work?”

I’m very curious how you can decrease the unit rate in your work. Please let me know in below comment box.

 

To you long term good results,
Timon Vinke

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