5 Top Reasons why using supplier production estimates is wrong

Dredge equipment suppliers are often asked by their prospects or clients to give an estimation of the production that the equipment can achieve on a dredging project. And the suppliers do provide these estimates, because their competitors do, so they need to do it to stay in the market.

On many occasions I have seen that the results in the field after the equipment purchase are below expectations. This leads to all sorts of problems, the biggest probably being that you either lose money on the first project or at best have a lower profit.

In this knowledge update I share with you the 5 Top Reasons why using supplier production estimates is wrong. And I finish with a small paragraph on what you should do.

1. Only part of the picture

Supplier estimates are typically limited to a Production-Length graph. This shows the production of a CSD at various discharge lengths.

By: Willi Heidelbach

This graph only represents the achievable discharge production. If you are lucky they have accounted for the suction process, the vacuum, as well. But what about the gathering production? And the cutting production?

Since not all the sub-processes are accounted for the results that you will get can be quite different from what you expected.

2. Best case scenario

Suppliers want to sell a ship and the competition is fierce. It is in their best interest to show that their vessel can provide the highest production. Therefore, the production figures that they give are often the bulk production. This is the production that can be achieved when swinging at full speed in the middle part of a swing.

The corner losses, stepping, changing anchors, technical delays and others are not accounted for. The result is that the estimated production cannot be maintained hour after hour, day after day.

3. No skin in the game

If the estimates from the supplier turns out to be too high there is not a real problem for those suppliers. They will try to give you a good estimate, but in the end, it will not cost them anything.

Good suppliers will aim for a long-term relationship, and therefore have an incentive to give you good support during the operation. But there is not a direct relation to your project and their wallet. If you occur penalty costs for a late project you won’t be able to claim those from a supplier.

4. No practical experience

The estimates of a supplier are typically based on theoretical calculations. But they have not been compared one on one with the actual productions on the projects when they go into execution. Therefore there is no improvement possible to the estimation methods and calculations.

The working method of the CSD has a big impact on the estimated production. Suppliers typically base their estimates only on the parameters of the project and the vessel. They won’t take the actual working method and project surroundings into consideration. It’s not that they are not willing, they simply don’t have the practical experience to determine the best working method in the field.

5. Not contract specific

A typical supplier does not take the contract into consideration when providing you the production figures. They will probably ask you about how many hours you are allowed to operate the dredger and what the discharge distance is.

But other aspects like is there a limitation on the amount of soil suspended in the water? Are you allowed to use anchors in the dredging area? Are the dredging tolerances realistic or do you need to remove additional material to actually achieve the design?

 

These were the 5 top reasons why using supplier production estimates is wrong. You might be shocked by this, but it is the reality as I have experienced it.

I have never encountered a situation where the production figures were wilfully exaggerated, but the reality is that the suppliers are not the best parties to provide you a high quality production estimate.

It also strikes me as odd, that you are buying an equipment of often millions of euros and you are largely basing that choice on the information provided from the supplier from which you are going to buy.

Whenever you buy a new equipment or need an estimate for a new project, call in an independent firm that can do that for you. Strategic Dredging can do that for you, but there are others in the industry as well. But please, don’t go only on the supplier estimates.

Did you ever experience the situation where the suppliers figures felt off? That they didn’t feel realistic? Let us know in below comments section.

 

To your success,
Timon Vinke

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