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

5 Biggest Production Optimization Mistakes

Every dredging company wants to have high productions from their vessels. But some serious mistakes are made when attempting to get the highest production. Today you can read about the 5 biggest mistakes.

Not optimize

Some companies don’t optimize at all. When you leave the achieved production to chance you can be certain it is not the highest it can be. When you accept the production that a dredger is doing on a project without analyzing it and without optimizing it you are leaving it to chance.

In many cases a few simple changes to the working method or dredging process can already boost your production.

If you are not willing to invest time and attention to the production, then you don’t really want to have higher productions. Don’t make this mistake. On every project, especially when they just started, optimize the production on board.

Not having a system

If you don’t have a system that gets you the highest production, then you don’t have the highest production.

The highest production can only be achieved every time if the optimizing is approach systematically, meaning you have a system in place that will always lead to the highest production.

An example would be the DICE system, which is a step-by-step easy to use system.

As soon as you apply a system to the optimization effort you will get better and consistent results. In addition every person in the organization will become familiar with the system, meaning it becomes easier to use over time as everybody speaks the same language.

Leaving it to the operators

The operators are responsible for the production, right? Well, their primary concern is the safety of the vessel and the people onboard. Then, if there is time left, they can work on the production.

In reality it results in lower productions than can be achieved. An outside optimization effort is therefore ideal, because that person can focus solely on the production and nothing else. Once that person has found the way to get the best production the operators can maintain that higher production.

Accepting the estimated production

When you accept the production that is estimated, especially when it was achieved easily, then you are not doing the maximum production possible.

An estimate is just that, an estimate, so by definition it is not 100% accurate. If you estimated a too low production and you subsequently accept this production in execution, then you are leaving thousands of dollars on the table.

Always optimize, even when the estimated productions are achieved easily.

Telling the crew what to do

When an outside person comes onboard to optimize the production it is tempting to tell the crew how they should dredge to achieve the higher production. The result is that the crew doesn’t understand why they should do it and subsequently, once the optimizer leaves, the production returns to the level it was before the optimizing.

Instead have the crew assist in the optimization and make sure they really understand why they need to do things differently. Once you have taught them the why they will maintain the higher production for a much longer time, if not indefinitely.

 

What was your experience when trying to achieve higher productions? What did you do that worked, what didn’t work? Let us know in the below comments section.

To your long term success,
Timon Vinke

DICE, a 4 Step Process to get Maximum CSD Production

There is a simple system to always get the maximum production for your CSD. On any project and any soil.

The DICE system. This is a 4-step process that I developed. You can read all about in my book Cutting Edge: How to systematically increase CSD production. You can buy the book on Amazon here. Or look here if you want to find out more.

The 4 steps of the DICE system are the topics of today’s Knowledge Update.

Step 1: Determine

The first step in the DICE process is determining the limiting process. The dredging process of a CSD can be split into four sub-processes:

  • Gathering
  • Cutting
  • Suction
  • Discharge

You need to determine which of these four sub-processes is limiting the production of the CSD. Once you have done that you also need to determine why that sub-process is limiting. The clearer you determine the reason why, the easier it is to find a solution. Which is the next thing to do, determine a solution that you expect would increase the production of that sub-process and thus of the CSD.

Step 2: Implement

The next step in the DICE process is the implementation of the best solution of Step 1. I say best, because you need to implement only one change to the dredging process at a time. The reason is that if you do multiple changes at a time you can’t determine which change actually caused the production change. In fact, one of the changes might even lower the production. But you will never know if you don’t try that solution by itself.

So always implement one solution at a time. Once the implementation is done it is time for the next step.

Step 3: Calculate

Calculate the effect of the solution you implemented. You do this by looking at the production figures before and after the solution. Ideally you would compare against the unit rate, but might be difficult to establish for shorter time periods.

Calculating the production can be done in various manners. Using the onboard sensors, using hand-soundings or using survey-data.

The survey is the most accurate, but it takes time to get the results. A combination of onboard sensors and hand-soundings is usually best. Onboard sensors for quick feedback. And the hand-soundings for the increased accuracy.

Once you have calculated the result of the implemented solution you know whether to keep the change or revert back to how things were.

Step 4: Enforce

Once you know the implemented solution indeed increases the production it is required that you enforce that solution.

You won’t be onboard all the time, so the (other) operators need to be aware of the changes that have been made. Otherwise the production increase will not be maintained.

Ideally the crew doesn’t only know what needs to be changed, but also why. You achieve this by providing a bit of training and coaching while you are onboard.

Subsequently the results must also be recorded for future use, for example for future production estimates. This requires that you write a report where all the implement solutions and their results are described.

 

These are the four steps of the system, however it is an iterative system. This means the DICE system needs to be applied again and again and again, what I call a cycle.

Each cycle you will increase the production a bit or find out more about the dredging process that will show the way to higher productions.

 

If you like the DICE system and want to know more about it, buy my book: Cutting Edge: How to systematically increase CSD production.
In it the DICE system will be covered in much more detail and you will learn about how to identify the limiting process, several solutions to common production limitations and much more.
The price is only USD 49,95 and it will teach you ways to increase the production of any CSD on any project which you can use for the rest of your career.
Click here to buy the book.

 

To your succes,
Timon Vinke

5 Steps to buy the best Cutter Suction Dredger

Buying a Cutter Suction Dredger (CSD) is a big decision. They are expensive and have a lifetime of 10, 15 or sometimes more than 20 years. To make it more difficult there are many suppliers all telling you their CSD is the best. It is important to buy the CSD that is the best fit for you. So here are the 5 Steps to Buy the Best Cutter Suction Dredger.

Step 1: Define the technical requirements

The first step is to define what the technical requirements are. This means that it should be clear what the Cutter Dredger must be able to do. These are matters like the dredge depth, ability to change anchors itself or with support boat, current water depth, hardness of material to dredge, discharge distance and many more.

Consider not only the first project that the CSD is going to do, but also expected subsequent projects. If you buy a CSD for only one project, then this is easy. But in most cases the lifetime of the dredger is longer than a single project. It would be a shame if you buy a CSD that is not suitable for the projects that are up for tender when the first one is over.

Step 2: Define the production requirements

The next step is to define how much production you need from the equipment. Projects have a deadline in which you need to dredge all the material. Also think about the factors that influence the production. A production of 500 m3/hr on a discharge length of 500 m has different requirements than the same production on 2,000 m discharge length.

For the same reason the soil needs to be defined, as there is a huge difference between dredging silt, sand, clay or rock.

For this step again consider not only the first project, but any expected subsequent projects as well.

Step 3: Make a technical selection

Based on the requirements found in step 1 you can make a first selection of the size of CSD. This is your first selection and basically the minimum size CSD you need. The CSD that is just able to fulfil the technical requirements.

Also consider equipment combinations. For example, when you need to discharge very far you might think you need a large CSD, but a small CSD with a booster station might also do the trick.

At this point it is more important to get a list of options that are at least capable of fulfilling the technical requirements. The final choice comes later.

Step 4: Make an operational selection

Taking the selection of CSDs from the previous step you need to check if they can achieve the required production.
This is done by making a production estimate for any option that you have. Any option that does not meet the production requirement is eliminated.

When the production requirement is high, consider that two small CSDs might do the same production as one large CSD. Depending on the future projects a smaller CSD might be a better fit for those projects.

Once the options have been narrowed down you can go to the next step.

Step 5: Make final choice

The final choice of CSD should be made on the unit rate. If you want to know more about the unit rate have a look here. It is tempting to make the selection based on purchase price alone, but generally speaking the larger the CSD the more competitive, provided you can keep it occupied with work.

Specific optional equipment might increase the CSD’s production and competitiveness. Such as anchor booms, a spud carriage, a booster station and others.

The unit rate of a CSD is calculated by converting the production estimate into a cost estimate. You do this for each option that passed step 4.
The option that has the lowest unit rate, not only for the first project but also the subsequent projects, is the best option for you.

 

These are the 5 steps to buy the best Cutter Suction Dredger. I can imagine that some steps are difficult to make when you are new to the dredging industry. Our dredging consultants are capable in helping you with each step. Just contact us here so we can talk about how we are able to help you.

What do you think is the most difficult step to make? And why? Let us know in the below comments box.

To your long term success,
Timon Vinke

5 Biggest Mistakes when Estimating Production

The production of a dredger greatly dictates the total cost of a project. Whenever a new project is up for tendering a cost estimate and production estimate are required for the best result.

But estimating production is not easy and many mistakes are made in this area. So below are the 5 Biggest Mistakes when Estimating Production.

1. Not estimating at all

Some companies, especially when pressed for time, decide not to make any production estimate. The financial risks of this approach are enormous, as the production is so variable depending on the soil, vessel and project parameters.

Not having a production estimate means you are taking a lucky guess on the cost of the project. On one side this could lead to losing a project as you miss judge the market rate and quote too high. You could also quote too low. This could lead to a significant financial loss. So even when pressed for time, make a production estimate, even if it is a very rough one.

2. Using only manufacturers input

Most dredger manufacturers can provide you input on the production capacity of their dredger. However, firstly the manufacturers do not have the practical experience to make accurate estimates. Secondly, they tend to be optimistic with their estimate, as they want to show that their dredger is superior to that of their competitors.

So always make your own estimate. Of course you can and should use the input from the manufacturer, but always check this and only use it as input to your own estimate, not as the end result.

3. Lack of defined soil parameters

The more soil information you have the more accurate you can make the estimate. Often the soil data is incomplete or sometimes completely missing.

In those cases write down the expected soil parameters as best as you can, define them. Then base the estimate on them.

At least you have a basis for your estimate instead of flying blind. But you can also try to put these parameters in your bid as conditions. For example: This bid is only valid for sand up to SPT 20. When the client accepts your condition and you encounter rock you have a strong basis for re-negotiating the price.

4. Estimating by hand

When estimating by hand you will have to redo the whole estimate every time a single input value changes. That would be very time consuming and is prone to errors, as even a small typo on the calculator will produce different results.

So always make an excel sheet with automated calculations. That way you can quickly make changes when the input changes. It also allows you to play around with the input to see how sensitive the estimate is when the situation in practice is a bit different from what you expect.

When making the excel sheet, make it so that you can also use it for future project estimates. That way you will save yourself a lot of time in the future.

5. Not taking downtime into account

Downtime has a big impact on the production, so it should definitely be taken into account. The most obvious downtimes such as weather, traffic, bunkering, etc, are almost never missed. What is often missed is the time for anchoring, changing spuds, changing teeth, in short delays caused by the dredging process.

Most of these delays are influenced by the production during swinging, the bulk production. If you have more bulk production the teeth wear more, so you need to change them more often. If you dredge small layers you will advance quicker, meaning you have to change spuds and anchors more often, resulting in more downtime.

These kind of delays have a significant impact on the production, so always account for them.

 

These are the 5 Biggest Mistakes when Estimating Production. As you can see there are many things that could go wrong. If you would like an expert estimate for your project, contact us via this link or send an e-mail to Info@StrategicDredging.com

The first step in avoiding mistakes is being aware of them. What kind of estimating mistakes have you encountered? Let us know in the below comment box.

 

To your long term success,
Timon Vinke

5 Top Ideas to get the Best Operators

To get the best production from the vessel you need to have the best operators. Below I share with you 5 top ideas to get the best operators, without having to hire them from the start.

Hire to win

A basic skill set is required, but motivation and the willingness to cooperate are very important when hiring to win.

Skills can be developed. But motivation and cooperation are much more difficult to develop in a person. By basic skills I mean the minimum skills needed to work in your organization. If you have an international team this probably means speaking English, preferably writing it as well.

Some technical background is preferable, but not a necessity. Experience is great, but only if the person is also motivated and cooperating in a team.

Train them

Keep educating more so the operators can do more production, are prepared for uncommon situations and stay motivated.

Getting top production requires detailed knowledge specific to the situation the operator is in. many operators don’t have that from the beginning. By training them you can have them learn to get good production more quickly. If you also train them on uncommon situation you make them better prepared for any future projects.

Training also shows the employer is serious about the end result and is willing to invest in the operators, which helps to keep them motivated.

Supervise correctly

Objective and results-based supervision works best to get the best results. Try to meet them in person regularly as well.

By having objective results agreed in advance you let the operators know what is important. By reviewing the results for these objectives regularly you reinforce the importance of the objectives. Leave the method to achieve the result to them. Tell them what to do, not how to do it. But make sure they know they can always ask for input and help, either form you or other people in the organization.

In short, they themselves are responsible for the result.

Give proper incentives

Motivation can be increased or, at least, maintained with proper incentives. The incentive can be monetary or in kind. The target to receive the incentive for should be objective, measurable and team based.

By making it team based you ensure that operators are not going to compete against each other. If, for example, production would be an individual target it could lead to the postponing of maintenance, so that another operator needs to deal with it.

The target should obviously be in the best interest of the company, even when taken to the extreme.

Listen to them

Motivating the operators can also be achieved by listening to them and really doing something with what they said. This can easily lead to great long-term improvements.

Especially experienced operators , but even new ones, can have great idea to increase the production on the vessel, on this project, but perhaps even for all future projects. If you don’t listen the operator will loose interest and after a while he simple doesn’t care about the company any more. Prevent that, get good ideas, listen.

These are just some of the ideas to get great operators, but there are many more. Please share how you think a company could get the best operators in the below comment box.

 

To your long term great results,
Timon Vinke

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

CSD production limit

Why can’t I do more production?

On a CSD continuous dredging takes place. The dredging process has four sub-processes, which are separate but still intertwined.

You need to understand these sub-processes before you can achieve maximum production.

The four sub-processes are:

  • Gathering
  • Cutting
  • Suction
  • Discharge

They have a logical order following the mixture.
Gathering is collecting the soil.
Cutting is breaking the soil and mixing it with water.
Suction is lifting the material from the seabed and bringing it to the pump.
Discharge is bringing the mixture from the pump to the reclamation area or end of the pipe.

These processes can be viewed as separate and each has its maximum achievable production determined by the soil and your equipment. The process with the lowest production of the four is called the limiting process. It is this process that limits your CSD’s production.

If you want to increase the production you need to focus on the process that is limiting your CSD.

Optimize

I developed the DICE system that will help you to systematically get the optimum production, always. It stands for:

  • Determine
  • Implement
  • Calculate
  • Enforce

Determine means you determine the limiting process and the optimum solution to increase it.
Implement means making the change in a controlled manner.
Calculate means calculating and measuring the result.
Enforce means you make sure the positive changes remain in place and people change their way of working.

This process needs to be followed a number of times, called cycles. Each cycle will either increase the production or show you the way how to increase the production.

You continue doing these cycles, until you reached the maximum production.

Equipment capacity

Equipment for the limiting process should be at maximum use. How high the production level is, is determined by the CSD design.

Each sub-process has associated equipment. For cutting it is the cutter power or pressure. The cutting process has reached the max when the power is max. But just as important, this max power needs to be used effectively!

For doing that you need to understand each sub-process and their related equipment.

If you want to learn more about optimizing the production and the CSD dredging process, have a look at our CSD Production Intensive training.

How could the DICE process for achieving maximum production help your company?
Let us know in below comment section.

 

To your long term great results,
Timon Vinke

Why not all TSHDs are large

TSHD size comparison, Part 2.

For part 1, click here.

This is part 2 of a two-part series about the extreme difference in size between TSHDs. Even today new TSHDs of 2000m3 hopper capacity or less are still being build. While on the other end of the spectrum we have TSHDs with a hopper capacity of 46,000 m3, a factor 23 larger. How is that the TSHDs on each end of the spectrum can still operate profitably?

In Part one we covered the advantages of large TSHDs. You can find it here.

Today we look at the small TSHDS. Why are they still being build?

Draft limits

Dredging mostly takes place near the shore. Therefore, the draft of the dredging vessel is limited. The large TSHDs have a draft of as much as 15 m. With these drafts these TSHDs simply can’t enter all the areas where dredging needs to take place. Smaller TSHDs are therefore a necessity.

Better maneuverability

The large TSHDs have lengths of more than 200 m. They aren’t agile enough to dredge in ports, around quay walls and such. Smaller TSHDs have a lot better maneuverability and therefore are ideal for dredging in tight spots.

A 1,500 m3 TSHD.
Source: www.dredgers.nl

Cheaper Mobilization

The weekly cost of a small TSHD is much lower than that of a large one. This results in lower mobilization costs. For small projects this is a clear advantage as it reduces the total cost of the dredging project.

Sufficient production

Not every project requires hundreds of thousands of cubic meters produced every week. In fact, on some reclamation projects this might even pose problems as these huge productions need to be accommodated. Smaller TSHDs sometimes simply provide sufficient production to finish the project on time.

Specialisation

As the initial investment of a small TSHD is lower there is more opportunity for specialization. An ultra-low draught vessel, a special silt dredger, try doing that with a 46,000 m3 TSHD. The investment would simply never return itself. But specializing a small TSHD can actually make it more profitable.

These are not the only reasons why there is a market for small vessels. If you know of any more reasons, let us know in the below comment box.

 

By combining Part 1 and Part 2 you will see that there are, even today, reasons to build very large TSHDs, small TSHDs and everything in between.

To your long term great results,
Timon Vinke

Why large TSHDs are cheaper than small ones

TSHD size comparison, Part 1.

This is Part one of a two-part series about the extreme difference in size between TSHDs. Even today new TSHDs of 2,000m3 hopper capacity or less are still being build. While on the other end of the spectrum we have TSHDs with a hopper capacity of 46,000 m3, a factor 23 larger! How is that the TSHDs on each end of the spectrum can still operate profitably?

Today we look at the large TSHDS. Why are they being build?

Large TSHDs are cheaper

Large TSHDs can produce cheaper than small TSHDs. Larger TSHD cost more to operate per week, but their higher weekly cost is countered by a much higher production. This reduces the unit rate, the cost per cubic meter, drastically. On a project where a large and small TSHD compete the small one will have no chance. In the next paragraphs we will cover some reasons as to why this is.

The largest TSHD with 46,000 m3 hopper capacity.
Source: www.shipspotting.com

Lower construction cost

Generally speaking the larger the ship, the lower the construction cost per cubic meter of hopper capacity. The construction costs determine a significant portion of the operational costs through depreciation and interest. On the other hand, a larger hopper capacity increases the production. The nett result is a lower unit rate.

Larger projects

Over time the dredging projects became larger and larger. This called for higher weekly productions, to be able to finish these projects in a reasonable time frame. Of course, a lot of small vessels could have been build, but taking the lower construction costs in account the industry moved to larger TSHDs.

Longer sailing distances

Not only did projects became larger, also the sailing distances became longer, specifically for large reclamation projects. Since the large TSHDS can carry so much load they have an added benefit on longer sailing distances.

Less crew

Although the largest TSHD carries 23 times as much as the smallest one it doesn’t have 23 times the crew. So on a per m3 hopper capacity comparison the amount of crew reduces. This reduces the operational costs.

Increased fuel efficiency

Larger TSHDs transport their cargo with less fuel per cubic meter than small vessels. This increased fuel efficiency means the fuel cost per cubic meter dredged is lower, adding to the competitiveness of the large TSHD.

These are not the only reasons why vessels are becoming bigger and bigger. If you know of any more reasons, let us know in the below comment box.

 

When there are is such a clear advantage of larger TSHDs it doesn’t seem to make any sense to still build small ones, but that is exactly what is still happening. In Part 2, we will look into the reasons why the small TSHDs are still being build.

To your long term great results,
Timon Vinke