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 centred around this. In the end dredging projects need to be finished with the lowest costs. So the volume has to be removed at 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 have to be found between those two, see below graph.

Unit rate balance

A low investment in equipment, people, maintenance and organisation will result in so much lower productions 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.

4 thoughts on “Do you focus on the right thing?

  1. One of the factor which is not given due notice . It is the idle time. Not that which is obvious. But also which is not obvious.If we do business process analysis , we can identify them and cause make substantial savings.

    1. Thank you Capt ANSAR AHMED KHAN for your comment.

      You are right, idle time has a huge impact on the unit rate.
      In the article, the idle time, or more specifically the uptime is included in the production.
      If you analyize, as you indicated, and subequently invest more in measures to reduce the idle time, it will also result in a lower unit rate.

  2. Firstly, the unit rate is highly dependent on capital cost, maintenance cost, interest on investment. All these factors are to be wisely balanced to achieve optimum production with most economical cost of production.

    1. Thank you Mr. Gosh for your comment.

      The factors which you mention do have an impact on the unit rate. However, after the dredger has been purchased the capital and interest costs are usually fixed.

      Meaning that the higher your production, the smaller percentage of the unit rate is from these fixed costs.

      How do you look at maintenance costs, do they fluctuate a lot with production?

Leave a Reply

Your email address will not be published. Required fields are marked *