Journal of Ship Production, Vol. 5, No. 4, Nov. 1989, pp. 234-244

Affordable Technologies for Small Shipyards K e n n e t h R. L a n e , 1 M a r k W . S i b u r g , 1 and J o h n W . W a t e r h o u s e 1

This paper attempts to recast some large shipyard production technologies in light of the needs of small yards. The importance of small shipyards to the nation's marine economy is addressed and three methods are offered as affordable ways of increasing yard productivity. These are operations management, numerical lofting, and zone outfitting. The paper concludes with a call for increased attention to the problems of small yards.

Introduction As OTHERS have before, we will begin by taking a brief look at history in order to set the scene for this paper. The history of modern shipbuilding has been well covered by many sources such as reference [1]. 2 However, past papers have been directed at large yards building commercial or naval vessels. Let us look briefly at smaller yards. Throughout America's history, the principal requirement for a shipyard has been a site along a river or harbor front and some skilled labor. For example, the Story yard, set on the banks of the Essex River in Massachusetts, consisted of a sloping open area for the ways and some small outbuildings. This y a r d successfully b u i l t m a n y G r a n d B a n k s schooners using the proven method of laying a keel, installing sawn frames, and then planking. With the hull finished, work shifted to installing the deck structure and then final interior outfitting. Launching was a grand occasion for the yard workers and their families. Bring the date up to 1988, substitute steel and welding for wood and nails, and you have a typical small yard as shown in Fig. 1. The vessels have changed but the basic procedure of building them has n o t - - q u i t e a contrast with a large yard, where more productive methods have been brought into play. The current shipbuilding industry is a troubled one. Large yards nationwide are seeing a dearth of new construction in commercial vessels and the result has been the closing of yards such as General Dynamics in Quincy, Massachusetts, and Lockheed in Seattle, Washington. The slump t h a t occurred in the mid-80's also affected many small yards since several segments of the workboat m a r k e t were depressed concurrently. We are seeing some recovery with the offshore oil industry and fishing vessel work is strong in the Northwest. What does this mean for the marine industry? Small yards form a significant portion of U.S. shipbuilding and repair activity. Their pool of trained labor and their consumption of marine equipment is vital to large vessel activity, both commercial and naval. If small yards can adopt improved shipbuilding methods then the entire marine community will benefit. Before proceeding any further, let's define some terms: S m a l l y a r d . A small business can qualify for special federal considerations if it employs under 500 people. For the purpose of this paper a small yard is one that has fewer than 250 employees and has gross sales of under $20M per year. 1Elliott Bay Design Group, Seattle, Washington. 2Numbers in brackets designate References at end of paper. Presented at the Ship Production Symposium, Seattle, Washington, August 24-26, 1988. 234

Technology. Webster's Dictionary defines technology as "The science or study of the practical or industrial arts." We will narrow that vista to focus on new methods, not on materials or equipment. New construction. For the size of ydrds being discussed the vessel types usually encountered consist of workboats, passenger vessels, barges and fishing vessels, all of simple construction and non-exotic materials. Three hundred feet length overall is a practical upper bound. Repair. Small yards can often handle a wide range of vessel types for repair. Typically, they are limited by dry dock size a n d / o r available pier length. Repairs consist of annual maintenance, conversions, or damage repairs. Repair work is usually differentiated from new construction by less steelwork and adapting to existing geometry and equipment. In this paper we propose to present several examples of modern technology that can improve small yard productivity at an affordable cost. The ideas discussed herein are familiar to readers of ship production journals so we ask for patience as we direct our remarks to small yard operators. We do not claim that these ideas are the only ones that small yards can implement to improve their productivity. On the contrary, the authors hope that this paper will engender a discussion on how small yards can work smarter and help the marine industry. To be applicable to small yards any new technology must be flexible in its implementation and modest in cost. A small firm cannot afford to throw all procedures into the dustbin of history; thus, implementation should be piecemeal. The methods involved in modern new ship production require extensive p l a n n i n g - - a traditional weakness of small yards. Their use will involve some pains as the yards change methods, but those pains need not be crippling. We feel that the following ideas are a place for small shipyards to start. Operations management We will not presume to suggest that every small operation needs a management overhaul, but due to the competitive nature of the marine industry today we hope that all yards will actively seek a competitive advantage. The idea of a competitive advantage will be the cornerstone of this discussion. To maintain competitive pricing each yard must be able to collect and analyze production cost data. This information is then translated into future cost estimates. Large yards have departments of estimators, planners, and accountants collecting and reviewing project data. Estimators provide a baseline for project cost control. Planners schedule engineering, purchasing, and production to optimize available labor, materials, and facilities. Accountants compile the

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JOURNAL OF SHIP PRODUCTION

Fig. 1

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project costs which provide the information for project evaluation. Small y a r d s u s u a l l y have only a limited e s t i m a t i n g staff which results in a broad b r u s h approach to estimating. General factors and ratios which have proven competitive are used to bid jobs. This approach carries a low degree of confidence when the time comes to t r i m prices. The problem of cost control arises a f t e r the project has begun with attention focusing only on completion with little or no control over resource allocation or m a t e r i a l costs. We will discuss crea t i n g a s t a n d a r d production framework, project scheduling, and methods of project e v a l u a t i o n in order to g a i n g r e a t e r control of project m a n a g e m e n t . Standard production framework A s t a n d a r d production f r a m e w o r k defines common blocks w i t h i n d e p a r t m e n t s or c r a f t s . E a c h y a r d h a s a u n i q u e f r a m e w o r k based on historical construction methods, breaking vessel construction into m a n a g e a b l e sections. A simple f r a m e w o r k would consist of the bow, midbody, stern, and superstructure. These four a r e a s would then form the subtotals of a project cost estimate, the m a i n blocks for planning, and the categories for cost control. Even t h o u g h these a r e a s differ from vessel to vessel, the required work r e m a i n s r e l a t i v e l y common. For example, a bow shape m a y change b u t the process of working with the complex forward shapes is common to most self-propelled vessels. This approach m a y a p p e a r much too broad to provide a n y significant information but experience proves otherwise. A figure for feet of weld per hour cannot be calculated using this method, b u t steelwork labor hours per pound can be produced. As information is collected for each block the blocks can be broken into smaller assemblies as further definition is encouraged by top m a n a g e m e n t . Once again, the goal of the f r a m e w o r k is to provide common construction blocks for production evaluation and e s t i m a t i n g future job costs. Project scheduling Project scheduling is accomplished using various methods. The most common scheduling tool has been the G a n t t or b a r chart. The format is simple and the information is r e l a t i v e l y easy to understand. U n t i l the late 1950's this was the m a i n tool of the project m a n a g e r , but as projects became more complex the a b i l i t y to d e t e r m i n e interdependencies between activities became a necessity. Interdependencies are the order in which t a s k s m u s t be performed, for example, comp l e t i n g the welding in a r e a s before t h e y are painted. Und e r s t a n d i n g the need to define interdependencies led to the NOVEMBER 1989

realization t h a t scheduling should be a dynamic process. This m a y be the g r e a t e s t h u r d l e to overcome in u n d e r s t a n d i n g the benefits of project scheduling. A realistic schedule cannot be compiled at the s t a r t of a project with the i n t e n t t h a t nothing will change. This dooms the schedule to failure. Two methods were developed to assist in m a n a g i n g these dynamic relationships: project e v a l u a t i o n and review technique (PERT) and the critical p a t h method (CPM). The critical p a t h method is used most often in construction where the tasks can be defined with a fair degree of accuracy. PERT was developed for use in designing the polaris s u b m a r i n e weapon system, where m a n y t a s k durations were highly speculative, lacking prior e s t i m a t i n g data. A l t h o u g h the two methods were developed independently, they share m a n y of the same principles. The major difference is t h a t PERT uses probability a n a l y s i s to help d e t e r m i n e t a s k d u r a t i o n s and the confidence level for t i m e l y project completion. By developing a s t a n d a r d f r a m e w o r k to use as a t e m p l a t e when e s t i m a t i n g job costs and p l a n n i n g pre-project strategies, the information required to create a logical network will be a v a i l a b l e without s t a r t i n g over with each project. CPM is used to create a logical link between the t a s k s and milestones required to complete the project. Tasks are defined as items of work t h a t require an e s t i m a t e d d u r a t i o n of time to complete, where milestones are major events which are a r e s u l t of the completion of a t a s k or a group of tasks. The critical p a t h is d e t e r m i n e d by the sequence of t a s k s which have the longest a g g r e g a t e d u r a t i o n as shown in Fig. 2. By j o i n i n g those t a s k s into a network, the impact of a delay in the completion of a n y t a s k can be observed while time exists to p l a n a l t e r n a t i v e action, such as double shifts, e x t r a personnel, or shipping needed m a t e r i a l s by air. The dynamic n a t u r e of scheduling has t r a d i t i o n a l l y required large computing capacity e i t h e r t h r o u g h large numbers of people or expensive computer e q u i p m e n t to calculate the impacts of progress on the schedule. M a t h e m a t i c a l equations are used to produce the float t i m e and o p t i m u m completion dates for the schedule. W i t h the increasing power of microcomputers, at a cost t h a t even small y a r d s can afford, the potential for effective scheduling is f i n a l l y a v a i l a b l e to small yards. Several software p a c k a g e s exist t h a t can handle project scheduling if the project steps are completely defined. C o m p u t e r m a g a z i n e s can be a good source of inform a t i o n on software choices [2]. Regardless of w h e t h e r a computer is used, the key to effective scheduling is u n d e r s t a n d i n g how to define realistic project t a s k s with d u r a t i o n s t h a t will utilize the a v a i l a b l e labor most efficiently and also, recognizing the t a s k interdependencies. A common question is: If we t h i n k out the project completely, why bother with a schedule? Such a question depicts the lack of u n d e r s t a n d i n g of interdependencies between d e p a r t m e n t s , activities, m a t e r i a l flows and other forces t h a t are too complex to r e m a i n static over the d u r a t i o n of a project. M a t e r i a l flows are often overlooked as a r e s t r a i n t on production. M a n u f a c t u r i n g industries have out paced ship construction in t h e i r recognition of m a t e r i a l flow problems. Mat e r i a l s m u s t be a v a i l a b l e to the workers when needed. This requires m a t e r i a l r e q u i r e m e n t s to be defined long enough in advance to allow p u r c h a s i n g to a r r a n g e for delivery without p a y i n g a premium. By including p u r c h a s i n g of major m a t e r i a l s and e q u i p m e n t in the schedule, fewer hours will be spent w a i t i n g for delivery. Project evaluation methods Project e v a l u a t i o n is most often done by s u b t r a c t i n g the total costs at the end of a project from the contract price and hoping the r e s u l t i n g difference is a profit and not a loss. C r e a t i n g a framework, as we discussed earlier, to provide a 235

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baseline for controlling project costs is a necessity to guide project m a n a g e m e n t decisions d u r i n g the course of the job. To effectively monitor costs and maximize profits a method of progress a n a l y s i s m u s t be implemented. W i t h o u t a framework of c o m p a r a t i v e e s t i m a t e d or historical costs and an effective scheduling procedure, defining s t a n d a r d s for project e v a l u a t i o n becomes difficult if not impossible. To ensure the a b i l i t y to gauge t h e project status, a baseline m u s t be developed to compare e s t i m a t e d costs to actual costs. This is the only w a y to d e t e r m i n e cost trends while action can still be t a k e n to a l t e r poor progress. Once again, the advancem e n t of microcomputer technology offers a cost effective w a y to m a n a g e the cost control data. A serious problem in crea t i n g a computerized cost control system is t h a t most software dictates t h a t a y a r d follow certain s t a n d a r d accounting principles or only addresses basic bookkeeping functions. This m a y help with payroll but it will not e s t a b l i s h a useful database for future bidding and project evaluation. Custom software should be considered especially by a small y a r d t h a t is concerned about m a i n t a i n i n g t h e i r procedures and will not benefit by a d h e r i n g to a generic accounting package. Modern p r o g r a m m i n g e n v i r o n m e n t s have t a k e n some of the horror out of s e t t i n g up a custom control system. The i n i t i a l cost of custom software m a y be slightly more b u t the t r a i n ing t i m e and g e n e r a l confusion caused by new systems will be far less. These systems should be set up to support, not to inhibit, effective production. I m p l e m e n t a t i i o n of a s t a n d a r d f r a m e w o r k , s c h e d u l i n g methods, and project cost controls are difficult for most companies due to the g e n e r a l lack of operational goals and methods. Large y a r d s who deal m a i n l y with the U.S. Gove r n m e n t are required to a d h e r e to certain procedures. Even though this produces mixed r e s u l t s it does set some guidelines to aid in e s t a b l i s h i n g systems. The commercial customers with whom most small y a r d s p a r t i c i p a t e care mostly about price. Effective scheduling and e s t i m a t i n g offer a w a y 236

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Numerical lofting and NC cutting Surely one of the most critical aspects of vessel construction is the d e t e r m i n a t i o n of the hull shape in full scale and the lofting of i n d i v i d u a l pieces for construction. Reference 3 defines lofting as: ~The process of developing the size and shape of components of the ship from t h e designed lines; traditionally, m a k i n g t e m p l a t e s using full scale lines laid down on the floor of the mold loft; today, largely performed at small scale u s i n g photographic or computer methods." The fairness of the hull form and t h e accuracy of the cut p a r t s have a direct i m p a c t on the t i m e required for construction. A n y m e a n s then to expediate this process or, more i m p o r t a n t l y , to increase the accuracy, r e s u l t s in decreased construction costs. The a d v a n t a g e s of t r a d i t i o n a l methods of lofting are few while the d i s a d v a n t a g e s are numerous. The p r i m a r y reasons for continuing to practice full-scale lofting are: • small capital i n v e s t m e n t r e q u i r e d to lay out a hull full scale; • lack of knowledge of more modern methods; and • reluctance to d e v i a t e from proven methods. The d i s a d v a n t a g e s of full-scale lofting t h a t are offset by more modern methods include: • large a m o u n t of space required to develop a hull form in full scale (Fig. 3); • large a m o u n t of space r e q u i r e d to store p a r t t e m p l a t e s a f t e r construction of first hull; • t i m e necessary to effect changes to hull form or p a r t s once lines a r e down and vessel is lofted; and • e r a d i c a t i o n of old lines upon lofting of a new vessel. In the late '50's and e a r l y ~60's, various s h i p y a r d s began to e x p e r i m e n t with n u m e r i c a l l y controlled (NC) b u r n i n g JOURNAL OF SHIP PRODUCTION

a necessity to remove an existing loft floor. The m a g n e t i c d a t a b a s e is easy to store and to duplicate, t h e r e b y reducing insurance risks. C o m p u t e r lofting can be b r o k e n into two major categories: Hull definition and fairing

Fig. 3 Traditional layout of tugboat bulkhead

machines to cut steel plate. These m a c h i n e s had the potent i a l to increase the accuracy of cut steel p a r t s and decrease the m a n - h o u r s required to cut those parts. In those early times, coordinates defining the shape of a p a r t were e n t e r e d at t h e k e y b o a r d by h a n d utilizing offsets obtained from the loft floor. Currently, prices of NC b u r n i n g e q u i p m e n t have put t h e m w i t h i n the reach of even small s h i p y a r d s (Fig. 4). W i t h the a d v e n t of the NC b u r n e r came the a b i l i t y to use scaled down versions of the hull lines. No longer was it nece s s a r y to use full scale lines to obtain p a r t geometry and 1/10th scale lofting using m a n u a l methods became popular. It was t h e n a simple m a t t e r to m e c h a n i c a l l y m e a s u r e and record coordinates from 1/10th scale p a r t t e m p l a t e s and e l i m i n a t e the k e y b o a r d e n t r y of coordinates and NC code. C o m p u t e r - a i d e d lofting was an obvious outcome of autom a t i o n of m a n u f a c t u r i n g s y s t e m s . As n u m e r i c a l l y controlled m a n u f a c t u r i n g systems were developing, computers were also developing and it was only a m a t t e r of t i m e u n t i l the two were linked, e l i m i n a t i n g the t r a d i t i o n a l mold loft floor as the source of all vessel geometry information. Comp u t e r lofting has m a n y a d v a n t a g e s over full scale lofting. Storage of the hull form and p a r t t e m p l a t e s is a major consideration. No longer is it necessary to have large space allocations for template storage. Computer generated hull lines are also e a s i e r to modify to meet new r e q u i r e m e n t s , or to effect hydrodynamic changes after testing. There is no longer

Fig. 4 Typical small yard burning table (courtesy of MARCO)

NOVEMBER 1989

There are a n u m b e r of hull definition p r o g r a m s c u r r e n t l y available, both in the public d o m a i n and t h r o u g h p r i v a t e parties. • Sophisticated s y s t e m s - - T h e y are less labor intensive, d e m a n d i n g less i n p u t from the operator. They have the ability to a u t o m a t i c a l l y g e n e r a t e structure and shapes. They typically support design and a n a l y s i s packages such as vessel hydrostatics calculations. • Public domain s o f t w a r e - - T h e software a v a i l a b l e as public domain software can be a very cost-effective m e a n s to do computer lofting. Typically, the p r o g r a m s d e m a n d powerful computer systems to run, t h u s r e q u i r i n g t i m e - s h a r i n g comp u t e r services or h i r i n g a consultant. These p r o g r a m s can be very time consuming and labor intensive to use if compliance with an existing hull form is a necessity. Many of these p r o g r a m s also require m a n u a l i n t e g r a t i o n with other design and a n a l y s i s programs. • Inexpensive fairing p r o g r a m s - - T h e s e can be an excellent value if used to g e n e r a t e a hull from the p r e l i m i n a r y design stage (Fig. 5). They are u s u a l l y limited as to the complexity of hull forms t h a t t h e y can handle and, therefore, have limited application. They also require m a n u a l integration with other programs. The proliferation of p r o g r a m s for micro-computers m e a n s t h a t t h e r e is now software for g e n e r a t i n g developable surfaces and creation of foil shapes using s t a n d a r d NACA sections. True t h r e e - d i m e n s i o n a l shape m a n i p u l a t i o n is expected in the n e a r future. P a r t s definition Parts definition involves extracting shape information from the computer hull shape to define decks, frames, bulkheads, etc. These structural areas are then further broken down into i n d i v i d u a l parts. W h e r e necessary the p a r t s are developed into f l a t shapes and detailed with l i g h t e n i n g holes, construction reference lines and piece n u m b e r s (Fig. 6). Once the p a r t geometry is completely defined the m a n u f a c t u r i n g considerations of tool p a t h and k e r f can be added, r e s u l t i n g in a piece r e a d y for n e s t i n g and NC cutting. A n a d v a n t a g e to p a r t s definition by computer is the ability to check the accuracy of the p a r t s and completeness of the structure before parts are actually cut. Because the pieces are assembled first on the computer, t h e y can be checked for

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fit before t h e y become parts. The g r e a t e r accuracy leads to easier construction with less rework. The overall r e s u l t is a less expensive, h i g h e r q u a l i t y product. The computer also gives the a b i l i t y to t r a c k weight of materials, allowing a n a l y s i s of module weights, i n c r e a s i n g est i m a t i n g accuracy, and giving g r e a t e r control of costs. More planning is required with computer lofting since each piece must be determined in advance. Thought m u s t be given to a n u m b e r i n g system to identify p a r t s as t h e y a r r i v e from the steel y a r d and t h e i r storage m u s t be organized to ensure t h a t the p a r t s can be located when needed. If zone construction is used in conjunction with NC c u t t i n g t h e n the build s t r a t e g y can be used as a n o r g a n i z a t i o n a l framework. In its simplest form, computer lofting is accomplished in the s a m e w a y as m a n u a l lofting. The same techniques and methods used by t r a d i t i o n a l loftsmen can be practiced on the computer, from development of shell plate to expansion of a cambered deck. The g r e a t e s t power of computer lofting lies, however, in its a b i l i t y to i n t e g r a t e a n u m b e r of s h i p y a r d disciplines from s t r u c t u r a l design to steel fabrication to mat e r i a l s handling. The people producing the computer inform a t i o n m u s t work effectively with the steel shop to create a producible design. Coordination is i m p e r a t i v e for this technology to succeed.

Zone outfitting The N a t i o n a l Ship Research P r o g r a m has identified several levels of shipbuilding technology [4]. The first is the t r a d i t i o n a l method described in the Introduction to this paper. The second is Pre-outfitting, where blocks of the vessel are outfitted i n d e p e n d e n t l y before final assembly, but, the o u t f i t t i n g process is still developed from t r a d i t i o n a l functional detail design drawings. The t h i r d level is zone outf i t t i n g where vessel construction involves r e t h i n k i n g the b u i l d i n g process as a series of i n t e r i m products oriented a r o u n d location in the vessel a n d / o r skills required to produce the product. It is this level t h a t we suggest small y a r d s should be a i m i n g for. For most small yards, some steps t o w a r d s zone o u t f i t t i n g can be found. A typical example is the s e p a r a t e construction of an a l u m i n u m deckhouse which is t h e n a t t a c h e d to the hull (Fig. 7). The key is t h a t a l u m i n u m work requires different skills t h a n steel fabrication and since the deckhouse is geographically distinct, the s e p a r a t e fabrication is logical. The deckhouse is t r e a t e d as a s e p a r a t e i n t e r i m product and could easily be produced by a subcontractor e n t i r e l y removed from the yard. This i n t e r i m product is small enough to be b u i l t in a covered shed and lifted by cranes. 238

Deckhouse for an 85-ft fireboat

S t r u c t u r a l e l e m e n t s are t r a d i t i o n a l l y the first a r e a where zone construction logic occurs. U n f o r t u n a t e l y , the zone logic proceeds no further. Small y a r d s will assemble s t r u c t u r a l blocks into the hull and only t h e n begin outfitting, y e t outf i t t i n g productivity benefits t r e m e n d o u s l y from a zone approach. W h y not outfit the deckhouse, with its r e q u i r e m e n t for carpentry, extensive electrical work and ventilation, before lifting it into place on the hull? Physical obstacles such as limited crane capacity can be overcome; it is the m e n t a l shift to a new w a y of a p p r o a c h i n g vessel construction t h a t is the real obstacle. Properly applied, the concept of zone outfit m u s t pervade the entire process of constructing a vessel. The usual construction process cannot accommodate this thinking. Let us outline the "normal" process: 1. Bid on a contract design--Few small yards have in-house design t e a m s so t h e y m u s t bid on vessel work, either new construction or modifications, t h a t have been designed by either the vessel owner or a t h i r d party. Seldom is t h a t cont r a c t design oriented a r o u n d an explicit construction strategy.

2. Negotiate contract with owner--After a successful bid opening the y a r d will u s u a l l y settle details of progress payments, schedule, and the design. A t this stage, a y a r d m a y or m a y not propose some design or e q u i p m e n t changes to improve productivity or m a t e r i a l delivery. 3. Prepare working drawings by system--Usually the yard will p r e p a r e some w o r k i n g d r a w i n g s to route systems and provide m a t e r i a l takeoff. Sometimes this stage is omitted e n t i r e l y on small vessels in the belief t h a t additional engineering is an u n n e c e s s a r y e x t r a cost. Where d r a w i n g s are done they are grouped by function, t h a t is, bilge and b a l l a s t system a r r a n g e m e n t and details. 4. Order materials--During the bid phase the y a r d estim a t o r will u s u a l l y contact vendors of specified e q u i p m e n t for price quotes. Following a contract signing, orders will be placed for long lead items while the w o r k i n g d r a w i n g s are being prepared. Short lead items will be ordered from a mat e r i a l s t a k e off on the w o r k i n g drawings. 5. Phase progress payments--The y a r d will expect p a r t i a l p a y m e n t upon achieving construction milestones. A typical schedule m i g h t be as follows: Signing contract 20c~ L a y i n g keel 10c~ Hull completion 10c~ L a n d i n g m a i n engines 10% L a n d i n g deckhouse 10% JOURNAL OF SHIP PRODUCTION

Launch 10% Engine start-up 10% Sea trials 10% Delivery 10% This type of payment schedule is wrapped around Level 1 construction and might result in a builder landing the main engines when the hull is only partially complete in order to get a payment. 6. Brace for omissions, changes, and delays--Since outfit is accomplished system by system, a competition for territory ensues, with resulting interference and consequent rework. Should materials ordering have overlooked a part, the omission will not be discovered until the system is near completion, bringing a scramble to correct the situation. This narrative is not intended to imply that small yards turn out shoddy goods. On the contrary, small U.S. shipyards can perform the highest quality work in the world with exquisite craftsmanship. We contend that zone outfitting can maintain or improve quality while increasing productivity. The new approach would be as follows: 1. Negotiate build strategy into contract--Since the build strategy is the foundation upon which productivity is based, it should become an integral part of the contract negotiations. By being up front about construction approach the yard and owner can agree to schedules, drawing reviews, and materials approval formats. The yard can push for minor changes in the design documents that will enhance producibility at no cost in quality. 2. Design and schedule by zone--Using the contract drawings and the build strategy the vessel is divided up into a sequence of smaller pieces that can be treated as interim products. A logical assembly sequence is then used to create a detailed schedule, integrating materials ordering, drawing production, and fabrication milestones. 3. Phase progress payments to detailed schedule--As part of the contract negotiations, the payments can be tied to project milestones that are based upon a logical build strategy. The detailed schedule shows when money is needed for materials purchases and manpower. The vessel owner can accurately track yard progress, giving assurance that payments are being properly applied, while the yard can structure a more even cash flow. 4. Brace for material delays--Vendor supplied equipment can still be delayed, regardless of approach, but zone outfitting results in more accurate materials lists, and omissions or delays are caught sooner. By breaking the project into smaller separate pieces, the critical path becomes clearly defined and scheduling impacts can be accurately determined when material delays are encountered. The benefits of zone outfitting have been alluded to but deserve repeating. By breaking the project into smaller units the work can be performed indoors with good lighting and ready hoist assistance. The work can be positioned to maximize downhand work and staging is minimized• Safety is improved which has insurance benefits and improves morale. Less rework is required which saves time and dollars. Additional engineering is required, as much as double, but added engineering cost is more than offset by decreased labor cost resulting in improved productivity [5]. So much for generalization. We will now present some portions of zone outfitting that are applicable to small yards and the vessels they encounter. The three portions are onunit assembly, on-block assembly, and standards. On-unit assembly

We will define a unit as a collection of piping, equipment, wiring, and assorted structure grouped by common geography and/or function. One example would be to group bilge/ ballast/fire pumps together with their associated manifolds, NOVEMBER

1989

strainers, and motor controllers. Structural elements can function as pipe hangers or grating supports while also providing sufficient rigidity to allow the unit to be moved. Design of such a unit must account for access during assembly, weight and attachment points for lifting, and access for installation on-board. All wiring and most painting should be completed before the unit leaves the assembly area. The similarity between units and purchased pieces of equipment should be stressed. A steering gear hydraulic set, bathroom module (Fig. 8), or a generator can all be viewed as units for zone outfitting. In fact, a yard may choose to treat custom units like purchased vendor equipment and have a subcontractor assemble them. On-block assembly A block is a major subdivision of the project consisting of structure and associated outfit. The block size is chosen on crane capacity and/or assembly logic. A typical example would be a lazarette section of a tug complete with steering gear hydraulics, motor controllers, rudder tube, lighting, and bilge piping. By careful selection of the erection seam, this block might be constructed separately without interferring with the shafting. Fig. 9 shows some partial outfitting of a block where large firemain piping is installed in the overhead of a fireboat engine room before turning the block over. Problems with block interconnections have been discussed in reference [6] but a few words appropriate to small yards are warranted• Many vendors offer fittings that are suitable to final connection of blocks, allowing for flexible joints or misalignment. The use of poured resin chocks provides alignment margins for final machinery setup. Judicious use of junction boxes or splices permit wiring to be installed in the blocks, reducing the time-consuming job of cable pulling. Standards

As stated in reference [7], "A standard is an agreed upon published description of an item and/or procedure defining characteristics between specified tolerances. It normally represents a tried and approved method of doing something. • . ." Widely used overseas, shipyard standards are a neglected productivity tool in small yards. Some yards have adopted steel and pipe fabrication standards for details but the use should be expanded to include outfit details and preferred vendor items. As mentioned in reference [6], a large yard could have over 4000 standards. Their use benefits all departments of a shipyard from purchasing to design to the shop floor. Using standards, like those shown in Figs. 10 and 11, provides for instant recognition of hours, cost, and connection sizes. Standards should be seen as a quality tool, not just as a

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The U.S. m a r i n e i n d u s t r y has declined steadily in n u m b e r of vessels, total tonnage of vessels, n u m b e r of s h i p y a r d s and labor force ever since the Second World War. The early p a r t of this decade has been p a r t i c u l a r l y tough on vessel types constructed by s m a l l e r yards. However, the m a r c h of progress has produced methods by which both small and large yards can improve their productivity and accuracy. The ideas presented in this p a p e r have been selected by the a u t h o r s as ones t h a t small y a r d s m i g h t i m p l e m e n t at modest cost. The expected benefits a r e s u m m a r i z e d as follows: • Less labor hours expended, • A n accelerated construction schedule, • Safer working conditions, and • A more accurate, h i g h e r q u a l i t y product. Modest dollar cost has been emphasized throughout. Small yards cannot afford h e a v y capital i n v e s t m e n t s in crane capacity, a u t o m a t e d welding equipment, or expensive mainframe computer systems. All change however brings some cost; adopting the ideas in this p a p e r will be no different. The cost will be in changing t h o u g h t processes and work h a b i t s which m e a n s c h a n g i n g people. By judicious subcont r a c t i n g of work, cross-training of staff, and the introduction of the micro-computer as a tool, the small y a r d can convince its staff t h a t new ideas don't t h r e a t e n the t r a d i t i o n a l skills of the shipbuilder, t h e y build upon them. As this p a p e r was being researched, the lack of information on or for small y a r d s became very evident. Published information on ship production has focussed on large yards,

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m e a n s of saving some dollars. In fact, the s t a n d a r d s themselves have to r e p r e s e n t good q u a l i t y if t h e y are to receive r e a d y acceptance from the vessel owner and classification agencies. W h e n a y a r d proposes a line of pumps t h a t t h e y have chosen as t h e i r standard, it m u s t be presented as a savings in design and planning and not as a lower cost or cheaper type, even if it is. Adoption of existing s t a n d a r d s such as ANSI, Mil-Spec, or MARAD is encouraged. Such s t a n d a r d s p r e s e n t acceptable levels of q u a l i t y t h a t provide a s s u r a n c e to owner and y a r d alike. Zone outfitting, or level 3 technology can be adopted by small y a r d s p r o f i t a b l y if the experience of l a r g e r firms is

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first on those performing new construction, and, as that dried up, on those overhauling naval vessels. It is time to address the special needs of small yards. The fact that small yards are a vital segment of shipbuilding is one that bears repeating, yet no one seems to have a clear vision of their abilities. With that in mind, the authors propose that a technological survey of small yards be undertaken with a scope similar to reference [9]. Such a survey will reveal much about the ability of small yards to support the needs of the U.S. marine industry and ensure that old skills are polished by contact with new methods. Acknowledgments The authors would like to acknowledge with thanks the support of Mr. L. D. Chirillo, Marco Shipyard, Seattle, and J. M. Martinac Shipbuilding Corp., Tacoma.

References 1 Chirillo, L. D. and Chirillo, R. D., "The History of Modern Shipbuilding Methods: The U.S.-Japan Interchange," JOURNALOF SHIP PRODUCTION, Vol. 1, No. 1, Feb. 1985. 2 Heck, M., "Project Management Programs for Executives," Info World, Vol. 10, Issue 21, 1988. 3 Ship Design and Construction, R. Taggart, Ed., SNAME, 1980. 4 Chirillo, L. D., Statement to Commission on Merchant Marine and Defense, 14 July 1988. 5 Stumbo, S. C., "Impact on Zone Outfitting on Ship Space Utilization and Construction Cost," Naval Engineers Journal, May 1985. 6 "Outfit Planning," The National Shipbuilding Research Program (NSRP), Maritime Administration, Washington, D.C., 1979. 7 "Improved Design Process," The National Shipbuilding Research Program (NSRP), Maritime Administration, Washington, D.C., 1977. 8 Tefler, A., "Zone Outfitting in a Canadian Great Lakes Shipyard: The First Four Years," JOURNAL OF SHIP PRODUCTION, Vol. 1, No. 4, Nov. 1985. 9 Lowry, R., Stevens, W., and Craggs, J., "Technology Survey of Major U.S. Yards," Trans. SNAME, Vol. 88, 1980.

Discussion L. D. Chirillo, Bellevue, Washington The most impressive feature of the subject paper is the authors. They represent the Elliott Bay Design Group, but their paper demonstrates understanding of all of the higher order management functions, that is, estimating, planning, scheduling, implementing and analyzing. Clearly, they understand that design is an aspect of planning, and implementation includes material procurement as well as production activities. To the best of my knowledge, their's is the first such paper out of a design organization in the U.S. and elsewhere. It seems that Elliott Bay ManagementGroup would be appropriate. NOVEMBER 1989

The paper is especially styled and written to cause very experienced and skilled small-shipyard managers and supervisors to pause and weigh the advantages of modern management methods. Most of the methods discussed were disclosed by the National Shipbuilding Research Program and are being implemented by some large shipyards in Canada and the U.K. as well as in the U.S. The authors' effort is valid because the wherewithal to produce an outfitted and painted block for a large ship is often the same for that required to produce a small ship of approximately the same displacement. Conversely, producing a number of small ships, even of different designs, often imposes the same problems 241

i n h e r e n t in producing blocks t h a t reflect i n t e g r a t e d hull construction, o u t f i t t i n g and p a i n t i n g for a single large ship. The question confronting small-shipyard m a n a g e r s who wish to adopt zone-oriented technology is, "How much of a large yard's i n f r a s t r u c t u r e can be j u s t i f i e d in a s m a l l yard?" Very little in my opinion, because design organizations t h a t can demonstrate the authors' capabilities could fill the gap. There is precedent. As a severe and prolonged s h i p b u i l d i n g recession exists worldwide, m a n y s h i p y a r d s have closed and some of the l a r g e s t shipbuilding firms, including I s h i k a w a j i m a - H a r i m a H e a v y Industries Co., Ltd. (IHI), m a d e drastic cutbacks in capacity. Reduced operations m e a n t t h a t abilities to maint a i n constant self-development of t h e i r m a n u f a c t u r i n g systems were jeopardized. IHI compensated by e n t e r i n g the s m a l l e r - s h i p m a r k e t in a unique way. A n order for a 90-m e t h y l e n e c a r r i e r was accepted. IHI performed all of the build strategy, design, significant m a t e r i a l procurement, production control, inspection and testing, and subcontracted the entire production effort to a small shipyard! The message I received from the foregoing u n i q u e approach is: It is far more i m p o r t a n t to r e p e t i t i v e l y exercise p l a n n i n g capabilities with new challenges t h a n it is to exercise production capabilities, for the purpose of continuing i m p r o v e m e n t s in a m a n u f a c t u r i n g system. In this context, the collective b u i l d i n g opportunities of two or t h r e e small s h i p y a r d s could comprise the basis for a c o n s t a n t l y self-developing m a n u f a c t u r i n g system if one design f i r m h a v i n g p l a n n i n g capabilities were involved. Frank H. Rack,

Shipbuilding Consultants, Inc., Dickinson, Texas

W i t h three exceptions, the a u t h o r s have p r e s e n t e d a n excellent p a p e r on how large ship production methods and procedures can be effectively used in s m a l l shipyards. The exc e p t i o n s - w h i c h have major implications, in m y m i n d - - a r e (1) operations m a n a g e m e n t , (2) project scheduling, and (3) project evaluation methods. My criticism is based on the idea of a f i r m s t r i v i n g for competitive a d v a n t a g e s in its operations. Shipyards have been using conventional methods, m a n y copied from the J a p a n e s e . W h a t is needed to improve our competitive position today is to i m p l e m e n t a process of ongoing improvements. Both large and small s h i p y a r d s have not i m p l e m e n t e d the most modern technology to g a i n the competitive a d v a n t a g e s needed to increase the p r o f i t a b i l i t y of the U.S. s h i p b u i l d i n g industry. The goal of s h i p y a r d m a n a g e r s is to m a k e more money in the p r e s e n t as well as in t h e future. You m a k e money by (1) i n c r e a s i n g t h r o u g h p u t (reducing construction t i m e a n d / o r producing more ships in the same period, (2) reducing inventory costs, and (3) reducing o p e r a t i n g expenses. As these concepts a r e implemented, significant competitive a d v a n t a g e s result. 1. Operations management: S h i p b u i l d i n g m a n a g e m e n t practices have lagged behind the major changes t h a t have t a k e n place in all aspects of m a n u f a c t u r i n g . Reference [10] (additional references follow this discussion) discusses several specific a r e a s including t h e changes in the a r e a of logistical systems (flow of material). This a r e a has seen the following major changes over the years: • 1 9 5 0 - - O r d e r Point • 1965--MRP • 1975--Closed loop MRP 1 9 8 0 - - M R P II • 1985--Synchronized Manufacturing Reference [10] states:

houses. This was our logistical system. About 1965, we tried for the first time to t a p the power of the computer for this t a s k t h r o u g h a technique called M a t e r i a l s R e q u i r e m e n t s P l a n n i n g (MRP). Despite an i n v e s t m e n t e s t i m a t e d at $10 billion, we were not satisfied with the results. In 1975 we r e n a m e d it closed loop MRP, believing t h a t feedback on the s t a t u s of shop orders and purchase orders was the key to faster m a t e r i a l flow. In 1980, it was MRP II, an effort to get the e n t i r e m a n u f a c t u r i n g organiz a t i o n - m a r k e t i n g , engineering, manufacturing and f i n a n c e - - s i n g i n g off the same h y m n sheet. Each phase of our MRP j o u r n e y involved large inv e s t m e n t s in computers, software and t r a i n i n g in how we m a n a g e d our businesses. It has been estim a t e d t h a t we have spent more t h a n $30 billion, b u t even these e n h a n c e m e n t s and i n v e s t m e n t s were not enough. MRP did not enable us to m a i n t a i n l e a d e r s h i p in the race for a competitive edge. The J a p a n e s e approach to the logistics of the shop floor, J u s t - i n - T i m e / K a n b a n , proved superior to our efforts. Today some W e s t e r n companies a r e a t t e m p t ing to e m u l a t e them. M e a n w h i l e the J a p a n e s e and others are searching f r a n t i c a l l y for an even b e t t e r system, called synchronized m a n u f a c t u r i n g , even t h o u g h we have yet to define exactly w h a t it is. The discusser believes t h a t most major U.S. s h i p y a r d s are still in the l a t e 1970's r e l a t i v e to i m p l e m e n t a t i o n of a Class A or B MRP II system. The f u n d a m e n t a l problem is l e a r n i n g how to m a n a g e c h a n g i n g from the conventional methods and procedure t h a t we have been following for too m a n y y e a r s to a new type of education. This new type of education gives rise to the emotion t h a t strives for a c h a n g e - - t h e emotion of the inventor. This is the old Socratic approach. The use of the Theory of C o n s t r a i n t s (TOC) 3 will r e s u l t in major changes from the conventional approaches t h a t have been practiced which have led to the decline of not only the U.S. shipbuilding industry but more importantly the U.S. flag m e r c h a n t marine. 2. Project scheduling: A f u n d a m e n t a l "Flaw" is p r e s e n t in the P l a n n i n g and Production Control (PPC) systems in use in most if not all U.S. shipyards. This s a m e "Flaw" is present in reference [11], which is a contract requirement of most DOD ship and system acquisitions. This " F L A W " can best be e x p l a i n e d as the difference between the "Conventional Rules" and the "Global Rules" discussed in reference [10] and in story form in Reference [12] the "Global Rules" a r e not fixed as t h e y are changed whenever an i m p r o v e m e n t is realized. A good e x a m p l e is Rule 1: The conventional rule which has been u n i v e r s a l l y used for m a n y y e a r s is: "Balance capacity, t h e n t r y to m a i n t a i n flow. Reference [12] supplies a good question and a n s w e r r e l a t i v e to "Conventional Rule 1." "Why do you t h i n k it is t h a t nobody a f t e r all this t i m e and effort has ever succeeded in r u n n i n g a balanced plant?" " . . . The real reason is t h a t the closer you come to a balanced plant, the closer you are to b a n k r u p t c y . " Global Rule 1 states: "Balance flow not capacity." This rule provides a much b e t t e r course of action t h a n the conventional rule b u t r e q u i r e s a new definition to be more effec-

•

D u r i n g the 40's, 50's, and into the 60's, we used m a n u a l "order point" techniques to control the ord e r i n g and flow of m a t e r i a l in our p l a n t s and ware242

3"Theory of Constraints" is a concept developed by Dr. Eliyahu M. Goldratt, a management theorist and educator. "Goldratt's system, in essence, forces production managers and workers alike to coordinate their work and the flow of parts through a factory with an underlying principle in mind: that bottlenecks . . . are what ultimately constrain the manufacturing environment---Business Week. JOURNAL OF SHIP PRODUCTION

tive. Step 2 of the TOC says: " . . . exploit the system's constraint(s)." The Goldratt Drum-Rope-Buffer (DRB) technique provides for a buffer (inventory) before the constraint(s) to increase t h r o u g h p u t and to exploit the constraint(s). W h e n you have a "buffer," which is inventory you can't have "flow," therefore, Global Rule 1 is no longer valid. Dr. G o l d r a t t provides us with an excellent new general Global Rule: The Solutions of Today Are the Diseases of Tomorrow. The following examples (quotes) from the authors' p a p e r indicates t h e y are discussing a conventional approach: • "Regardless of w h e t h e r a computer is used, the key to effective scheduling is u n d e r s t a n d i n g how to define realistic project t a s k s w i t h directions t h a t will utilize the a v a i l a b l e labor most efficiently and recognizing the t a s k interdependences." • " E s t i m a t o r s provide a baseline for project cost control. P l a n n e r s schedule engineering, purchasing, and production to optimize a v a i l a b l e labor, m a t e r i a l s , and facilities." The m a i n misconceptions in the above quotes are: "Utilizing the a v a i l a b l e labor most efficiently" and "optimize a v a i l a b l e labor, m a t e r i a l s , and facilities." The "Goal" of a s h i p y a r d is "To m a k e more money now and in the future." "Utilization" and "optimization" of all a v a i l a b l e labor, m a t e r i a l , and facilities is not the "Goal" and if done will only lead to increased o p e r a t i n g expenses and increased i n v e n t o r y costs r e s u l t i n g in decreased profits. The following reference [10] Global Rules when used with the TOC will r e s u l t in m e e t i n g the "Goal." GLOBAL RULES 1. Balance flow not capacity. (This rule has been changed as noted previously). 2. The level of utilization of a non-bottleneck is not d e t e r m i n e d by its own potential b u t by some other cons t r a i n t in t h e system. 3. U t i l i z a t i o n and activation of a resource are not synonymous. 4. A n h o u r lost a t a bottleneck is an hour lost for the total system. 5. An hour saved at a bottleneck is a mirage. 6. Bottlenecks governs both t h r o u g h p u t and inventories. 7. The transfer batch m a y not and m a n y times should not be equal to the process batch. 8. The process batch should be v a r i a b l e not fixed. 9. Schedules should be established by looking at all of the constraints simultaneously. Lead times are the result of a schedule and cannot be predetermined. MOTTO The sum of the local o p t i m u m s is not equal to the global optimum. 3. Project evaluation methods: References [10], [12], and [13] to list a few, provide sufficient evidence to prove t h a t the p r e s e n t conventional cost accounting methods of meas u r e m e n t s (evaluations) below the top level are " F a t a l l y Flawed." I m p l e m e n t a t i o n of the TOC will r e s u l t in a major conflict with present shipyard cost accounting systems which e v a l u a t e labor and schedule performance and physical progress on efficiencies and utilization of all resources i n s t e a d of the effect of the c o n s t r a i n t on all e l e m e n t s t h a t a r e measured. NOVEMBER 1989

The most "Affordable Technologies" a v a i l a b l e to large and small s h i p y a r d s is for t h e m to obtain the knowledge necessary to i m p l e m e n t the TOC and the "Global Rules."

Additional references 10 Goldratt, E. M. and Fox, R. E., The Race, North River Press, New York. 11 Performance Measurement for Selected Acquisition, Department of Defense Instruction, No. 7000.2, June 10, 1977. 12 Goldratt, E. M. and Cox, J., The Goal, revised edition, North River Press, New York. 13 Johnson, H. T. and Kaplan, R. S., Relevance Lost, The Rise and Fall of Management Accounting, Howard Business School Press.

Authors' Closure The a u t h o r s would like to t h a n k Mr. Rack for his thoughtful discussion. His concern r e g a r d i n g the need to r e e v a l u a t e the c u r r e n t methods and theories used by m a n a g e m e n t in the U.S. shipbuilding i n d u s t r y is a concern t h a t m a n y of us share. Through our p a p e r we had hoped to promote discussion about c u r r e n t methods t h a t are working to help m a k e shipyards more profitable. Shipbuilding is a low-technology i n d u s t r y in comparison with other m a n u f a c t u r i n g industries. One doesn't have to look far to find progressive ideas used for m a n u f a c t u r i n g products such as aircraft. S m a l l s h i p y a r d s a r e steeped in tradition, using old-fashioned construction and organizational methods. Mr. Rack points out t h a t "shipbuilding m a n a g e m e n t practices have lagged behind the major changes t h a t have t a k e n place in all aspects of m a n u f a c t u r i n g . " Mr. Rack's r e m a r k s are appropriate, for large shipbuilding organizations, but there are i m p o r t a n t reasons why the small y a r d s a r e n ' t responding. The majority of the small y a r d s have n e v e r h e a r d of MRP. F r o m an operations m a n a g e m e n t d e v e l o p m e n t standpoint, these y a r d s are still in the 40's, 50's and 60's t h a t Mr. Rack mentions. His s t a t e m e n t "most major U.S. s h i p y a r d s are still in the late 1970's r e l a t i v e to the i m p l e m e n t a t i o n of a . . . MRP II system," shows t h a t he identifies with the l a r g e r shipbuilding concerns. We have no doubt t h a t Dr. Goldrat's "Theory of Cons t r a i n t s " (TOC) is an effective m a n a g e m e n t tool. But t r y i n g to sell such an idea or theory to a s m a l l s h i p y a r d is a tough task. S m a l l y a r d s m a n y times won't consider the s m a l l e s t of changes, much less a total r e v a m p of t h e i r system. Mr. Rack's large s h i p y a r d focus is f u r t h e r indicated by his idea of a ~'conventional approach." W h a t is considered conventional in a large m a n u f a c t u r i n g organization is a c t u a l l y quite advanced when viewed by the s m a l l s h i p b u i l d i n g concern. The TOC a p p e a r s to be a very sound set of m a n a g e m e n t ideas. It would be very exciting to watch a small s h i p y a r d a d a p t these ideas as t h e i r m a n a g e m e n t guideline and observe the i m p r o v e m e n t s made. But one m u s t l e a r n to crawl before walking and there is much to be learned by these small operations. There a r e small y a r d s t h a t have been able to operate profitably and r e m a i n in business over the span of m a n y years. The a d a p t a t i o n of ~'new" technologies on the s m a l l e s t scale could lead to large i m p r o v e m e n t s in m a n u f a c t u r i n g efficiency. In conclusion, we would like to reiterate our hope t h a t each s m a l l y a r d will e v a l u a t e the needs of m a n a g e m e n t and imp l e m e n t methods t h a t help m a x i m i z e i m m e d i a t e , as well as long-term, profits. Profits and longevity are the true test of competitive a d v a n t a g e . F i n d i n g the methods t h a t work for each s h i p y a r d is the real challenge to s h i p y a r d m a n a g e ment. Our goal as contributors should be to help educate 243

shipyard management about the available methods and help with effective implementation. As in all industry, the shipbuilding industry is dynamic and management must constantly evaluate the effectiveness of their methods. At this time the U.S. shipbuilding industry needs constructive input

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to improve the application of current methods and develop alternatives to methods that have proven ineffective. Our ultimate concern must be to develop management methods that will strengthen the competitive advantage of U.S. shipyards and carry the entire industry into the next century.

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