Going with the lowest bid might seem to be an attractive option. However, the saying “buy cheap pay twice” could not be more true when it comes to construction projects. Experts point out that cutting costs for critical competences, such as project management, can lead to costly downtimes and unforeseen situations, inflating the budget, causing delays and, therefore, eroding profits.

“Anyone with experience in construction knows that proceeding strictly as planned can be quite a challenge: unforeseen problems arise at building sites, shortages of materials occur and delays become inevitable. In fact, these are among the top reasons that lead to the erosion of a project’s profit margins. This is in addition to instances of inaccurate technical drawings or documentation or where there is a lack of labour and appropriate planning. This is why meticulous planning and a flexible, competent team capable of solving issues on-site are crucial for a project to be successful. Our long-term experience in electrical installation, shipbuilding and complex construction management projects has shown us that investing in prevention is more profitable than paying for the consequences”, Evaldas Kaziulis, a Director of sales at RNDV, says.

Mr Kaziulis continues: “Sometimes, to save money in the long run, you have to know where to invest. Once our new clients have had the opportunity to learn about the benefits of having a proper project management team, they very rarely want to try and cut these costs again. This is because it not only saves money but also gives you more stability, certainty and, therefore, peace of mind.”

This is why, according to the experts, having a comprehensive team with a project manager, site manager, site foremen and team leaders is crucial – and something that is still often overlooked.

“A well-built contractor’s project management team is necessary to make sure that the full kit principle functions properly. In this way it can significantly contribute not only to sustaining but even increasing profits. Unfortunately, many players in the industry still overlook it, leading to significant losses of both money and time,” he remarks.

The size of the project management team required to effectively implement the full kit methodology largely depends on the project’s scale, complexity and the diversity of its resources.

“A well-structured team should be adequately staffed to ensure meticulous planning and resource coordination, in addition to timely communication. For larger or more complex projects, this may necessitate specialised roles, such as procurement managers, engineers, quality managers and more, who manage the comprehensive preparation process,” Mr Grėbliūnas notes.

However, more is not always better, and overstaffing can also lead to inefficiencies. It is, therefore, essential to strike a balance such that the project management team is large enough to handle the workload without having any redundancy within the team. “To put it simply, a proper project management team ensures that a project is carried out at 100% efficiency. This means transparency, cost-effectiveness and predictability,” he concludes.

The business of actually building a ship gains far less attention than contract announcement or christening, despite it being the most complex part of the process. Once the signing ceremony is done, attention turns to the detail of how to design a plan that will get the ship on the slipway so the champagne corks can pop.

The problem for shipyards – and contractors alike – is that the hard bit in the middle of the process can be seen as the lowest value link in the chain. Working with steel plate and blocks, pipework and components are often viewed as elements where costs should be driven down to the lowest possible number.

It’s a strategy that rarely returns positive results, and instead creates problems that could have easily been avoided, had the contractor and shipyard had a more constructive conversation before work begins.

In many ways, contractors have been seen as a necessary evil in the shipyard process and there is a simple reason for that. Winning bids based on lowest cost rarely complete the project anywhere near the initial estimate. There are simply too many unknowns in the process once it has begun to make these quotes reliable. Instead, low cost bidders hope to make up the difference in variation orders once work has started.

It’s unsustainable, for the shipyard, for the contractors and ultimately the owner. Quality doesn’t need to be compromised and it can be accurately costed with the right approach. Adopt this mindset and the benefits are shared, the product delivered closer to expected cost and timescale.

In an industry so focused on margin performance, shipyards can hardly be blamed for seeking to contain costs. The key to success is for a contractor to understand what client needs, their routines and preferences. It can take one to two years to fully understand how a shipyard really operates.

There will always be some issues in the business of building a complex ship or offshore asset, Understanding this risk and being prepared for it are key to managing the process of change that always accompanies ship construction.

Beyond understanding the international norms that shipyards operate under, our work has enabled us to create a database that can be used to derive scenarios for any project. A clear picture enables a comparison of theoretical requirements versus historical deliverables. Negotiating every line of the client budget might be tedious, but in the long run it creates value.

If it avoids a day’s delay in the shipyard – which on a big project can run to Euro1m – then the effort put into making the job financially sustainable is time and money well spent.