Ship Repair, Maintenance &

Modernization Cost Model

1
The Cost Model is a Microsoft EXCEL workbook that contains various tabbed worksheets.
There are worksheets to enter basic project information such as ship characteristics ,
rates and factors to use and the detailed cost items required for the estimate. The
following illustrates the various worksheets in the Cost Model workbook.

2 Versions:
• Metric
• U.S.

2
The “Ship Repair, Maintenance & Modernization” Cost Model provides a
wide range of typical ship repair and maintenance activities (over 1,400
ship yard services and production processes across 15 different work
categories) from which the user may choose to generate a cost estimate.

The Cost Model generates detail estimates for labor hours and material
costs and summarizes them according to the cost model’s repair work
breakdown structure (“RWBS”) as shown below:

3
Limited Sample of Available Electrical Services Detail Cost Items

4
More Detail Cost Items are Available Under Sub-Categories within Each Detail Estimate
Worksheet
Docking Services Structural Services Machinery Services

5
Piping Systems Services HVAC Services Cleaning & Coating
Services

Hull Outfit Services

6
Accommodations Outfit Services Electrical Services Other

7
 Detailed Cost Items for Generating the Estimate

Within each of the RWBS worksheets are the detail cost items the user may
choose to make active for the cost estimate. The table below shows a sample
section of cost items within the “Structural Repairs” worksheet.

8
 Calculating Costs from Labor & Material CERs
To select a cost item for the estimate, the user fills in the appropriate quantities (plus any
other necessary parameter such as item size). There is a version of the Cost Model using
U.S. units of measure (feet, inches, etc.) and another using metric (meters, millimeters,
etc.).

Each cost item may carry a pre-programmed cost estimating relationship (“CER”) for labor
hours and for material cost. These CERs are typically average costs per unit of measure .

9
 Escalating Material Cost CERs
The user defines in the “Rates & Factors” worksheet the “present” year (“PYR”)
for the cost estimate. The Cost Model automatically adjusts the original date
material costs to suit that “present” year by applying appropriate escalation
factors (illustrated on the next slide) based on the type commodity of the cost
items.

10
11
 “Use Factor”
In addition to the Quantity and any necessary size date, the user must exercise
the “Use Factor”. Normally, this factor is set to 1.00 to get the full effect of the
CERs. A “Use Factor” less than one will reduce the impact of both the labor hour
CER and the material cost CER. A “Use Factor” greater than one increases the
CERs by the same proportion.

12
The “Use Factor” can be modified to adjust costs be Areas of Difficulty on
board the ship. The “Use Factor” also may be increased in value if the work
may involve more scope than normal.

13
Modifying & Adding Cost Items to the Cost Model

The user may easily modify the CERS to reflect his/her own cost experience. New
cost items may also be added to the worksheets following very simple guidelines
as described in the User Manual.

14
 Other Cost Model Adjustment Features

The Cost Model provides a user-defined entry for a general labor productivity
factor that can be applied to the estimated labor hours to what may be more
relevant to a shipyard’s own experience (higher or lower levels of productivity).

There also is an entry for defining a currency exchange rate to convert from US$
to another currency. The Cost Model will apply this rate to all material cost
generated by the model.

Still another factor can be defined that reflects a general increase or decrease in
local material costs relative to average purchases of materials in the US.

15
 The Cost Model Generates a
Summary Cost Estimate Report from
all the Detailed Cost Items

16
17
18
19
20
The Cost Model keeps track of all the estimate cost items (“Contents” worksheet)
that are available within the cost model and a count of items that are actually being
used in the detail worksheets to generate an estimate.

Note that the Cost Model offers hyperlinks to quickly jump from one worksheet to
another.

21
The “Ships
Characteristics”
worksheet provides for
general information
about the ship to be
repaired. A number of
CERs within the various
detail cost worksheets
can be linked back to
this information.

22
The “Rates & Factors”
worksheet provides
cells for the user to fill
in that define such
pricing data as labor
rates, profit, and
others.

The present, or
Current Year also must
be given by the user
so that the Cost
Model will adjust all
material costs to that
same year.

The estimated
schedules are needed
by the Cost Model to
estimate manpower
requirements. Details describing each of
these data are provided in the
User Manual. 23
The cost estimate generated within the Cost Model can be downloaded to SPAR’s
PERCEPTION© database system for additional reporting and detail estimating functions.

PERCEPTION is an optional software system that has options beyond cost estimating:
production planning & scheduling; purchasing & material control; work order
development & time charge management; earned value project management reporting of
progress, cost and schedule forecasts; links to financial & accounting systems; links to CAD
systems; etc.

24
PERCEPTION offers many different report formats and levels of detail.
Below are samples.

Detail Cost Item Listing Displaying CERS

25
Detail Cost Item Listing Displaying Extended Costs

26
SWBS Summary Cost Report

27
Customer Cost Estimate Report

28
PERCEPTION offers many different report formats and levels of the cost estimate.

Selections of Report Categories Reports within Category Selections

29
PERCEPTION, which uses an SQL relational
database, can be accessed by third party report
writers (e.g., Crystal).

Reports also can be downloaded in Microsoft Excel

30
 Accuracy

How accurate are the cost estimating relationships (CERs)? As accurate as possible
considering they have been compiled from known costs. Nevertheless, a prudent user
of the cost model will review the results from the model to ensure they reflect your
own cost experience and appropriately fit the specific requirements for the project
being estimated. No cost fits all jobs. Good estimates are custom made for a
particular project and for particular contractor through judgment, analysis and
experience.

The cost model will generate preliminary estimates, to cross-check costs from other
sources and from subcontract bids and when no actual costs are available. The cost
model will reduce the chance of error or omission on estimates, speed “ball park”
estimates, and be a good guide when there is no time to get quotes.

Users are expected to adjust the applied cost and pricing data so that they reflect
more accurately the cost and price performance anticipated for a specific shipyard.

31
 User Caution
Users of a cost model are cautioned that it is intended to provide only an estimate of
cost information. There are limits to the capabilities of these calculations beyond
which results may not be accurate.

The data provided in the cost model is not a substitute for judgment, analysis and
sound estimating practice. The cost model is an aid in developing an informed opinion
of cost. If you are using the cost model as your sole cost authority for contract bids,
you are reading more into the cost model than what has been intended.

SPAR ASSOCIATES, INC. MAKES NO WARRANTIES OF ANY KIND WITH REGARD TO THIS
MATERIAL, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTIBILITY AND FITNESS FOR A PARTICULAR PURPOSE.

SPAR Associates, Inc. shall not be liable for errors contained herein or for incidental or
consequential damages in connection with the furnishings, performance or use of this
material.

32
Over 40 Years Serving the Shipbuilding &
Repair Industry

33