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Best price or best value? Building for the future with Oceanco

Business
Written by
Charl van Rooy

When we heard that one of the world’s largest and most successful custom superyacht shipyards recently changed the way they build yachts, we immediately wanted to know more. The shipyard in question is Oceanco and we were interested in discovering their vision for the future and exactly how this Dutch company has altered their approach in orchestrating some of the finest yachts in the global superyacht fleet. We join Commercial Director Dirk de Jong, Sales Manager Bas Swanink and Strategic Purchasing Manager Lars Claassen in Alblasserdam for a discussion of a technical kind. 

110m Jubilee launch at OceancoPhoto: Tom van Oossanen / SuperYacht Times

Before you read any further, yes, things will get technical in this article. However, in an attempt not only for you to understand this, but also for myself, I have applied the same practice as is required by a Best Value (BV) expert, or co-maker in Oceanco terms (more about this later), in writing this piece; that is to explain a very technical issue in the simplest of terms for all to grasp. But first, what is co-maker alignment and what does it have to do with building superyachts?

The answer has been up till now, nothing, really. The Best Value Principles (BVP) is a structure applied in the client/vendor realm of the business world that seeks to create an ideal environment of collaboration for all parties involved. Used, amongst other areas, within governmental and construction tendering ventures around the world, Best Value shifts the responsibility to the contractor in any given project and challenges the conventional ‘controlling’ and ‘directing’ aspects generally associated with the client. This is achieved by creating a structure that treats the contractor as the ‘expert’ and has the client taking on a supporting role, charged with facilitating the contractor with anything he/she needs to do their job in the best way possible. Instead of managing the build of a hull section, for example, Oceanco lets the expert do what they do best and simply checks in on the progress as agreed ahead of the project. Jubilee launchPhoto: Francisco Martinez

So, why are we talking about client-contractor relationships in the same breath as custom superyachts; objects that are so unequivocally associated with their ‘under-one-roof’, ‘in-house’ and custom characteristics? Well, this is where Oceanco comes into their own and also why the BVP approach works so well for them. The yacht builder has become a master in involving outside companies to collaborate on the build of their yachts and not solely relying on their own workforce to get the job done thereby creating the best product possible, together. And therein lies the crux of this entire operation and the reason why Oceanco is attempting to streamline the way they go about building boats. 

You see, for a company that relies so heavily on the skills and expertise of so many other players, Oceanco has everything to gain from making their procurement and workflow strategies as efficient as possible. In an ideal world, the successful implementation of the Best Value principles would result in a shorter build time and a more cost-effective product that involves fewer players. The new process is still a work in progress, though, as only the last three new-build projects at the yard are subject to this new way of operation control. For a better understanding of where Oceanco’s build style is coming from and how it differs from this new strategy, let’s look at a few key cogs in this complex continuously rotating wheel.

Oceanco project Y718Photo: Tom van Oossanen / SuperYacht TimesFrom co-makers to experts
As mentioned before, Oceanco has made contractors a key part of the way they build their yachts. Known as ‘co-makers’, the reliance on these individual companies have always been a central pillar to their business approach and will remain so in the future. Going forward, the difference comes in the amount of responsibility carried by these companies, known as ‘experts’, and their interaction with each other. “An expert,” explains De Jong, “is someone who can in very simple terms explain what value they will bring to the project by delivering an easy-to-understand report on how they will successfully complete their part of the build.” These companies are rated during the tender stage on various criteria including their skill, experience, budgeting and methods, amongst others. Following this value-added point system then delivers the company/individual who will essentially bring the best value to the project.

Once operating separately, Oceanco now actively encourages all experts of a project to work together as teamwork itself increases value and mitigates pitfalls in the later stages of the build. “Very early in the process, before work at the shipyard even kicks off, all parties meet several times where we then discuss the entire scope of the project from A to Z and identify all the risks and responsibilities.” De Jong adds that this extra step in the build timeline may take more time before the ball gets rolling at the production end of the scale, but leads to a far smoother overall process and creates an environment for direct communication links between experts; a fundamental part of how Best Value Principles operates at its core.Oceanco project 717 launch at the Oceanco yardPhoto: Charl van Rooy / SuperYacht Times

Apples with apples
Risks are aplenty in the extremely technical environment in which Oceanco and their co-makers operate, but so are highly-skilled and intelligent decision makers. For Swanink, it is all about tapping into those expertise and using it as tool to minimise risk. “The system allows you to predict what an expert’s actual cost will be at the end of the day after all the risks and value additions have been studied.” That might sound logical as you read this, but as Dean Kashiwagi (specialist in the field of BV and Oceanco’s mentor on the subject) put it best, logic has a lot to do with BV: “warranties are replaced with common sense,” he says. 

In many ways, selecting the right expert is the most tricky part of the entire process. De Jong explains that even the most seemingly qualified expert might not exactly be the best man/woman for the job. “One company might have a very strong project management team but at the same time are using outdated technology in their methods, making their profile, which at first seemed very strong, not so convincing anymore compared to someone who continuously updates their systems. So the selection process really comes down to comparing apples with apples and taking every single aspect of an expert’s possible value into consideration.”

Oceanco project 717 launch at the Oceanco yardPhoto: Tom van Oossanen / SuperYacht TimesBetter together
At its core, BV might be a simple system that can be applied to a broad range of business fields, designed to eliminate the need for decision making or even the need to think as planning at a conceptual stage forms such a big part of the entire project. But for regular companies who are used to conventional managerial structures, adopting this strategy will require an investment in infrastructure. Oceanco, together with its new Strategic Purchasing department and a broader future plan named Horizon 2020, has clearly proved that it’s committed to taking this new direction head-on, something that inspires confidence in the companies it works with, as Claasen explains. “Our co-makers have realised that we are investing a lot of resources into this new way of building yachts, and they have therefore started doing the same. We are not in this for the short run, and would like to learn together with these companies to further optimise our strategy.”

According to De Jong, playing open cards with these co-maker companies will be the key to securing future relationships, all with the aim to break down barriers and streamline the build process. “As part of our long term plan,” he says, “we are sharing our targets with these companies and ask them how they can help us reach these goals. In turn, they communicate with us how things can be simplified and integrated in order for them to increase their productivity and quality of work.”Black Pearl Launch at OceancoPhoto: Tom van Oossanen / SuperYacht Times

Although on paper Best Value might seem like the way to end all operation struggles from a construction management point of view, it is important to note that the system is designed to favour certain setups that are not always applicable to the superyacht business. Despite Oceanco’s particular way of superyacht construction, though, Swanink feels that the BVP principles could benefit most shipyards. “Looking at other shipyards, you notice that many of them have shifted in how they operate and now rely more on external personnel. In theory, the principles can be applied to any managerial organisation that involves this type of structural approach, to what degree it is implemented is up to the client. We have fully embraced the practice and it has been working out very positively so far.”

It seems the sidestep this Dutch giant has taken is already paying off, having recently signed three new superyacht projects, one of which measures 125 meters in length and set to become the largest project of its kind ever undertaken in the Netherlands. By optimising its build process, Oceanco is working on reducing the risk for all the players involved in their projects, leading to an overall benefit for all, including their clients. Now only time will tell if others will follow suit. 

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