Page 318 - Practical Design Ships and Floating Structures

Practical Design of Ships and Other Floating Structures 293
You-Sheng Wu, Wei-Cheng Cui and Guo-Jun Zhou (Eds)
0 2001 Elsevier Science Ltd. All rights reserved

EVALUATING DESIGN FOR UPGRADEABILITY: A SIMULATION
BASED APPROACH FOR SHIPS AND MARINE PRODUCTS

I L Buxton and G H Stephenson
Dept of Marine Technology, University of Newcastle, Newcastle NE1 7RU, UK
School of Engineering, University of Northumbria, Newcastle, NE1 8ST,UK

ABSTRACT

Major engineering products like ships, offshore plant and power stations have lives of over 20 years.
Technical and market changes may require mid-life upgrading, such as increasing capacity by
jumboisation or installing new machinery or equipment. The question for the designer is how far to
design for such upgradeability, e.g. by provision of additionally unused space or more powerful
equipment than is required initially. A methodology has been developed for evaluating whether designs
incorporating some upgrade capability from the start may be more economic than those which do not.
A range of upgrade scenarios from ‘bare minimum’ to ‘over-engineered’ can be evaluated to show
which are likely to show the greatest economic benefit in terms of NPV over the life cycle of the
product. Since this depends on a probabilistic view of say market demand, a simulation model is
needed to compare the alternatives. A spreadsheet-based evaluation has been developed which allows
the user to incorporate stochastic values, and to investigate how much it is worth spending now in
order to save later. Some results for a container ship are presented.

KEYWORDS
Design, Upgrading, Simulation, Container ship, Through life costs, Discounted cash flow.

1 BACKGROUND
Since 1995 a continuing research theme of the Engineering Design Centre (EDC) at the University of
Newcastle, England, has been the use of estimates of product Through Life Cost (TLC) to support
design decision making. The EDC concentrates on long life large made-to-order (MTO) products,
which have a marketable output, such as ships, offshore production platforms or process plant. With
guidance from the wide range of major companies that are sponsoring partners in the EDC, a generic
approach to determining the TLC has been agreed. This uses Discounted Cash Flow (DCF) to arrive at
a Net Present Value (NPV) for a MTO product. The method requires that all input variables are first
defined and is, therefore, suitable for almost any application, A particular feature is the ability to build
up a whole life cycle from cyclical activities, such as a voyage in the case of a commercial ship. The
voyage is in turn broken down into loading, sailing and unloading. Costs and overheads can be