April 16, 2011

Vessels are great investments..when done right

Anyone making a multi-million Dolar investment in building a vessel or a complete fleet of vessels is faced with a critical question: What is the business idea? This leads itself to a number of further questions:

·         What could be an appropriate business proposition?
·         What is a better transport system solution?
·         How many vessels?
·         What functionality?
·         Which price level?
These decisions are usually based on individual experience, knowledge, and gut feeling. The process is time consuming, going on for months, or even years. All too often, its lack of rigor and formality results in an immature investment plan. Even then, such unrefined ideas are often presented to a naval architect in order to sketch a solution that is outlined in a General Arrangement drawing plan. This leads to a lot of technical design work without the benefit of a clear understanding of the commercial and operational requirements and their consequences. The end result can be high costs, poor quality and time consuming projects, with an unclear business plan.
All the people around the seasteading movement are familiar with a number of failed projects for floating cities precisely because they were created without mature business plans. It is therefore critical, before starting design work on any stead, to do the business development process in a formalized way in order to obtain the major profits from the vessel investment.
The figure below shows how the business development process is the first stage prior to ship design. However, inside the business development process itself, three subjects have to be taken into consideration:
– Commercial.
– Technical.
– Operational. 
Therefore, business development should be the first stage, but it is also the most critical stage and should be done in a iterative way, combining commercial, operational and technical aspects. In the case of a seastead, political issues should also be taken in consideration.