A tanker owner’s plan to modernize a vessel resulted in the decision that the owner would supply a certain large item of new equipment to be installed by the US west coast shipyard.
The owner selected a vendor based on low pricing, anticipating a savings of about $60,000 below what the shipyard’s charge would have been. After the project commenced, however, the owner’s team discovered that the selected vendor was unable to demonstrate that the component met the required testing and certification standards. The vessel owner’s team then had to re-order the component from another manufacturer, paying a premium for rushed completion. Moreover, because the newly selected vendor was far from the shipyard, the vessel owner’s team had to charter an aircraft to rapidly transport the component from Texas to the US west coast.
In the end, the anticipated savings of about $60,000 was replaced by extra costs in excess of $100,000 above what the shipyard’s charge would have been. If instead the vessel owner’s staff had spent time to write a precise specification and had given the shipyard the responsibility to acquire the component in accordance with that specification, any and all those extra costs would have been for the shipyard’s account.
The lesson learned: vessel owners should not use anticipated cost-savings as a basis for deciding to provide equipment as owner-furnished.