Cancelled New Construction Trawler

[DavidM]

That's all true for certain consumer products although a horrible strategy for most. However, not for a boat yard. If a yard is building a boat at a loss, you the buyer are in trouble. Guaranteed. Every time I've ever seen this course pursued, the lack of funds along the way has become critical.

I have seen this happen dozens of times on construction projects during my career. The low bidder (significantly lower) gets the contract. Then he tries to cut corners, drags his feet when a better job comes along, change orders the client to death and if he really gets in trouble- goes bust.

But I don't know how to avoid it. Sometimes you can get a good price from someone who has a hole in his backlog, wants to break into a new market, or makes a mistake in his bidding. It all happens. If its the first two reasons, well he knows what he is getting into. The third, well not so good for anyone.

It takes guts to turn down a bid 25% lower than the others, and isn't done very often in my experience.

David

 

[BandB]

But I don't know how to avoid it. Sometimes you can get a good price from someone who has a hole in his backlog, wants to break into a new market, or makes a mistake in his bidding. It all happens. If its the first two reasons, well he knows what he is getting into. The third, well not so good for anyone.

It takes guts to turn down a bid 25% lower than the others, and isn't done very often in my experience.

David

Not if it's 25% lower than people you know to be knowledgeable and good at what they do. You know they can't build the same boat for 25% less. You also know the other builder doesn't have that kind of markup to allow someone 25% lower. I've just never seen it work out in boat building. I've seen many buyers end up having to purchase the builder to get their boat finished and others in litigation.

Now if you're talking building in different countries, a sizable difference is possible, but even then one must be suspicious. A lot of cheap and bad stainless tossed on boats, lousy upholstery, and so many other ways to save that end up costing you.

If I had three bids and knew the highest two were good dependable builders who were reasonably priced and the third was 25% less than them, I'd never go with the cheaper without extensive research and verification that's not likely to help.

 

[Mako]

I have three shipyards identified who are all generally in the same ballpark of pricing when I "normalize" their quotes (they have slightly different specs). Final pricing will be after I visit and work out the little details.

My greater concern is with inspections via a 3rd-party who I can trust to look after my interests, at a reasonable fee. My wife (who is infinitely more practical than me) doesn't think it's possible unless I move into a nearby apt for 6+ months and overlook everything myself. Good advice although I'm unable to take extensive leave from work unfortunately.

 

[BandB]

My greater concern is with inspections via a 3rd-party who I can trust to look after my interests, at a reasonable fee. My wife (who is infinitely more practical than me) doesn't think it's possible.

The big question is what you consider a reasonable fee. I would think it would cost somewhere between $30,000 and $80,000 for a 3rd party to keep an eye on things with weekly or bi-weekly visits and to have that person full time on site would be between $70,000 and $120,000.

 

[sean9c]

Sure be interesting to know what you're building.
Even if you'd onsite supervise the build it'd still be daunting. You just can't know enough and be watchful enough. You need to start with a yard you can trust.
Has to be a passion to want to have a custom boat built, it sure doesn't make financial sense, even less so out of steel.
Best of luck.

 

[BandB]

Sure be interesting to know what you're building.
Even if you'd onsite supervise the build it'd still be daunting. You just can't know enough and be watchful enough. You need to start with a yard you can trust.
Has to be a passion to want to have a custom boat built, it sure doesn't make financial sense, even less so out of steel.
Best of luck.

Obviously this boat is a passion for him. Doesn't matter that it may not make financial sense. No boat does. Some just less than others. Still life is more than finances.

 

[ssobol]

A younger, smaller company should have lower overhead and may be able to respond faster. An older, more established company is going to have a lot more overhead that they have to pass on in the bid price.

Younger company may be more innovative because they are not of the "this is how we've always done it" mindset.

An established company has more experience in what doesn't work.

 

[BandB]

A younger, smaller company should have lower overhead and may be able to respond faster. An older, more established company is going to have a lot more overhead that they have to pass on in the bid price.

Actually of the ones I've seen the established company is generally far more efficient. Yes, they may have more overhead but they have more work to spread that over so as a percentage of their direct labor and a percentage of total costs, it's no more and may be less.

A big differentiation in profit is meeting or not meeting schedules. Both young and old companies vary there. Every month delay carries very substantial costs and also means they're not working on the next boat soon enough. I absolutely want to know when every boat I see in production was originally promised. Being late is a sure sign of problems.