An Assessment of the Comparability of Dredging Cost Standards to Industry Market Rates for Trailing Suction Hopper Dredgers
CEDA Dredging Days 2019
C. Sheehan and L. Holmes
Abstract: The financial costs associated with dredging activity are highly variable, depending on the plant being employed and the type of dredging being undertaken. Since 2005, the Construction Industry Research and Information Association (CIRIA), has published the book ‘Cost standards for dredging equipment’. The guide presents the primary capital values and costs associated with a range of dredging plant, based on their specification. This publication is commonly used throughout the industry for a range of studies including CAPEX estimation, cost allocation between dredging contractors in joint venture and most prominently in disputes, where cost estimation is required to be undertaken.
Due to the high capital cost and subsequent value of dredging plant, the accurate calculation of the respective depreciation and interest is fundamental to the build-up of the estimated daily operating plant rates. Ongoing maintenance and repair of the plant also forms a primary cost. The CIRIA publication details these items for a variety of dredging plant. However, it does not provide detail on other operational costs such as labour, insurance, fuel, wear and tear, overheads and profit/risk. These must be derived from further calculations to ascertain the total cost of leasing the dredging plant, commonly known as the daywork rate.
Consistent and widespread anecdotal evidence within the dredging industry has postulated that the costs derived by the use of the CIRIA publication are elevated above the market daywork rates for dredging equipment for projects internationally. This paper investigates these contentions and compares industry rates for various projects over the past ten years with rates calculated and developed through the use of CIRIA. Deviations are highlighted and where possible recommendations provided to improve the estimation of costs associated with dredging plant.
Keywords: Cost, estimation, CIRIA, daywork