Amanda Johnson

What Was the Challenge?

Project Developers in the energy and resources sectors face a common dilemma when ordering new or customised vessels: how to balance cost control, schedule certainty, and design flexibility while working with global shipyards.

To meet this challenge, INCITIAS developed a bespoke contracting strategy aimed at building trust and transparency between all parties—especially critical for complex or novel vessel designs.

How Did INCITIAS Apply This Strategy?

As part of our engagement with Pacific Traverse Energy (PTE), INCITIAS led the strategic procurement of an LPG Floating Refrigeration Unit (FRU). This included:

• Evaluating the technical and commercial feasibility of both a newbuild FRU based on a Very Large Gas Carrier (VLGC) hull, and the conversion of an existing VLGC.
• Developing a full road map strategy, newbuild specification, and formal Request for Proposal (RFP).
• Shortlisting qualified Chinese and Korean shipyards with experience in gas carrier construction.
• Leading technical clarifications during bid engineering through to Front-End Engineering Design (FEED).

What Is an Open Book Strategy and Why Use It?

An open book strategy is a procurement approach where the shipyard’s cost structure—labour, materials, equipment, and margin—is fully visible to the client. This transparency allowed the project developer to:

• Build trust with the shipyard from early bid stages.
• Achieve a firm contract price based on actual build costs plus a jointly agreed margin.
• Support collaborative design development throughout FEED without escalating commercial risk.

What Were the Benefits?

1. CAPEX Savings of Up to 30%
   The transparency enabled accurate benchmarking of key components and reduced the need for excessive shipyard contingencies. As a result, the developer could lower their capital exposure without sacrificing quality or compliance.
2. Schedule Reduction of 8–12 Months
   By leveraging the shipyard’s full EPC capability, including topside integration, and accessing established supply chains, the strategy accelerated timeframes from shipyard selection to delivery.
3. Shared Risk and Opportunity
   The open book model allowed for a clear cost-resolution pathway for scope changes, reducing disputes and improving flexibility. It also encouraged innovation and continuous improvement from the shipyard.
4. Lower Risk Exposure Through FEED
   With early engagement and shared visibility, both shipyard and client could address scope evolution proactively—avoiding rework, claims, and expensive design changes later in the process.

When Should This Strategy Be Used?

INCITIAS recommends open book procurement for:

• FPSO, FSRU, FSU and other newbuild vessels requiring significant customisation
• Projects where hull and mooring systems exceed 50% of total CAPEX
• Early-stage developments where scope definition is still evolving
• Developers seeking faster paths to Final Investment Decision (FID)

How Does INCITIAS Add Value?

Our hybrid expertise in engineering, commercial strategy, and project execution allows us to act as a trusted interface between developers and shipyards.

We help clients by:

• Structuring procurement pathways from pre-FEED through contract execution
• Leading market engagement, benchmarking, and cost validation
• Facilitating early-stage design trade-offs and EPC integration
• Actively managing the open book process and reporting requirements

Want to Reduce Cost and Time on Your Next Marine Project?

Involving INCITIAS early allows project developers to assess all options—conversion vs newbuild, hull reuse, and cost-control strategies—before committing to FEED or FID.