Ballast Water Management Retrofits – Key CAPEX Considerations
Generally there are a number of critical considerations of any ballast water management system retrofit project, including; CAPEX, OPEX, Technical Suitability and corporate viability. Many owners and operators focus solely on the CAPEX, since this, ultimately, is the biggest driver in today’s sensitive commercial market. However, there are elements of the CAPEX analysis that many owners and operators are unaware of, that are critical considerations for any retrofit project.
Taken from our recently released Guide to Ballast Water Management Compliance, we examine some critical considerations of the Capital Expenditure (CAPEX) aspect of the ballast water management retrofit project.
Total Retrofit Cost
The total retrofit cost is driven by many aspects, not just the capital cost of the BWMS itself, including:
- BWMS & component costs
- Engineering & design costs
- Fabrication & procurement costs
- Installation costs
- Commissioning costs
- Class approval costs
Overall, there are many drivers of the total cost, and it can be difficult for any compliance partner to estimate these costs without having undertaken, at least, a vessel survey and feasibility study.
Given the minimal costs, at least, within our own pricing structure, of the vessel survey and feasibility study stages, the added benefit of being able to quantify and price the total retrofit cost more accurately, is a no brainer.
Many BWMS manufacturers and, indeed, finance houses are now offering attractive financing packages to help meet the financial I investment demands of undertaking retrofit installations.
A number of countries are also offering, via their respective governments, attractive financing options if an owner elects to install a BWMS manufactured by a company based in the respective country.
Whilst not an attractive option for all owners and operators, the ability to access finance may be attractive, particularly for smaller operators.
From our experience in assisting numerous owners and operators in identifying, procuring and installing BWMS to various different vessel types and sizes, it is of prime importance to review, carefully, the final technical specification of the BWMS proposed, as well as its ~optional” extras.
Many manufacturers offer optional extras which are, in fact, required, from a technical standpoint, in order to ensure the BWMS functions correctly. Booster pumps, cooling units and sampling points, to name but a few, are regularly excluded from the main scope of supply, and unaware owners and operators may fall foul of not identifying the need for such components.
In addition, some manufacturers exclude the commissioning from the main scope of supply and include as an, often expensive, optional extra.
It is important during the BWMS selection process to build a thorough understanding of the desired level of redundancy of the BWMS and the ongoing operation of the vessel.
Many owners and operators are worried about the performance of filter units associated with BWMS, and hence often request that an additional filter be installed, solely as a backup, within the system.
This, of course, adds a significant level of cost to the entire scope of supply, so it is critical to identify the redundancy required early.
One aspect that is often overlooked by owners and operators is the impact of the BWMS on the lifecycle of the vessel itself.
Setting aside the OPEX impact of the BWMS, which will be covered in a future article, the BWMS will have a significant impact on the lifecycle of the vessel – both positively and negatively.
From a positive perspective, a vessel with a BWMS installed already will most likely achieve a higher re-sale value on the open market, as prospective buyers are not exposed to retrospective compliance issues once the vessel has been purchased.
However, similarly, this may only be true for vessels which install a reputable, or, at least, trustworthy BWMS. Some prospective buyers may shy away from purchasing a vessel that has a BWMS with negative reputation installed – through fear of ongoing operational and commercial challenges.
From a negative perspective, some BWMS may have negative impacts on the scrappage value of the vessel. This may be particularly true of BWMS that involve chemical storage and use, which would have to form pan of the vessel’s “Green Passport” for recycling.