Shipyards, Design Firms and Engineering Contractors: What's the Difference?
Shipyards, design firms and engineering contractors often work on the same shipbuilding or offshore project, and all three may have their own in-house design teams. Their roles can therefore appear to overlap.
One reason is that these companies are not classified according to the same criteria. A shipyard is primarily defined by its construction facilities and production capabilities. A design firm mainly provides engineering design and technical services, while an engineering contractor is defined more by its responsibility for coordinating and delivering a contracted scope. A shipyard may act as the main engineering contractor, and an engineering contractor may have a fully integrated design team. The boundaries are not absolute.
To understand the role a company plays in a particular project, three questions should be asked: What contract has it signed? What is it required to deliver? And which part of the project is it ultimately responsible for?
Design firms: Turning project requirements into engineering documents
Take an offshore production platform as an example. During the early stages of a project, the operator’s development requirements must be translated into a practical engineering solution.
The design process gradually defines the platform’s production capacity, process configuration, structural form, equipment requirements and overall layout.
This work may be carried out by an independent design firm, a specialist engineering consultancy or the engineering department of a larger contractor. Process, structural, piping, electrical, instrumentation and safety engineers perform calculations, select equipment and develop layouts. Their work must then be coordinated across disciplines to form an integrated technical solution.
Depending on the contract scope, a design firm may undertake conceptual design, basic design, detailed design or a specific engineering package. Its deliverables extend well beyond drawings and may include calculations, technical specifications, equipment data sheets, material take-offs and interface documents. These documents provide the basis for equipment procurement, material ordering, fabrication, installation and commissioning.
The design firm is primarily responsible for ensuring that its engineering work is technically sound, compliant with applicable rules and standards, and suitable for implementation. Unless its contract says otherwise, it is not solely accountable for whether equipment arrives on schedule or whether the shipyard completes construction on time.
Engineering contractors: Bringing the project together
A large offshore project may involve hundreds of equipment and material suppliers. The hull, topside modules and living quarters may be built at different yards, while design, procurement, construction, transportation and offshore installation may all be performed by separate companies.
These activities must be coordinated as one project. This is usually the role of the engineering contractor.
Depending on its contract scope, the contractor may be responsible for engineering, procurement, scheduling, cost control, subcontractor management and technical interfaces. Under an EPC contract, it is accountable for the engineering, procurement and construction scope. An EPCI contract also includes installation, while EPCIC adds commissioning. Transportation, hook-up and other activities may also be included, depending on the wording of the contract.
However, an engineering contractor is not necessarily an EPC contractor. Some engineering companies provide only design, procurement services, project management or a standalone work package. Conversely, a large shipyard may itself act as the EPC contractor.
The engineering contractor’s key capability is its ability to bring design firms, shipyards, equipment suppliers and construction contractors together and deliver the contracted scope within the agreed schedule and budget. It may not perform every activity itself, but it must manage the interfaces between them and remain accountable for the overall outcome within its scope.
Shipyards: Turning designs and equipment into physical assets
A shipyard has the docks, quays, workshops, lifting facilities and workforce required to build ships, offshore units and modules.
Its work covers everything from steel cutting, forming, block fabrication and hull assembly to module lifting, equipment installation, piping, cable pulling, coating, testing and commissioning. Its principal deliverable is the completed vessel, offshore unit or module specified in the contract.
Shipyards do not simply wait for all drawings to be completed before construction begins. They are often involved during the basic or detailed design stage, providing input on block division, lifting plans, equipment access routes and construction sequences. A yard’s facilities, production methods and lifting capacity may also influence the design itself.
Most shipyards have their own design departments, and production design is one of their most important responsibilities. Engineering design determines how systems should be configured and where equipment should be located. Production design takes this further by defining how steel should be cut, how piping should be prefabricated, how equipment should be installed and in what sequence the work should be carried out.
A shipyard therefore delivers more than fabrication labour. Its core capabilities include production design, construction engineering, work planning, quality control, testing and commissioning.
Why can their roles change from one project to another?
In a conventional merchant shipbuilding project, the shipowner usually signs a shipbuilding contract directly with the yard, which is responsible for delivering the complete vessel. A specialist naval architecture or ship design firm may provide the vessel concept and basic design, while the shipyard and its design partners complete the detailed and production design.
The structure of a large offshore project is often more complex. An oil company may first appoint a specialist firm to carry out a concept study or front-end engineering design (FEED). An engineering contractor may then take responsibility for an EPC, EPCI or EPCIC contract. The hull, topside modules and living quarters may be subcontracted to different shipyards, while offshore transportation and installation may be handled by specialist marine contractors.
The same company may therefore play different roles on different projects. A shipyard might fabricate a single module, deliver an entire vessel, or act as the main contractor responsible for engineering, procurement and construction. A design firm might deliver drawings only, or it may also provide procurement support, site services and project management.
A company’s name usually reflects its traditional position in the industry. Its contract scope reveals the role it actually plays in a specific project.
The key differences
The three roles can be compared most clearly by looking at their principal deliverables, the questions they answer and the capabilities they rely on.
In simple terms, design firms answer how an asset should be designed; engineering contractors coordinate how the contracted scope will be delivered; and shipyards determine how the physical asset will be built.
These three types of companies can expand into one another’s traditional areas, but they are not interchangeable. To understand where a shipbuilding or offshore company sits in the value chain, look beyond its name and examine what it is contracted to deliver and which results it is responsible for.