FREQUENTLY ASKED QUESTIONS ABOUT NEW-BUILDS AND REFITS
What are some of the reasons for having a new yacht built?
The primary reason is to secure a yacht that precisely meets your personal tastes and requirements.
An additional reason that motivates a high percentage of new build buyers and owners is the personal satisfaction and enjoyment they garner from taking a personal vision from concept to actualization. For these buyers, the process of having a yacht built is just as fascinating and enjoyable as the yacht herself.
How long does it generally take to have a new yacht built?
That depends on the size and complexity of the yacht, the shipyard chosen to do the build, and the yard’s schedule at the time of executing a contract.
In general, a fully custom yacht under about 100 feet LOA will take 15 to 21 months from contract signing to delivery, assuming that the yard can start the project timely and runs the project efficiently. Between 100 feet and about 130 feet LOA, the time will be about 18 to 24 months, assuming that the design is pretty much complete at the time of signing the build contract. From 130 feet to about 180 feet LOA, the duration is likely to be on the order of 24 to 30 months, again assuming that the design has been pretty much completed by the time the build contract is executed.
Above about 180 feet LOA, overall project duration can vary widely, depending on complexity of design and engineering.All of these times are reduced for semi-production yachts, which are generally begun on speculation by the shipyard in question, and partially completed by the time a buyer signs a contract for completion. Production yachts, which are regularly being built by a shipyard, are generally available on timetables that are much reduced from those for custom and semi-production vessels.
What are the differences between production and custom yachts?
Production yachts are designed, engineered, built, and priced with the goal of appealing to the greatest number of buyers interested in, and qualified to purchase a yacht of the size in question.
Custom yachts, on the other hand, are designed, engineered, and built to meet very precisely the vision, tastes, and requirements of the buyer.As to quality, a very good production yacht can exceed in the quality of its construction that of a poorly done custom yacht, although in general, the average custom yacht represents much higher quality than commonly available in production yachts.
A semi-production (or semi-custom) yacht often represents a reasonable compromise between required build time and cost versus tailoring the result to one’s personal tastes and requirements. In semi-production yachts, hull, deck, superstructure, and placement of structural bulkheads are usually fixed by the shipyard and cannot be modified. Possibilities for customization generally exist in terms of main propulsion selection, and interior finish and décor.
Is having a new yacht built by a non-U.S. builder cost-advantageous?
Sometimes, and sometimes not. It all depends on your goals and objectives in having a new yacht built, and on the type of yacht in which you are interested.
For certain types of vessels, U.S. yacht builders can be exceptionally price competitive on the world market, especially when you consider that many of the components for major systems are manufactured in the U.S.
Against that, if Italian styling and high level of “continental” finish are what attract you, an Italian shipyard may be the best choice. The issue of cost-competitiveness will also be affected by currency exchange rates and the state of any given yard’s order book at the time one negotiates a deal.
How do custom yacht costs compare to those of a production yacht?
In general, but not always, having a custom yacht built is more costly than purchasing a production vessel. Of course, you need to make sure that you are comparing apples to apples.
For instance, all other factors held constant, if the proposed custom yacht has larger, more technically advanced propulsion engines, a far superior ship’s electrical generating and distribution system, more extensive, higher end galley appliances, and other premium features, the so-called “equivalent” production yacht may not, in fact, be less expensive for what you ultimate receive.
Because production yachts are designed and built to appeal to the widest possible market at the most competitive price possible, they usually involve extensive compromises. But if a given production yacht meets your requirements as to functionality and aesthetics, you are wise to pursue its purchase in preference to a fully custom build.
And if a production yacht meets your requirements in most respects, except that it lacks the level individuality you desire, consideration should be given to the range of semi-production vessels available on the market today.
What kind of payment schedule is involved in a new yacht build?
This depends on the shipyard involved and on the magnitude of the project. Most of the time, a custom build will involve a down payment with the signing of the contract, a series of interim progress payments to be made upon the yard’s achievement of contracted milestones, and a final payment at acceptance and delivery.
Semi-production yachts usually involve a payment structure similar to that of fully custom builds; however, because the build duration of a semi-production vessel is compressed, the payment timeline is generally also compressed.
New production yachts that are built to order can usually be contracted for a down payment of 10% to 20%, with the balance due and payable at delivery and acceptance. The operative expression in this case is “usually.”
But keep in mind that there are situations in which a shipyard will seek to handle a production new build on a payment structure similar to that of a custom build.
What financial protections are available to a new build buyer?
In the U.S., a new build buyer who is paying a deposit and progress (milestone) payments can be protected under the Uniform Commercial Code (UCC) by “perfecting” First Priority Security Interest in the collateral property, i.e., the vessel under construction.
This type of security interest places the new build buyer first in line for the payout of any monies in the event of a shipyard reorganization or bankruptcy. The legal perfection of a First Priority Security Interest and the concomitant filing of a lien against the vessel in process is best handled by legal counsel. At the Port Royal Group, we regularly work with a number of prominent admiralty and business lawyers to assure the best possible financial protection for our clients in any new build or other boat buying situation.
Outside the U.S., other forms of protection for the new build buyer are available. In Canada and Western Europe, legal protections similar to those available in the U.S. can be implemented. There are also a wide array of other devices and techniques that can be employed, such as the judicious use of Irrevocable Commercial Letters of Credit and the issuance of performance security bonds by major insurance underwriters. Again, the best course of action is to engage the services of an admiralty or business attorney who practices in, and is familiar with the laws of the country in which the selected shipyard operates.
However, do not make the mistake of turning all aspects of the build supervision over to an attorney who may not, indeed is not likely to be intimately familiar with the build process itself or the ins-and-out of dealing with a shipyard on a day-to-day basis. (See Ten Golden Rules for Successful New Build Projects
Do change orders during a project increase costs significantly?
Change orders issued willy-nilly during a contracted build can not only significantly increase the cost of building a new yacht, but seriously delay completion as well.
As part of our New Build program, we work to avoid the need for avoidable change orders by working at the early stages of a project to develop as complete a general specification as possible.
We then work to assure that the contracted terms and conditions for dealing with change orders during the build are fair to both buyer and shipyard.
And finally, we manage and monitor change order acceptance, pricing, and implementation to assure cost-efficiency in the generation of any necessary change orders.
What does it mean when you say you “represent” a shipyard?
When we say that we “represent” a particular shipyard, we mean that we have a special “strategic” association and relationship with that yard which facilitates our development of preliminary plans and proposals (if you don’t already have such from a naval architect or yacht designer).
It also means that we can secure timely cooperation in pricing and contracting for a new build at that yard.
We regularly visit the yards we represent, and maintain an intimate knowledge of, and atmosphere of close cooperation with such yards.
How many shipyards does PRG represent?
Our New-Build and Refit Program specifically, and by strategic agreement represents a select roster of notable and well established shipyards located in various parts of the world, including the U.S., Canada, Italy, Greece, Turkey, South America, and Asia.
However, while we enjoy a “special” relationship with the yards on that roster, we can match a client up and mediate a new-build or major refit contract with pretty much any shipyard in the world.
By working through our New-Build and Refit Program, you receive the added value that our team brings to every new-build and refit deal with which we are involved, which includes guidance through contract and price negotiations, development and/or review of the General Specifications for the yacht, management of any necessary engineering by third parties or the shipyard, and management of milestone inspections and verification for periodic payments to the yard.
Are there significant differences between custom shipyards?
Absolutely. Some shipyards are experienced in and best for composite (FRP) construction, others for welded aluminum and/or steel. Some are best for the construction of sailing yachts, some for motor yachts, and some for high performance sport yachts.
Some yards are primarily production builders (even if building 40 meter or larger yachts), while others are primarily custom yards, producing a relatively small number of highly personalized yachts for very demanding buyers.
And some yards are excellent at delivering a high valueto-cost ratio, while still others are best when cost is not a first or even a signigicant consideration.
One of the primary objectives of our New-Build and Refit Program is to match you up with the best shipyard for the type and size yacht that you want to build or refurbish.
Is it more advantageous to employ a U.S. or a non-U.S. shipyard?
The decision depends on the type and size of yacht involved; the basic construction material for the hull/deck/superstructure shell; the balance between targeted quality and price; the choice between production, semi-production, and fully custom; the desired time frame for completion and delivery; flagging and tax considerations; and a plethora of other factors.
For example, U.S. shipyards have a deserved reputation for building yachts of very high quality and reliability. Italian yards are noted for stunning Euro-styling and absolutely superb interior finishes. Greek and Turkish yards for exceedingly high value to cost ratios. And Asian yards for being highly competitive in pricing and the production of large yachts on relatively small budgets.
This is not to say, however, that a number of these qualities are not exhibited as a group by any given world-class shipyard. It’s only say that certain yards are known primarily for one of these listed distinguishing characteristics.
As part of our New Build and Refit Program, we spend significant time and effort working with buyers to develop an initial project profile that defines as clearly as possible the key objectives that our client wants to achieve by having a new yacht built. We then use that profile to match that client with the yard or selection of yards best suited to achieving those objectives.
What are the criteria for matching a client or project with a shipyard?
About fifty criteria, including type and size of yacht envisioned; level of fit and finish desired; performance targets; intended frequency of visits by client to yard during the build; required time frame for construction and delivery; and compatibility of personalities and styles of doing business.
Obviously, one objective in a new build is to get the yacht you want, engineered and finished specifically to your personal requirements and tastes. But another critical objective is to experience the pleasures of engaging in the new build process. In order to achieve this latter objective, a good match between buyer and shipyard is absolutely essential.
What is different about PRG’s New-Build program?
Speaking candidly, the Port Royal Group is not the only firm offering to help you with the purchase and/or building of a new yacht. What distinguishes us from the others is the fact that our New Build and Refit team is composed of people with truly extensive experience, not only in the sale of large yachts, but in their construction as well — from design and engineering, to deal development and contract negotiations, project planning and management, right through to sea trials, delivery, and post-delivery warranty follow-up.
Phil Friedman, who heads up our New Build Program, has hands-on experience in yacht design and construction, and in the operations and business management of a world class megayacht shipyard. Phil has designed, managed the engineering for, and supervised the construction of large yachts for more than 25 years. Just as important, he enjoys close working relationships with designers, naval engineers, and shipyard executives worldwide. Which is why we’ve been able to form strategic associations with noted designers and shipyards around the world.
When we say we know both the sale and construction of new yachts inside and out, you can be assured that we have the history and track record to back up that claim.
How do I get started with looking at a new yacht build?
Call or email us today for a confidential discussion and, if desired, an initial face to face meeting to discuss your needs, tastes, requirements, and how best to realize your new build objectives.
We will be more than happy to work with you to develop an initial proposal and project definition, from which further meaningful discussions with shipyards and other shipbuilding professionals can proceed.
THE PORT ROYAL GROUP
Tel: 954.224.2145 – Email: Phil@portroyalgroup.com
Greater Fort Lauderdale Area, Florida, USA
(Office Hours by Appointment Only)
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