16 Jan 2018
On 9 November 2017, IADC President Frank Verhoeven gave the keynote at CEDA Dredging Days. Entitled “Dredging the Industry’s Mindset”, the presentation investigated the driving factors which led to the changes experienced by dredging contractors over past decades and the impact those changes made to their organisations.
If you did not see the keynote in person, then read the IADC President’s keynote below:
This photo was taken on a dredger nearly thirty years ago. What is strikingly missing?
- Hard hats
- Protective clothing and shoes
- A total lack of concern for safety regulation
At the time, this was a normal day for an employee in the dredging industry. Fortunately, big changes have occurred within dredging contractors and companies since then.
In terms of safety alone, the importance has permeated the entire structure of contractors, from the forefront of a worker’s mind as a personal sense of responsibility, to an entire SHE-Q department dedicated to ensuring safety during operations, spreading an impactful message of safety first. This push from the top is essential. Accidents have been dropping from all aspects of marine infrastructure projects and unnecessarily unsafe situations like this photo, are nearly eliminated.
The dredging industry pushed forward, advancing itself as a result of being a highly innovative industry. The opportunities were there but changes needed to take place to utilise them. Decisions were then guided by a strategic vision. What led to the industry’s proactive mindset? In what ways did it adapt?
Building bigger vessels is one aspect. New equipment generates new projects. But it is not the only key to today’s proactive dredging industry. There were broader developments related to people and organisations.
To better understand the changes experienced by contractors over past decades, an awareness of the industry’s foundation of the market drivers and their impact on the industry is important. Let’s dive into the drivers.
There are five which represent the primary reasons for new projects and changes within
the industry and individual organisations. The most important among them are:
- World Trade
- Energy Demands
- Urban Development
- Climate Change
- Tourism and Environmental Development
The leading factor for port development and the deepening of channels is World Trade.
In particular, the increasing sizes of container vessels have led to requirements for larger design depths. Based on historical and economic trends, investments in ports are predictable as they are cyclic in character.
Increases in world trade can be attributed to population growth and development.
With increasing development also comes growing demands for energy. Both the downstream and upstream part of the oil and gas market generates various interesting activities for our companies. The investments have always been determined to a large extent by oil prices. Here you can see the variation in the price of oil since the beginning of the 1970s.
Between 2014 and 2015, the price of crude oil fell by more than 50 per cent. And for a period of 3 years, oil prices have been much lower than in the years before. As a result of these relatively low oil prices, investments made by oil companies during recent years have reduced considerably or were limited in scope. While there was a largely negative effect for contractors, the forced energy transition introduced a new market for companies and gave rise to the renewables market.
Investment in the offshore wind industry in Europe is reported to have grown at an annual average of 30 per cent in the last five years, and during the same period, the price of building an offshore wind farm fell significantly.
The price of oil has recently gone up, having surged to a stable level hovering between 50 and 60 dollars per barrel in the last quarter alone, placing today’s oil price above the break-even point in a number of regions and therefore will lead to a return to investing in infrastructure for the oil and gas sector.
From just three billion people in 1950, global population today has more than doubled to 7.5 billion people. And this number is expected to rise to 9.8 billion people by 2050. Migration patterns are expected to shift rural populations to urban areas. And in 2030, twice as many people will live, work and recreate in coastal areas. Therefore, more and more land will be required in the regions of deltas for the purpose of hosting additional housing which accommodates the populations concentrated in urban, coastal areas. As population growth places pressure on countries with limited space as a result of urbanisation, the ability to expand their buildable land area can alleviate this problem. This need has made land reclamation a major driver for the dredging industry. Contractors regularly execute land reclamation projects around the world, broadening the boundaries of existing coastal areas or islands. In fact, Singapore’s land area increased by 25 per cent within 30 years-time. By using Jumbo Trailers, an abundant amount of sand can be carried from far away locations and it is economically feasible to do so.
Building in coastal areas faces the continuous threat of rising sea levels which means measures must be taken in the delta regions in the world. More and higher dykes among other strategies must be employed to mitigate the impacts of rising water.
Experts have differing opinions concerning the rate of sea level rise into the future. A couple of years ago, an increase of 40-80 cm in sea levels during this century were predicted in the region. Deltares, the institute for applied research in the field of water, subsurface and infrastructure in the Netherlands, revealed scientist’s latest projections concerning sea level rise, amending and elevating the forecast range for their research to between one hundred and two hundred and fifty centimetres. The truth is, nobody knows the exact amount. To reduce variation and find an accurate prediction, further study must take place over the course of the next few years to give us more reliable data.
TOURISM AND ENVIRONMENTAL DEVELOPMENT
Development for both tourism and the environment can be drivers as well. For example, the Amager Beach Park in Copenhagen, a 2 kilometre long artificial island of parks and facilities for recreation. Bird isles are created exclusively for the purpose of providing diverse habitats to migratory birds such as the Marker Wadden in Lelystad, the Netherlands. Silt is being utilised to form islands with marshes and mud flats designed with a bird’s needs in mind. The vegetation will add much-needed oxygen to the Markermeer, a turbid fresh water lake which was created when it was cut off from the North Sea by dams and dykes.
There is also a small market for the dredging of contaminated sediment.
It is clear: these drivers have given a lot of opportunities to dredging companies while on the other hand have required several changes within these organisations.
INTRODUCTION TECHNICAL INNOVATIONS
These drivers are a universal force for the industry. To make optimum use of the opportunities presented by these drivers, we developed a lot of technique s over the last 25 years. What are the impacts of the industry’s technical developments within companies?
To a large extent, developments fall into two categories:
- Special developments related to new market sectors such as the capability of reaching deeper water depths
- Production improvement, this led to the reduction in a project’s execution time.
Great progress has been made for all kinds of equipment. A number of innovations are worth mentioning.
Backhoe dredgers have been introduced with reliable technical components for greater water depths. Thirty years ago, the maximum depth which could be reached was 14 metres. Nowadays, dredgers can reach 30 metres. Today’s biggest buckets are ten times larger than in the past. Bucket volumes used to hold 4.5 cubic metres and now they can hold 45 cubic metres. That’s three times the size of a concrete mixer truck. Vessel designs were completely reimagined to accommodate deeper depths and larger buckets.
Jumbo trailers entered the market which are suitable for large reclamations with low cubic meter rates. From 10,000 cubic metres 30 years ago, hopper volumes have reached 50,000 cubic metres to allow for competitive pricing. Besides, these dredgers can strategically manoeuvre at much greater water depths – of over one hundred metres – as well as handle much harder soil types. Not to mention the trailer dredger is very suitable for extreme wave conditions, ensuring a certain level of productivity continues at the bottom of the sea when other dredger types must stop working altogether.
Cutter dredgers have become larger and heavier. They can now dredge much harder rock types which reduces the need for drilling and blasting. While workability in severe wave conditions is still a problem, newer vessels are rolling out with a new feature: the spud carriage includes hydraulic buffering to work for longer periods in poor weather conditions.
The areas of automation and instrumentation showed enormous advances since the 1990s, making dredgers much more suitable for the rough conditions on soil types while minimising over-depths – unpaid cubic metres – considerably.
CONCLUSION TECHNICAL INNOVATIONS
The changes and developments in equipment I’ve just mentioned form only a brief overview of the main types of developments which have been made, and does not include the considerable production improvements which resulted.
INTRODUCTION SOFT SKILLS
Meanwhile, as these technical innovations, or as I will call them “hard developments”, were taking place, big changes also took place in the area of new disciplines which entered the companies (soft skills).
While the upcoming presentations of CEDA Dredging Days will address these technical developments in much greater detail, I intend to emphasise the considerable influence of “soft skills” on the organisations of Dredging Contractors.
In particular, three must be recognised:
- The use of Design and Construct contracts
- High requirements for both SHE-Q
- The environment
DESIGN AND CONSTRUCT
In the past, the types of contracts were generally less risky for contractors. The design came from the client. The Design and Construct contract is more commonly used nowadays. In this case, the client only gives the final requirements to the contractors. The additional ‘unknowns’ became the contractor’s risk in a tender phase, meaning mistakes equal higher costs and risk for the contractor.
By adding design to the project’s scope, an experienced civil engineering department is essential. Both theoretical and practical experience must be available for the disciplines of port design, morphology, soil mechanics, ecology, and so on. By adding in-house engineering departments, knowledgeable employees joined the companies.
Due to huge quantity of engineering hours for tenders, continuously the right balance must be determined in reference to the effort for each tender, to which detail the design is necessary in this phase to make a sufficiently accurate cost calculation. An exemplary project with this type of contract was “Maasvlakte 2”. The cost of the entire tendering and negotiation phase was approximately ten million euros.
Those new types of contracts like Design and Construct, alliance, partnering and DBFMO (Design, Build, Finance & Maintain, & Operate) contracts lead to higher requirements of communication within companies between employees and other uncustomary competencies for employees. For an alliance project in Australia, the client required special psychological tests for the proposed project management team of the selected contractor. It is clear that a lot of online courses were introduced for soft skills as well.
In the eighties, SHE-Q started out as an emphasis on “Quality Assurance”. In fact, delivery of a project was done according to the requirements of the client. Meanwhile, the contractor’s Quality programmes tend to be a combination of improving efficiency and to fulfil the client’s requirements.
Safety became a larger and larger priority mainly due to the strict requirements of oil and gas companies.
Starting with the implementation of general means of protection, safety measures subsequently took a turn, leading to a period where many procedures were written for situations where often accidents occurred. During the last ten years, most companies introduced behavioural programmes which led to an even further reduction in the number of accidents. Nowadays, the sizes of the SHE-Q organisations within companies are large, requiring a lot of people in the field as well as the head office.
The initiatives taken by contractors in the Netherlands and Belgium to spend a lot of time and money in Environmental research led to a considerable change in the design of maritime infrastructure projects and the execution of dredging projects. In the design phase, it is essential that the existing flora and fauna situation is an important given together with the other relevant data, as soil info, morphological data, and so on.
During the dredging process, all sorts of data – like turbidity values – can be monitored to prevent that certain relevant parameters are higher than yield values. For example, dredging in the vicinity of coral reefs is possible by adjusting the dredging technique to minimise turbidity, since the additional sediment which falls on coral reefs has been determined to threaten their survival. Due to monitoring, turbidity values created during operation could be minimised to reduce this impact.
We learned from these measurements and therefore knew the facts. For example, until a certain level, dredging near coral reefs is not harmful, but we can monitor to control the discharge. When deep mining in the North Sea, there was concern regarding harming Benthic life. So we monitored. We learned if we put pipes directly into the sand, but then reshaped the sea bed with ridges after completion, fauna will grow back return faster and better. Later today, CEDA President Polite Laboyrie will introduce Dredging for Sustainable Infrastructure, a new book resulting from ongoing developments in the area of ecosystem services. Knowledge is power.
CONCLUSION SOFT SKILLS
Concluding it can be stated that the organisation of the dredging contractors changed considerably due to the required new disciplines. Besides the here mentioned Design and Construct, SHE-Q and ecological disciplines, other items such as project management, risk management and communication skills can be mentioned as well. However by adapting to these new market requirements, contractors have been given the opportunity to change their roles within projects. Instead of just being a subcontractor for dredging works, companies have the capability of executing large maritime infrastructure projects as the primary contractor with their own subcontractors. Improvements to safety and contracts opened the gates to markets like offshore wind farms.
A proactive mindset led to making better use of drivers, adapting both the equipment and organisation of our companies. The results are smart dredging companies which contain an enormous and broad amount of knowledge.
Companies are now ready for future market opportunities in many areas. Existing in-house engineering departments can dive even further into the realm of design, working with floating cities to keep up with increasing urbanisation rates. There is existing knowledge within companies to begin mining at large depths. An analysis of the economics can determine if it is in fact feasible.
At a certain point, when depths are too extreme, the industry could separate its vessels. A dredging vehicle can be independent at the bottom of the sea and operated remotely from a vessel above.
Contractors could consider the lifecycle of a project in the further development of the currently used Design and Construct contract. New types can even include maintenance for ten years beyond a project’s completion.
The scope of monitoring can be further expanded. Clients can be given the opportunity to monitor a vessel in real time, including its location, movements and activities such as dredging depths and volumes.
With the drivers continuously challenging the limits, a proactive and innovative dredging industry – powered by its knowledgeable employees – is prepared to respond to opportunities of the future.