Conversion
Projects
8 August 2018
Last revised
minutes
2
Reading time
While the refitting of an older yacht may appeal to some owners, others may prefer to go a stage further and upcycle a naval or other working vessel. These often have an attractive aesthetic born of practical necessity - which can be transformed into uniquely beautiful yachts, inherently well suited to cruising in unusual locations.
minutes
2
Reading time
8 August 2018
Last revised
While the refitting of an older yacht may appeal to some owners, others may prefer to go a stage further and upcycle a naval or other working vessel. These often have an attractive aesthetic born of practical necessity - which can be transformed into uniquely beautiful yachts, inherently well suited to cruising in unusual locations.
Some commercial and surplus military vessels can be purchased at a fraction of the price of large yachts, creating interesting opportunities.
Buying directly from the seller or their appointed broker is preferable to using an intermediary, which can lead to increased costs and communication issues.
Refit and repair yards, rather than builders, are more likely to undertake conversion projects, providing more choice and negotiation power for owners.
Conversion projects involve combining new and old designs into a single vessel, requiring integration and compliance with evolving regulations.
Interfaces between old and new elements can present challenges during and after the conversion process.
Structural changes can affect the distribution of pressures and forces, potentially compromising previously sound parts of the vessel.
There is a risk of unexpected costs and lost commercial opportunities during conversions, leading to compensation payments from the yard.
Yacht conversions require a measured approach to ensure high-quality fit and finish.
Legal and practical issues specific to conversion projects should be addressed before entering into an agreement with the yard.
Converting ships to yachts is a niche business, and experienced project management is crucial to ensure high standards and attention to detail.
Structural changes can affect the distribution of pressures and forces, potentially compromising previously sound parts of the vessel.
There is a risk of unexpected costs and lost commercial opportunities during conversions, leading to compensation payments from the yard.
Yacht conversions require a measured approach to ensure high-quality fit and finish.
Legal and practical issues specific to conversion projects should be addressed before entering into an agreement with the yard.
Converting ships to yachts is a niche business, and experienced project management is crucial to ensure high standards and attention to detail.
Some commercial and surplus military vessels can be purchased at a fraction of the price of large yachts, creating interesting opportunities.
Buying directly from the seller or their appointed broker is preferable to using an intermediary, which can lead to increased costs and communication issues.
Refit and repair yards, rather than builders, are more likely to undertake conversion projects, providing more choice and negotiation power for owners.
Conversion projects involve combining new and old designs into a single vessel, requiring integration and compliance with evolving regulations.
Interfaces between old and new elements can present challenges during and after the conversion process.
Commercial vessels exist to fulfil particular roles. When no longer needed they become liabilities which are generally disposed of without delay – often at a fraction of the price of a similar-sized yacht. High-performance military vessels can also become dated or surplus to requirements as geopolitical sands shift, with government bureaucrats having little interest in maximising sale prices. Opportunities to purchase tend to arise on an ad hoc basis. As when buying a yacht, you should ensure that you’re dealing with the seller directly or the seller’s appointed broker. Using an intermediary broker leads to extended lines of communication, more costs and a greater chance of the purchase falling through.
YARD CHOICE
While conversions may involve the rebuilding of entire parts of the original ship, such projects are always unique, and cannot readily be fitted into a build slot. For this reason, it is generalised refit and repair yards rather than builders which tend to undertake the work. And, as there are more of the former than the latter, owners have more choice and can drive a harder bargain.
PROJECT CHARACTERISTICS
All conversion projects have a number of common characteristics. To a greater or lesser degree, they will all combine new and old designs into a single vessel, which must then function effectively as an integrated whole. All this against a backdrop of constantly evolving regulations governing specifications, materials and equipment. And so there will exist various interfaces between old and new elements which do not exist in the context of newbuilds. Issues may arise not only during the conversion process but well after the vessel has re-entered service in its new role.
Depending on the extent of any structural changes, hydrodynamic forces may no longer be distributed as originally intended, possibly compromising previously sound parts. Even where the yard has provided a post-redelivery guarantee of workmanship and materials, it may be an unforeseeable aspect of the combination of old and new elements that leads to a fault – rather than a deficiency in the workmanship and (new) materials.
When trading ships are converted from one role to another, there is always the risk that the project will cost more than expected because the works have taken longer than expected and charters and other commercial opportunities have been lost. A yard will often have to pay a fixed, daily rate in compensation as part of their agreement with the owner. The works can be rushed and/or the vessel not properly surveyed prior to agreeing a timescale. As the quality of fit and finish is paramount, a more measured approach is needed for yacht conversions.
The unique characteristics of the conversion project give rise to a number of practical and legal issues that need to be considered and addressed before entering into any agreement with the yard. And sometimes even before acquiring the would-be project in the first place.
PROJECT MANAGEMENT
Converting ships to yachts is, to say the least, a niche business. Using yards more used to converting ships for use in one trade to another can lead to significant cost savings, but the high standards of workmanship and the attention to detail demanded by yacht owners can come as a surprise to the yard’s management. Various specialist third party contractors might be needed – and this may not be how the yard typically operates. It is therefore vital that owners have an experienced and effective project manager in attendance on a full-time basis.
Thank you to all our Members who contributed to this article. Unless otherwise stated, this article broadly describes, by way of illustration, the situation in the United Kingdom waters in respect of United Kingdom-registered vessels. This piece does not provide or replace legal advice.
Join the discussion over in
the Club's group
Questions or comments?
You can also read about