The price in a build contract is not the total cost of the boat. The budget is built around the contract price; the payment plan is tied to progress and to security.
What sits outside the contract price
- Change orders: every decision made during the build can be one. Approved in writing with the effect on price and time.
- Owner-supplied equipment: electronics, tender, interior items, including freight and the installation interface.
- Supervision: independent build supervision and acceptance tests.
- Certification and registration: CE conformity, flag and registration.
- Launch, sea trials and delivery passage.
- Taxes and fees, and a contingency.
A staged payment plan
Payments are tied to verified production stages, not the calendar. The stages below are an example; proportions depend on the contract.
- Signing. Contract and approved specification.
- Mould or frame. With materials accepted.
- Hull complete. With thickness and laminate checks.
- Deck joined and main engines installed.
- Launch and sea trials.
- Delivery and acceptance. After the snag list is closed.
Securing the payments
A bank guarantee from the yard for large advances is common practice. The contract also states who owns the boat and materials during the build, the yard's construction insurance, and what applies if the build runs late.
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- Material acceptance: Certificates, checks and storage.
The build budget table
A build budget is layers built around the contract price. The first line is the contract price, written with its payment plan. Then come owner-supplied equipment, an allowance for change orders, supervision and acceptance tests, certification and registration, launch and delivery, and taxes and fees. The contingency sits at the bottom. On a long build, currency movement is a line of its own too; payments fall on different dates, so the same amount can weigh differently at different times.
How change orders affect the budget
New decisions during a build are unavoidable: a layout change, different equipment, an added system. Each change affects not only its own cost but often the schedule and other work. So each request is numbered, priced with its effect on time, and not carried out until approved. Making decisions early, especially before moulds and structure are complete, keeps the cost down; the same change after the interior is closed costs far more.
Verification before payment
Before each stage payment, completion of the stage is verified by photos and measurements: dimensions and symmetry at mould and frame, thickness and laminate records at the hull, bonding and fastening at the hull-deck joint, the pre-close inspection at systems installation. The verification report is attached to the payment request, so the owner knows what they are paying for without visiting the yard.
The yard's finances
On a long build, one of the biggest risks is the yard running into financial difficulty before completion. An advance-payment bank guarantee, staged allocation of materials and hull to the owner, and where possible registration of the boat under construction are the measures taken against it.
The budget table is kept current throughout the build: every payment, approved change and draw on the contingency goes into it. At any point the owner can then see where the total cost is heading, and decide early whether a wish-list item still fits.
The line most often overlooked is the first year after delivery: the first service, small non-warranty jobs, insurance and berthing. It belongs in the budget from the start rather than arriving as a surprise.