APRIL 15, 2013 — An ambitious plan to build the largest hopper dredge in the U.S. as an ATB ( see earlier story) has run into major difficulties. Shipbuilder Signal International, Inc. today issued a statement revealing that differences between it and customer Great Lakes Dredge and Dock have reached a point where Signal has discontinued work towards the design of the ATB dredge.
It says that Great Lakes' response "has been to terminate Signal and find another shipyard to build the A/TB Dredge with a substantially revised specification."
Signal says it has "demanded arbitration under the contract in order to resolve the dispute."
Following is the text of Signal's statement:
Signal International, Inc., announced today that work toward the design of an Articulated Tug/Barge Hopper Dredge for Great Lakes Dredge and Dock (GLDD) has been discontinued. Signal and GLDD entered into the contract for both the design and build of an AT/B Hopper Dredge in August 2012, with construction originally scheduled to begin in January 2013. According to Signal, the project has undergone numerous delays and construction has not started due to a series of major design changes initiated by GLDD. These ongoing requests for modifications have continued even past the revised construction start date. Signal stated that they have been working with GLDD to firm up the design but the attendant escalating costs and schedule delays were not being addressed by GLDD in an equitable manner.
Signal retained PA Consulting Group, a leading management, IT and technology consulting firm, to conduct a strategic analysis of the program situation and options. PA's analysis included assessing the impact of GLDD-driven design changes on the program cost and schedule, and options to improve the program. The results of PA's program modeling and analysis showed significant delay and construction cost impacts from the changes, as well as, a variety of mitigation options that would reduce cost and schedule impacts if there were reprogramming and schedule adjustments. A senior member of PA presented their findings to GLDD and Signal management on March 21, 2013.
Signal CEO, Richard Marler noted, "Our Company reaches out to customers when we see a red flag on a program with the idea that risks can be reduced if both sides understand the problem and work together to develop mitigating solutions. The primary consideration is providing quality products that help make our customers more successful while respecting the integrity of our company, our employees and community constituents." GLDD's response has been to terminate Signal and find another shipyard to build the A/TB Dredge with a substantially revised specification. Signal has demanded arbitration under the Contract in order to resolve the dispute.