Are current shipbuilding cost estimation methods ready for a sustainable future? A literature review of cost estimation methods and challenges

In the fiercely competitive shipbuilding industry, precise cost estimates must be considered as they serve as a critical input for determining market prices effectively and ensuring a small profit for the shipyard. In Western Europe, where most projects are Engineering-To-Order (ETO), cost estimations are extra challenging, due to lack of similarity between projects. On top of this, cost estimations are becoming increasingly difficult in a market confronted by mounting challenges related to safety regulations, cost-effectiveness, and the pressing need to address energy conservation and environmental protection. New technologies introduce changes in nearly all aspects of shipbuilding design and construction. This article conducts a literature review, to present the state-of-the-art methods for estimating man-hours, explicitly focusing on man-hours for shipyard production, excluding overhead costs and challenges the suitability of existing systems for ETO and especially for the changes caused to ships by the energy transition. An indication is given of the practicality of each method as outlined in the literature. A solution direction, incorporating the construction process, is proposed to improve cost estimations for ETO projects in pre-contract phase.