Profit margin forecasting based on the project schedule, readiness and current margin in cruise ship outfitting projects

Abstract

Profitability has always been one of the most important key elements for sustainable businesses. Cruise ship outfitting projects are large scaled, complex and long-term projects which profit margin is crucial to keep in the target from start till the delivery. The aim was to investigate the ship building specific project challenges for scheduling, readiness reporting and conduct a comprehensive theoretical background study in profit margin forecasting methods to bring up concrete proposals on how to forecast the profit margin more professionally and most importantly more accurately throughout the whole project based on the current schedule and readiness. A mixed method approach was selected for the search. The survey was conducted as quantitative research with specific participants who had experience in ship building industry and more specifically in the same environment where the research took place. A total of twenty-five responds were received and examined carefully with cross relations to bring up insights from correlations and frequency. Five different interviews were completed with people from different units to perform qualitative research. Different aspects of the research topic were discussed broadly, and the results were documented with coding method. As the main result from the conducted research and theoretical background study, earned value management (EVM) was proven to be the best fitting method in ship building projects as a tool for forecasting the profit margin to increase accuracy. In addition, correct and detailed construction of work breakdown structure (WBS) was crucial for success together with improving cross functional teamwork between project and planning to maximize the effect of EVM.