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Success story | Re-negotiation of financial conditions of a naval program



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Re-negotiation of financial conditions of a naval program



Our client, a middle-sized company in the naval construction sector,  wished to revisit its contractual commitment after production of the 4 first ships. The program had suffered losses due to economic difficulties such as hyper-inflation on raw materials, energy, labor and subcontractors as well astechnical and organizational difficulties in shipbuilding.

CYLAD’s assignment was to help building a clear, quantified argumentation to the end-customer, explaining the unpredictability of the current situation and the impossibility to continue the contract under its current conditions.



CYLAD mobilized various stakeholders (Finance, PMO, Sales, Purchasing, Engineering and on-site Production) to:

  • Re-forecast costs at completion (EAT), considering inflation, suppliers feedback, experience and lessons learned from the first production runs as well as an improvement plan
  • Breakdown and characterize increases in 3 categories: (1) changes in the economic situation, (2) cost overruns driven by client requirements on product’s architecture, and (3) company non-performance.
  • Adjust contract price and conditions to consider the updated production cost
  • Tailor a detailed, illustrated and quantified negotiation file



  • Cost and price comparison including risk quantification
  • Economic conditions evolution analysis
  • Technical difficulties and internal organization assessment
  • Comprehensive and quantified negotiation file