The refit that doubled in scope.

The yacht was 12 years old, approaching its second five-year survey, with the cosmetic and major systems condition demanding a substantive overhaul. The owner had bought the yacht two years earlier on the brokerage market and intended to hold it for another five years. The refit was the right decision in principle.

The yard chosen was a recognised Western Mediterranean operator, well-equipped, with a strong reputation for paint and structural work. The original quote was EUR 3.2 m for paint, deck refurbishment, an interior soft-furnishings refresh, mechanical service across both main engines and the generators, and electrical compliance work to address known issues from the previous five-year survey.

The contract was the yard’s standard refit agreement. The scope was specified in general terms across nine work packages. Milestone payments were tied to calendar dates rather than to defined deliverables. The owner’s representative was the brokerage that had sold the yacht to the owner two years earlier. The brokerage was paid no separate fee for the refit oversight; the support was “part of the relationship.”

What the engine room found

Five weeks into the project, with the engine room stripped, the yard’s mechanical team found that the port main engine’s heat exchanger had developed a cracked end cap, the failure mode of which had not been visible from the engine’s service history. The crack was significant enough that the engine could not safely be re-started without full overhaul of the cooling system. The yard’s estimate for the additional work was EUR 380,000.

Three weeks later, the electrical compliance team found that the previous yard’s compliance work had been incomplete. Two switchboards had been left in a configuration that would not pass current class inspection. The remediation cost was EUR 220,000.

Four weeks later, the paint cells found that the underlying primer beneath the topsides had failed in two locations, requiring full strip and re-prime before the new topcoat could be applied. The additional cost was EUR 480,000.

Six weeks later, the interior team found that the air handling units in two of the guest cabins had been running at reduced capacity for years and required complete replacement. The additional cost was EUR 290,000.

Each finding was real. Each was within the empirical pattern of refit discovery. None could have been quoted for in the original visual inspection. The yard’s communication on each finding was technically competent and commercially aligned with the yard.

The structural problem

The owner’s representative attended on Tuesdays. The owner himself attended once a month for two days. The representative’s reporting was framed largely in narrative form (“paint cell complete,” “engine work ongoing”) without a quantified snag list against original scope or a running variance against budget.

By month four, the project was at EUR 4.6 m, against the EUR 3.2 m original quote. The owner asked the representative for a fixed final cost. The representative offered EUR 5.0 m. By month seven, the project was at EUR 5.8 m. By month nine, it was at EUR 6.1 m. The yacht delivered at EUR 6.4 m, double the original quote, four months past the planned redelivery.

The 100 percent overrun is at the high end of practitioner experience. It is not unique. It is the pattern when scope is loosely specified, milestone payments are tied to calendar rather than deliverables, and the owner’s representative is not paid by the owner.

The 30 to 50 percent overrun is the empirical expectation. The 100 percent overrun is the case where the contract structure and the representation discipline have failed together.

The recovery

The owner engaged an independent adviser at month nine, with two months of project remaining. The adviser ran the snag list discipline, the technical handover, the sea trials post-redelivery, and the warranty claim management for the remaining 12 months. Five claims under the yard’s warranty, totalling approximately EUR 410,000, were prosecuted to closure with the yard within the warranty period.

The adviser’s fee for the engagement was EUR 95,000. The warranty recovery alone returned approximately 4 to 1 against the fee. The adviser’s subsequent assessment of the project, in writing for the owner, identified the three structural failures: scope specification at contract, milestone payment structure, and representation discipline. The owner’s next refit, four years later at a different yard, was contracted with each of those addressed. That project landed within 14 percent of original quote.