This is another one of those make it your own activities. Depending on the age of your kids or their attention span there are so many different ways to play with boats and floating objects.
ALWAYS watch your kids around water.
We planned to do this project in our pool but we got some crazy winds and the pool is a disaster so we moved it indoors to the tub. You could do this in a plastic bin, kiddie pool, sink etc.
First we made a paper boat. You can use the instructions we posted on our hat/boat/life jacket post using a regular piece of paper instead of a newspaper
The paper boats DO float - make sure you pull open the bottom a bit to stabilize.
Then we turned it into a "let's see what floats" experiment
Of course minifigs got involved.
I try to leave activities like this open ended even now as they are older so it can go where they want it to.
For the building portion leave plenty of supplies at their disposal to create and experiment with. We went the quick and easy route with some styrofoam packaging. It makes a perfect boat.
I love that activities like this lead to natural questions and experimentation (the best way to learn). Build off of these activities and see how much each floatation device can hold before sinking.