This is GALENA, having progressed with some deck details and a chin, lying alongside the less-finsihed LORD CLYDE. The deck details are cardboard, the funnel is a length of plastic sprue.
Next, concentrating on GALENA, having pre-marked my gunports on both sides, I cut the square outline of the port into the side of the ship. I do this by inserting the blade about 1/16" for each of the four sides. You must have a very sharp, long-pointed blade. Anything else will crush the wood when you attempt to make your cross-grain cut.
Next part is to push the port into the ship. For this I have a special tool: an old paintbrush with the butt end whittled into a point. The point is square in cross-section, and the sharp tip of the point is sanded off. The end of the brush is about 1/32" square.. If you insert this into a pre-excised port, it will compress the wood nicely into the ship, leaving a square port.
GALENA's port lids seem to have hinged at the top, and folded up at the half-way mark. I simulated this by gluing two thicknesses of cardstock above each port.