Ship
Managers Cooperate To Set Key Performance Indicators
6/29/05 9:59:02 AM
Self-Regulation of the global ship management sector has taken a step nearer
reality following the announcement that a method has been developed to set an
industry-wide standard for operational key performance indicators (KPI)
governing the management of today’s ships. A pilot project initiated by a
Sponsor Group made up of the International Ship Managers’ Association
(ISMA) together with 18 of the world’s leading ship managers and owners
has identified a methodology to establish common standards for measuring,
calculating and reporting KPIs to the industry. The move is significant in that
it is the first time since the establishment of ISMA in the late 1980s that the
global ship management industry has come together to agree how to
self-regulate. The pilot project decided that methodologies capable of
measuring the value of different contributing factors should be used to rank
the importance of such KPI attributes for safety, quality and environmental
protection. The Conjoint Value Heirarchy methodology, developed by Intellectual
Capital Services Ltd, is one such methodology capable of performing
‘multi-attribute/multi-stakeholder’ value measurements. The results
from the pilot project indicated good correlation between the output from the
CVH methodology and what representatives from the Sponsor Group considered to
be prime factors for operational safety and environmental excellence in ship
management. The Sponsor Group has concluded that the CVH methodology had good
potential to be an instrument for establishing consensus among important
stakeholders on a standard for operational KPIs in international shipping, and
to resolve the differences of opinion that would inevitably emerge. The Sponsor
Group will now circulate the findings of the pilot study to the shipping
industry in general as part of the drive to achieve international acceptance
and support for the further work required to arrive at a standard for
operational KPIs in shipping. The communication will be spearheaded by ISMA,
but the cooperation of other associations and organizations including the Round
Table of participants comprising of INTERTANKO, INTERCARGO, BIMCO and ICS/ISF
is also sought to gain support for this important initiative. A gathering of
ship management ‘wise-men’ will consider feedback from the industry
at a special round table meeting due to be held in the autumn. Concern has been
high in the world ship management sector that an inability to embrace
self-regulation could result in a lack of consistency of quality in the way
ships are managed. While many responsible ship managers have developed their
own in-house KPIs, there has, as yet, been no common standard to set
industry-wide applicable KPIs. The use of KPIs in shipping has gathered pace as
the industry focus has shifted from detailed process regulation to goal-based
regulation. And while ‘stakeholders’ such as owners, charterers,
oil majors, insurance companies, P&I Clubs and underwriters, port state
authorities and flag state authorities require more proof of a ship
manager’s operational worth, the lack of a defined set of standards has
sometimes led to confusion and mistakes through the misrepresentation of facts.
According to ISMA, it is essential that KPIs in the ship management sector give
a representative picture of the quality of the ship’s operational
performance. They must also be limited in number, uniquely defined, transparent
and economic to collect. “No pan-industry agreement can be reached
without a tool to measure the ‘value’ of the various contributing
factors to safety and environmental protection,” ISMA said. Rajaish
Bajpaee, president and group managing director of Eurasia
and ISMA president, said: “ISMA knows that a compliance culture
doesn’t lead to the highest standards in shipping. Quality comes from
self-regulation with verification for which we need uniform measurement
criteria. This initiative is founded on the very same basic principle.”
Svein Sorlie, Head of the project’s Steering Committee, described the
initiative as “extremely important for the enhancement of safety and
quality in international shipping,” and said “the help of ISMA has
been invaluable in coordinating and taking this project forward”.
