COM- Content Company Operational Manual
COM
1.1 Business Management 		Doc No.: COM 1.1
Revision: 0
Date: 15 Apr 2023
Issued by: DPA
Approved by: MD

Business Management

1.1 Purpose


Use this document for management of Company’s business relationship with its clients.

1.2 Scope

This document defines procedures for:

1.3 Hazard


Based on industry data and internal risk assessment, we have identified these main hazards for a client:

1.4 Mitigation


To mitigate the risk from these hazards, use the guidelines and step procedures in this document.

1.5 Introduction


This procedure is applicable to the management of the company’s business relationship with its clients, through implementation of the terms and conditions of specific management agreements. The procedure details the requirement for managing the full scope of a contract, including:

Term Definition
Client A company that has negotiated or is negotiating a ship management agreement.
Company The contracting company and the sub-contracted management office.
Agreement A contractual document defining the business relationship between the client and the company, including:
  • Appointment as manager and agent
  • Services by the company
  • Fee structure and schedule
  • Arrangements for:
    • Budgeting
    • Payments
    • Management of funds
  • Obligation of the parties on:
    • Insurance
    • Liabilities
    • Indemnities
Contract Term for the full scope and realization of services provided in accordance with an agreement.

1.7 New Business

1.7.1 Evaluation Criteria for New Business

Obtain a firm commitment from the owners for new build including:

Check the new business for the following criteria before entry to management:


Evaluation Criteria
• Maintained Class with IACS Class Society since new build
• P&I insurance must be with International Group Club.
• Maximum Age:
   o Cargo ships and other “dry” vessels up to 17 years old
   o “Wet” (including LPG) vessels up to 20 years
   o LNG vessels up to 25 years.
• Port State History: maximum 1 detention in the previous 2 years, maximum 10 defects in same period.
• Vessel must not appear on USCG blacklist (previous owner or vessel).
• Vessel or owner are not on US or other governmental sanctions blacklist.
• A copy of the client’s latest audited accounts and a report from a credit risk rating company (e.g. Infospectrum or similar) has been received. The accounts / credit risk report should demonstrate that the client will be able to fund the vessel’s operating costs.
• The ship’s Flag is not to be on the Paris MOU blacklist.
• There must be no Conditions of Class, or Conditions of Authority, in place affecting trading.
• Vessel must be crewed through the company crew management system.
• Aside from new builds, the vessel must have been inspected by Ship management company staff in the last 3 months.
• The crewing agreement must be in line with ITF agreements.
• Management Agreement to be under English law.

1.7.2 New Business Risk Assessment

Risk Assessment Considerations for Full Management

Record initial and final risk levels in A16. Consider for preparing A16:

We recommend the team assigned for takeover to brainstorm the risks and benefits to the company. If risk to the company or the client during the period of the contract, utilize part of any decision-making process.

Circulation

Complete and circulate A16

Level Meets Minimum Criteria Risk Level = 3 or below Risk Assessment Approval
1 Yes Yes Final Approval by MD. Forward copy of RA for records.
2 Yes No Review RA and if possible, strengthen controls to reduce Residual Risk to 3 or below. If YES, then same as Level 1. If NO, RA needs HSSEQ Department sign-off. Risk level greater than 3 requires HSSEQ Department sign off.
3 No Yes Completed RA to HSSEQ Department. Not meeting minimum criteria requires HSSEQ Department sign-off.
4 No No Consider if risk excessive. If YES, HSSEQ Department in consultation with MD to REJECT vessel. Copy of RA for information.
5 No No If Risk considered by HSSEQ department acceptable, forward completed RA to Managing Director. Managing Director SIGN-OFF REQUIRED.

New Business Risk Assessment Procedure

The HSSEQ Manager must do this procedure and appoint an individual to collate information.

This procedure is applicable for a vessel entering full management. If deviation occurs, notify the Managing Director.

Steps to Follow

  1. Follow Decision Tree

    2. Warning! Do not allow vessel entry to management without pre-entry risk assessment.

  2. Complete A16
  3. If credit risk report indicates funding delay:
    • Check with Finance Manager & Managing Director
  4. Circulate A16

New Business Risk - Stop-Work Authority

After the project risk assessment has been approved for management entry, the hazard controls stated within A16 shall be closely monitored throughout the delivery project. In the event that stated controls change, or cannot be fulfilled, the A16 shall be revised and submitted for re-approval in line with this procedure.

New Business Procedures

1.7.3 Inspections

Do We Inspect New Business Vessel?
Inspect vessels, except new builds, prior to management takeover. Check for requirements including:

The inspection forms the basis for estimating budget expenditure and maintenance standards. The inspection report must establish the baseline maintenance and operating condition for contract reviews. Use A13 as the report template.

If exceptional circumstances, the Managing Director may give a waiver for inspection. The request for a waiver must include documentation, including:

Pre-Takeover Inspection Status

Completed Takeover Inspection Requirement
▶ Complete post-takeover inspection within 3 months.
MD waiver in place & no inspection Complete full technical inspection at takeover port.

New Business Vessel Inspection Procedure

The HSSEQ Manager must do this procedure before taking a vessel into management. If deviation, notify Managing Director.

  1. Appoint Superintendent
  2. If client approves, consider using:
    • Vibration analysis
    • Thermography
    • Lube oil analysis
  3. Superintendent to check:
    • Condition of vessel
    • History
    • If applicable, new regulations
  4. Send copy of the report to HSSEQ Department & Technical Department.
  5. Maintain report in ship's file in the office.
  6. If Managing Director waiver, complete A13 after delivery.

1.7.4 New Business Potential & Negotiations

Business Potential

The HSSEQ Manager must coordinate the company’s services with MD under his/her strategic direction. The HSSEQ Manager is responsible for:

Note: The requirement for confidentiality is applicable both externally and internally.

If firm potential for a contract, the Managing Director shall allocate the vessel to HSSEQ Manager / Technical Manager considering:

Note: MD must be familiar with the details of the potential contract.

Who Negotiates?

The MD, with the support of the HSSEQ Manager, negotiates with the clients. Negotiations should consider:

General

After submission of the budget, approval of the potential client, and completion of the vessel inspection, we may submit a further budget proposal with a disclaimer:

“Direct revision following a vessel inspection by Ship Management company personnel and subject to a 3-month revision after delivery as per full machinery assessment.”

Before Completion of Negotiation Procedure

The HSSEQ Manager with the support of the Technical Manager should do this procedure.

  1. Review contract.
  2. Confirm A16:
    • Closeout
    • Approval by Managing Director
  3. If applicable, identify risks and management controls specific to the contract.
  4. If applicable, approval of changes to the Company’s standard agreement.
  5. Confirm Budget approval, including:
    • Ongoing maintenance standard
    • Manning level
  6. If upgrading maintenance, confirm approval for:
    • Capex
    • Exceptional cost
  7. Define:
    • Management performance criteria
    • If applicable, specific reporting requirements
  8. Confirm availability of company resources.

After Completion of Negotiation Procedure

The HSSEQ Manager shall do this procedure. If deviation, notify Managing Director.

  1. Agree to delivery schedule.
  2. Maintain contact with the client during the period before delivery.
  3. If changes in requirement:
    • Document
    • Act as necessary

1.7.5 Management Agreements

What is a Management Agreement?

The agreement governs the terms and conditions of the company’s business relationship with a client.

What Type of Agreement to Use?

Type Description
Ship Management Agreement Where the Company is employed by the client to act as the manager of a vessel, providing comprehensive technical and crewing services.
Crew Management Agreement Where the Company is employed by the client to act as the crew manager of a vessel, providing crewing services only.
Contract Crewing Agreement Where the Company is employed by the client to supply a full or part crew to a vessel and where the client retains management responsibility for the crew.
Other Service Agreements The relationship of entities supplying other services, e.g., post-fixture management, consulting, new building supervision, are controlled by customized agreements.

Who Finalises the Agreement?

The ship management company contracting party is the entity performing the management service. Exceptions are allowed for statutory flag requirements or specific client needs. If there is an exception, the Managing Director must confirm.

Agreement Finalisation Procedure

The MD must do this procedure:

  1. Confirm signature on two sets of agreement by:
    • Company authorized signatory
    • Client authorized signatory
  2. Confirm signature of both authorized signatories on each page.
  3. Give one set to the client. Note: Finance Manager maintains all agreements.
  4. Update record of agreements in force.

1.7.6 New Business - Crewing

New Business Crewing Procedure

The Crew Manager must do this procedure before vessel entry to management. This procedure is for contracts originating from HSSEQ Manager.

  1. Confirm MD initiates RA.
  2. Check RA in line with A16.
  3. Sign off RA.
  4. If credit risk report indicates funding delays:
    • Get Finance Manager to sign off RA.
  5. Maintain risk assessment register.

1.8 Budgets

1.8.1 What Type of Budget to Use?

Two types of vessel budget are used:

Use operating cost budget:

1.8.2 How to Prepare Budget?

Use company budgeting system with reference to budget assumptions, including:

Note: Certain budget elements are compulsory or fixed.

Present operating and crewing cost budgets in a standard format. Show annual and quarterly expenditure by major expense categories. Decide the management fee in consultation with the Managing Director.

1.8.3 Vessel Budget Estimation Procedure

The Technical Manager must do this procedure.

  1. Prepare budget in consultation with MD, including:
    • Senior functional managers
  2. Base estimation on information by client
  3. If applicable, consider similar vessel in management
  4. Send quotation to client
  5. Include disclaimer

Note: Subject to revision following a vessel inspection by Ship management company personnel and subject to a 3-month revision after delivery as per full machinery assessment

If no inspection before delivery in management:

1.8.4 What is Approved Vessel Budget?

Consider a budget as approved operating cost budget, after either:

1.9 Delivery into Management

1.9.1 What to Do for Vessel Delivery in Management?

Plan a delivery schedule in agreement with client. Consider the terms of agreement. If applicable, consider specific client requirements.

If delivery at the time of purchase, special arrangements may apply.

Use A16.

1.9.2 Records for New Business Project?

Maintain the following records in a file:

1.9.3 Why Have Observers?

Observer’s attendance is to:

Through onboard testing, familiarization, and review of records, the observers must identify risks to:

After agreement with client, place as observers in enough time before delivery schedule:

Only experienced company personnel must be observers. Brief observers on:

1.9.4 Instruction to Observers?

Provide observer with a copy of A26 Discuss and review A26 during pre-joining meeting.

Note: A26 is a standard format. It may be amended for vessel specific requirements.

The instructions include checks and tasks to do immediately after vessel entry into management.

See – A26 - Observers Instructions

1.9.5 Before Vessel Delivery Procedures

Technical Superintendent Before Delivery Procedure

Checklist

The Technical Superintendent must do this procedure before delivery date.

The Technical Superintendent may liaise with owner representative or observers to gather information.

If deviation, notify Technical Manager.

  1. Prepare running cost:
    • Daily
    • Annual
  2. Get approval for:
    • Budget
    • Accounts
  3. Appoint agent at delivery port
  4. Arrange:
    • Technician for:
      • SSAS reprogramming
      • Radio station programming
      • Radio survey
      • EPIRB
      • AIS
      • VDR
    • Note: Technician must be Class Approved
    • If applicable, class attendance for change of either:
      • Name
      • Flag
    • If applicable, Under Water Survey (UWS)
    • Note: Memorandum of Agreement (MOA) must mention requirement for UWS
  5. Confirm ROB quantity of:
    • Fuel
    • Lube oil
  6. Confirm specification of ROB
  7. Check bunker requirement
  8. If required, arrange for bunkers
  9. Get list of critical spares
  10. Coordinate delivery of:
    • Spares
    • Stores
  11. Confirm testing record of:
    • Foam analysis
    • CO2 hydraulic
    • BA compressor
  12. Confirm certificates of:
    • Breathing apparatus
    • EEBD servicing
    • Anchor
    • Cable chain
    • De-ratting
    • IOPP, including:
      • 15ppm oil filtering equipment
      • If applicable, ODME
      • Incinerator
    • Ship lifting appliances
    • Cargo handling gear
  13. Arrange contracts for:
    • Analysis:
      • Fuel
      • Lube oil
      • Hydraulic oil
    • If applicable, hired equipment
  14. Arrange class approval for Chief Engineer to perform CSM items
  15. Procure:
    • Machinery service letters for:
      • Main
      • Auxiliary
    • OWS:
      • If applicable, 3-way interlock valve
      • Flange seals
  16. Collect from previous owner or managers for main machinery:
    • Total running hours
    • Running hours since last overhauling
    • Major components with photographic evidences
  17. If applicable:
    • Request for EU MRV monitoring plan
    • IMO -DCS
    • SEEMP Part I
    • SEEMP Part II
    • SEEMP Part III
  18. If applicable, obtain warranty engineer agreement
  19. Use A16

HSSEQ Before Vessel Delivery Procedure

The Marine & HSEQ Superintendent must do this procedure before vessel entry into management.

If deviation, notify HSSEQ Manager.

  1. Obtain SMS documentation from HSSEQ department
  2. Note: Use SMS order form
  3. Arrange supply of SMS documentation
  4. Confirm with Master receipt of SMS documentation
  5. Get approval for:
    • SOPEP
    • If applicable:
      • SMPEP
      • Panama SOPEP
    • If tankers:
      • STS Plan
      • VOC Plan
    • BWMP
  6. Do Ship security assessment
  7. Get Ship security plan approval
  8. Apply:
    • CSR to flag state
    • Safe Manning Certificate
    • Radio License
    • If Tanker, CLC certificate
    • Bunker CLC
  9. If applicable:
    • Eastern Canada response corporation (ECRC)
    • Compliance with EU advanced cargo regime
  10. Request DMLC part 1 from flag
  11. Make emergency towing booklet ship specific
  12. Check LSA & FFA training manual
  13. Register Satcom with AAIC
  14. Check EPIRB registration
  15. Place on board:
    • Copy of declaration of company
    • Copy of designated person for registration to flag state
    • Flag state regulation
    • If applicable, NAV 27 publications
    • Registry flag
    • Radio license
    • P&I booklet, including:
      • Correspondent