Part 3: Reviews of, and changes to, Safe Ship Management

Maritime Safety Authority: Progress in implementing recommendations of the Review of Safe Ship Management Systems.

3.1
In this Part, we look at 2 independent reviews of the Safe Ship Management System – a report completed in 2000 by Pacific Marine Management Limited, and a more comprehensive review completed in 2002 by Thompson Clarke Shipping Pty Limited. We set out:

the nature and findings of both reviews; and
whether the MSA Board responded reasonably and appropriately to the recommendations made by the 2002 review.

Independent consultant’s report in 2000

3.2
A paper by an independent consultant,³ commissioned by the MSA Board in 2000 – Review of Safe Ship Management – concluded that: “In overall terms, the introduction of SSM has been beneficial, as is its continuation. The administration of SSM, by both the MSA and the SSM companies, is satisfactory, but there are several specific issues that need attention”.⁴

3.3
The issues needing attention included:

inconsistencies in standards and interpretation by SSM companies;
concerns about the competence of unqualified SSM company inspectors; and
non-acceptance of the Safe Ship Management System by 20-30% of owners and operators.

3.4
As a result of this review, the MSA decided to work closely with the maritime industry to improve the industry’s understanding of the Safe Ship Management System and to resolve the issues identified in the report. No other action was taken in respect of the report. We consider that this was a reasonable response.

Independent review in 2002

3.5
By 2002, the MSA had identified a number of issues with Safe Ship Management. These issues had arisen as a result of further developments in safety management systems such as the introduction of the Safe Operational Plans concept and the merger of some SSM companies. Issues identified included:

increasing concerns about the safety management systems, including lack of consistency in the application of SSM from various service providers, over-charging, lack of reward for good operators, lack of support for MSA safety initiatives, and reluctance to undergo MSA audits;
an increased number of deficiencies detected by inspections and audits;
lack of understanding by some SSM companies and vessel owners and operators of their responsibilities and obligations, particularly to the MSA; and
diminished economic viability of the system to deliver safety at reasonable cost over the longer term.

3.6
The MSA recognised that, although the SSM was still relatively new, there were implementation problems, and it took action, in accordance with its statutory mandate to promote a safe maritime environment.

3.7
On 20 March 2002, the MSA Board formally decided to commission an independent review of Safe Ship Management and Safe Operational Plans. The Board engaged a firm of safety experts from Australia, Thompson Clarke Shipping Pty Limited (Thompson Clarke), to enquire into the Board’s concerns and to report back to the Board on the operation of Safe Ship Management and Safe Operational Plans.

Findings of the Review of Safe Ship Management Systems

3.8
The MSA Board received Thompson Clarke’s comprehensive 214-page Review of Safe Ship Management Systems (the SSM Review) in September 2002.

3.9
The SSM Review painted a critical picture of the way in which Safe Ship Management and Safe Operational Plans safety provisions were being administered and delivered.

3.10
The SSM Review also raised specific issues that needed immediate attention. For example:

a significant number of private service providers (SSM companies and authorised persons) were not meeting minimum procedural requirements;
private service providers were not always effective and consistent; and
the MSA was playing an increasingly remote role under SSM because of the involvement of SSM companies, which meant it was losing “hands-on” vessel survey experience and understanding of small vessel operations.

3.11
The SSM Review also found that the MSA lacked adequate management control over private service providers, with the consequence that the providers were not always working in the best interests of the SSM system. The review noted that vessel safety management systems were excessively complex and costly for smaller owner-operated vessels, and that owners of these vessels lacked the resources to manage systems developed for larger vessels. The main findings of the SSM Review are set out in the Appendix to this report.

SSM Review recommendations approved for implementation

3.12
At a meeting on 17 December 2002, the MSA Board approved 11 of the SSM Review’s 29 recommendations for implementation, and noted the remaining 18.

3.13
The recommendations which the MSA Board approved included that the MSA should:

take a more direct role in delivering SSM services to ensure that its expertise is maintained;
improve its overall strategic management of SSM delivery;
improve its management control over SSM companies;
introduce national standards and performance indicators for SSM companies;
improve its targeting of SSM vessels;
promulgate a Safe Ship Management standard that SSM companies would implement; and
abandon the Safe Operational Plans Authorised Persons scheme and replace it with an in-house Safe Operational Plans scheme.

3.14
Since adopting the recommendations, the MSA undertook a consultation process with key stakeholders (SSM companies and the owners and operators of Safe Operational Plans vessels) to obtain their commitment and “buy-in” to the proposed changes.

3.15
The changes can be grouped into 3 main areas:

introduction of a New Zealand Code of Practice for Safe Ship Management. The new Code of Practice was originally going to be implemented and be effective from 1 February 2004. However, it was not implemented until 1 February 2005. We comment more about this in paragraphs 6.3-6.14;
the MSA reclaiming most of the Safe Operational Plans services from private sector providers. This change took place from 12 July 2004. We comment more about this in paragraphs 6.15-6.26; and
other changes relating to risk management processes and improving communications with key stakeholders. The MSA has progressively implemented these changes.

3.16
Specific progress in implementing the changes is discussed in Part 6. We have also included recent developments in Safe Ship Management and Safe Operational Plans in an Addendum following Part 6.

Our findings

3.17
We believe the MSA Board approached the review of the Safe Ship Management System in a timely and reasonable manner. The MSA Board first reviewed the new system by commissioning an independent consultant’s report in 2000, which was less than 2 years after the system was introduced. Although the 2000 report identified some issues with the new system, these were not so significant as to require a fundamental review. Moreover, given the nature of the findings, the MSA’s response to them was appropriate.

3.18
However, by early 2002 there were indications of a number of significant shortcomings with the Safe Ship Management System and the MSA Board, appropriately in our view, asked Thompson Clarke to undertake a more comprehensive review of the system. This review led to Thompson Clarke making some significant recommendations.

The Maritime Safety Authority’s process for adopting recommendations

3.19
In order to decide which of the SSM Review’s recommendations to approve, the MSA Board had access to the full report of 214 pages, and had the opportunity to question MSA staff about the review. At a meeting on 19 November 2002, the author of the report gave a verbal analysis and debriefing of the SSM Review and answered the Board’s questions.

3.20
At a further meeting on 17 December 2002, the MSA Board considered and adopted a paper recommending that 11 of the 29 review recommendations be approved for implementation, and noting, rather than requiring MSA action on, the remaining 18 recommendations.

Our findings

3.21
The MSA Board’s decision-making process was well-informed and open. Moreover, we are satisfied that the information received by the Board – prepared by the MSA’s Strategic Review Group – was accurate and balanced, and fairly reflected the SSM Review’s key findings and actions. In developing this advice, the Strategic Review Group used 19 separate criteria to rank the options and mixes of recommendations suggested for approval by the Board.

3.22
The criteria included:

· vessel safety outcomes;
reasonable costs to operators and the MSA;
nationally consistent standardisation;
coverage and compliance;
effective MSA control over service delivery;
strategic management of Safe Ship Management; and
improved risk management.

3.23
The criteria selected allowed the Strategic Review Group to appropriately balance some of the competing priorities inherent in the SSM Review and to give the MSA Board appropriate advice.

3.24
The SSM Review focused on how to improve Safe Ship Management and Safe Operational Plans for small specialist commercial vessels. We expected that recommendations for possible improvements would be assessed in terms of their effectiveness and efficiency in fulfilling the relevant MSA statutory responsibilities. This was the case.

The Maritime Safety Authority’s reasons for not adopting all recommendations

3.25
The MSA did not take any action on 18 of the recommendations. One of the aims of our audit was to look at the reasons why the MSA Board did not adopt all the review recommendations.

3.26
In this respect, we note that the SSM Review itself never expected that all the recommendations would be implemented. In particular the SSM Review noted that –

For its part, TCS does not expect universal acclamation for all the Findings contained in this Review, neither does TCS expect that MSA will implement necessarily all the Review’s Recommendations; our expectation, however, is that this Review will generate a robust and constructive debate in New Zealand amongst all involved in the attainment of maritime safety outcomes about the future direction of Safe Ship Management.⁵

3.27
The MSA Board’s reasons for not adopting particular recommendations were that:

· the recommendation concerned wider policy issues; or
the Board disagreed with the recommendation; or
the recommendation was contained in other recommendations; or
the recommendation was being addressed through other MSA initiatives.

Our findings

3.28
We are satisfied with the reasons that the MSA has provided for not adopting all the recommendations. As we see it, the MSA has picked out the key recommendations and is moving to implement them, primarily through the Code of Practice.

3.29
We consider that this approach of the MSA Board is based on carefully reviewing all the recommendations and implementing the main ones.

3: Pacific Maritime Management Limited.

4: Review of Safe Ship Management, Pacific Maritime Management Limited, page i.

5: SM Review, page 23.

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