Part 4: Implementation of the SSM Review recommendations

4.1
In this Part, we discuss the implementation of the SSM Review recommendations; in particular:

• use of project management to implement the 11 approved recommendations;
• monitoring of implementation; and
• the costs of implementation.

Use of project management

4.2
Because of the length of time and the complexity envisaged to implement the approved recommendations (in particular, the Code of Practice, which encompassed most of the recommendations but was not going to be implemented until 1 February 2004), we expected that implementation would have been project-managed. This would involve a planned and managed approach within defined parameters of time, cost, and performance targets, with an individual staff member responsible for the day-to-day management of the project.

4.3
The MSA Board did consider and note a detailed process and timetable for considering and implementing the SSM Review’s main recommendations. The project manager was the General Manager, Maritime Operations.

4.4
The completion date on the original project plan was subsequently extended for an additional year (to 1 February 2005) to allow enough time for, in particular:

• necessary amendments to the Maritime Rules to align them with the new New Zealand Code of Practice for Safe Ship Management; and
• improvements in the MSA’s strategic and operational management of the SSM system, including a structural review and the appointment of new staff.

4.5
Although the Code of Practice was implemented and became operational from 1 February 2005, the MSA says it now seems likely that full implementation can be no earlier than late 2005. Primarily, this is because the MSA is still having difficulty getting all SSM companies to be compliant with the Code of Practice.

4.6
We note that the MSA has now written to all SSM companies setting out what SSM companies need to do to become fully compliant with the Code of Practice, and senior MSA staff have recently visited all SSM companies to re-emphasise the requirements.

Our findings

4.7
The SSM Review was received by the MSA in September 2002 and the Code of Practice was implemented and became effective from 1 February 2005.

4.8
The recommendations – particularly the new Code of Practice – have taken a long time to implement. However, implementation of the recommendations required a Rule change and also the development of the new Code of Practice, which were significant undertakings. Moreover, implementation of the recommendations was hindered by the MSA not having enough resources initially to make progress in implementing the relevant recommendations.

4.9
Development and introduction of the new Code of Practice has proved particularly time consuming. Its development involved consultation with the maritime industry. Moreover, there have been ongoing difficulties with ensuring that all SSM companies are compliant with the Code of Practice. For example, as late as July 2005 the MSA sent all SSM companies a letter outlining areas where it believed some companies were not compliant with the Code of Practice, and asking them to make the necessary changes so they become compliant.

4.10
Although the recommendations have taken a long time to implement, we believe that the MSA has done what it could do to implement the recommendations in a timely fashion. The main issue now facing the MSA is to ensure that SSM companies comply with the Code of Practice.

4.11
However, there are some lessons to be learnt from this experience. In particular, when undertaking such a significant project, appropriate levels of staffing must be allocated to the project. Moreover, it is important not to underestimate the difficulty in getting the sector to “buy in” to significant change.

4.12
We were also told that the MSA has been under extensive financial restraint, and is currently the subject of a review for sustainable funding. The allocation of internal resources was limited by the financial resources available. However, we note that where, as in this situation, the lack of resources may inhibit the ability to implement required changes, it is incumbent on all interested parties – particularly the MSA in this case – to ensure that appropriate resources are requested to implement the required changes.

Monitoring implementation of the recommendations

4.13
In approving some recommendations and noting others, the MSA Board also approved an implementation strategy that required it to be kept informed of progress in the implementation of approved strategies through monthly and strategic monitoring and compliance reports.

Our findings

4.14
The MSA Board received updates on progress in implementing the recommendations. However, we note that between June 2003 and January 2004 – a period of 8 months – the MSA Board received no formal updates on the progress. The Chairperson told us that, although this item was not a formal agenda item for its meetings during this 8-month period, she believed that the Board was being kept up to date by other means – such as members hearing at first-hand about issues in their other capacities, (e.g., through professional associations), through their contact with the maritime industry, or through verbal submissions at Board meetings.

4.15
We subsequently met with the MSA Board to discuss the extent to which they believed they had been kept informed of progress on implementation of the recommendations. The Board confirmed that they had always been kept fully informed of progress.

Costs of implementation

4.16
We expected that the MSA would have determined how much implementation of the recommendations would cost to the industry.⁶ This is usual practice when an organisation proposes changes such as those contemplated by the MSA.

Costs to the maritime industry

4.17
The SSM companies we interviewed told us that their costs would increase because of the additional auditing work required of them by the new Code of Practice (see Part 6). Auditing of Safe Ship Management was always required under the original Maritime Rule Part 21. However, while auditing was not a new requirement, it had not been practised effectively; nor understood by SSM companies, operators and owners. The companies said these cost increases would be passed on to the Safe Ship Management vessels’ owners and operators, some of whom (the smaller ones) have indicated that they are already having difficulty coping with SSM company charges and any additional costs necessary to remedy faults found by the audit/inspection, even before the changes formally come into effect.

Our findings

4.18
We saw no evidence that the MSA estimated the additional costs to those owners and operators subject to the requirement to have their safety systems audited. When we discussed this with MSA management, they said they did not see this as a new cost, but rather an existing cost; hence separate costings were not estimated.

4.19
The MSA’s view that these were not “new costs” may have some validity. However, the owners and operators we talked to certainly regarded the costs as new. Accordingly, from the perspective of relationship management, it may have been useful to estimate these costs and to inform owners and operators of them.

6: We note that a cost/benefit analysis was undertaken in the 2000 review undertaken by Pacific Marine Management Limited. The analysis showed a net present benefit at the time of $146.2 million, with a benefit to cost ratio of 6.5:1.0.