Principles of Project Management

Ship Repair Contract Administration
For ship repair contracts covering Government-owned (or leased) vessels, it is customary to assign a Contracting Officer along with a Port Engineer to manage the Shipyard Contract, especially if it involves a major overhaul or conversion project. However, within the Ship Repair industry most Contracting Officers are qualified in business administration and to some degree, in basic accounting, but invariably, without any experience in engineering. As such, their ability to administer a major ship overhaul or conversion contract, is limited and contingent upon the effectiveness of the designated Port Engineer acting in a surrogate capacity on their behalf. Accordingly, the primary functions of the Port Engineer during a typical shipyard contract usually include but may not be limited to the following:


 * Monitor progress of industrial production.
 * Ensure Contractor compliance with the Specification Work Package.
 * Monitor Contractor's interpretation of the Work Package.
 * Coordinate with vessel Master and Chief Engineer on contract-related matters.
 * Attend shipyard production meetings.
 * Report project progress to Contracting Officer or Head Office, at least weekly.
 * Witness operational testing of equipment and machinery by Contractor.
 * Coordinate with Regulatory Body Representatives.
 * Monitor scheduled arrival of Ship-owner-Furnished material.
 * Negotiate with Contractor on emergent changes to the contract.
 * Supervise Assistant Port Engineers, if any.

The above listed functions are typical of those performed by contemporary Project Managers, differing somewhat from the conventional routines of traditional business managers. The term "Project Management" can be traced back to the development of the U.S. Ballistic Missile Program (for submarines, in the early 1960's and represents a departure from the conventional line-staff concept and subsequent displacement of same by the growing trend toward a functional teamwork approach. Accordingly, the Project Manager generally operates independently of the parent organization's normal chain of command, under what might be described as "Autonomous Hierarchy". When required, the Project Manager usually negotiates directly for support from functional elements within the parent organization, often crossing functional lines and bypassing the chain of command as warranted. The Project Manager's responsibilities may range from a coordinating function to that of a task force leader but regardless of title, his primary purpose is to act as the single focal point of contact for integrating, synchronizing and expediting an organizational effort toward attainment of project objectives. There is a philosophic conflict between the relatively passive "eight-to-five" attitude of Home Office bureaucracy on the one hand and the Project Manager's "round-the-clock" dynamic vigilance, on the other hand. This is due to the fact that the functional elements, of which there may be several within the Head Office, are only required to perform their respective daily tasks on a repetitive basis and seemingly without regard to time constraints or schedule. Whereas the Project Manager is responsible for completing his project on time, within budget, and in full compliance with specific technical performance parameters and managerial accountability.

The Project Manager, whose duty station may be remote from the Home Office, is much more dependent upon intermittent logistic support provided by various functional elements than are his counterparts based in the parent organization. In most cases the organizational life-span of the Project Manager's hyperactive domain is of finite duration and usually ends upon completion of his assigned project. Briefly, Project Management may be summarized as being governed by three fundamental factors, these are:

1 - Definition of Project Objectives.

2 - Evaluation of Resources.

3 - Judicial application of Resources to the task of accomplishing Project Objectives.

PROJECT MANAGEMENT PRINCIPLES
The philosophic intent may be considered to imply as a minimum, the following principles:

1) - DEFINITION OF PROJECT OBJECTIVES: This involves specific identification of *The required-end-result. *The required completion/delivery date. *The estimated or negotiated total cost. *The technical performance specifications/plans to be complied with. These factors should be spelled out clearly and approved by top management within the parent organization or corporate structure, and plainly understood by all concerned. This includes the designated Project Manager and assigned Project Team members (if any) to ensure that there is absolutely no doubt of what is expected of them.

2) - EVALUATION OF PROJECT RESOURCES: Typically, this includes available manpower, existing in-house employees, temporary personnel specifically hired for the project duration, or, dedicated contract labor to be provided by the prime and/or subcontractor for the project. The projected time-frame in terms of calendar days and contractually specified number of labor man-hours. Funding allocation for contract labor and material costs, salaries and expenses of Project Management Team members and miscellaneous project-related costs. Facilities either owned, rented or contracted for. Plans, drawings, work performance specifications and technical documentation, and related technical support such as manufacturer's representatives; plus intermittent logistic support from the Home Office and periodic meteorologic forecast reports for the duration of contract performance period.

3) APPLICATION OF PROJECT RESOURCES: This is where the Project Manager is on his own and must demonstrate the required expertise to effectively utilize available resources to maximum advantage, despite inevitable problems, for timely attainment of his ultimate objective, namely, successful completion of the project. Learning to recognize the degree of adversity he can cope with, without compromising his effectiveness, is the hallmark of an experienced Project Manager.

PROJECT MANAGEMENT GUIDELINES
Unlike conventional business management, wherein traditional patterns and prescribed rules are the norm, project management involves a fairly constant effort to cope with known, unknown and often unpredictable variables. Since many of these variables are subject to change in nature, magnitude and frequency, efficient operational management under such conditions can be quite frustrating. This is especially true when the variables to be contended with, such as labor disputes, climatic conditions, sources of supply, civic strife, budgetary limitations, cultural conflicts, language barriers, etc., are beyond effective control of the project manager. Thus for planning purposes, it may be advisable for a prospective project manager to conduct a logistics study of the project area to identify those factors that may be conducive to or that may detract from successful accomplishment of project objectives. This is particularly applicable to projects in the international arena wherein because of its inherent dynamism, a typically American proactive operational approach may appear to conflict with the relatively passive nature and antiquated bureaucracy of certain host countries. Typical factors to be considered for the formulation of a project support plan should include but not be restricted to the following parameters:

a) - RESTRICTIONS: Business licenses or operating permits required, including visas allowing entry into a foreign country for the specific purpose of managing a ship repair or overhaul project. Government agencies having jurisdiction over, or private interests exercising influence over the proposed project area. Local ordinances or legislation covering environmental disturbances. Complications involved in clearing imported essential project parts and materials through local Customs, inevitable bureaucratic delays and potentially adverse impact upon project completion date.

b) - CLIMATIC CONDITIONS: Extremely high or low temperatures; heavy rainfall; thick fog; strong winds; high humidity; sandstorms or rough seas. Such conditions may reduce the number of available work days during a given period and may also require special protection for personnel, sensitive instruments or materials and equipment. In addition, they may pose safety hazards and cause delays in transportation.

c) LOCAL LOGISTICS: Availability of on-site transportation and frequency of air freight domestic and foreign; communications; purity of potable water; dependable power supply; consumable supplies, etc. Allowances should be made for the possible need and cost of shipping from home base or elsewhere, if not locally available. Housing, hotels, eating facilities, food supplies, medical services, recreation and entertainment.

d) - LOCAL ECONOMY: Pay rates of skilled and unskilled labor. Fees, duties and/or taxes imposed on equipment and supplies brought into the area. Certain foreign countries and states offer liberal tax exemptions and waiver of fees as inducements to projects deemed to be beneficial to the development of the national or local economy.

e) - POLITICAL STABILITY: This factor may be significant in some overseas areas where a sudden change of regime; insurgent rebel attacks or civic strife may pose a threat to the safety of project personnel and to continuity of operations. In rare cases provision may have to be made for emergency evacuation of personnel.

f)- PRODUCTIVITY: Allowances should be made on foreign projects for possible differences in the rate of individual work accomplishment compared with that of home base standards. National and religious holidays may tend to reduce the available number of work days or add to overtime costs.

g) LOCAL CUSTOMS: For ethical reasons it is advisable for project personnel to be cognizant of local or national customs, restrictions and practices, based either on religious or moral convictions, so as to minimize the transgression upon the cultural domain of the area by persons not familiar with it. Mistakes of this kind however unintentional, can sometimes cause considerable embarrassment and may even result in project activities and personnel being subject to hostile acts.

PROJECT GUIDELINES (continued) - Regardless of the magnitude of the ship repair contract in terms of relative cost, the Project Manager should always be cognizant of the fact that contract administration is not an end in itself but merely a means of supporting an end, namely, the successful attainment of project objectives - which in this case means timely completion of the ship repair or overhaul contract. The administrative function is a prime responsibility of management by means of which it provides the necessary guidance to keep the assigned project team active, productive and on a pre-determined course. It constitutes day-to-day supervision, the initiation of actions designed to keep the project team in balance with the demands made upon it and simultaneously controls the rate of expenditure of resources in fulfilling these demands. In providing direction the Project Manager must maintain a flexible posture, capable of and prepared to react to developments by issuing new or revised directives as required, including advisory policy guidance where warranted, within the scope of his assigned autonomy. To ensure a smooth flow of project management effort synchronous with the mainstream endeavor of primary objective attainment, a logistic support definition conference should be convened at the Project Manager's Home Office prior to deployment of the Ship Repair Management Team to the Shipyard Contractor's facility following notification of contract award to the successful bidder. The meeting should establish the scope of Home Office logistic support available to the Project Manager and assign responsible points of contact for coordination, implementation and follow-up. Specific areas of logistic support should be defined in writing and responsible points of contact identified along with their respective after-hours telephone numbers. These should include but not be limited to the following:


 * ENGINEERING: Timely response by the Engineering Department to technical questions posed by the Project Field Team.
 * CONTRACTUAL: : Timely response by the Contracting Officer (if any), to questions of a contractual nature, posed either by the Project Manager or the Shipyard Contractor.
 * SUPPLY: Timely confirmation of actual shipments of Ship-Owner/Government-Furnished materials and/or parts, plus notification of any anticipated changes in delivery dates.
 * ACCOUNTING: Timely response by Accounting Department to questions of funding.

PROJECT MANAGEMENT RESPONSIBILITIES
These should range from direct involvement in the advance planning stage, to coordination of project documentation and plans, mobilization of Field Team personnel (Ship Repair Management Team), cooperating in project contracting functions, to actual on-site project management and final project close-out. During the advance planning stage the Project Manager should perform or supervise the following activities:


 * Performance of all project planning, controlling, reporting and evaluation functions.
 * Conduct frequent project evaluation and review meetings to identify current and future potential problems, and determine appropriate resolutions.
 * Prepare and submit periodic project planning progress reports to Top Management. During the contract solicitation and procurement stage, the Project Manager should perform the following tasks:
 * Ensure that those responsible for procurement of project material and support services fulfill their respective responsibilities to obtain delivery of materials, equipment and services on a timely basis.
 * Specify planning, scheduling and reporting requirements for major purchase orders and service contracts.
 * Conduct pre-award survey of prospective contractor's facilities and prepare reports of findings for Top Management with recommendations as applicable.

Depending upon complexity and duration of the project, the Ship Repair Field Team may include a Secretary; one or more Assistant Port Engineers and a Contracting Assistant. The secretary may be an existing employee, detailed to the project team for the duration or, a temporary employee, hired by the Ship Repair Contractor for this specific purpose and assigned exclusively to the Project Manager. The secretarial function should consist of the following skills:  Telephone Etiquette; Typing; Filing; Correspondence, Computer Operation and Mail; Office Management; Taking notes during production meetings; and making travel arrangements.

PROJECT MANAGEMENT RESPONSIBILITIES - (continued) - Assistant Port Engineers should be assigned to specific areas of project responsibility, such as (1) Hull, dry-dock and structural; (2) Habitability, auxiliary machinery and equipment. If a Sponsor or Charterer is involved, the Project Manager may prefer to assume responsibility for the Sponsor/Charterer related work package himself plus the Main Propulsion Plant. He should also be responsible for negotiation with the ship repair contractor on changes to existing work specifications, cancellation of specific items, growth, and totally new items plus the impact of such changes in terms of increase or reduction in man-hours and pricing. Each Assistant Port Engineer should maintain a written daily log of events, contacts and work progress and should provide the Project Manager with a daily verbal briefing and a weekly written report covering at least, 1) Work Items completed and Work Items newly started, 2) Estimated percentage of completion of Critical Work Items and any deficiencies observed, 3) Inspections performed and operational tests witnessed by Regulatory Body Inspectors, and 4) Certification of operational tests. Based on his own personal observation and that of his Assistant Port Engineers, the Project Manager should compile a weekly progress report for Top Management covering all critical aspects of the ship repair project, including but not limited to the following:

1) Current percentage of completion of major sections of the project work package, such as dry-dock work, major structural modifications, main propulsion machinery, auxiliary machinery, habitability, electronic and navigation equipment, deck machinery and cargo gear and Sponsor/ Charterer work where applicable. 2)The report should also cover any changes, actual or anticipated, to the project schedule. 3) Completion of major work items, 4) Percentage of growth-within-scope. 5) New work items and those cancelled. 6) Delivery status of customer/government furnished materials. 7) Any apparent problems that may adversely impact upon scheduled project completion.

ADMINISTRATIVE PROCEDURES
Of the several duties and responsibilities assigned to a Port Engineer or Marine Superintendent, one of the most challenging is that of negotiating with a Shipyard Contractor. While both parties customarily owe their primary allegiance to their respective employers, both should be equally aware that their primary task is to ensure the successful completion of the ship repair contract, in a timely manner, and preferably within budget. From the Port Engineer's perspective, this objective should be approached with a positive attitude of professionalism rather than adversarial antagonism, while respecting the right of each party to conscientiously defend his or her respective interests. The technique of subtle negotiation lies in part in knowing how and when to make a minor concession with the ultimate objective of ensuring more significant gain further down the line. Such discussions invariably involve differences of opinion regarding interpretation of Contract Work Specifications; degree of compliance with contractual requirements; or the man-hours of labor charged by the Contractor for work involving a Change Order. Despite the occasional difficulty in reaching a conciliatory conclusion in discussion, it should not be allowed to impede normal work progress. Every effort should be made to finalize all outstanding Change Orders and/or disputes prior to completion of the Work Package, including any Sea Trial deficiencies, before the ship departs the Shipyard. Should there be some outstanding issues that can not be resolved between the Port Engineer and his Shipyard counterpart they should be documented with notations of the pertinent Work item(s) in question and the specific point(s) on which the two parties disagree. This should be supported by a statement from each party of his or her objection(s), and proposed solutions. In the event of major disputes each Work Item involved should be accompanied by pertinent documentary evidence such as a signed affidavit by a third party as witness to the matter in question, plus diagrams or photographs serving to clarify or support the respective contentions of the two parties, for review and resolution by the respective Contracting Officers of the two parties or by higher authorities.

DEFICIENCY REPORTS
If and when deficient or hazardous conditions are observed that are attributable to the Shipyard Contractor and/or his personnel, it is customary for the Port Engineer or Project Manager to issue a DEFICIENCY REPORT detailing the nature of the condition, location, time and date of subject deficiency. Whenever possible, the Work Specification Item number with which subject deficiency is associated, should be annotated. All Deficiency Reports should be logged, numbered and discussed at the Production Progress meeting. Any reported deficiency that is not corrected or addressed by the Shipyard Contractor within twenty four hours of notification should be flagged for future reference. When the Shipyard Contractor submits a request for partial payment of Work Items completed, for approval by the Project Manager, the list should be reviewed to ensure that it does not contain any Work item for which there is an outstanding Deficiency Report. Failure to correct a deficiency in a timely manner will preclude approval for payment of the respective Work Item involved. When the Shipyard Contractor corrects a reported deficiency to the Project Manager's satisfaction, such correction is acknowledged in writing by the Project Manager and the Deficiency Report Log annotated accordingly.

MANAGING CHANGE ORDERS
A Change Order to cover additional work and/or material can either be requested by the Shipyard Contractor or issued by the Port Engineer for the convenience of the Ship-owner. Since each Change Order has the potential to create additional work, increase the final contract price and possibly extend the contract performance period, the Port Engineer should be guided by the following considerations in evaluating the need to issue a Change Order:

1) Is the additional work to be authorized by the Change Order related to an existing Work Item in the Contract Work Package and is it essential to ensure the proper accomplishment of the existing Work Item? If so, the Change Order can be safely issued within the designation of "Growth-Within-Scope". If it appears that the additional work was omitted from the original Work Specification due to an oversight, the scope of additional work should be stated on the Growth Control Log Sheet. This is to provide a degree of accountability of the reasons for growth while also serving as a reminder to future specification writers.

2) Is the additional work essential to ensure the seaworthiness of the vessel and/or the health and safety of the crew? If there is any doubt about this in the mind of the Port Engineer; he should consult Title 46, Shipping - Code of Federal Regulations, for pertinent guidance. Otherwise, he should not hesitate to call the U.S. Coast Guard, Office of Marine Inspection, to determine the legal requirements covering the scope of work envisaged in the prospective Change Order. On this basis he can draft a scope of work that will ensure full compliance with regulatory body requirements. This course of action will also provide a legal justification for the associated growth. 3) Is the additional work (a) The result of a specific requirement by a U.S.C.G. inspector in the course of a routine inspection? (b) Is it required by the Code of Federal Regulations (C.F.R.  46),  to be performed on a periodic basis? (c) Is it the subject of an outstanding citation such as a CG-835? In either case, the work is considered mandatory and essential for either the seaworthiness of the vessel, the health and safety of the crew, or the re-issuance of the ship's Certificate Of Inspection (C.O.I.) without which the ship is not legally allowed to sail.

4) What is the probable consequential effect of not having the work done during the current shipyard availability? If the additional work falls within the scope of paragraph 1 above, there is a real probability that the original Work Specification will not be fully completed as required and the system or equipment will not pass operational test as intended, nor will it pass Regulatory Body inspection, and will most likely become the subject of a CG-835. In this case, the citation may require accomplishment of the additional work prior to the vessel's departure and to the satisfaction of a further Coast Guard inspection.

5) Is the additional work required by an "As-Found-Condition" report submitted by the Shipyard Contractor resulting from an original Work Item directing the Shipyard Contractor to "Open, Inspect and Report", if so, it is considered an anticipated item of "Growth-WithinScope", and should be shown on the Growth Control Log as such. When writing a Work Specification that directs the Shipyard Contractor to "Open, Inspect and Report", it is also customary (for the Ship-Owner) to issue a supporting Work Specification known as a Category "B" Item, that directs the Contractor to perform the repair or overhaul work required by the "As-Found-Condition". Estimated costs of Category "B" items are then considered and factored into the Shipyard Contractor's original bid. In such case, the Port Engineer has the discretion to request an itemized cost break-down of the additional work involved, including labor and material, and either invoking the applicable Category "B" item for which the price is already known, or writing a change order to cover the cost and charging it off to the Contingency Labor Allowance. This will depend upon the estimated cost of the scope of work envisaged by the "As-Found-Condition" report, relative to the bid price of the Category "B" item.

6) Is the purpose of the Change Order to cover procurement of parts and/or material by the Shipyard Contractor in lieu of unsuitable, insufficient or late delivery of parts and/or material ordered or furnished by the Ship-owner? This is another instance in which the underlying cause should be shown on the Growth Control Log Sheet to justify the additional cost involved and as a reminder to future Work Specification writers. Additionally, if the parts and/or material ordered or furnished by the Ship-owner, are either unsuitable, insufficient or late in arriving, this may adversely impact production and possibly delay completion. Should this happen, the Shipyard Contractor may file a claim for "Equitable Adjustment" to off-set any monetary loss involved such as the charge for "Liquidated Damages", which is the usual penalty lodged against a Shipyard Contractor for late delivery of a ship. In a "Worst Case" scenario, if the re-floating of a ship is delayed by late delivery of a Ship-owner-furnished underwater appendage, such as a transducer sonar dome, Doppler speed log, etc., the Shipowner will normally be charged for each day his ship occupies the dry dock over and above the original time period envisaged and bid on by the Shipyard Contractor to perform all underwater hull-related work within the Contract Work Package.

7) Is the Change Order required to cover procurement of a Manufacturer's Tech-Rep by the Shipyard Contractor, due to failure to do so by the Ship-owner? As in para. 6 above, it is important that the Contract Work Specifications clearly identify who is to order, procure or provide parts, materials, Tech-Reps and related services. It is also the obligation of the stated provider to ensure that all parts, materials and outside services are delivered or made available to the Shipyard Contractor in a timely manner. In the case of a Manufacturer's Tech-Rep, any delay in his or her arrival may adversely impact production. This may result in a "domino-effect" where completion of another system or equipment may be contingent upon operational readiness of the system or equipment that is waiting to be worked on by the Manufacturer's Tech-Rep.