Tinker, Tailor, Owner, Operator, Client, Flag

Having run through some of the problems in the dynamic positioning (DP) industry operating environment from the viewpoint of the DPO, DP duty engineer (DPE), class society, DP consultant, and designer, some of the risks that need to be managed by the owner, operator, and vessel clients are obvious. These are risks to the businesses that need to be managed by the business systems. Good business practice would be to help each other to a win-win solution but sometimes things are less cooperative and one of the parties gets demanding or recalcitrant. This is a shame because all of them want the vessel to show its value by operating well and safely, so they can all make money. The problem is usually with a mismatch in expectations and poor visibility of the business conditions and processes.

Before we start looking at the expectations, we need to look at and remember some of the risks. Some vessels are standby rescue boats for whom DP is a convenience but not a necessity, as they normally sit outside the 500m exclusion zone. Loss of position is an inconvenience but not particularly critical, as they have a long way to go and considerable time to react before they hit something. An offshore supply vessel operates inside the 500m work zone and must not hit other vessels, especially not forcefully. Loss of position or position keeping capability means that they cannot do their job and may cause damage. A construction vessel can cause massive equipment damage, if it loses position. A drilling rig or production vessel might cause an environmental disaster, if it loses position. And a diving vessel might kill crew, if it loses position. So, risks range from inconvenience to death, depending on the task of the vessel, and position keeping requirements can range from very loose to very tight and very reliable. All those ships want to keep position but they need it to different degrees.

Some ships can slip between different roles, and requirements can vary with role and client. With two identical vessels, one might operate as an offshore supply vessel and the other as a dive vessel. The position keeping criticality and requirements are different for the two roles. If the offshore supply vessel has operated at a lower required operating standard for a long time, some of its capability to safely operate as a diving vessel will have degraded and it cannot immediately operate at the same level as the sister ship that has been held to tighter requirements for a long time. Operating a supply boat at dive boat levels is inefficient and getting it operating again at the higher standard takes time and effort. Yet the long-time supply vessel might be called to operate almost immediately as a dive vessel. Things like this happen on the spot market. As an analogy, a ship built for arctic exploration might be forced to drill off of Africa, lose all the fancy insulation to rot, and let the heat-trace degrade. If it then has to go to either pole, it has to restore functionality.

One client may just need the job done (#1), another might understand the risks and work to manage them (#2), and another may overspec everything just because they can (#3). Client 1 isn’t managing their risk and may consider accidents a price of business. Client 2 understands that DP incidents are a failure of operations control and works to minimize them. Client 3 creates market confusion with his long term operation of a DP3 dive boat as a crew boat. The crew boat released by the over-specifying Client 3 presents an unexpected risk to the lax Client 1 when he operates it for diving. Similarly, the prudent Client 2 would face additional work to mitigate risks and bring the vessel and operations up to diving standards.

Then there is the complication that a ship can work happily for Client 1a, Client 1b, & Client 1c, and then encounter a lot of fuss from a new client. How likely are the new client’s concerns and requirements to be valid when all the old clients were happy, everything is class approved, and everything went well? Are the improvements reasonable? Has the vessel been operating wrongly the whole time? Surely not. Everyone likes to think that they do a good job, or as good as practical. The new client looks like Client 3. If Client 2 is very patient and gives the vessel time to absorb the changes and their reasons and pays for the changes, then they might stick. Otherwise, prudent Client 2 might be mistaken as an unreasonable, tyrannical Client 3 that pays well and must be temporarily obeyed, but can be safely ignored as soon as they can work for a better client. The bigger the change, the greater the chance that the vessel might only go through the motions of complying. Especially as some over specifying Client 3’s don’t do much verification.  

So, you can have identical vessels with very different levels of risk available for hire and little clear differentiation, and have clients that impose different burdens on the vessels. This causes the market to become segmented. All expectations come with costs and this can cause conflicts in an environment where the costs are clear but the risks are not. Even if the vessel client covers the time and money to retool, retrain, and allow time for absorption, there is the psychological cost of having been wrong and this can lead to denial and resistance. The risks may be demonstrably real but if they are not perceived and, if it is costly and time consuming to explain to each market player, then improved regulation or guidelines are needed to control standards.

Vessel owners and operators also have varying levels of competency and risk management:

• Risk agnostic – Officially meets base requirements with anything additional up to the customer, as clients who want more usually want something different. This keeps monetary costs low but does not help manage risks. Popular with Client 1 types.
• Paper Tiger – All paperwork and certificates exceptional but actual systems and procedures questionable. These vessel are popular with Client 3 types, but are almost as dangerous as the bottom of the market, as paperwork is blind.
• Good People, Poor Equipment – A good crew, which knows the limits of their vessel and how to work around them, can make up for a lot of problems. If the crew is replaced then the value of the vessel is reduced. This is a problem if the vessel enters waters requiring a crew of nationals, or if money is saved on crewing by replacing the experienced hands. This ship scares off Client 3, is a concern for Client 2, and is welcomed by Client 1, especially if they can lower their crew costs.
• Good Equipment, Poor People – A crew, who doesn’t understand the vessel, systems, & roles or have poor morale, can cause unexpectedly creative problems. Human error is responsible for what proportion of DP incidents? The equipment systems are still dependent on the people to save them from failure. Choose wisely and manage well. Of deep concern to Client 2, but good for Client 3, if the documentation looks OK. Client 1 might like the razzle-dazzle of new equipment but usually doesn’t like the associated cost.
• Good People, Poor Management – You occasionally see vessels where all the value is added by the crew and their actions. This happens organically as part of the ship culture and despite their remote managers. If the crew is replaced or the ship culture eroded then the hidden value is lost. If the managers won’t let money be spent on basic necessities, eventually the luck will run out. Client 2 might support the crew, but Client 1 and 3 won’t care.
• Good Management, Poor People – Good managers can turn around a poor crew with an investment of time, money, and energy, if they manage to detect them. This is most important when taking over vessels and companies, and with new vessels and crews. Peoples’ responses are highly situational, so understanding and adjusting perceptions can be crucial to resolving the problem. Hopefully detected by internal monitoring, consultants, or Client 2. Otherwise, a hidden risk.
• Risk Adverse – Infinite safety costs a lot of money and creates performance limits. The market makes sure these vessels don’t exist, but Client 1 managers might find them more common than they like. Client 3 might get the unpleasant surprise of getting exactly what they specified. Vessels sometimes become temporarily risk adverse after a close call.
• Risk Managing – Of course, there are good vessels with good crew and management, but market conditions try to squeeze them into one or more of the previous categories. Those companies that resist try to manage their risk and the risk that they present to their clients while still performing work at a good price. They prefer Client type 2 as operating allies for sustaining this.

The market itself is risk agnostic and believes strongly in short term price and paperwork. The associated risks are less clear, so in the short term the market has difficulty dealing with them. For example, most DP capability plots are misleading, but they are still commonly used (See my article on them).

None of this is class’s fault so far. It only becomes their fault when the basic IMO 645/1580 and classification rule requirements are not met. This happens a lot and adds additional risk to vessel owners, operators, and clients. The reasons for this are covered in another article (Class aren’t DP Gatekeepers) and the risks are borne by the industry and public. They are accepted, ignored, or unknown by Client 1, hunted and managed by Client 2, and vainly specified away by Client 3, who may or may not invest in more than paper verification.

What about Flag State or Coast Guard? Sorry, “Flag” was mostly added to make the title read better. Flag states are very interested in safe operation in their waters and to a lesser extent by their vessels but are mostly hands off and delegate most oversight to the class societies. After Macondo, USCG was very interested in safe DP operation, adopted MTS DP guidelines and started a DP incident reporting system. Many of us were interested in helping them but their enthusiasm seems to have dissipated.

There is some industry confusion about DP class. DP3 is not necessarily better than DP2, the field performance is close, as their implementation is lacking. As far as DP control system redundancy, DP1, DP2, and DP3 are not that far apart, as they all depend on the DPO taking independent joystick (IJS) control when, not if but when, the DP control system fails, and detecting and correcting faults. DP2 has duplicated components with the same hardware, software, network, and environment, while DP3 has the duplicated components in different spaces but still have the same hardware, software, and network. Duplicating components sometimes saves them from a hardware failure, and placing them in different spaces saves them from most hardware and environmental faults, but other common faults remain and the only relief is the DPO. DP1’s weakness is lack of duplicated and independent thrusters, power, etc. DP2 is a major improvement on this, but some DP1 vessels have the same duplicated and mostly independent power plant. The main difference is that the DP1 plant redundancy may not have been reviewed. DP3 is supposed to have duplicated, independent, and segregated power plants. All three can be improperly designed, constructed, maintained, setup, and operated, and this causes the differences between each DP class to be much smaller in operation than they appear on paper. DP1 might have a single switchboard and a DP2 vessel might have two, but if their bus ties are closed and they lack extraordinary protections, then that might be the equivalent of one switchboard. I don’t believe that closed bus tie DP3 is possible, as they have to achieve and maintain the equivalent safety to two open bus ties, but I see people selling it. It doesn’t matter what class the vessel is, if the tuning is off, a network or software error fails all the thrusters or generators, a master system like power management, DP, or safety shutdowns fails unsafely, or an operator makes an error. What is the point of being DP3 if the vessel is dependent on a common control network? It might really be DP1. I’m sceptical of approved DP class until I look at the details myself. In the real world, DP class is a guideline to vessel redundancy and nowhere close to a rule.

In the ideal marketplace, those providers who supply the best solution for the best price will prosper, while their less successful competitors must either imitate or decline. In a real marketplace, it is not clear what the best solution is or what the real price is. The accuracy and appropriateness of solution claims are variable and hard to verify. Direct monetary costs are obvious while the total real costs can be hidden in factors like increased risk, reduced real redundant uptime, and reduced efficiency. The hidden risk can sometimes be more that the direct monetary cost of the vessel. Evaluating and controlling the obvious and the hidden is what good management is all about. Companies need a positive cash flow but as they say in business school, “Manage your risk or they will carry you out.” Less experienced managers might be fixated on monetary costs and cash flow. Managers who are prone to this need to get in the habit of explicitly monetizing the hidden costs so they become visible and can be managed. Sharing the rewards of safe operation in the form of bonuses and the risks of its absence as a share of liability can help get all groups to focus on safe operation.

Finally, DP is the means to an end. Excellent mission equipment and experience, but poor DP, is usually preferred to adequate mission equipment and experience but excellent DP. DP is the prerequisite for performing the mission safely, not the purpose of the vessel. The focus is accomplishing the vessel mission and DP is a support function that is almost invisible when it works properly. That is its goal. It’s only really visible if it goes wrong or interferes with accomplishing the vessel mission. For example, the redundant DP capability is much smaller than the healthy intact capability of the vessel, so clients and operators are tempted to work until the vessel can no longer hold position, so long as the increasingly bad weather does not interfere with the industrial mission. DP risk is usually a small part of the larger industrial mission risk. But the demands of the high priority industrial mission often increase the DP risk.

DP operation risks are best managed by correctly engaging the source of each risk – design, operation, crew, management, mission, and customers. Design risk is not eliminated by the classification process and later documented & undocumented modifications can further mar the design. These need caught by an experienced reviewer and tester focused on ensuring safe redundant DP operation. Problems caught by previous users are not always resolved. Maintenance is worth listing separately from operation as some clients may not allocate time for its performance and some owners will attempt to minimize cost. Operational procedures, requirements of safe operation, and limits of safe operation need agreed in advance between the owner, operator, & vessel client and the crew included in the deliberation for buy-in and practical feedback. There needs to be space in the planning for evaluating, developing, and maintaining crew competence and emergency capability. This means that short-term thinking and planning needs to be avoided, except in emergencies. Clients or providers who cannot do these things should be avoided. If they cannot be avoided, additional systems need to be put in place to mitigate the additional risk and ensure crew and vessel operation to the required standard.  

Market competition and limited or errant information and attitudes pose a challenge to safe and redundant DP operation, but good management creates good processes that balance taming risk and costs. Creating and sustaining long term value requires resisting short term thought and identifying true costs. Internal and external challenges to management visibility of problems need to be overcome so good decisions can be identified. Clear discussion of risks, expectations, and procedures need to be carried out with all crucial mission participants, so an agreed framework can be used for decision making. Valid identified problems are an opportunity for increased value for all participants. Shared success deepens the professional partnership between individuals and companies and makes future operations easier. None of this is unique to DP. DP presents particular challenges, but its challenges can be managed with good sense and long proven, good business practices.