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Concepts V3.0

This is version 3.0 valid from 2018-Q1

Overview

The Shipping KPI Standard is built up hierarchical with 8 Shipping Performance Indexes (SPIs), 33 Key Performance Indicators and 64 Performance Indicators (PIs). 

There is a mathematical relation between SPIs (high level indexes) which are calculated from Key Performance Indicators, and KPIs which are calculated from Performance Indicators (lowest level). 

On the lowest level you find the PIs, which are based on data capture (measurements or counters) directly from a ship or from the shipping management. Data is collected once and re-used within the Shipping KPI Standard in order to reduce the amount of data. 

On KPI level a form of normalisation take place. The KPI are scaled into a range from 0-100, where zero indicates unacceptable and 100 is outstanding performance. This makes it possible to compare ships with different characteristics or amount of data captured. 

Finally, on the highest level the KPIs are combining into Shipping Performance Indexes in order to express performance within specific main areas.




Shipping Performance Indexes:

The Shipping Performance Indexes (SPIs) are aggregated expressions of performance within a particular area. The SPIs are expressed as a weighted average of relevant KPI Ratings on a scale between 0 and 100. The objective of the SPIs is to give external stakeholders information about the overall performance of a ship.

Key Performance Indicators:

The Key Performance Indicators (KPIs) are expressions of performance within a specific area. The KPIs ratings will form basis for the Shipping Performance Index (SPI) score. The KPIs can be expressed in two ways; a KPI Value which is a mathematical combination of relevant Performance Indicators Values and a KPI Rating which is an expression of the KPI Value on scale between 0 and 100 where a high rating (100) is a result of high/excellent performance. Some PI Values can be included in the calculation of more than one KPI Value. Examples of KPIs are: Budget performance, Drydocking planning performance and Ship availability

The objectives of KPIs are to:

    • measure for continuous improvement
    • measure for internal and external benchmarking
    • measure to set incentives

KPI accepted as part of the Shipping KPI performance hierarchy must be:

    • Observable and quantifiable
      A KPI is a mathematical formula on basis of unambiguous, observable performance measurements.

    • Valid indicator of performance
      A KPI expresses performance within an area which the Ship Manager needs to perform well. Also the Ship Manager needs to have complete control of the factors affecting the performance measured.

    • Robust against manipulation
      A KPI must relate to a large extent to unambiguous descriptions of the needed measurements and not leave room for “favourable interpretations”.

    • Sensitive to change
      A KPI will reflect actual changes in the Ship Manager’s performance well (by increase/decrease) over time.

    • Transparent and easy to understand
      A KPI is interpreted by all users in the same manner.

    • Compatible
      A KPI is harmonized with the rest of the performance hierarchy. The KPI must be compatible with other KPIs to prevent the decision-makers receiving contradictory control signals.


Performance Indicators:

The Performance Indicators (PIs) are the building blocks giving the basis for KPI Value calculations. PIs are directly observable parameters (measurements) for each ship under management, e.g. Number of dismissed crew, Number of collisions and Number of fire incidents. 

The Performance Indicators are the only elements that must be reported manually or by means of implemented ICT solutions. Focus has been to provide the hierarchy with unambiguous definitions of measurable low level parameters based on existing measurements in the industry. Each PI may be used in the calculation of several Key Performance Indicators (KPIs). An example is the PI Number of recorded external inspections which is used as a denominator in the calculation of several KPI Values.

Meta Data:

Meta data is used for grouping and filtering during statistical analysis. It usually represents an attribute of the ship, like its length or the nationality of seafarers used during the reporting period.

A typical use of meta data allows a ship manager to benchmark it's ships not against all other ships in the system, but for example only against ships of the same ship type.


Period for reporting vs. Period for data capture

Performance data of ships is always reported quarterly, i.e. the period for reporting is always the quarter.

In the normal case the reporting period is also the same as the period for data capture, so the data reported for Q1-2011 is also the performance data measured (i.e. captured) in Q1-2011. However in a few cases this does not appear to be practical. For example:

  • 'Actual running costs and accruals' might not be known in time of reporting for a given quarter. It was therefore decided that PI011 is using last year's values.
  • 'Officer terminations' are difficult to specify for a single quarter, due to the use of temporary contracts in the maritime industry and the return of officers at a later stage. It was therefore decided for PI041 to look at a longer period.

In conclusion it is important to check for each PI measured, which time period is specified in its documentation for data capture.

Note: The KPI association is well aware that the variations in data capture period are adding to the complexity of the KPI standard. This was also confirmed by feedback of the participants. The KPI Expert Group therefore works on the practicalities of unifying the capture period, if possible also to a quarterly base.

Ship vs. Fleet wide reporting

In general the KPI standard is ship oriented. Performance Indicators (PIs) are captured and reported by ships. KPIs and SPIs are also calculated by ship. But it turns out, that a few performance measurements cannot be expressed by ship.

A classic example is PI017 'Number of cadets under training'. Some cadets get trained on one ship and deployed later at another one, some cadets are not on ships at all. So the cadets employed with a ship manager are an investment into the future, where not only a specific ship benefits, but a whole fleet of ships.

To address this the term of a Strategic Business Unit (SBU or short BU) is used. A BU is an organizational sub-entity of a shipping company responsible for a subset of the ships. This could be a branch, a country office or a region etc. All fleet wide defined PIs are measured by BU. Basically the BU defines the fleet.

Again in conclusion it is important to check for each PI measured, if it is measured for a single ship or across all ships in a BU. In effect the ships within a BU share the same value for such PIs.

KPI Profiles

A KPI profile is a subset record of KPIs that is used to store the interested KPIs of the ship operator. Depending on the structure and the company needs, account managers are entitled to select and assign KPI Profiles to ships from a predefined list of built-in KPI profiles. Also, the KPI profile refers to the explicit visual representation of ships performance data. 

KPI Profile concept provides a set of benefits such as:

  • Simplifies the way users perceive the KPI Standard
  • Limits the KPI Standard as per the company needs
  • Reduces the data entry volume 
  • Customized visual representation of the ship’s performance 

Primary Vs Secondary KPIs

A primary KPI is selected by the account manager to be in the KPI Profile. Primary PIs are the PIs, which should be entered in order to calculate the primary KPIs of your KPI profile whereas primary SPIs are the SPIs to which a primary KPI contributes to. Similarly, a secondary KPI is excluded from the KPI profile and secondary PIs should be entered to calculate the secondary KPIs.