Ship Managers

Ship managers may either work in-house as part of the ship owner’s own organisation or as an independent entity contracted to the owning company under a management agreement.  This lesson assumes that the ship manager is working as a separate entity on a “full management package” basis which assists in making a clear distinction of the responsibilities falling on the ship manager.  Even in cases where the ship management department is in-house, the discipline imposed by operating as if the management is a separate entity is frequently beneficial.  The accounting function forms the core of ship management.  While the owner has control over capital costs, he must look to his ship manager to provide him with a safe, efficient and economical ship operation package which can be accurately costed to enable the owner to make the correct commercial decisions. The ship manager’s job as far as accounting is concerned falls into three stages, budgeting, processing and reporting.  The budget estimate will first be submitted to and discussed with the owner in detail so that agreement can be reached on the way the ship will be operated.  The budget will normally cover a 12 month period and from it can be produced a cash flow forecast which will set out the anticipated expenditure on a monthly or quarterly basis.  The second processing stage is reached as the ship is in service, expenditure is actually incurred, and bills have to be paid.  Finally, at regular intervals the manager will prepare a detailed report analysing the costs incurred on behalf of the owner and compare these with the budget forecast. This final stage is the acid test of the managers’ efficiency and ability to forecast operating costs with accuracy.  The budget -v- actual cost analysis will also form the basis on which to prepare the budget estimate for the following year.