Shore Labour

Under this heading are included costs of specific spare parts ordered as replacements for items which wear out or become damaged, together with the cost of carrying out any repairs to deck or engine areas.  The cost of shore labour used to carry out repairs in port is also included together with the cost associated with any riding crews employed to carry out repairs to the ships at sea.  The cost of maintaining automation, electronics and navigation aides in a modern sophisticated vessel can be major item of expense. Some of these items may be rented on a full-maintenance basis rather than owned, in which case the rental charges will replace maintenance costs. Survey fees and classification fees also fall into the maintenance category. It is common practice for managers to estimate the cost of periodical drydockings and to spread the cost over the years on an accrual basis. Thus, if a vessel is expected to drydock every second year, half of the estimated drydock expenditure will be budgeted within each year leading up to the drydocking.  This means that an allowance against the drydocking will have been built up or accrued in the owners’ accounts towards the eventual cost.  On the other hand, some owners prefer to disregard drydocking expenditure from the budget, electing to accept the cost when incurred as a special item.  Managers will have to establish from owners what their individual philosophy is in this regard at the budget agreement discussions.  By the same token consideration must be given as to whether drydocking remains within the budget or is shown separately “below the line”. The cost of insurance premiums and estimated P & I calls are based on quotations obtained or renewal negotiations.  It is frequent practice for the P & I budget figure to be based on estimated total calls as applied for the year in question.  This may of course be at slight variance with the actual cash position but it will allow the owner to accrue for the true cost of P & I insurance during the year in question.