Some Captains don’t like to use two anchors and, given some of my early experiences, I can understand the reluctance and the ‘you must be joking, more trouble than they’re worth’ sentiment.
Those early experiences were not always successful and, on occasion, the chains would end up not just crossed, but knotted together – even though I was sure I had spread the anchors wide enough. I didn’t really understand why, and it felt like Aquaman and his water breathing buddies had been having a bit of a laugh seeing who could tie the most overhand knots in my chains – I’ve heard they may also operate in Porto Cervo!
However, I persevered and, when I did get it right, the benefits were obvious.
In this piece I will share what I learnt and one method I used with regular success.
When anchored in calm conditions with little wind, sea or current, you don’t need to worry much about the yachts movement, it’s inertia and how it might affect the holding.
Without external forces the yacht just sits atop the point where the chain touches the seabed. But, when wind, current, waves, interact with the yacht you get movement which, in sheltered waters, is mainly surge (longitudinal) sway (transverse) and yaw (rotational).
The manifestation of this movement is that in strong winds a yacht will ‘sail’ around its anchor; sometimes with significant changes in speed and heading. That movement and resultant inertia, combined with the wind force against yacht, places large loads on the mooring equipment, chain and anchor – enough to break the anchor out of the seabed.
We have all heard and felt the terrible shudder as the bow finally comes to a stop against the stretched chain at the extreme of each swing. And, stood on the bridge, bleary eyes transfixed on the ECDIS in the hope that ‘smiley face’ being traced doesn’t turn into the ‘Mark of Zoro’ – a sure sign of dragging!
I found that two anchors could significantly reduce that movement and minimise the chance of dragging. This made staying at anchor in strong winds more secure and comfortable for everyone onboard. I certainly slept better with two out!
It became my preferred choice, not just in strong winds but, also as an option when trying to keep the wind off the aft deck where guests were dinning. Preventing wind blowing away glasses and table settings certainly helps the departmental dynamic!
Along with the normal factors such as depth, scope, quality of seabed, hazards, weather, etc., there are some basic considerations that I found held true.
Set the anchors too close and you do not make significant difference to the yachts movement, and it’s easy to cross when dropping and/or dragging.
Set the anchors too wide and, although the movement may be dampened, their pull works against each other, reducing the holding power of your anchors.
Through trial and error, I found that the Admiralty Manual of Seamanship recommendation of forming an equilateral triangle between the bow and the two anchors worked the best. It provided sufficient spread to reduce the movement and also prevent fouling of the chains.
The method set out below is just one of a number I used. It could be described as ‘precision anchoring’ as the end result was you ended up ‘brought up’ on the spot you originally selected. It gives you a lot of confidence when you have to set two anchors in a tight or busy anchorage.
As it requires more a bit more thought and planning to get right, it’s also a great way to teach the bridge and deck teams about anchoring.
Once I have selected the area, using ECDIS and radar to ensure the area is clear, I construct my reference points on an over scaled ENC – changing the VRM units to metres also helps. As I am interested in my final position, I also need to make an adjustment for the position of the CCRP (Continuous Common Reference Point).
It’s an easy calculation as follows – you can access Trig functions on an iPhone by opening the calculator and rotating the screen.
Once you know the amount of chain (scope) you intend to use, you can calculate VRM1 and VRM2 and draw them on the ENC and set EBL1 to point directly at the true wind, and EBL2 perpendicular to wind pointing in direction of 1st anchor – as per the animation.
One word of caution; there is often the temptation to let go the 2nd anchor too early, either before the full scope is paid out, or before the chain is off the beam at a medium to long stay…resist the temptation or you will not achieve the correct spread and you may end up fouling the 1st anchors chain.
Of course, there is nothing wrong with using the bow thruster to move transversely to the 2nd anchor position but, for me, I preferred to use the wind as my thruster as it gave me a better feel of how it was affecting the yacht.
And, when the wind finally abates or shifts direction, it’s time to heave up the leeward anchor before a tangle is created – don’t delay, it’s no fun trying to take a turn out. If you’ve set them properly you can often do this using the windlass without engines or thruster.
Although I struggled initially, partly because it was something that was not taught and, I also failed to seek advice from others. When I finally got it right, the benefits were clear and as a bonus I found that the thought process involved helped improve my overall approach to anchoring.
I hope this has provided some food for thought, especially for those who have never used two anchors or, have been reluctant due to the horror stories told about fouled chains and anchors.
It is by no means the only way, but it is one that worked for me!
Although the primary environmental concern challenging our industry is C02 and other emissions generated from burning fossil fuels, there are other vectors such as sewage and grey water that can also have an impact.
Whilst on the larger yachts the new treatments plants take care of both, producing effluent that can be clean enough to use as wash down water, smaller and/or older yachts may not be so well equipped, or have inadequate black/grey holding tanks. Grey water is often simply discharged overboard.
For those of us who have had the ‘pleasure’ of sticking their head into a grey water tank, we are only too aware of the odious and putrid soup that is contained within, in fact, I suggest many crew would rather inspect a sewage tank than a grey water tank such is the assault on the senses. And, given these sensory observations, and the impact grey water can have on tank coatings, why is grey water treated essentially as a harmless liquid?
Whilst the discharge of sewage (black water) is mostly regulated under the International Convention for the Prevention of Pollution from Ships (MARPOL) Annex IV and other national legislation such as United States Environmental Protection Agency (EPA) Clean Water Act (CWA) grey water from ships and yachts is discharged untreated directly into the sea. On yachts, this is very often in close proximity to the coast, beaches, ports and marinas, where there are swimmers or other recreational water users and where it has the potential for the greatest impact on the marine ecosystem.
So what is grey water?
*If using mobile phone, swipe or rotate screen to see the full table.
Grey Water Definition
Annex V Reg 1 Definitions
4. Domestic wastes means all types of wastes not covered by other Annexes that are generated in the accommodation spaces on board the ship.
Domestic wastes does not include grey water.
1.6.1 Dishwater means the residue from the manual or automatic washing of dishes and cooking utensils which have been pre-cleaned to the extent that any food particles adhering to them would not normally interfere with the operation of automatic dishwashers.
1.6.2 Grey water means drainage from dishwater, shower, laundry, bath and washbasin drains. It does not include drainage from toilets, urinals, hospitals, and animal spaces, as defined in regulation 1.3 of MARPOL Annex IV (sewage), and it does not include drainage from cargo spaces. Grey water is not considered garbage in the context of Annex V.
*Note: if in-sink macerators drain into grey water tanks, then the contents and discharge of that tank will need to comply with Annex V.
Clean Water Act, 33 U.S.C. 312(a)(11)
Galley bath and shower
Coast Guard regulations, 33 CFR 151.05
Drainage from dishwasher, shower, laundry, bath, and washbasin drains and does not include drainage from toilets, urinals, hospitals and cargo spaces.
So, whilst grey water is well defined, what is less well understood is that untreated grey water contains many undesirable pathogens, organic matter, chemicals and micro plastics (the microfibres that are shed during washing of man-made fabrics) often at levels that can be higher than domestic effluent from sewage treatment plants, and can have an impact on human health and the marine ecosystem.
One of the largest studies on grey water was done by the EPA following a petition in 2000 from Bluewater Network who represented 53 environmental organisations who wanted the EPA to take regulatory action on cruise ship pollution. The report – Draft Cruise Ship Discharge Assessment Report (EPA842-R-07-005) – was published in 2007 and covered sewage, oily bilge water, solid waste, hazardous waste and grey water. And, whilst there are significantly more crew/passengers on cruise ships and waste volumes greater, the sources and treatment are very similar to the superyacht industry.
From that study they list common sources and characteristics of grey water in the table below.
Automatic Clothes Washer
bleach, foam, high pH, hot water, nitrate, oil and grease, oxygen demand, phosphate, salinity, soaps, sodium, suspended solids, turbidity
Note: recent studies also suggest micro plastics from man-made fibres are also contained with the waste water.
Automatic Dish Washer
bacteria, foam, food particles, high pH, hot water, odor, oil and grease, organic matter, oxygen demand, salinity, soaps, suspended solids, turbidity
Sinks, including kitchen
bacteria, food particles, hot water, odor, oil and grease, organic matter, oxygen demand, soaps, suspended solids, turbidity
Note: if food waste from in-sink macerators is draining into grey water tanks this changes the grey water to food waste and therefore discharge must comply with MARPOL V.
Bathtub and Shower
bacteria, hair, hot water, odor, oil and grease, oxygen demand, soaps, suspended solids, turbidity
Source: ASCI 2001
Of course, the quantity and quality of grey water varies considerably depending on many factors, such as the number of crew and passengers, the various types of detergents and cleaning products used, personal grooming and hygiene products used by the crew and passengers, and various filters and fat traps if installed.
The EPA study, combined with findings from a previous study by the Alaskan Department of Environmental Conservation – Alaska Cruise Ship Initiative in 2001, found a range of readings of various analytes. A sample of which are found below.
Untreated Domestic Water
10,000 – 100,000
Biological Oxygen Demand (BOD 5 day)
110 – 400
Chemical Oxygen Demand
250 – 1,000
66.9% between 6.0 and 9.0
Between 6.0 and 9.0
Totals Dissolved Solids (TDS)
Total Suspended Solids (TSS)
100 – 350
Ammonia – Nitrogen
Total Kjeldahl Nitrogen
20 – 85
*MPN – most probable number
Untreated grey water contains many pathogens and, in addition to those listed above, can also include, Salmonella, shigella, hepatitis A and E, and gastro intestinal viruses (national Research Council, 1993). Pathogens can pose danger to human health by contact or ingestion of contaminated water, or by consuming shell fish which feed by filtering water.
The 1986 EPA Quality Criteria for Water, commonly known as the ‘Gold Book’, references pathogen indicators and has defined water quality standards based on two activities of import to yachting: marine water bathing and, shellfish harvesting.
From the samples of untreated grey water analysed in the study, the average fecal coliform contamination exceeded the standard of 43 MPN/100mL for shellfish harvesting and, the average enterococci contamination exceeded the standard of 35 MPN/100mL for marine water bathing.
Although not a major indicator in this study, chlorine is used on yachts in a variety of applications including sanitising fresh water tanks, the discharge of which is generally pumped overboard, often via the grey water tanks, so levels must be carefully controlled so they do not exceed recommended limits.
Studies have found that chronic affects to the marine biota such as poor reproduction and health can be observed at concentrations above 230mg/L with acute effects, severe illness or death, at concentrations exceeding 860 mg/L.
Organic matter from the grey water acts as food for water borne bacteria. The more food available, the greater the number of bacteria decomposing the waste and using oxygen in the process. Nitrates and phosphorous also contribute to high oxygen demand by providing nutrients for plants and algae to grow quickly, contributing to organic waste when plants die and decompose.
Reductions in oxygen level can be harmful to aquatic species and can, in extreme cases, create ‘dead zones’ where no fish or other organisms can live.
Suspended solids can affect the clarity of the water and in turn adversely affect the photosynthetic activity of marine biome.
This is a more recent and topical concern relating to plastics entering the food chain, consumption by humans, and the longer term environmental and health impacts.
A number of studies have shown that during machine washing of man-made clothing significant numbers of tiny fibres are released into the waste water; and, in the case of yachts, into the grey water tank and eventually into the sea.
One such study is ‘The release of microplastic micro fibres from domestic washing machines: Effects of fabric type and washing conditions’ (Elsevier: Imogen E. Napper, Richard C. Thompson).
This study examined the release of textile fibres during machine washing of clothes from three commonly used fabrics; polyester, polyester-cotton mix and acrylic. The results showed that laundering 6kg of synthetic material could release between 137,951 – 728,789 fibres per wash, ranging in size between 20 𝜇m and <5mm. Given the load on most laundries and, composition of the fabrics washed, one can see the potential for a significant number micro plastics being discharged into the sea on a daily basis.
It is important to note that when grey water is discharged into the surrounding sea it mixes with the sea water and dilution takes place. This effect can be affected by factors such as discharge rate, salinity, water temperature, wind, currents and, of course, a yachts movement.
The Alaska Department of Environmental Conservation (ADEC) concluded that dilution factor would range from approx. 5 to 60 and occur between 1 and 7 meters from the ship (ADEC, 2004). The EPA report suggests that the initial dilution estimated by ACSI and ADEC for a vessel at rest would not likely be great enough for untreated grey water to meet the ‘Gold Book’ standards for fecal coliform and enterococci
From tests conducted by the EPA, it was shown that the dilution effect, due to the movement of a vessel and the mixing by their propellers, for a ship underway between 9.1 and 17.4 knots was a factor of between 200,000:1 and 640,000:1 immediately behind the vessel and, based on those results all ‘Gold Book’ standards for water quality, apart from fecal coliform, would be met.
From this it can be seen there are significant benefits in only discharging when underway and away from the near shore.
Apart from yachts that have advanced waste treatment systems that treat both grey and blackwater compliant with MARPOL IV 9.1.1 and the guidelines in MEPC.227(64) most yachts will be discharging untreated grey water from their holding tanks, often with food waste contrary to MARPOL V, whilst static, directly into the sea. The effect of this can be observed in busy marinas and crowded anchorages on windless days when there is little water movement or seabed disturbance and the water takes on a milky and/or scummy appearance – the difference in water clarity around Cala de Volpe in and out of season is quite striking.
Furthermore, the grey water has the potential for human health risk – depending on contamination levels – especially for those engaging in activities such as swimming, jet ski, wake-boarding, or any other activity where they may ingest seawater or have contact via an exposed scratch or wound. There are also short and long terms considerations related to the marine ecosystem such as algae blooms, bacteria in shellfish, and the introduction of micro plastics into the food chain.
Whilst the issue surrounding grey water applies to commercial shipping as well, due to their sailing and trading patterns they tend to have little impact on inshore waters – as can be seen from dilution effect underway. For cruise ships, if they do not have suitable onboard treatment of grey water, the Cruise Lines International Association (CLIA) members voluntarily agreed to limit the discharge of untreated grey water to when they are underway at not less than 6 knots and at least 4 nm from the nearest land and not to discharge grey water when in port.
What can we do?
I outline some of the steps could be taken to reduce the impact of grey water discharges.
As per CLIA, no grey water discharge closer than 4nm from nearest land, underway at not less than 6 knots
No discharge of grey water in port if facilities available – marinas have work to do here?
Where available, discharge grey water to suitable reception facilities e.g. barge or ashore
On new builds, increase size of holding tanks to more practical sizes based on ‘practical’ use of yachts, so discharge can be better managed – including smaller yachts
Install filters to remove micro fibres from washing machines
Use ‘environmentally friendly’ cleaning and personal hygiene products – not just ‘ECO or Green’ labeled as these are often-abused and misleading descriptions – carefully scrutinise such claims and check if they have been independently assessed and verified
On new builds specify and install only black/grey water treatment plants
On refits, consider updating your treatment plant and include grey water
Consider dosing grey water with additives that reduce pathogens and/or organic matter
Avoid using in-sink macerators if the pulp discharges directly into grey water tanks – instead, bag, store and dispose as per MARPOL V
Installation of fat traps
Some of the above does not require major expense, just a change in operational procedures and, of course, education costs nothing.
The quality of our oceans, and its health are fundamental to yachting – it is the ‘playground’ from which we experience so much pleasure. With our intimate connection to the to the sea we have a responsibility to minimise our environmental impact, protect the long term health of our oceans, and to ensure that future generations get to experience the same pristine seas and diverse marine life that we have all enjoyed.
I was prompted to write this because of the increasing restrictions in France due to environmental concerns and the impact anchoring has been having on the sea grass/Posidonia. This means that in many places along of the French coast, yachts will have to anchor in water >30m depth.
Although the French rules have perhaps highlighted this, it is not the only place where anchoring in water deeper than 30m is required; other places include Monaco, Capri, the Amalfi Coast, some anchorages in Croatia, Greece and Turkey, the fjords in Norway and Chile and, some of the Caribbean islands – it is not uncommon.
With that in mind, and my own experience of the yachts I have run, I ran a short survey on LinkedIn to gauge how much chain yachts carry.
Although not a huge response, the results were sufficient to mirror my own experience of the amount of chain some yachts carry – in some cases, totally inadequate.
The results to “how many shackles do you carry per anchor?”
Less than 6 shackles – 18%
7 shackles – 18%
8 shackles – 33%
More than 9 shackles – 30%
Rule of Thumb
Of course, there are several ‘rules of thumb’ to help determine how much chain cable is laid depending on the depth of water, among other factors such as type of seabed, weather, current, length of stay, etc. Two such examples are: –
The International Association of Classification Societies (IACS) – length of chain in Metres = ratio 6 – 10 x Depth of Water in Metres.
For 30m this would be a minimum of 180m or just shy of 7 shackles.
The Admiralty Manual of Seamanship uses a formula – number of shackles = 1.5 x √Depth of Water in Metres.
For 30m this would be a minimum of just over 8 shackles.
With the above figures, if you err on the side of safety, just under 40% of yachts who responded may not have sufficient chain cable to anchor in water >30m depth and, at 35m depth, only 30% of yachts would have the recommended amount of chain. How this compares to the total fleet would be very interesting.
Interestingly, the RYA recommendation is for a minimum of 4 x Depth. For 30m depth only 4 shackles – approx. half of IACS and The Admiralty recommendation. This may be fine for recreational boats, but for superyachts this seems at odds with both IACS who test and approve anchoring arrangements for ships and superyachts, and the experienced seafarers of the Admiralty.
As RYA qualifications are inherent to Yacht Deck Officer training and certification, has their ‘rule of thumb’ become the standard that most superyacht crew use – again an interesting question!
There is no doubt IACS and The Admiralty are a more qualified authority when it comes to anchoring of ships and large yachts and in my opinion captains would be wise to use their ‘rule of thumb’ rather than the RYA.
The Mysterious Equipment Number
Until I did my Master Unlimited CoC, I never took time to consider how the size of anchor and length of chain were determined for a given vessel. That’s when I learnt about the Equipment Number (EN).
Most superyachts are Classed by one of the IACS members such as Lloyds, DNV GL, ABS, RINA, etc., and they use common rules to determine the mooring equipment. This is based on the EN which is calculated for every Classed vessel – the formula is as follows: –
EN = △ ² ⁄ ³ + 2 BH + 0.1A
△ = moulded displacement in tonnes to Summer Load waterline
B = moulded breadth, in metres
H = effective height, in metres, from Summer Load waterline, to top of uppermost house
A = area, in square metres, in profile view, of the hull, superstructure and houses above Summer Load waterline.
The resulting EN is used in a table that details the number and mass of the anchor, chain length, diameter and grade, as well as towing and mooring lines.
Excerpt from Equipment Table – note ‘Total Length’ of chain is normally split equally between the two anchors.
It is important to note that the EN and anchor equipment is based on the following assumptions and limitations:-
Temporary mooring in harbour or sheltered waters
Current velocity: max 5 Kn
Wind velocity: max 48 Kn
Length of chain paid out, scope 6 -10
Good holding ground
The effect of waves is important – a significant wave height of just 2 metres would reduce the equivalent max current and wind velocities as follows:-
Current velocity: max 3 Kn
Wind velocity: max 21 Kn
A significant reduction in the holding power.
As most yachts use high holding power anchors (HHP) the rules also allow their mass to be reduced to not less than 75% of the table value.
Bitter End – Caution!
It is also important to know that the pin securing the bitter end to the chain locker is designed to be sacrificial and break at a load between 15% – 30% of the minimum breaking strength of the chain cable – it is designed to fail to prevent structural damage to the vessel.
It should be a fundamental part of the yachts risk assessment and procedures that, in the event of a runaway chain, the mooring team evacuate to a safe area as the flailing end of an anchor cable can have devastating effects – as was sadly experienced on Ocean Victory.
The anchor and mooring arrangements need to be carefully designed for the risks involved; unfortunately, some yachts, especially those with enclosed decks, place the windlass operator in harm’s way and do not provide safe egress in the event of a failure. Like many operational aspects of yacht design, work is still required to improve safety.
A Guide to Anchoring
The video ‘Anchor Awareness’ produced by DNV, GARD and The Swedish Club, although based on commercial ships, is also valid to larger yachts and is a useful resource that helps demonstrate anchor procedures and safe practice and is well worth a watch – especially for junior officers and deckhands who may be part of the mooring team.
Can be accessed by taping on the image below.
This piece was not meant as a guide to anchor best practice, but to try to assess if yachts carried sufficient chain for the intended depth, and help fill in some of the knowledge gap that may be missing from the yacht syllabus.
I hope it imparts a better understanding of how anchor and chain cable size and length are determined for yachts. And, importantly, the amount of chain paid out relative to depth that is recommended by authoritative bodies.
This knowledge may result in more secure anchoring and the provision of chain more appropriate to the expected use, water depths and conditions that may be encountered.
I must admit to a bit of plagiarism here as the title, in part, comes from the World Maritime University (WMU) Report1 into the hours of work and rest (HOWR) in the shipping industry – link at the bottom. When I saw the title, read, then reflected on its contents, it became clear there were parallels with the superyacht industry.
That being said, it is important to recognise that in the superyacht industry the issues surrounding misrepresentation of HOWR are generally limited to the peak periods; those times when guests are onboard when, due to a combination of high demands and insufficient crew. To successfully navigate the obligations and intent of the legislation it is important to fully understand the regulations. The alternative is creative application of HOWR – something I am sure that most yacht captains and crew will have experienced.
In my early days on yachts, working long hours to deliver the guest experience was the norm and just part of yachting. “Harden-up” was often the refrain when someone spoke out on fatigue. It was like the measure of a job well done and validation that yachting was for you. Hours of work and fatigue were given very little attention and remained undocumented; unless you were crew you had no idea of the extent of the problem. Over subsequent years, regulations such as ISM and MLC were introduced to improve vessel safety and pollution prevention and the health and welfare of crew – less about yachting and about preventing the abuse of crew that was prevalent in some sectors of the shipping industry.
Unfortunately, as the WHU report suggests, despite the regulations and a greater appreciation of fatigue and its consequences, there is still a culture where work hours are, either under reported or adjusted to facilitate compliance. There are many reasons given, many of which are analogous to the superyacht industry:
Legacy – it’s part of the ‘can do’ attitude that is prevalent within yachting; the desire to deliver the best experience for the owner or guests.
Manning – having an appropriate manning level to meet the diverse demands of the operation; not just ‘minimum safe manning’ which is often the metric.
Contemporary Yacht Operations – yachting has evolved and so have the demands on crew, not only from owners who expect greater levels of service and experience, but also from the administrative burden that is a consequence of both regulation and management company reporting systems. Manning has failed to keep pace with this and something OnlyCaptains alluded to in this piece – Manning A More Considered Approach Required
Cost – crew are one of the highest costs of yacht ownership and so it is understandable that advisors and yacht owners are driven to reduce manning.
Financial Incentive – charter tips or bonus.
Employment Security – whether it be the Captain responsible for the yacht compliance, or an individual crew member not ‘towing the line’ there are concerns about the effect accurate reporting may have on employment prospects.
Management Pressure – either directly or indirectly they send signals that encourage the misrepresentation of HOWR.
Stakeholder Distance – the physical and psychological distance between the various shore-based stakeholders and the operational crew, means there is often a limited understanding of the work that crew do and what it takes to deliver an exceptional yachting experience, day after day.
Lack of Effective Controls – as proven, it is relatively easy to under report or adjust HOWR, even on some electronic systems, to ensure compliance. The fact that these are not identified by internal audits, Flag or PSC suggests the current inspection and enforcement mechanisms are not fit for purpose.
Also, in yachting due to the cyclical nature of demands ‘guest on vs. guest off’ there is also an attitude of:
What’s the big deal, the crew get plenty of time to rest when we are not onboard.
The reality is often very different; there is still plenty of work to be done that is critical to maintain and protect the value of the asset, safety considerations, and to ensure the yacht and crew are ready for the next visit.
Rest and Fatigue
This leads onto ‘Compensatory Rest’ as allowed by MLC, to mitigate or justify non-compliance; often the rule rather than the exception. Unfortunately, this is not always practical due to a yachts program e.g. short turnaround for next guests (back-to-back guests/charters) repositioning in rough sea, etc. And, unless the compensatory rest is both, timely and adequate, it will not prevent fatigue and its consequences.
There are numerous studies on fatigue; searching ‘fatigue and its effect on performance and safety’ in Google (other browsers are available!) produced 1.5 million hits – I would hazard a guess that none of the results would praise its health and performance benefits!
It is recognised there are three types of fatigue:
Transient fatigue this is acute fatigue as a result of sleep restriction or extended hours awake within 1 or 2 days
Cumulative or chronic fatigue brought on by repeated mild sleep restriction or extended hours awake across a series of days.
Circadian fatigue refers to the reduced performance during night-time hours, particularly during an individual’s “window of circadian low” (WOCL) -typically between 2:00 a.m. and 05:59 a.m.
Research has also shown that the accumulation of sleep deficit e.g. having an hour less of sleep for several consecutive days, needs a series of days with more-than-usual sleep for a person to fully recover from cumulative fatigue.
This suggests that, very quickly into a busy guest period, crew may already be affected by fatigue; their cognitive ability impaired, decision making and judgement clouded, and performance impacted. Many studies compare fatigue to the effects of alcohol consumption, the last thing anyone would want would be crew behaving as drunks due only to sleep deprivation.
Adding to the problem is that many crew cabins are cramped, poorly designed, and suffer from light and noise pollution, these factors, along with the yachts motion, even at anchor, can all affect the quality of sleep – another area worth consideration?
The shipping industry is aware of fatigue and has contributed to the canon of research on the subject, these include The SEAFARER FATIGUE: THE CARDIFF RESEARCH PROGRAMME, MCA MGN 505(M) and IMO GUIDELINES ON FATIGUE (MSC.1Circ.1598) and are all well worth reading.
Interestingly, in 2006 when the Cardiff Research Study was published, one conclusion was:
This study shows the current method for recording and auditing working hours is not effective and should therefore be reviewed.
Seems not much has changed.
As I discovered, honest reporting of HOWR comes with a cost, unless you have a supportive management company and yacht owner, so I fully appreciate why some captains might be reluctant. However, unless we report HOWR accurately we will remain part of the problem and there will be no incentive to change.
If you always operate at max, like an engine constantly run in the red zone, something will break sooner rather than later!
Ultimately the reason why there may be a need to under report or adjust of HOWR is that, in many cases, there is insufficient crew for guest periods. And, this is after all when a yacht owner, their family and friends or charter guests get to experience the enjoyment of yachting.
A Contempoarary Problem
Far from this being restricted to older yachts, this remains a contemporary issue, with some recent prominent examples shown not to have enough crew to deliver consistently the full range and standard of services demanded by yacht owners and charterer guests – this does beg the question; who is advising the owners and how did they assess the manning levels?
In response, I like to reflect on a comment from a respected designer Carlo Nuvolari, of Nuvolari Lenard, when he stated in an interview in Boat International – Nuvolari Lenard discuss the problem with yacht design 18 November 2015 by Stewart Campbell:
A Lot – Not All, But A Lot – Of Our Colleagues Don’t Go On Boats. I Can’t Understand It.
Perhaps ‘a bittongue in cheek here’ a solution would be for every designer or advisor, to spend at least one season working on a busy yacht in all departments, before they are allowed anywhere near a prospective yacht owner and/or its operation…just a thought!
And, whilst we can address the problem with more careful consideration of manning on new-builds, clearly, we cannot re-build each yacht and the demands will not decrease…so what can be done?
Searching for A pathway
Apart from accurate reporting, Captains will need to look at every aspect of their operation and work schedules to find efficiencies and/or time saving solutions e.g. use of a standing shore team that speeds up turnarounds. Yacht management working with their captains to improve SMS and operational reporting, using technology to make the systems more user friendly and efficient. And, where practicable, directing much of the administration back to shore management, freeing Captains and crew to be the operators, focused on ensuring the yacht owners, their guests and charterers are the priority.
Final thought. Would you fly on a long-haul flight if the captain (eyes darkened by fatigue) was trying to finish the plane’s budget, next maintenance schedule, organise his parking at the next airport and was on the phone interviewing a cabin attendant as you boarded? I think the answer is obvious, so why do we run our yachts this way?
When I was asked to write a piece on Minimum Safe Manning (MSM) and how it affects yacht operations for the Superyacht Report, I knew that, although an important factor, it was only one of a number of considerations used to determine the crew complement. However, what was also clear, is that many yachts do not have sufficient crew to meet the expectations and demands of their owners and guests. A point that was recently expressed in article from the International Superyacht Society (ISS) Captains Committee, where they raised concerns about fatigue and its dangers, and asked:
Why is it that manning levels that were appropriate years ago are still accepted as the norm today?
From my own experience I can empathise with this.
Some time ago I took command of a yacht owned by a lovely family with a large family residence serviced by what seemed like an inexhaustible number of staff. For them, they were used to having the most attentive service 24 hours a day and had the same expectation for the yacht. They built a beautiful yacht that could carry up to 22 passengers which, she often did, but unfortunately was manned with the same number of crew as an equivalent 12 passenger yacht. As might be expected, it created significant challenges!
Following that experience, I also had the opportunity to review three new build PYC yachts and their manning. My observation on all of them, was that there was insufficient crew, partly because PYC compared to LY3 required additional MSM numbers, which impacted on the hotel side, but also due to the number of guests carried and services expected. After delivery, two ended up building more crew cabins – imagine the expense – and one downgraded to LY3 because they could not meet the MSM requirements without negatively impacting on the interior service. Clearly, if it was so obvious to an experienced mariner, why was it not obvious to the broker, designers and the shipyard?
The suitable manning of yachts is not restricted to large yachts either; there has been numerous discussions and articles written about crew on various sizes of yacht having to be ‘creative’ with their hours of work and rest in order meet owner/guest demands and remain compliant.
I suspect that many readers who have worked on busy yachts will have all had the same experience, where the team spirit, professionalism and commitment of the officers and crew to deliver the very best experience, overrides concerns about fatigue and the effect on performance, welfare, mental health, safety and crew retention.
So how are manning levels determined and, how can they be better understood?
Along with the MSM (more of which below) there are other factors that normally determines the size and makeup of crew:
Finance is an important consideration as crew expenses are amongst the highest operational costs so obviously it makes sense to optimise manning
Manning levels on similar sized yachts are used as a comparable standard, especially applicable to production yachts
Given the high value of the yachts ‘real-estate’ owners, understandably, will want to maximise owner/guest accommodation – the luxury spaces
Technical, service, access and operational spaces also require a large volume
Additionally, some in the industry may be keen to gloss over crew numbers to help with a sale, they may fail to manage the owners expectations or, just do not possess the operational experience to understand the numbers needed for a particular owner and yachts operation.
Once the above factors are considered and the various spaces assigned, the crew accommodation is designed following the Maritime Labor Convention (MLC) guidelines and the number of cabins/berths can be defined. Interestingly, MLC may actually be having some unintended consequences; as one respondent – maybe controversially? – in the ISS article suggested:
What we need is more berths not more space!
Minimum Safe Manning
A commercial yacht will require a Flag state approved MSM – many private yachts, as with other regulations, may also choose to comply on a voluntary basis.
An owner/operator will make an MSM application based on Flag guidance and the IMO Principles of Safe Manning Resolution A.1047(27). Once approved, an Administration will issue an MSM certificate, however, this is only the minimum number of crew (those requiring STCW or equivalent qualifications). This is the captain, deck/engineering officers and ratings and, cook, depending on crew numbers and Flag requirements, necessary to safely operate a yacht when it proceeds to sea:
The ship named in this document is considered to be safely manned if, when it proceeds to sea, it carries no less than the numbers grades/capacities of personnel specified in the table
This does not include the hotel team; service, housekeeping, laundry and galley, or the additional deckhands necessary to launch tenders, run the water sports, etc., or other specialists required these days – these are all additional to the MSM.
Of note is that the A.1047(27) changed from previous resolutions as follows:
A.890(21) and amendment A.955(23)
1.1.1 maintain safe navigational, engineering and radio watches in accordance with regulation VIII/2 of the 1978 STCW Convention, as amended, and also maintain general surveillance of the ship;
1.1 maintain safe navigational, port, engineering and radio watches in accordance with regulation VIII/2 of the 1978 STCW Convention, as amended, and also maintain general surveillance of the ship;
As you can see, safe manning in port was added but, so far, I have not seen any yacht specific guidelines on ‘port’ safe manning – commercial ships are normally involved in cargo operations so they tend to be more fully manned in port. In-port-manning can be a difficult issue for captains; it is often left to them to determine and they have to strike a fine balance between safely manning the yacht and providing crew valuable shore leave but, given number of incidents and fires in port, perhaps it should be better regulated? Running drills with reduced crew will help identify what is a safe number.
Often the Manning Scales provided by an Administration will be used as the standard. However, they allow some latitude on numbers based on the strength of the application and, operators can also take advantage of manning reductions allowed due to ‘distance from safe haven’ – which, for yachts, seems contrary to their operational demands?
Once the MSM has been agreed the rest of the crew can be determined – if the total number of berths is 15 and the MSM is 8, that leaves 7 berths for the rest of the team.
Three Hundred and Sixty Degree Approach
As can be expected expect this approach produces mixed results – a bit like the ‘off-the-shelf’ budget that so often disappoints.
What is necessary a three hundred and sixty degree approach; an in-depth assessment of all the factors and how each unique owner wants to use their yacht. Only once armed with that information can you estimate the right manning levels and/or manage expectations by modelling the expected demands, peaks and crew work schedules.
The point of managing an owners expectations is key, especially in the case of production and semi-production yachts where crew accommodation/berths tend to be fixed. In these circumstances it is still important to make the assessment. This helps avoids frustration and disappointment by communicating any limitations that may surface, along with possible solutions, such as use of external laundry services, shore-based crew, or shadow boat, at the earliest stage to an owner.
Yes, the yacht can operate with these crew numbers but, the service onboard will be limited in these areas…is that what you want?
Making a proper assessment requires effort and collaboration; asking questions, getting to know an owner, how they expect to use the yacht and the style and depth of services that are important to them.
• Likes quiet time with wife and one or two guests
• Meal times, silver service and large and varied selection
• Rises late goes to bed early
• Has boat full of family and friends
• Likes to be in port as often as possible
• Likes to party and stay out late
• Eats very light diet and at strict times
• Loves to be at anchor
• Guests have to follow his rules
• Some guests rise early late, others rise late and bed late – no rules set for guests
• Wants very light touch and informal service
• Love water sports, all the toys setup and available
• Happy to help themselves
• Tender rides for sightseeing, shopping trips, etc.
• Doesn’t want fuss
• Wants a masseuse available
• Just love being on the yacht
• Expects crew to look after children
• Wants formal service at all times – loves the attention and show
• Will not help themselves and expects stewardess on call 24/7
• Often invites friends over for drinks/meals at short notice
On both (A) and (B) the normal crew complement was 19. The manning on (A) worked well, but on (B) we were unable to deliver and maintain the standards of service expected and without being non-compliant. Fortunately, the owner was understanding and pragmatic and, after detailing the issues and possible solutions, it was agreed that we would use two guest cabins for 4additional crew that allowed us to provide the level of service that was important to him. Later, the the yacht was modified and 2 additional crew cabins (4 berths) were added at considerable expense.
Understanding use and gathering information similar to the above example will help to determine the appropriate manning levels, especially during those important peak times in guest operation, and allow you to develop work schedules for all crew and each department. It may need several iterations and some finessing to get right but this is a crucial exercise as it provides the information necessary to have a meaningful discussion about manning with an owner.
Operational vs. Standby
Unlike a commercial ships where workload and manning is more easily determined and manage accordingly, yachts are a much more difficult and, not just because of different owners demands and expectations but also the seasonality and operational profile.
Many yachts, apart from shipyard periods, operate all year round, on standby for visits at the drop of a hat. These tend to be larger yachts and so full manning required can more easily be justified.
Smaller, or one season yachts, are a more complex situation. Whilst it might be essential to have 19 crew during the season, it may be difficult to justify that number sitting in port for the winter with no guest movements where a more appropriate number might be 12 i.e. sufficient to safely man and maintain the yacht in good order. And, if that choice was made, at least you have the berths necessary to increase crew for the season; though it should be noted it is easy to downsize a crew but, much more difficult to upscale again and expect the same quality of crew, personalisation, level of service, operation and safety standards.
Importantly, manning levels should be determined by the peak periods of operation; after all, that is when an owner or charter guest gets to experience the depth and quality of service.
In my time I have seen the whole industry evolve and so many positive changes have taken place.
Today, yachts are better built, more reliable, safer, officers and crew better qualified and trained, employment conditions improved, and there is now much better support available from yacht management and other shore-based service providers. At the same time, there has also been an incremental increase in owners expectations – some examples below: –
Yachts and guests now rely heavily on electrical/electronic and AV/IT systems
Beach clubs’ add another deck to be servced
SPA therapists, hairdressers, gym instructors, nurses, nannies, are now routinely carried – are they single or dual role? Whatever the case, it generally means service and housekeeping are stretched as they lose a member to other activities
Every night is ‘theme night’ with new table decorations and service expectations
Photograph/video guest experience and provide a personal record for guests to go home with
Flight crew, security and owners staff can add to numbers carried and place their own demands on crew
Tenders are bigger, requiring more crew to launch and operate
More toys carried like inflatable slides -heavy and labour intensive to setup/breakdown, especially when wet! – an ever-expanding list of toys, diving equipment, motorcycles, etc. – all require crew and maintenance
Diving, Pilates, jetski, sailing, windsurf, kite surf…an almost endless list of activities
Accommodation for river or ice pilots for yachts traveling further afield
These are further compounded by an increase in paperwork that is a fact of modern yachting e.g. budgets, purchase and approvals, crew HR functions, maintenance and refit planning, safety management systems, and management reporting – this generally falls on the shoulders of the captain and senior crew. One study on a 100m+ showed that the captain was spending 33% his time on their management companies demands which, along with their normal duties and responsibilities, was clearly unsustainable.
Whilst there has been some positive changes in the industry that should be celebrated, the evidence suggests that manning levels maybe one element that has not profited from the evolutionary process.
Perhaps yacht crew are partly to blame for this due to yachting culture, as already posited, where they will work all hours necessary to deliver the very best experience for owners and guests, and often do so without complaint or communicating the problem outside of the yachts team. And, apart from this cultural norm, there are also undeniable concerns about job security where captains and crew may be reluctant to speak-up and/or report their hours of work and rest accurately for fear of losing their job. However, it is important as proper reporting helps to educate owners and the wider industry. Furthermore, if there was an incident and an inquiry, if falsification of hours of work were discovered and fatigue the root cause or contributing factor, it could have serious consequences for the crew, especially the captain.
The quality of captain, officers and crew and, the onboard experience is, without doubt, key to the success of a superyacht and this can only be achieved with the right manning levels which, unfortunately, have not kept pace with the advances made in the rest of the industry.
As the ISS piece stated ‘for the love of yachting’ we need to have an honest conversation about manning that includes owners and all industry stakeholders, especially those with operational experience. Getting this right improves the health and well-being of the crew, their performance, retention, yacht safety and, ultimately, leads to a better ownership experience.
There can be no doubt that we have seen some significant improvements in employment of yacht crew over the last decade or so and, on the whole, they fare very well compared to many working on commercial ships. Unfortunately, disputes still do arise and, if it cannot be resolved amicably, legal action may be necessary.
With that in mind, a recent UK Employment Tribunal hearing raises some interesting questions for both owners and crew. The case involved a claim of unfair dismissal; however, the preliminary hearing was not to judge the merits of the case, but to ascertain whether the UK Employment Tribunal had jurisdiction over the claim.
The case involved a captain who was not a UK resident, working on a Cayman Islands flagged and owned yacht that spent time in UK waters, the captain was employed via a Guernsey employment company and the yacht was managed by a company based in France. His employment agreement also expressly stated that it was based on Guernsey law and that all parties would submit to Guernsey jurisdiction in matters relating to the agreement.
As per most maritime employment claims, a rather complex mix of parties and jurisdictions were involved. In this example, based on the submissions of the claimant and plaintiff, and case law, the decision was that it could be heard by a UK Employment Tribunal and, interestingly, despite the ownership structure, the judge also determined that the ‘effective owner’ was resident in the UK.
This raises some questions, such as; do the common employment practices provide the necessary protections for crew in the event of a dispute? And, is the protection often cited for owners, as robust as some would suggest?
In the past it was quite common for crew to be employed without employment contracts, I certainly never had one in the first 20 years of my time in the industry. But, with the growth in management companies and the introduction of the Maritime Labour Convention 2006 (MLC) Seafarers Employment Contracts (SEA) became the norm for Commercial yachts – with many Private yachts adopting the format of SEA for their crew.
Putting MLC to one side for the moment, one of the reasons why it was recommended that owners use an offshore employment company, was to distance the crew (Employee) from the owner (Employer) in order to limit the latter’s liabilities. With the introduction of MLC, an added advantage in using an offshore employment company in a sympathetic jurisdiction, was to minimise the number of social protections required by MLC – a minimum of 3 are required out of a total of 9 branches, which can be covered by insurance or National schemes – thereby, reducing liability and costs for an owner.
Under MLC there is a requirement for a connection between the Shipowner and the Employer; an SEA can only be signed by an Employer if they have authority from a Shipowner and there is evidence of that authority e.g. Power of Attorney – a ships Master can also sign. Those who are authorised should be noted in DMLC Part II. So, in the case of an MLC compliant yacht, there should always be a contractual link between Crew (Employee) and Shipowner.
Depending on the agreement, a management company who has taken on the responsibility for the management and operation of a yacht, could also be the ‘Shipowner’ under MLC – a similar definition as ‘Company’ as per STCW and the ISM Code.
As per Article II.4 of MLC, many flag States exclude pleasure yachts ‘not ordinarily engaged in commercial activity’
As per Article II.4 of MLC, many flag States exclude pleasure yachts ‘not ordinarily engaged in commercial activity’ (defined as Private throughout the rest of this article) from their enactment of MLC. Therefore, it is important to understand that SEA’s issued by Private yachts will not be MLC compliant unless a yacht has the necessary MLC certificates. And, if a yacht is not compliant, the SEA’s will probably fall outside the jurisdiction of flag State law. Even if a Private yacht is compliant, there are still questions about jurisdiction if they are expressly excluded from flag State legislation.
I believe some flag States are making progress towards making SEA’s compulsory for Private yachts, which will be a good thing however, they will also need to have a legal framework in place to provide the necessary oversight and enforcement powers. I wonder how easy that will be without upending the whole concept of Private yacht ‘voluntary compliance’ with MLC and other maritime codes and conventions?
In the meantime, perhaps Private yachts should rename their agreements simply as a Crew Employment Agreement (CEA) to avoid confusion and legitimacy with an MLC SEA?
Irrespective of whether yachts are Private or Commercial, where used, SEA’s have no doubt improved employment by the provision of a contract detailing the terms and conditions such as salary, leave, repatriation, notice period, working hours, sickness benefit, etc. – this has been a very positive advance. However, there is still a perception within the industry that crew feel there is little they can do in the event of an employment dispute.
Indeed, to illustrate this point, the Professional Yachting Association in a recent article stated:-
In reality, there is no job protection in yachting, and anyone can be fired at any time, without reason.” (PYA What to do when things go wrong – 27 Aug 2019).
It is likely that readers will have some knowledge of situations where owners, management companies and, yes, captains as well, have dismissed crew for a variety of reasons that would not withstand scrutiny under most domestic employment laws where there are better protections against such things as:-
Unfair dismissal – e.g. no reason given or, reason not one of those described within SEA or crew handbook.
Wrongful/constructive dismissal – e.g. forced to resign due to a breach of employment law or SEA, such as lack of due process, discrimination, sexual harassment, salary or leave disputes.
On many occasions crew are ‘persuaded’ to resign rather than being fired due to a belief it is better for their future employment prospects – this could be judged as constructive dismissal.
The latter point, along with the lack of clarity on the legal protections and jurisdiction, is probably why there may be a reluctance to make a claim; crew fear they may be labeled a ‘troublemaker’ and it might affect their career. This feeling is not limited to yachting, it also applies to shipping as highlighted in the EU report “Service contract regarding a study on the implementation of labour supplying responsibilities pursuant to the Maritime Labour Convention (MLC 2006) within and outside the European Union – Final Report October 21, 2015”. And, although ‘blacklisting’ is illegal, there is plenty of evidence to suggest it goes on within our industry.
It should be noted that most countries have time limits and qualifying periods of employment as prerequisites in employment disputes, particularly unfair dismissal However, if a case involves acts that are contrary to certain specified rights or civil liberties, e.g. discrimination, sexual harassment, etc. such time limits and qualifying periods may not apply, additionally, such cases may raise the possibility of criminal prosecution. It is therefore important to obtain the proper legal advice.
As alluded to previously, not helping matters is the confusion over the appropriate jurisdiction given the number of parties and administrations involved and their domestic, international and maritime laws: –
The Flag State (FS)
The Yacht Owning Company (YOC)
The ultimate beneficial owner (UBO)
Employment Company (EC)
Management Company (MC)
UNLCOS and UNCTAD state that a Flag State has “jurisdiction and control in administration, technical and social matters of ships flying its flags.
Although International conventions such as UNLCOS and UNCTAD state that a FS has “jurisdiction and control in administration, technical and social matters of ships flying its flags,” it is not always the case that they have the necessary motivation, resources or legal framework to provide an effective forum in the event of an employment dispute. And although we mainly use ‘white list’ high-quality flags within the yachting industry, some may have less favorable employment laws for seafarers – beyond that of MLC, if applicable – and crew may find them to be unsympathetic or lacking any enforcement power when it comes to employment disputes.
Employment companies, depending on their residency, and despite what may be stated in a SEA, may also not have the necessary laws in place to hear maritime employment disputes e.g. their employment laws may not apply to non-residents.
Given the above, it’s not surprising that there is a perception that crew feel that the odds seem stacked against them and there is little they can do.
This brings me back to the case mentioned at the beginning.
This case clearly demonstrates that, depending on the circumstances, motivated crew with the right legal advice and support can find a suitable forum and jurisdiction. In this case the UK Employment Tribunal, through domestic employment law and, EU REGULATION (EU) No 1215/2012 – on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, and the various submissions and precedent, judged that they can hear this case – this is good news for the captain.
It also demonstrated how owners might not be fully insulated from legal action, especially if there is a UK/EU connection and, irrespective of the ownership structure, an owners personal involvement with their captain, crew, yachts finances and operation, etc., may prove sufficient evidence to judge (as it was in this case) that they were the ‘effective owner’. Being identified in this way may be of some concern to some owners and their family offices as it raises questions about privacy and liability,
There have been similar cases in Europe where both yacht and commercial ships crew have taken advantage of EU legislation and domestic law to initiate an employment claim against an Employer and/or Shipowner irrespective of flag.
With respect to France, ‘concealed employment’ was introduced in 1997. Loosely, this description is given to an employment arrangment that helps an Employer avoid their obligations defined by the Labor Code and/or taxes or social insurance contributions. This is particularly relevant to those yachts that might be subject to French Social charges – I believe that some cases in France that started out as simple employment disputes became a more serious matter due to the fact ‘concealed employment’ was involved.
Returning to the questions raised earlier.
Yes, there are much better protections for yacht crew these days due to the widespread use of employment agreements and MLC, but, compared to domestic employment law, some protections may be less favorable. This is why crew may have to seek redress in domestic courts where, despite the perception and challenges involved, it is possible to find a jurisdiction who will hear their case. And, it appears that an ownership or employment structure may not always protect owners from being embroiled in employment disputes. It’s also worth remembering that, unlike arbitration, Employment Tribunals, as in this case, tend to be a matter of public record.
Finally, it is clear from my research, that most maritime employment disputes are not straight forward, they tend to be protracted and there can be significant hurdles involved. Depending on the circumstances of the case, the clear advice would be to try and find an amicable resolution before resorting to the courts.
Whenever I talk to owners and their teams, the subject of running costs and budget always comes up. I always advise, it is a fundamental tool for measuring the financial performance of the yacht but, like fine art, requires careful crafting and curation to be of value, and this always comes with a caveat – there is no ‘one size fits all’ model. That “10% of the value of the yacht” as often cited, can turn out to be a significant underestimation that can lead to financial shock and a negative ownership experience; with some owners withdrawing from the industry because of it.
There is no ‘one size fits all’ model
The cost of running a Superyacht is significant, with annual costs ranging from €2M for a 50 metre yacht, and up to €20M+ for some of todays Gigayachts. And, with such significant expenditure it is essential to have financial controls in place, and a well formulated, approved and monitored budget is one of the most valuable tools available.
A budget must; forecast the amount and timing of funds, measure performance and instill accountability and transparency into the fiscal management of the yacht.
A realistic budget takes time and effort to develop. The schedule of accounts must reflect the expenditure accurately and, as mentioned, this is unlikely to be achieved from ‘an off the shelf budget’ for an identical or similar sized yacht without adapting it to the owner and use.
The process of developing a budget requires proactive collaboration and consultation between the captain, the yachts team, and the owner, his family office, and/or management company. It will be important to understand how the yacht is to be used as this knowledge will help with the accuracy of the budget.
The process of developing a budget requires proactive collaboration
Knowing the cruising plans and use of the yacht e.g. one or two seasons, stand-by or scheduled use, crew employment terms and conditions, standard of maintenance, along with preferences for economy or speed, marina or anchorage, food and drink, etc., will help in creating a workable budget. There is also the question of private or charter, which although adds income to the yacht – not guaranteed and often over estimated – also has cost implications; extra hours on engines and systems, general wear and tear and crew issues.
The Head’s of Departments (HOD’s) – engineering, deck, interior and catering – should be involved in the development process and should have responsibility for managing their departmental budgets. This helps improve the accuracy of the budget, and serves as a motivational tool by giving senior crew ownership and accountability of their area of expertise.
As yachting is perhaps, the ultimate discretionary expense, and a big part of its appeal is the freedom and spontaneity it affords, one should understand that the budget is subject to many variances, some which can be significant depending on how plans change. In addition a yacht is made up of complex systems and equipment and operates in a hostile environment. This will inevitably result in breakdowns or incidents that cannot be readily modeled into the budget, other than trying to mitigate a potential shortfall by maintaining a contingency for unexpected events.
During the life of the yacht, the reality is that repair and maintenance costs will increase. A new yacht in its first year is covered by shipyard warranty, so associated repair costs tend to be low – although beware of the travel and subsistence costs that may be levied as these can be high if there is a large amount of work carried out remote from the shipyard – in later years, these costs will progressively increase as the operating hours take their toll on equipment, systems and machinery.
Future expenses that I would categorise as Periodic Maintenance, such as dry docking and shipyard periods should also be considered. A Private or Commercial Yacht 12 PAX or less, will require two dry-docks in a five year cycle for works such as – Class survey, antifouling paint, checking and maintenance of shafts, stabilisers, rudders, bowthruster, anchors and cables, hull and ships side valves. It is also likely that the hull and/or superstructure may need a repaint within that period, again a cost that should be budgeted for. The cost of servicing engines and generators – excluding the normal checks and oil/filter changes – is often something that is overlooked and is dependent on use and hours. As an example a service contract by one engine manufacturer for maintaining 2 x 300kW engines over 16,000 hours was around €450k, and 2 x 3600kW engines over 12,000 hours was in excess of €550k.
Periodic Maintenance costs are cyclical and spread over a number of years and there are a number of ways of accounting for these. An owner should decide if he wants he to spread these over a 5 or 10 year cycle, or whether he would prefer each year to be independent, with Periodic Maintenance added separately.
An owner should decide if he wants he to spread these over a 5 or 10 year cycle
Capital expenditure for new equipment and/or upgrades should also be accounted for as a separate category as it falls outside the normal operational expenses of the yacht.
Following good accounting practices there should be sufficient cost centres, sub-catagories and account codes – the metrics – to enable a thorough analysis of expenditure. For example with suitably defined crew costs, the budget could be used to highlight and identify the real cost of high crew turnover by spikes in recruitment fees, uniform, repatriation/travel costs, etc., and provide the financial imperative to resolve the situation. Lumping costs together limits transparency and value of the budget and should be avoided.
Inevitably the budget will go through a number of versions as it is developed, reviewed and finessed, before finally approved by an owner. And, once implemented, the budget will need to be effectively monitored to ensure the defined financial targets are being met and any variances are brought to the owner’s attention without delay.
The budget is an important aid but, is only part of the picture, it must also be backed up with other controls and procedures in order to effectively manage the yachts finances. These include such things as format and frequency of reporting and auditing, purchase order request and approval process, and setting expenditure limits and authority.
As many of the suppliers and service providers we rely on in the industry tend to be small businesses, the effect of delays in the payment cycle can be profound. And, for the yacht, it can create reputational damage – you end up being at the back of the queue or, ignored completely, for services and supplies which, in high season, can impact on the owner and guest experience. Having a budget that effectively forecasts cash flow can ensure funds are available to make prompt payments – although sometimes, unfortunately, slow payment is the policy of an owner or his financial team.
Finally, it should be understood that the budget is a dynamic document and will need to be continuously reviewed and improved upon over time, and changed as circumstances dictate. If crafted and curated well, the budget provides an owner with a valuable tool in understanding and controlling costs, minimising financial shock and, improving the ownership experience.