KPI

Overview

The Shipping KPI Standard is built up hierarchical with 3 different levels:

1. Key Performance Indicators groups (KPI groups)
2. Key Performance Indicators (KPIs)
3. Performance Indicators (PIs)

 There is a mathematical relation between the last two levels. In basic terms, Key Performance Indicators are calculated from Performance Indicators (lowest level) using a KPI formula.

On the lowest level you find the PIs, 63 in number, 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.

The 33 KPIs are scaled into a range from 0-100, where zero indicates low 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 combined into KPI groups for better categorization and visualization purposes. No form of calculation or aggregation is happening on this level.

KPI Groups

The old concept of Shipping Performance Indexes (SPIs) has been replaced from the concept of KPIs Groups. Compared to SPIs, KPI Groups do not express any aggregated performance in any area. No calculation is happening on this level. It’s just used as a grouping criteria.

Key Performance Indicators

The Key Performance Indicators (KPIs) are expressions of performance within a specific area. The KPIs can be expressed in two ways; a KPI Value which is a mathematical combination of relevant Performance Indicators Values and a KPI Ranking which is an expression of the KPI Value on scale between 0 and 100 where a high ranking (100) is a result of high/excellent performance. KPI ranking can be also considered the actual position of the ship within its ranking criteria (4th out of 500).

Some PI Values can be included in the calculation of more than one KPI Value. Examples of KPIs are: KPI002 Budget performance, KPI010 Drydocking planning performance and KPI032 Ship availability

The objectives of KPIs are to:

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  • 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. PI026 Number of dismissals, PI022 Number of collisions and PI032 Number of fire incidents.  In general the KPI standard is ship oriented. Performance Indicators (PIs) are captured and reported by ships. KPIs are also calculated by ship. But it turns out, that a few performance measurements cannot be expressed by ship but by Business unit (see relevant chapter below). A classic example is PI017 Number of cadets under training.

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 PI052 Number of recorded external inspections which is used as a denominator in the calculation of several KPI Values. 

Costs

The Shipping KPI Costs is built up hierarchical with 3 different levels:

1. Cost Groups
2. Cost Categories (CCs)
3. Cost Items (CIs)

 There is a mathematical relation between the last two levels. In basic terms, Cost Categories (CC) are calculated from Cost Item (lowest level) using a summation formula.  On the lowest level you find the CIs, 37 in number, which are based on captured directly from a ship or from the shipping management. Data is collected once and re-used within the Costs in order to reduce the amount of data.

Cost Groups

Cost Groups do not express any form of aggregated calculation in any area. It’s just used as a grouping criteria. By default, the system makes use of the following group:

• Costs

Cost Categories 

Costs are reported with a list of predefined cost categories. The total cost of a ship is made up of the total of all (main) cost categories.  Cost categories can be broken down into sub-categories. The sum of all sub-categories of a specific cost category equals the cost of the category itself. The system supports data entry of cost categories on all levels (cost category and cost item). 

Cost Item

The Cost Item (CIs) are the building blocks giving for each category to calculate the cost. 

Cost Factor

The concept of cost factor was introduced to facilitated the calculation of the cost per day by dividing the Cost by the ownership days. 

Factor Item

The concept of cost factor was introduced to facilitated the calculation of the cost per day by dividing the Cost by the ownership days. 

Ownership days

In order to calculate costs per day, the user must specify days of ownership (for ship owners) or days under management (for ship managers). The Ownership day added to specify the number of days of entering ownership/management. 

Ship attributes - METAdata

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 its ships not against all other ships in the system, but for example only against ships of the same ship type.

KPI Rankings

Ranking is an implicit benchmark where performance is regarded as relative to who I am compared with. Each ship is compared with other ships on the same KPI based on its own ranking criteria, hereby creating a ranking result where each ship is given its rank.

It can be compared to a race, where the fastest runner is on place 1, the next person on place 2 etc irrespective of the absolute time. Something like a marathon with 100 runners, the first, the second, the third etc. To get a silver medal, it’s not important how fast I was, it only counts that I was behind the first.

For calculating the ranking of an individual ship for particular KPI in a particular quarter, the below steps are followed:

1. Calculate KPI value based on the KPI formula
2. Calculate position by comparing the KPI value of the ship with rest KPI values of ships having the same ranking criteria
3. Calculate ranking as percentage based on a global formula used for all KPIs which considers the total ships participating with the same ranking criteria and the actual position of the ship in this list

In case of calculating KPI rankings of multiple ships i.e of a Business Unit (BU), the system first aggregates PI values (not KPIs) of the ships belonging to the BU and then follows the exact same steps.

Important to note that, in order to calculate KPI rankings either on the ship or the BU level, the rule of 3 should apply on each individual KPI. In effect that means for calculating the ranking of a ship in a particular quarter for a particular KPI, its ranking criteria must contain at least 10 ships from 3 different accounts.

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 Q1-2020 is also the performance data measured (i.e. captured) in Q1-2020. 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 Last year’s actual running costs and accruals 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 Number of officer terminations from whatever cause to look at a rolling year 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 BIMCO KPI Expert group 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 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 Business Unit (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.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 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 list which combines built-in and custom 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. Similarly, a secondary KPI is excluded from the KPI profile and secondary PIs should be entered to calculate the secondary KPIs.