Updated: May 29, 2020
My latest article published on the Superyacht Investor web site.
Appointing an owner’s representative to oversee a shipyard project can avoid extra cost and confusion later on, argues captain Iain Flockhart.
Based on some of my own less-than-ideal experiences with shipyards and those of colleagues who have discussed their experiences with me, I have decided to write some articles on the things an owner ought to consider before embarking upon a new build or other extensive shipyard project, writes captain Iain Flockhart.
In this first article, I have started at an early stage of the process from an owner’s perspective. This is his or her need to appoint an owner’s representative (OR) to look after their best interests for the duration of the work.
In most cases, the builder, as the seller of the vessel, will pay an often-substantial commission to whoever brings them the business. In many cases, this will be a broker but it could be whoever has the right connections with the buyer. This transaction needs to be, transparent and maintained separate from the actual build process.
Genuine independence and avoiding any conflict of interest is paramount for the success of the project. With such large sums of money involved, there is scope for true independence to disappear out the window and serious conflict of interest to arise.
No broker will ever take responsibility, nor assume any liability, for whatever may go wrong on a new build project. Buyers should, therefore, be very aware if this illusion appears to be present in any part of the pre-negotiations.
It is imperative that the OR has solid experience in the operation of a similar type of vessel from a senior crew point of view. Managing a vessel from an office desk is only part of the story. A dedicated, full-time person or team with a single point of contact is most desirable to streamline workflow and clarify lines of communication. It is well worth the cost it entails.
Managing a vessel from an office desk
The writing of reports – though important to keep the owner and other relevant parties fully up to date with progress and budget issues – is not as important as constant hands-on supervision of the project. The devil is very much in the detail and only constant daily supervision of what’s happening on the shop floor will ensure that the OR is aware of everything that needs to be carefully monitored, corrected and reported upon. Without a significant level of hands-on attention, such report writing will be incomplete, lacking in accuracy, and of little real value.
The owner needs to be confident that his representative is always protecting his best interests throughout the project. Significant trust needs to exist on the part of the owner with his OR. I have seen a lack of trust in this area cause significant problems on large projects. If an owner does not have complete trust in their appointed representative, they should replace them with someone who they do trust, providing that they meet all the other essential criteria. Lack of trust can be a recipe for disaster and cost an owner dearly.
The OR should have the ability to make decisions within pre-approved guidelines and budget. This is to save time in production and show the builder that the representative has the required authority, which should be respected by the builder during the construction. It is prudent for the owner to ensure from an early stage that the builder is fully aware of the fact that the OR has been empowered in this way.
Empowered by an owner
Many an instance has been recorded of an OR legitimately having been empowered by an owner, but the yard not respecting the views and input of the representative. This is effectively disregarding the direct wishes of the owner. An owner initially clarifying the chain of command will go a long way towards avoiding many issues.
The owner’s captain and senior crew should be consulted to provide relevant input. This is especially valuable if they have been with the owner for several years. As with the requirement for the authority of the OR to be respected, it is again prudent to ensure that where the senior crew are directly representing the owner their input should be valued.
It is often the case that a captain and senior crew with longevity with an owner will know him or her better than anyone else with regard to what specific features and details onboard are important to the owner.
This is often very subtle and it’s wise to consider their input. Extravagant requests to please specific crew should, however, be avoided. Furthermore, no one knows the logistical issues of how a vessel runs better than the crew.
The crew are, after all, the very people who will have to live and work with all the mistakes made during the build and incur the owner’s displeasure accordingly.
About the author
Iain Flockhart, Saor Alba Holdings Ltd, MD, is a highly experienced yacht captain with over 265,000 nautical miles in the role of master since 1996. He bought and completely refitted his first yacht at the age of 20 and went on to buy a larger ocean-going yacht a few years later and set sail across the oceans, often with novice crews.
As well as being a master, Iain provides professional mentoring services to yacht crew and advises on issues relating to hiring, managing and retaining the right crew.
He’s an ambassador for the Rafnar brand of RIBs, through his brand SA Marine. He enjoys simple pleasures such as using his 7m RIB to go exploring and wild camping in natural beauty of his native Scotland.
Captain Iain Flockhart, The Yacht Crew Mentor. +44 7958 301 111