Part of running a vessel is managing the overtime which is being earned on the vessel, as in many cases, if not most, overtime will cost more than the base contract wages. Recognizing this, management controls need to be placed on the disbursement of overtime, allowing staff to actively manage the amount spent on overtime and against which tasks. Management Systems Consulting has developed tools that allow companies to manage this spend based upon various criteria, recognizing that each company is different in how they want to manage this.
The two most common methods for commercial operators to manage overtime is either by (i) percent of base wage or (ii) budget by period.
Percent of base wage allows for a percentage to be determined against the various components of the base wage (which might be more than a single earning type which can have multiple values due to contract raises). This budget percentage can also be fine-tuned against department onboard, as you may want to set a lower threshold for different departments. Once this has been set, the system reads the overtime records in real time and compares this against the calculated budget. This can be done by looking at an overall time period (e.g. a month, quarter, or any date range specified) or by payroll register (defined pay period). The system provides various reports and analyses related to the current spend, all of this before the actual voucher has been closed on the seaman.
Budget by Period is very similar, except that rather than dynamically calculating a percentage of wages, there is a singular value that is set by period (any number of periods can be defined) and by department. Using this information and the actual service, overtime analyses can be generated that provide the same information as discussed above with the same options. The major difference is the derivation of the budget.
In addition to the methods above, there is also the capability to define overtime as controlled or uncontrolled. Typically uncontrolled overtime is overtime that is stipulated as mandatory in the contract and is unavoidable. You want this to count against the budget, however, the realization must be made that this type can't be controlled, so emphasis need be placed on that overtime which is classified as controlled and optional.
Government Reimbursed Overtime
For companies operating vessels on the government's behalf as ship managers, reimbursable overtime is quite important and is in many cases a measure that goes into their evaluation as a suitable government ship manager. With this in mind, Management Systems Consulting LLC has developed an overtime reporting tool which is project based, as much governmental overtime is allocated on a project (or Letter) basis.
Our tool allows you to specifically define the Projects that have been granted overtime allowances. When these projects are defined, the following information is defined:
- Project Details (name, description, number, scan of Letter/Authorization)
- Project Start and End Date - defines acceptable period of overtime entries
- Budget for Letter/Authorization
- Applicable Ships
- Allowable Positions to Charge Against Overtime (based upon payroll table for vessels)
- Various Actions (Generate Invoice Documentation, Suspend Project, Close Project, etc...)
As overtime is entered into the system, the tool provides the capability to produce reports to indicate where you currently are against any Authorization/Letter. This allows you to manage the spend and to not exceed the defiend values. The system also has reports that can be provided to the various ships to show the acceptable overtime codes that can be used during the period (i.e. open Authorization/Letters). Reports are also provided which indicate erroneous entries made by the crew, thereby allowing these to be corrected before the payroll vouchers are closed.
Along with the monitoring comes the billing portion, as the system keeps track of what has been billed against each Authroization/Letter and generates the backup informaton which is required to be submitted.
As can be seen, the tool is a complete management tool that streamlines the entire process and ensures that you are the best ship manager you can be with the least amount of effort.