Previous SSA consultant warned of problems

1994 report cites inefficient ferry overhauls, reactive ‘firefighting’ culture long before HMS findings.

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The MV Sankaty went 53% over budget according to a 1994 report. Like the recent HMS report, the 1994 report, done by McKinsey and Company, described the SSA's reactive problem solving as a culture of "firefighting" as opposed to planning. —File Photo

Updated January 2 at 7:50 pm

The Steamship Authority was described 25 years ago as having a reactive culture, one characterized by continuously “putting out fires,” according to a report produced by McKinsey and Company. Titled “Enhancing SSA’s Organizational Effectiveness,” the report weighed in heavily on economic deficiencies at the ferry line, but in doing so, it made some findings that echo portions of the HMS report released last month. McKinsey found that “large scale projects,” vessels in particular, “[were] currently not managed effectively, resulting in budget overruns, delays in project completion, and potentially lower quality of ongoing maintenance efforts.”

HMS Consulting and its subcontractors, Glosten Associates and Rigor Analytics, the authors of the recent report, also found numerous faults with how the SSA overhauled its vessels. Many of these faults were showcased in a dissection and analysis of the troubled MV Island Home overhaul. The McKinsey report did not dive deep into particular vessels but noted that the SSA’s “problems with large projects are hardly a new phenomenon.” It cited cost overruns that dated back to 1985 with the construction or overhaul of the MV Eagle, MV Sankaty, and MV Islander, and MV Martha’s Vineyard.

Like the HMS report, the McKinsey report pointed to a fundamental lack of proactivity within the SSA.

“Lack of resources and upfront planning can cause maintenance to become overly involved in ‘fire-fighting,’ reducing effectiveness of ongoing maintenance,” the McKinsey report states.

“Firefighting is easier than planning,” the HMS report states. HMS levels blame for firefighting on “pervasive hero culture: a culture in which the organization is overly reliant on a small number of individuals.”

The HMS report goes on to say, “A hero culture creates a vicious cycle. While the culture of cost-cutting has resulted in vastly inadequate organizational planning, breaking out of the hero culture ironically requires significant planning.”

Sean Driscoll, spokesman for the SSA, said a number of changes were instituted in the wake of the McKinsey report. Among other things, the SSA adopted a five-year repair plan for each ferry and added “several positions and products to aid in planning” as a hedge against “firefighting,” he emailed. One specific change was “having a staff member dedicated to better using our Maximo maintenance program to plan vessel and facilities work in conjunction with our maintenance department.”

Marc Hanover, the Vineyard’s representative on the SSA board, said he knew of the old report generally, but did not have intimate knowledge of the its contents. Hanover had recommended the very same firm when he pushed for an analysis by an independent consultant after a series of cancellations and mechanical failures swept the SSA fleet last spring. The board ultimately chose HMS Consulting from a pool of eight firms. Hanover told The Times he was unsurprised to learn some findings in the McKinsey report bear similarity to findings in the HMS report.

“I think there is a culture over there that’s very set in their ways,” he said of the SSA. He added that the culture needs to change.

“I have a real sense of urgency that we need to jump on this immediately,” he said of the HMS findings, “and I hope management and the board feel that way.”

Lack of planning

Planning was a shortfall cited by the authors of the McKinsey report. They noted there was “little formal project planning once [a] budget [is] approved” and included the following unattributed quote in the report: “Plans around here tend to be seat-of-the-pants.”

When asked if the SSA took steps to hedge against “seat-of-the-pants” management of vessel overhauls, among other things, Driscoll pointed to the creation of the Fairhaven Maintenance Facility. He also cited “the position of vessel maintenance manager, who works at that facility;” and went on to write, “we also have more port engineers on staff than we did in 1994 to better help the authority identify and address items that need to be addressed during vessel overhauls.”

Nevertheless, the HMS report strongly implied seat-of-the-pants management of the spring 2018 MV Island Home overhaul. It noted the breadth of the project wasn’t fully defined, and that there was no method in place to measure the scope of the work as it progressed, nor the quality of the work, the cost of the work or how the work would be scheduled. HMS also pointed out the SSA did a poor job of monitoring the work of Senesco Marine, the shipyard that did the work on the MV Island Home.

The McKinsey report cited “mistrust” between engineers and maintenance personnel and a “lack of communication between management and employees.”

McKinsey found a “disconnect” between management and the rank and file that led to “low morale.”

“‘Management does not communicate to us at all. Everything is a surprise,’” an unattributed quotation in the McKinsey report states.

“Lack of information and senior management ‘visibility’ [is] hurting coordination between layers of [the] organization and reducing employee morale,” the McKinsey report states.

The Steamship Authority board, as well as general manager Robert Davis, have said publicly in the run up to hiring HMS Consulting that communication issues are a recurrent problem for the SSA. Since the communications part of the HMS report is delayed, the full scope of the consultant’s findings on the subject is not yet known. However there are glimmers of communication issues in the report that’s already out. HMS points to a “lack of a clear aspirational vision” as causal to what it describes as “competing factions” within the SSA. The HMS report goes on to say,  “This appears in regular interactions between various departments and individuals, resulting in different factions undermining and working against each other at the expense of the organization’s performance.”

Like the HMS report, the McKinsey report points to an ill-defined vision or “mission,” as the source of numerous problems within the ferry line.

HMS attributed some of the communications issues within the SSA to the previously mentioned “hero culture.”

McKinsey recommended a retooling of SSA project management “due to a lack of clear process and poor information flow” and noted “direction and oversight from [the] board and management on major projects [was] at times inconsistent or lacking.”

HMS too found management changes were needed and found understaffing a significant issue. In its report, the addition of several new positions, such as a chief operating officer and a director of marine operations, were recommended to alleviate overburdened managers.

The McKinsey report called for more clearly defined roles for exant managers and greater scrutiny of management by the board.

Both reports cited a need for greater accountability within the SSA.

Concerning vessels, the McKinsey report recommended specifying “a single project manager to oversee all aspects of overhaul” and to “improve pre-overhaul planning.” Its report also recommended “greater accountability and ownership for results,” improvement of “internal coordination,” and minimization of “cost overruns and project delays.”

McKinsey cited four vessels in its report as suffering cost overruns between 1985 and 1993: the MV Eagle, the MV Martha’s Vineyard, the MV Sankaty, and the MV Islander, the first three vessels being new to the SSA. The MV Sankaty, an offshore supply ship that like the MV Gay Head and MV Katama, was converted to meet SSA needs, ran 53 percent over budget, the report states. A conversion of the MV Islander ran 33 percent over budget. The construction of the MV Eagle went over budget by an amount unspecified in the report. The MV Martha’s Vineyard, which was delivered new from a Florida shipyard, was a modest 2.6 percent over budget.

The midlife refurbishment of the MV Martha’s Vineyard, which was plagued with glitches, was originally contracted at a figure of $16,967,150, Driscoll, the SSA spokesman, told The Times.

An additional $2.3 million in change orders stacked up on that figure.

The MV Island Home drydock work was contracted $1,970,734, according to Driscoll. The sum of $276,499 in change orders was added to the contract amount. The work involved replacing the vessel’s bow thrusters. These failed to operate properly after installation, and most recently have suffered damage from electrolysis.

Driscoll cautioned against characterizing change orders as cost overruns and emailed that “[a] standard contingency is assumed in projects of about 10 percent of the total cost for change orders; so in the case of the Martha’s Vineyard, a roughly $1,600,000 contingency was assumed on our end for changes.”

Updated to correct information about the MV Eagle and the MV Islander.

3 COMMENTS

  1. Excellent analysis here by Rich Saltzberg that demonstrates how little changed at the Steamship Authority after its 1994 external review. SSA management and SSA Board members need to take this analysis to heart and stop making excuses for current sloppy management practices. One fears that SSA management will ignore most of the recommendations of the 2018 external review, just as SSA management ignored the recommendations of the 1994 external review.

  2. Marc Hanover continues to disappoint. He’s quoted as having “hope”. Hope is for churches, not for running the SSA. Further, he said “he knew of the old report generally, but did not have intimate knowledge of its contents.” Why not? Does he know his role on the SSA?

  3. Have we beat this dead horse long enough? It’s time to start the planning of the new Bridget Tobin bridge to the island. There is no hope of cleaning up this mess, only more of the same .Give all the workers jobs as toll booth clerks and keep the rates the same for the bridge to hold down the traffic to the island

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