Annual report 20108.31 MB - Boskalis

Risk managementsum, which is finalized through negotiations with theclient or an arbitration process. Should it transpirein the course of a salvage operation that the finalsalvage fee will not be sufficient to cover the costsinvolved, then the LOF (contract) can be convertedto a contract based on a daily hire fee. This limitsthe financial risks.The other major operating risks at the HarbourTowage division are characterized by a broadgeographical spread of the activities, with towagecontracts often being carried out under longtermcontracts with fees being reviewed eachyear. This allows for changes in local wage costdevelopments, fuel price developments and theavailable capacity of the equipment involved - forexample tugboats - to be reflected.Terminal services are usually performed underlong-term contracts with a fixed price for thecontract period, corresponding to the wishes andspecifications of the client. Most contracts includesome form of price indexation.Within the Transport and Heavy Lift segmentequipment often tends to be leased for relativelyshort periods (spot markets), meaning that theoperational risks in general, certainly as comparedto the other activities, are relatively limited.Local management on projects and operationsis expected to have a grasp of the complexity ofworking under the specific local circumstances.The scale of local operations is often too small towarrant a fully fledged organization, complete withextensive support services and staff departments.Regular visits by responsible managers andemployees from the relevant business unitsand support from highly qualified central staffdepartments at head office make up for this.In 2010 SMIT Salvage started work on salvaging the container ship MSC Chitra in India. As a result of a collision the ship started listing heavily beforeeventually running aground just outside the port of Mumbai.Royal Boskalis Westminster nv53