Service Level Agreements (SLAs) are an essential component of B2B and B2G acquisition contracts for marine craft. A well-structured SLA helps ensure operational reliability, cost control, and clear accountability between buyer and seller.
An SLA defines the level of service the buyer expects from the seller. In practice, this level is determined through a set of predefined metrics that both parties use to track the performance of the services provided. The agreement also specifies remedies or penalties that apply if performance falls below the agreed service level.
Core Components of a Marine SLA
Typically, an SLA includes two main parts:
1. Services
This section covers:
- Specific details of the services provided
- Conditions of service availability
- Defined service levels
- Responsibilities of each party
- Performance metrics
- Escalation procedures
- Cost versus service trade-offs
2. Management
This section focuses on governance and measurement, including:
- Definitions of measurement standards and methods
- Reporting contents and frequency
- Mechanisms and intervals for updating the SLA
- Dispute resolution processes
Selecting the Right SLA Metrics
The choice of metrics depends on the services being delivered. Selecting appropriate metrics is critical for ensuring both operational effectiveness and contractual clarity. The following guidelines are commonly recommended:
- Choose metrics that are easy and cost-effective to collect and monitor
- Limit the number of metrics (typically 2–5 maximum)
- Ensure metrics are accessible to both parties, for example via an online portal
- Focus on metrics that promote positive behaviours from both parties
- Remember: what gets measured gets done
- Recognise that metrics exist at different hierarchical levels
- Ensure metrics are largely within the service provider’s control
Understanding Metric Hierarchies in Marine SLAs
Metrics vary significantly in complexity and scope.
For example, operational availability is often a key metric for operators. It represents the percentage of time a system is capable of performing its assigned mission. It is typically expressed as:
Availability = uptime / (uptime + downtime)
While this may appear straightforward, it often includes factors such as:
- Logistics delays
- Administrative delays
- Preventive maintenance
- Corrective maintenance
This makes it a high-level metric making it difficult to measure and control by the service provider.
By contrast, a low-level metric example is fill rate — the percentage of ship-from-stock orders dispatched within 24 hours of receipt. This metric is simpler but more directly controllable and measusurable.
Service providers must carefully balance whether a metric is both:
- Meaningful to the service recipient
- Realistically controllable by the provider
Setting Realistic Performance Levels
Once metrics are defined, performance targets must be realistic and achievable. These can vary significantly between projects due to factors such as:
- Geographic operating environment
- Mission criticality
- Logistics constraints
- Operational intensity
Establishing appropriate performance thresholds is essential for maintaining trust and avoiding contractual disputes.
Marine Industry SLA Expertise
There are established standard metrics and performance benchmarks widely used in the marine industry, but tailoring them correctly requires sector experience and practical insight.
If you are developing or reviewing an SLA for marine craft acquisition, professional guidance can significantly reduce risk and improve operational outcomes.
👉 Contact us to discuss how to establish a robust and effective Service Level Agreement tailored to your maritime operations.