SSO Cost & Pricing Analysis 2 — Questions and Answers
Question 1: When calculating the total cost of a ship security drill, which indirect cost is most commonly overlooked?
- Crew overtime wages
- Administrative overhead and planning time (Correct answer)
- Equipment replacement parts
- Port authority fees
Correct answer: Administrative overhead and planning time
Administrative overhead and planning time are indirect costs frequently omitted from drill cost calculations despite being significant contributors to total expenditure.
Question 2: A Ship Security Officer receives quotes from three vendors for CCTV maintenance: $4,200, $3,800, and $5,100. What is the average (mean) quote price?
- $4,000
- $4,367 (Correct answer)
- $4,200
- $4,500
Correct answer: $4,367
The mean is ($4,200 + $3,800 + $5,100) / 3 = $13,100 / 3 = $4,366.67, rounded to $4,367.
Question 3: Which pricing model is most appropriate when procuring long-term security equipment maintenance contracts under ISPS Code requirements?
- Spot pricing
- Fixed-price contract
- Cost-plus contract
- Time-and-materials with a not-to-exceed cap (Correct answer)
Correct answer: Time-and-materials with a not-to-exceed cap
A time-and-materials contract with a not-to-exceed cap provides cost control while accommodating variable maintenance needs typical in long-term security equipment upkeep.
Question 4: An SSO must justify a $15,000 security system upgrade to management. Which financial metric best demonstrates long-term value?
- Gross margin percentage
- Return on investment (ROI) over 5 years (Correct answer)
- Monthly depreciation charge
- Current ratio
Correct answer: Return on investment (ROI) over 5 years
ROI over a defined period quantifies the financial benefit relative to cost, making it the most persuasive metric for capital expenditure justification.
Question 5: Under US maritime regulations, when competitive bidding is required for security service contracts, what is typically the minimum number of bids that must be solicited?
- Two
- Three (Correct answer)
- Four
- Five
Correct answer: Three
US federal procurement guidelines and most company policies require a minimum of three competitive bids to ensure fair pricing and prevent sole-source abuse.
Question 6: A vessel's security budget shows a 12% variance between planned and actual spending. Which action should the SSO take first?
- Request an emergency budget supplement
- Identify and document the root cause of the variance (Correct answer)
- Reduce non-essential security patrols
- Notify the flag state immediately
Correct answer: Identify and document the root cause of the variance
Identifying the root cause of budget variance is the essential first step before any corrective or reporting action can be appropriately taken.
Question 7: Which cost classification describes the salary of a dedicated Ship Security Officer employed full-time aboard a vessel?
- Variable cost
- Semi-variable cost
- Fixed cost (Correct answer)
- Sunk cost
Correct answer: Fixed cost
A full-time SSO salary does not change with operational output or voyage frequency, making it a fixed cost within the vessel's operating budget.
SSO Cost & Pricing Analysis 2
When calculating the total cost of a ship security drill, which indirect cost is most commonly overlooked?