SSESSING MAINTENANCE CONTRACTS RISKS M ASTER T HESIS A

1

M

ASTER

T

HESIS

A

SSESSING MAINTENANCE CONTRACTS RISKS

A

T

G

RONINGEN

S

EAPORTS

University of Groningen Faculty of Economics and Business Technology and Operations Management

2

A

BSTRACT

In this paper the risks of maintenance contracts will be discussed, and suggestions for assessment of those contract risks are provided.

A risk-based framework consisting outsourcing risks, contract aspects and contract types is constructed, which gives more insight in maintenance contracting problems.

Contract aspects are revealed by discussing several maintenance contract models from existing literature. Maintenance contract risks derived from literature supplemented with case study results are categorized by using the typology of Aron, Clemons, & Reddi (2005). Contract types used to distinguish contracts are: work package contract, performance based contract, lease contract and flexible asset management contracts. Hence the typology of Marttonen, Viskari, & Timo (2013). And finally a stepwise approach is provided which can be used by managers for assessing maintenance contract risks.

3

T

ABLE OF CONTENT

Abstract ... 2

1 Introduction... 4

2 Background Theory ... 8

2.1 Important aspects of maintenance contracts ... 8

2.2 Outsourcing risks ... 11

2.3 Maintenance contract types ... 14

2.4 Relation contract aspects, contract risks and contract types ... 17

3 Methodology ... 20

4 Results ... 24

4.1 Important factors of maintenance contracts for Groningen Seaports ... 24

4.2 Contract risks at Groningen Seaports ... 30

5 Design ... 34 5.1 FMEA ... 34 5.2 Stepwise approach ... 35 6 Discussion ... 37 7 Conclusion ... 38 8 References ... 39 9 Appendix ... 41 I. Interview Protocol ... 41

II. Interview analysis’s GSP ... 45

4

1 I

NTRODUCTION

Groningen Seaports is a seaport company in the north of the Netherlands. The main activity of this company is to facilitate seaport customers in their activities. They facilitate seaport customers by providing an infrastructure for shipping, such as docks and floating jetties and by exploiting pipelines and electric wires, etc. The maintenance of all these assets is outsourced to other companies. Difficulties that Groningen Seaport faces because of this outsourcing strategy are to determine and assess all potential risk in the maintenance contracts. Some risks are not measurable in cash, and others may be unforeseen. This research will provide insight in outsourcing risks and provides a risk based framework for assessing the maintenance contract risks for seaports assets.

Outsourcing is a strategy that is used more and more, especially in public services (Brudney, 2004). According to Marttonen et al. (2013): “competition has become tight and globalised and the number of outsourcings has increased”.Gilley and Rasheed (2000) define outsourcing as “procuring something that was either originally sourced internally (i.e. vertical disintegration) or could have been sourced internally notwithstanding the decision to go outside”, for example maintenance. Mostly outsourcing is used because it may lead to more efficient service delivery and cost savings (Brudney, 2004). Outsourcing maintenance to contractors increases the scale of maintenance, because maintenance contractors perform maintenance mostly for multiple firms and therefore maintenance can be performed more economically (Martin, 1997). However, there is no consensus about how many costs are saved by outsourcing, if any (Hodge, 2000; Sclar, 2001). Maintenance costs can be between 15 to 40 percent of total production costs (Pinjala, Pintelon, & Vereecke, 2006). For this reason firms try to reduce those costs by performing the maintenance as efficiently as possible. By means of outsourcing their maintenance activities for example. Besides cost savings, there may be other reasons to outsource maintenance activities. According to Straub (2009) “Outsourcing enables maintenance contractors to assume responsibility for certain activities for which they are better equipped to perform than their clients”.

If a company has decided to outsource maintenance activities, maintenance contracts are used to capture mutual agreements. “A maintenance contract is the outsourcing of maintenance actions where defects/failures are rectified by an external agent for an agreed period of time. The agent (service provider) in turns charges a price for such service” (Rahman & Chattopadhyay, 2008).

5 manufactures are dependent on the quality the contractor delivers to the client (Kaya & Özer, 2009). Another risk of outsourcing is probability of information leakage, and loss of technological competencies (Hoecht & Trott, 2006).

A type of firm that outsources their maintenance activities are seaports. Seaports have high value complex assets which need to be maintained. One of their services is to facilitate seaport customers. Seaports provide facilities for their customers such as steam pipelines, and floating jetties. Customers of seaports require that the seaports assets are very reliable and operational at all times needed. The seaports themselves strive for a good reputation, and their reputation can be harmed if they deliver poor services. Therefore the seaports want to ensure availability of their facilities. Another argument for seaports to have a good asset maintenance management program are guidelines such as NEN3650 PED NTA8000 NTA8120, which are generally respected. And also the Dutch government requires a certain safety level for pipelines ‘Besluit externe veiligheid buisleidingen’ (Huizinga-Heringa, 2010). This forces companies to perform maintenance or maintenance inspections at their pipelines if public safety can be jeopardized when a failure occurs.

These aspects require a thorough outsourcing partner selection. As discussed before these decisions go beyond price selection only, and should also include risk assessment. The management question of Groningen Seaports (GSP) is: “In what way can the risks of outsourcing maintenance be assessed during contract closing?”.

It is not possible to solve this question by developing a mathematical method to contribute in this outsourcing decision, since some risks are impossible to quantify. There exist risk assessment models (Aubert, Patry, & Rivard, 1998; Relph & Parker, 2014), but they are mostly built for production outsourcing rather than maintenance outsourcing. Welborn (2007) used a failure mode and effect analysis (FMEA) to assess outsourcing risks of product manufacturers. However there is no suitable method, model or assessment technique that is suitable for assessing maintenance contract risks.

The aim of this study is to deliver a complete risk based framework which can be used to establish a solid maintenance contract. While non-contractible risks may not be covered in the contract itself, they are assessed during selection of contractor before contract closing. The research question resulting from the management question of Groningen Seaports is: “What are the maintenance contract risks and how can those risks be assessed and integrated in maintenance contracts?”

6 included in maintenance contracts (table 2.1). It is also important to know what outsourcing risks are already known and exist in literature, since maintenance contracts should ideally cover the outsourcing risks. Outsourcing risks may differ between contract types, because the contract type mainly influences what risks belongs to the contractor and what risks belongs to the client. Hence the types of maintenance contracts that are commonly used in practice should be included in the framework. There may be firm specific aspects important for seaport asset maintenance contracts not mentioned in literature that need to be included in the framework, and some risks may not exist at Groningen Seaports. Finally, a framework can be constructed to which can be used to as a base for assessment of maintenance contract risks. In short the following sub questions should be answered to answer the research question:

1. What aspects are important to include in maintenance contracts? 2. What types of outsourcing risks exist in literature?

3. What are existing maintenance contract types?

4. What are important factors of maintenance contracts for Groningen Seaports? 5. What types of contract risks exist at Groningen Seaports?

6. How can the maintenance contract risks be assessed?

7 Figure 1.1 Research structure.

Q1 Aspects in contract models Q4,Q5 Analysis contracts/ contracting processes Q3 Maintenance contract types Literature Empirical Q4 Aspects from contract models applicable to GSP Q2 Types of outsourcing risks

Q5 Existing contract risks at GSP

Design

Q1,2,3,4,5 Risk-based framework

8

2 B

ACKGROUND

T

HEORY

In this chapter the existing knowledge will be discussed and used as a base for the framework. The first three sub questions will be answered in this chapter. To start with important aspects of maintenance contracts. Then outsourcing risks will be discussed and finally existing maintenance contract types.

2.1 Important aspects of maintenance contracts

Important aspects of maintenance contracts are discussed in contract models, especially maintenance contract models. By discussing contract models one by one, important aspects included in these models will be revealed. Used search terms for finding these models were: maintenance, contracts, asset contracting, cost estimation, costs, seaports, model, complex assets, management, contracting out. Searching was done in different libraries: Google scholar, EBSCO and Business source premier. It might be possible that by using these key words some models are missed because the scope was narrowed. However, results were more likely to be useful for this research because those models were meant for purposes similar to this case i.e. maintenance contracts at seaports. Nevertheless, it is no guarantee that no other models exist in literature which may include different important aspects also important for maintenance contracts for seaports assets. Due to time limitations not all contract models can be analysed. By using specific search terms the most promising and complete models were selected and most important aspects are repeated in the discussed models already. With interviews at Groningen Seaports and contractors other possible important contract aspects not mentioned in these models may be recognized (see section 3.2). The important aspects that are mentioned in the models will be summarized in table 2.1.

2.1.1

9 model determines which contract type returns the highest profit for the contractor, constrained by the desired availability and reliability set by the client.

2.1.2

This model is specifically constructed to deal with repairable systems. The model helps to determine whether a system should be replaced, or repaired, in terms of cost efficiency. In the case that it should be repaired it also gives the most optimal repair interval. Several models that deal with optimal repair and replacement intervals exist, but in this model it is constructed for a finite time horizon which is usually the case with maintenance contracts, for example in the case study of Lugtigheid et al. (2007) 60 000 hours. This helps to determine which repair policy would be most appropriate for the maintenance contractor. Although this model is less useful for contract type decisions because it already implies that there is some kind of contract used, this model can be used to obtain insight in feasible maintenance contract costs and maintenance contract aspects. The model distinguishes maintenance types, preventive maintenance or corrective maintenance. It also mentions criticality of failures in terms of costs associated with failure.

2.1.3

This model distinguishes itself from other models because it also includes aging, which implies that failures are not equally distributed during lifetime but occur more often at the end of the life time. In this model contracts can differ with regard to response time and service. A short response time and service time is more expensive than a long response and service time. Furthermore, the model includes penalty costs, costs due to downtime, and operating costs, costs when the system is operational. With this model the minimal ownerships costs are determined. I.e. it determines which contract type leads to minimal reliability associated costs, the sum of operating, repair and penalty costs.

2.1.4

This model is built to be able to calculate costs of a contract of a rail infrastructure. This is more from the contractor perspective to ensure that the contractor is able to make profit. The model takes into account preventive and corrective maintenance. It also includes reliable estimated failure rates, risk costs, inspection costs, maintenance costs and penalty costs for not conforming to the contract. In this model a finite time horizon is used. The model is a detailed application of an earlier cost estimation model for maintenance of complex assets developed by Rahman and Chattopadhy (2008).

10 Table 2.1 Contract aspects

Contract aspects Wang

(2010) Lugtigheid et al. (2007) Lisnianski & Frenkel (2008) Rahman & Chattopadhy (2010) Maintenance Performance Availability/Downtime x x x Reliability x x x Response time x Repair time x System characteristics

Time horizon of contract x x x x

Repair options x x x Aging system x x Criticality/impact x Failure rate x x Cost elements Contractor profit x x Maintenance costs x x x x Operating costs x Cost of downtime x x x Inspection costs x

Repair cost (allocation) x x x

Cost of failure x

Spare parts ownership/pay x

Maintenance strategy Maintenance type (PM CM) x x x Quality of maintenance x x x Maintenance frequency x Periodic replacement x Run to failure x Inspection interval x x Control instruments Availability/reliability penalties x x x x Downtime compensation x

11

2.2 Outsourcing risks

In this section will be discussed which outsourcing risks exist in literature that can actually be applied to maintenance activities, for example an outsourcing risk such as poaching (misuse of information, for own purpose) is not a maintenance outsourcing risk and therefore it will not be discussed in this section. The types of risks are divided in the four categories as described in earlier work of Aron et al. (2005): strategic risks, operational risks, intrinsic risks of atrophy and intrinsic risk of location, see table 2.2 At the end of this section the maintenance outsourcing risks are summarized in table 2.3.

Table 2.2 Taxonomy of risks (Aron et al., 2005)

Type of risk Elements that constitute the risk type

Strategic risks “Risks that result from opportunistic behaviour of

one or both parties” (Aron et al., 2005)

Operational risks

“Risks of suboptimal output that results from a variety of cases including complexity of operations, geographic separation between client and vendor, and the limitations of the communications and transmission systems between the two” (Aron et al., 2005)

Intrinsic risks of atrophy

A company loses the staff and knowledge involved by the activity if the activity is

outsourced for long periods, expertise decreases. (Aron et al., 2005)

Intrinsic risks of location

This are geopolitical risks, exchange rate risks, different socio-political systems and other differences between regions that may cause problems between parties. (Aron et al., 2005)

2.2.1

One strategic risk that harms an organization is shirking, shirking is underperforming while claiming full payment. This is hard to detect because the contractor itself has the maintenance information and not the client (Aron et al., 2005). Commitment between parties may diminish over time which leads to shirking (Relph & Parker, 2014).Shirking can happen deliberately for profit maximization (Aron et al., 2005)or by losing client focus (Relph & Parker, 2014)

12 Thus when the client gets locked in with a single agent (Marcus Alexander & Young, 1996; Sanders et al., 2007; Wang, 2010)

2.2.2

Six operational risks were found in literature. The first operational risk is contract pricing, cost-plus contracts may lead to unexpected costs because both parties try to maximize profit and therefore charge fees for every non-contracted service (Yao, Jiang, Young, & Talluri, 2010). To overcome this, firms may use fixed price contracts where all fees are included. The price that they agree upon should be well determined. If the cost price for services declines during the contract period (for example through increased scale) the client pays a lot more than the actual costs the contractor makes.

The second operational risk are hidden costs of outsourcing, costs that arise while outsourcing, such as transition costs consisting of setup costs, redeployment costs, and cost for human resources that are needed to manage contracting the outsourcing activity (Aubert et al., 1998). Hidden costs could also consist of important tasks which are not included in the contract but should have been included, which will be performed by the contractor, but entail extra costs (Sanders et al., 2007)

A third operational risk is loss of control over the activity. By outsourcing the activity the client may have less control over the activity (Barthélemy & Geyer, 2005). Because maintenance and inspections are performed by the contractor, the client has less control over the activity itself. The fourth operational risk is quality risk, the client is dependent on the quality the contractor delivers. Quality is not always included in contracts because quality is difficult to measure and verify (Kaya & Özer, 2009). That is also caused by the loss of control. Furthermore, firms cannot make a contract that describes what the quality should be in every possible eventuality (Salma, Lyes, Abderahman, & Younes, 2007; Tirole, 1998).

Another operational risk is declining innovation, maintenance innovations may be fewer than when maintenance is performed by the client itself, because innovations can reduce costs. This cost reduction is now realized by outsourcing. The contractors do not feel the need to innovate since the client pays for the maintenance anyway (Teece, 1988).

The last operational risk is contention risk. Contention risk is a risk for lack of service at a critical moment due to a large numbers of clients demanding service from the contractor i.e. limited availability (Sanders et al., 2007). This can also be caused by unreliable suppliers who experience work of other organizations as more important to them (Weidenbaum, 2005), this may be a result of a different culture and other values.

2.2.3

13 when maintenance activities are outsourced for a long time. The intrinsic knowledge of the organization may disappear because employees who were responsible for the maintenance are no longer needed or may leave the organization. Also staff managing the maintenance is not managing the maintenance itself but establishes maintenance contracts with contractors. Therefore experience with managing maintenance will decrease over time (Doig, Ritter, & Speckhals, 2001).

2.2.4

Another risk is the shift of location, i.e. maintenance companies at remote locations. This can lead to political risks such as change of leader or politics (Weidenbaum, 2005) and exchange-rate risks if the company is situated in another country (Aron et al., 2005).

All risks mentioned above are summarized in table 2.3 to be able to get a clear overview. Table 2.3 Outsourcing risks

Strategic risks Operational risks Intrinsic risk of

atrophy

Intrinsic risk of location

Shirking (Aron et al., 2005; Relph & Parker, 2014)

Contract pricing (Yao et al., 2010)

Reduced-in-house-knowledge (Aron et al., 2005; Doig et al., 2001; Wang, 2010) Change of politics (Weidenbaum, 2005) Opportunistic renegotiation (M Alexander & Young, 1995; Sanders et al., 2007; Wang, 2010)

Hidden costs (Aubert et al., 1998; Sanders et al., 2007)

Exchange-rate risks (Aron et al., 2005)

Loss of control (Barthélemy & Geyer, 2005)

14

2.3 Maintenance contract types

In this section maintenance contract types that have appeared in the literature will be discussed. Finally the typology of Martin (1997) extended by Marttonen et al. (2013) will be explained in detail and used in this research to make a distinction between contracts.

15 Table 2.4 Typology and characteristics of business concepts (Lay et al., 2009)

Characteristics of business concepts Fu ll s er vice co nt ra ct s Per for man ce -b a sed co nt ra ctin g Int egr a ted solut ion s Fu ncti ona l pr odu ct Fu ncti ona l s a le s Se rv ici sin g Produ ct ser vice s sy stem s Produ ct -lif e ex ten sion ser vic es Che mical man a g eme nt ser vice s Ener g y ser vice co nt ra ctin g

Ownership Yes Yes Yes Yes Yes Yes

Financing Yes Yes

Production

personnel Yes Yes Yes Yes Yes Yes Yes

Maintenance

personnel Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Payment Yes Yes Yes Yes Yes Yes

Number of

customers Yes

Location of

operation Yes

Retrieval,

recycling Yes Yes Yes Yes Yes

16 Figure 2.1 Morphological box of business concepts (Lay et al., 2009).

In this research the typology of contract types initially described by Martin (1997) will be used as a categorisation of contract types, because these types are described quite easy and do not need detailed analysis of contract terms. This is therefore convenient for practical use. Martin (1997) distinguishes between three kinds of contracts. A work package contract, a performance based contract and a lease contract. Although the typology is relatively old it can be justified to use this typology. Since there were no alternative suitable or improved models provided in literature. Except for the extension of Marttonen et al. (2013) who extended Martins typology (1997) with an extra contract type, flexible asset management contracts. Which will also be included in this research.

2.3.1

A work package contract is a contract in which “the clients perform all planning and control logic themselves, i.e. clients tell the contractors when they have to do what maintenance activities” (Martin, 1997). This contract is quite simple because it only describes what has to be carried out at what time. However, the client itself is still responsible for the planning and design of the maintenance plan. This responsibility makes it still necessary to hire a small amount of maintenance employees to conduct the planning and determine the kind of maintenance needed.

2.3.2

17 (maintenance need) should be described in the contract, and every irregularity should be discussed with both parties. This makes it extremely difficult to determine a fair budget because the budget should be enough to perform all necessary maintenance actions but not extremely exceed the maintenance costs. Another requirement of this contract is that the availability should be measured because availability determines whether the maintenance is sufficient or not (Martin, 1997). This type of contract is quite complex.

2.3.3

With a lease contract, also called facilitator contract by Martin (1997), the client is only a user of the system. The contractor owns the system and takes care of the maintenance of the system. This contract is quite simple because the clients pay for the time they use the system or the amount of products they produce with the contractors system (Martin, 1997). However, the contractor is highly reliant on the client because the investment risks are for the contractor. If the client faces bankruptcy the contractor has a system without a user. Another possible disadvantage is that the contractor determines the operation instructions and not the client.

2.3.4

This contract type is quite new in literature, and there is no proof of its benefits in practice. Nevertheless it is a viable additional contract option for outsourcing maintenance, which should be considered. The idea of this contract is to shift ownership from the one company to the other company. Which also happens with the lease contracts. The difference between the lease contract and the flexible asset management contract, is that with this contract type the profit from the shift of ownership is shared between the two companies. This can happen with fixed assets, such as pipelines and also with working capital such as spare parts. Hereby risks can be balanced between both parties, this can result in a loss for the contractor and a win for the client, but the sum of the loss and profit can be positive, a win-win situation for both parties because that profit will be (actually must be) shared. This is the foremost benefit of this contract type, see Martonnen et al. (2013) for a detailed explanation of this phenomenon. This type of contract needs trust between both parties, and is quite complex, but potential benefits are higher(Marttonen et al., 2013). And not in all cases a win-win situation occurs, hence there is no benefit, and therefore this contract option cannot be used for all situations.

2.4 Relation contract aspects, contract risks and contract types

18 the desired availability is already included (because a performance based contract is an agreement about availability). Thus contention risk is already covered, because the contract type directly leads to the contract aspect, availability. Also contract aspects such as cost elements can lead to contract risks, i.e. wrong contract pricing. However, this relation is not straightforward. The contract type only influences contract risks, but it is possible to assess those risks by including contract aspects. And the contract risks themselves also influence what types of contracts are suitable for the outsourcing situation. This means that all three concepts should fit together.

Figure 2.2 Conceptual model relation contract types, contract risks and contract aspects.

From this relation a framework can be constructed which includes the important aspects of maintenance outsourcing, see table 2.4.

Contract types

Contract risks

19 Table 2.4 Maintenance contract outsourcing aspects

Contract types Contract risks Contract aspects

Work package contract

Strategic risks

 Shirking (Aron et al., 2005; Relph & Parker, 2014)

 Opportunistic renegotiation (M Alexander & Young, 1995; Sanders et al., 2007; Wang, 2010) Maintenance Performance  Availability/Downtime  Reliability  Response time  Repair time System characteristics

 Time horizon of contract

 Repair options

 Aging system

 Criticality/impact

 Failure rate

Operational risks

 Contract pricing (Yao et al., 2010)

 Hidden costs (Aubert et al., 1998;Sanders et al., 2007)

 Loss of control (Barthélemy & Geyer, 2005)

 Quality risks (Kaya & Özer, 2009; Salma et al., 2007; Tirole, 1998)

 Declining innovation (Teece, 1988)

 Contention risk (Sanders et al., 2007; Weidenbaum, 2005)

Performance based

contract Cost elements _{ Contractor profit}

 Maintenance costs

 Operating costs

 Cost of downtime

 Inspection costs

 Repair cost (allocation)

 Cost of failure

 Spare parts ownership/pay

Lease contract

Intrinsic risk of atrophy

 Reduced-in-house-knowledge (Aron et al., 2005; Doig et al., 2001; Wang, 2010) Maintenance strategy  Maintenance type (PM CM)  Quality of maintenance  Maintenance frequency  Periodic replacement  Run to failure  Inspection interval Control instruments Flexible asset contract Intrinsic risk of location  Change of politics

(Weidenbaum, 2005)

 Exchange-rate risks (Aron et al., 2005)

 Availability/reliability penalties

20

3 M

ETHODOLOGY

The aim of this study is to build a theory, a risk-based framework that will give managers insight in the aspects of maintenance contracting. An embedded case study will be conducted, since this method is appropriate for theory building. The cases studied are multiple assets of Groningen Seaports maintained by contractors. This research is mainly descriptive since there is already some explorative research done on the factors involved with maintenance contracting. These factors were described in section 2. However, it is not described how these factors should be assessed during contract closing, and this research will contribute to that issue. In this section the sample selection, the instruments used, and the way of data collection will be discussed. Followed by a case description of the selected cases.

3.1.1

This research focuses on risk of maintenance contracts at seaports. Samples are selected on the next criteria:

1. The samples should be assets that are common in seaports, because the aim of this research is constructing a risk-based framework for maintenance contracts at seaports.

2. Criticality, the samples should have an impact on the organization when risks materializes.

3. Maintenance needs of assets, the degree to which assets need maintenance since the framework to be build is meant for maintenance contracts, the contracts are less important if assets do not need any maintenance at all. Measured in contract size, i.e. the contract price.

3.1.2

For multiple assets, interviews will be conducted to reveal the important maintenance contract factors for seaports assets. Data obtained by interviews will be structured to allow for future analysis. An FMEA analysis will be used for risk prioritization as suggested by Welborn (2007). This method prioritizes risks by rating the risk for opportunity, probability and severity, see section 4.3. Although this method is not very accurate, it can still be very helpful and it is a quick and simple method to assess risks (Welborn, 2007). This method also makes it possible to quantify risks to some extent. A risk based framework can be used as an input for this method. Whereas the FMEA can then be used in a step wise approach to force management to assess risks before closing the maintenance contracts as well rather than considering costs only.

3.1.3

21 used for data collection. For internal validity, patterns in interviews will be matched with other interviews. Furthermore an interview protocol will be used to ensure internal validity. External validity will be created by a decent sample selection that represents the port industry. For reliability reasons the interviews will be held according to the interview protocol and the interviews will be recorded with a tape recorder and formatted in transcripts. Triangulation will be achieved by conducting interviews among multiple stakeholders, the contractors and GSP. And also by using different sources, documents, contracts and interviews.

3.1.4

Primary data that will be used is data collected by interviews and surveys. The interviews will be structured using the tables from section 2 of this research to maintain consistency in the interviews. Interviewees will be selected on their function during contract closing. Contract closers will be interviewed, technical engineers responsible for building or maintaining the assets, representing the client, and technical engineers responsible for building or maintaining the assets, representing the contractor. Secondary data that will be used are documents with in-firm analyses of assets that are selected, and maintenance contracts for those assets.

3.1.5

Research was done among different assets of Groningen Seaports:

 Medium voltage power supply network

 Public lightening network

 Compressed air and nitrogen pipelines

 Steam pipeline

 Quay

These cases will now be discussed one by one. The medium voltage power supply network is an assets which provides the power supply for ships docked in the port. It transforms 20 000 Volts in 390 Volts. Ships can use this supply when they are docked, which allows ships to turn off their own ship engines used to generate electricity. This installation is an extra service which results in costs savings for ship owners and reduces the environmental damage of the port. Ships are not dependent on this installation because they can generate their own electricity on board. Therefore impact of downtime is limited. However GSP wants to facilitate their customers and maintenance of their assets is therefore needed to be able to provide reliable services and maintain their reputation to be attractive for new clients.

22 The public lightening network is an installation that enlightens the public area, property of GSP. This lightening network is meant for security, safety and comfort of the clients. The network consists of about 2000 lighting poles, and wires connecting the poles. If the whole installation has a breakdown, the safety for driving in the dark will be low, uncomfortable and it may result in a feeling of insecurity. If a couple of poles are broken, it has little impact on safety comfort and security, however it may still harm reputation of GSP, because it gives an impression of bad maintenance. Besides that, impact of downtime is quite limited.

The maintenance contract is a one year work package contract extended every year, where inspections, corrective and preventive maintenance are excluded, only an agreement about inspection moments, material and labour prices.

The compressed air and nitrogen pipeline, is a pipeline which transports compressed air and nitrogen between delivery companies and consuming companies located on the terrain of GSP. This pipeline is an extra facility for seaport clients, which makes the port more attractive. If the pipeline has a failure. The production of dependent companies will be interrupted, which will result in high downtime cost for the affected companies. Availability is highly important, since this is a critical assets for the seaport customers. Safety is also important because leakage of nitrogen is dangerous. This makes good maintenance of this asset very important.

The maintenance contract period is 10 years and afterwards it will be tendered again. The price category is between 10 and 25 thousand euros. The contract type is a work package contract. Where inspections are included and planned. And corrective and preventive maintenance repairs are excluded.

The steam pipeline transports the by-product steam of a power plant, to other companies, which can use the steam for their processes. Thus this pipeline connects companies that supply or demand steam located on the terrain of GSP. The impact of downtime is high, since production processes will be stopped if delivery of steam is interrupted. Also safety of the pipeline is important, since the pipeline contains hot steam under pressure. Which may be dangerous if the pipeline breaks down. Hence, availability and maintenance is important for this asset.

The maintenance contract of this asset is 15 year contract which can be extended two times by 5 year. The price category of this contract is 1-5 million euro. The contract type is performance based contract, where inspections preventive and corrective maintenance repairs are included.

23 to production stoppage of the power supply. Short unavailability does not immediately lead to production stoppage but maintenance is important. Accessories such as fender panels for protection of ship and quay need to be maintained since broken fender panels can result in ship or quay damage. The same holds for drowning ladders which are needed for safety requirements.

The maintenance contract period of this asset is 25 years, which is available for tendering after 25 years. The price category is between 1 and 5 million. And the contract type is performance based contract.

Table 3.1 Case description

Cases Contract period Price category Type contract Criticality*

Medium voltage power supply

network

10 years, then

yearly extendable 10 000 - 25000 Work package Low

Public lightening

network yearly extendable Payment per job Work package Low Compressed air and nitrogen pipelines 10 years, only extendable by tendering

10 000 - 25 000 Work package High

Steam pipelines

24

4 R

ESULTS

The in the previous section described cases were used to determine important factors of maintenance contracts for GSP and contract risks at GSP. Those factors and risks were determined by interviews among personnel involved with contract closing of the contractor and GSP. The outcomes of these interviews will be discussed in this section. First the important factors for maintenance contracts for GSP will be discussed and secondly the contract risks at GSP. At the end of this section the FMEA analysis will be used to arrange the risks for maintenance outsourcing.

4.1 Important factors of maintenance contracts for Groningen Seaports

In this paragraph every case will be discussed separately, in the same sequence as the previous section. First the results from interviews at GSP will be discussed followed by results of interviews conducted at contractors. And in the end a cross-case analysis will be presented.

4.1.1

The current maintenance contract of GSP with contractor for this asset is a work package contract. Before this contract GSP had no maintenance contract for this asset. There were only loose payments per corrective maintenance job, which GSP outsourced only when there were failures. It happened in the past that there were no engineers available when a failure occurred, therefore repair time was long which may have harmed GSP’s reputation. For GSP it is important that maintenance is performed because the asset should be available for their customer. And there is a certain maintenance level required because of legislation. Also the responsibility for the maintenance condition should be clear. Quality of inspections at this installation is also important because it is determined in legislation (NEN 3840). In previous situation, when there was a repair job, the contractor had no responsibility for the condition of the installation after a repair job. The new maintenance contract resulted in more clarity of the party that has responsibility for operation and maintenance on the installation.

Control on maintenance condition was increased by outsourcing the maintenance, because the only maintenance that was done before the maintenance contract was closed, were corrective repairs. And contract also improved responsiveness of contractor, because job is not placed at end of queue, but handled in the response time.

25 terms is undesirable, because it is almost impossible to determine costs, which may lead to a very high contract price. Furthermore when contractor is dependent on third parties the contractor desires an opportunity to pass through increased costs they are facing to ensure economic viability.

4.1.2

Before the current contract GSP had no contract, every failure was outsourced as an individual job, resulting in high maintenance costs due to the call-out charges. Therefore a maintenance contract was made, resulting in a major decrease of maintenance costs, which was a goal of GSP. Important for GSP is that when a failure occurs (i.e. defective lamp), the defect is repaired in a reasonable period, the response time. For safety security and reputation issues, as mentioned earlier. Also inspections and resulting repairs should be planned in the winter period, this increases performance of the lightning network when the lightning network is then most needed. After outsourcing the maintenance condition improved. However, in the previous situation there were no planned inspections only corrective repairs. Penalties for reliability are assumed as not really important for GSP for assets with low criticality, because these may harm a trust relation, but if they are included they should be high enough to motivate the contractor into action. Availability is not desired in this contract because it has minor importance, and it is not reasonably measurable with this installation. Also maintenance reports are assumed as time consuming and have limited added value since criticality of this asset is low.

For the contractor is important that the response time is a reasonable period, so that the contractor is able to combine a jobs, what leads to cost efficiency. The contract period is important for the contractor because it influences costs for maintenance. When desired service level increases, importance of contract period increases because in an aging system more effort is needed to maintain a high service level. But also a short period leads to a higher price because investments have to be recovered in a shorter period. The contractor considers a bonus malus in the contract as desirable because it triggers them for high service and can increase their profit if they are performing well. For the materials and labour the contractor desires a price indexation to compensate for over time price fluctuations of material and labour. If innovation is desired by the client, the contract should be suitable or triggering innovation.

4.1.3

26 be beneficial for the contractor, which can lead to shirking. The importance of availability was underestimated in the contract. In the contract is no agreement about uptime of the pipeline. But for customers the availability of the pipeline should be as high as possible. This means that the response time is important to keep downtimes as short as possible. Whilst in the current contract is no agreement about the response time. Also agreements about the maintenance plan should be included in the contract, because in the current contract there is no clear agreement about the planning of inspections. This can result in irregular inspection intervals. Furthermore monitoring of maintenance that is performed is important if contractor is not responsible for the overall maintenance condition of the installation. It could have happened in the past that preventive maintenance inspections were not performed at all, this came up when the initial contractor went bankrupt and there were maintenance reports missing of previous inspections. So GSP has now no insight in the maintenance condition of the pipeline, only when they request for maintenance reports themselves. The maintenance contract was meant to unburden the management of GSP from maintenance, however because they have to approve permission for every corrective repair they are not really unburdened from the maintenance. And with a critical asset a communication plan for coordination between stakeholders is desirable, in the current situation, the contractor struggles with finding a convenient moment to work on pipeline, it was unclear which party had the lead in this coordination. Therefore necessary repairs were postponed. Because there was either no suitable moment for a repair nor equipment, materials or manpower available to perform the job. Therefore it is also important for GSP that critical spare parts are on stock. Another important agreement for GSP is that the maintenance condition of the pipeline at the end of the contract period is in compliance with the position of the asset on the lifecycle.

27

4.1.4

The contract price for this asset was initially very high. The contract type was design construct and maintain, with full downtime compensation included. Which led to a very limited number of contractors willing to perform job, therefore price competition was not possible. This risk of the downtime fee was covered by the contractor with a high contract price. The fees were initially included in the contract because it is important for GSP that the availability of the steam pipeline is a high as possible and stoppages should be predictable, so that customers of GSP can finish a whole batch before stoppage. This keeps the consequential losses to a minimum. Also the amount and type of required spare parts that should be on stock are important to mention in the contract for avoiding unnecessary delays of repairs. Furthermore, a clear communication model is desired to indicate what communication should be done by which party. And to clarify which party is allowed to make the maintenance decisions, i.e. at what time the pipeline can be taken out of production for maintenance. In the contract a 10 days period was mentioned as reserved for maintenance on the pipeline. But for customers of GSP 10 days planned downtime of the pipeline is unacceptable. This should be discussed more extensively with stakeholders. Furthermore because of legislation a notified body inspects the installation with a 4 year interval. The installation must meet legislation requirements at those times, which needs a solid maintenance plan.

For the contractor is important what the estimated desired availability is, to determine how many working hours are available to work on the pipeline. In the current situation the demanded availability is higher than was agreed in the contract. However, responsibilities for downtime were loosened and downtime penalties were reduced for lower maintenance costs. Visual inspections are performed more frequently than prescribed in contract specifications, in order to decrease failure and consequential damage, and therefore maintain high availability. The responsibility for stock of spare parts should be described in the contract, some products have a maximum determined shelf life because of safety regulations, and that should be considered in the contract price. Increased uses of asset requires more expensive maintenance, an eventuality which should be handled in the contract price, to ensure economic viability of the contract.

4.1.5

28 efforts. However the current contract is assumed as uncomprehensive, there is too much involvement of GSP management needed to coordinate maintenance, because sometimes agreements are vague which has led to discussions about maintenance responsibilities. This is especially the case for areas where installations of customers are built on the quay.

For the contractor is important that the quay is available for maintenance when maintenance is needed. In the contract is agreement included about availability percentage for maintenance. Once in 5 years is the whole quay available for maintenance. The agreement of availability in percentage has no use, because the position were a ship needs to unload is fixed. And there are no agreements about which point of the quay will be available for maintenance. Therefore appointments for maintenance activities must be made in cooperation with GSP. The contract period is important for decisions about what materials will be used for replacement parts. If the contract period is long, use of long-lasting materials is an option to reduce maintenance costs. Quality and frequency of maintenance is determined in NEN norms, nevertheless GSP requires a higher frequency on sampling of drinking water, because the water is used scarcely. This leads to discussion, therefore it should be clearly stated in contract what quality is expected.

4.1.6

29 for the contractor that needs to be compensated. For example if downtime compensation is included in a contract for a critical asset, the risks is high, but if instead fixed downtime penalties for downtime are included in the contract, the risk is much lower, since this is better incalculable. The differences and similarities between the cases are shown in table 4.1.

Table 4.1 Cases comparison

Cases Criticality* Type contract Complexity of

contract

Discussion/Imperfections

Medium voltage power supply network

Low Work package Low Low

Public lightening

network

Low Work package Low Low

Compressed air and nitrogen

pipelines

High Work package Low High

Steam pipelines High Performance

based High Medium

Quay Medium Performance

based Low Medium

30

4.2 Contract risks at Groningen Seaports

In this paragraph issues that need attention before or during contract closing will be revealed. Because those issues can cause risks for the contractor or client. Those issues were revealed during the interviews. The issues are presented per case, and at the end of the paragraph the contract risks and aspects of table 2.4 are supplemented with the risks and aspects that are important revealed by the case study, resulting in table 4.2.

4.2.1

- Response time for repairs, if not included contractor is free to determine time of repair, if to tight the contract price may be unnecessarily increased.

- Responsibility for the safety of the asset, should be clearly expressed in contract to avoid confusion and therefore non-compliance.

- Determination of contract price it is hard, contract price should be determined thoroughly to avoid over- underpaying. This may need a certain level of technical knowledge of the maintenance.

- Extra management costs resulting from outsourcing, managing maintenance activities. Those costs are not allocated to maintenance, thus there are hidden costs shifted to administration department.

- Obsoleting of in-house knowledge causes need for outsourcing.

- Contract type should be suitable for organization in-house knowledge. Performance based contracts requires more technical in-house knowledge than lease contracts. - Availability requirement may lead to high contract costs, because costs of ensuring

availability are hard to determine.

- Stock requirements of custom made products, may lead to risks for contractor and therefore will probably lead to a high contract price.

- Changing use of installation, above save capacity may lead to failures, under responsibility of contractor without contractors influence.

4.2.2

- Maintenance backlog can hinder outsourcing, because contractors fear for unexpected, or difficult maintainable assets.

- For outsourcing, there is some technical knowledge needed to determine appropriate outsource needs/maintenance policy.

- Penalties for response times, must be avoided for non-critical assets because it may harm a trust relation. If it is assumed as necessary, they should be high enough to actually trigger a contractor into action.

- With a work package contract, there is no proof of good maintenance of the lightning network. This becomes important when an accident happens due to darkness.

31 - If contract is limited to corrective repairs only, there is no trigger for innovations.

4.2.3

- The pipeline has cathode protection, this protection needs solid maintenance plan to prevent unnecessary maintenance caused by protection failures.

- Criticality of asset for stakeholders should be well identified to determine required maintenance needs.

- Downtime compensation should only be included if useful. Contract price may increase unnecessary because of these compensations. Consequential losses because of unavailability of pipelines can be very high and responsibility of availability is therefore very risky. If responsibility lies on a small contractor and a failure occurs, which results in an availability below requirements. The contractor may face bankruptcy because of large payments for consequential losses. And their cash reserves can be so small that they are not even able to cover the risks.

- Shirking of maintenance is appealing since this results in more work for contractor, more corrosion etc.

- If pipeline is out of use, the pipeline still needs maintenance because the pipeline becomes receptive for corrosion when out of use, therefore extra maintenance costs are involved. It should be clear who is responsible for this extra maintenance.

- If maintenance reports are not requested in the contract, there can be no supervision on maintenance that is performed.

- Mutual expectations, responsibilities are not clear so this can lead to discussions. - Government may request strict inspections on the pipelines in the future due to

possibility of earthquakes in the area.

4.2.4

- Notified body inspects installation every 4 years, the installation must meet legislation requirements at those times.

- Improper use of assets by users can cause damage to assets of which the contractor therefore refuses to repair at own costs.

- A package deal, design construct and maintain including response times, fees and compensations, reduce the number of contractors willing to perform maintenance, i.e. outsourcing becomes difficult and reduces possible price competition, which leads to higher contract price.

- The pipeline is used at the maximum capacity, which was not expected, therefore maintenance costs increased. In order to be able to use the pipeline at maximum capacity (stronger) parts were needed and alternative repair technics are needed to be able to keep the pipeline in operation while a repair is performed.

32 - A high required availability combined with penalties for downtime result in high risks for contractor. Therefore contract price will become very high to compensate for that risk. - There was no historical information about maintenance needs for this asset. Only

theoretical feasible operating hours. Therefore maintenance needs could differ significantly in practice.

- Control on how the asset is used. When a failure occurs a contractor can requests for figures about the use, but the datasets are very large and therefore nearly useless. Which means that contractor has little insight in the way an asset is used, but they are responsible for downtimes.

4.2.5

- Repair costs for damage caused by third parties are for GSP if causer is unknown, therefore not all repair costs are actually included in the contract.

- Changed use, ship types that are unexpected to dock at the quay can cause more abrasion than expected and therefore maintenance needs increase. Contractor might charge GSP for these extra costs.

- Technical knowledge of client over the asset can decrease if maintenance is completely outsourced.

4.2.6

33 Table 4.2 Risk based framework

Contract types Contract risks Contract aspects

Work package contract

Strategic risks

 Shirking (Aron et al., 2005; Relph & Parker, 2014)

 Opportunistic renegotiation (M Alexander & Young, 1995; Sanders et al., 2007; Wang, 2010) Maintenance Performance  Availability/Downtime  Reliability  Response time  Repair time System characteristics

 Time horizon of contract

 Repair options

 Aging system/reference inspection  Criticality/impact  Failure rate  Requirements by legislation Operational risks

 Contract pricing (Yao et al., 2010)

 Hidden costs (Aubert et al., 1998;Sanders et al., 2007)

 Loss of control (Barthélemy & Geyer, 2005)

 Quality risks (Kaya & Özer, 2009; Salma et al., 2007; Tirole, 1998)

 Declining innovation (Teece, 1988)

 Contention risk (Sanders et al., 2007; Weidenbaum, 2005)

 Changed demand of the

asset Performance based

contract Cost elements

 Contractor profit

 Maintenance costs

 Operating costs

 Cost of downtime

 Inspection costs

 Repair cost (allocation)

 Cost of failure

 Spare parts ownership/pay

Lease contract

Intrinsic risk of atrophy

 Reduced-in-house-knowledge (Aron et al., 2005; Doig et al., 2001; Wang, 2010) Maintenance strategy  Maintenance type (PM CM)  Quality of maintenance  Maintenance frequency  Periodic replacement  Run to failure  Inspection interval

Flexible asset contract Intrinsic risk of location  Change of politics (Weidenbaum, 2005)

 Exchange-rate risks (Aron et al., 2005) Control instruments  Availability/reliability penalties  Downtime compensation  Maintenance reports

 Control way of use of

asset

 Witness points

Responsibilities

 Responsibility for safety of asset

34

5 D

ESIGN

In this section the solution for assessing risks in maintenance contracts will be provided. At first is explained how an FMEA can help assessing the risks. Secondly a stepwise approach proposed and suggested to construct suitable and comprehensive maintenance contracts with reduced imperfections and exposure to risks.

5.1 FMEA

In table 4.2 the risks, aspects and type of contracts are presented. The aspects and risks need to be assessed to be able to determine their importance for the maintenance contract. With an FMEA analysis the priority of risks can be determined. With this method it is possible to quantify the risks that are involved with the outsourcing of the asset. Every risk, for example transportation delay is rated on a scale of 1-10. This means for opportunity how often this situation will be repeated, thus how often a transportation takes place and therefore can occur. The probability means to what degree it is plausible that a delay occurs. With severity is meant what the impact for the firm is when the delay occurs. The product of these three aspects result in a risk priority number (RPN) indicating what risks should have the most attention in the maintenance contract. The risks in table 4.1 can be arranged by their risk priority number, the risk with the highest priority number needs the most attention in the contract. For table 4.1 is that: changed demand of the asset, followed by shirking. For an example and proof of the advantages of using FMEA see article of Welborn (2007).

Table 5.1 Table that can be used for FMEA analysis

Risk Opportunity (1-10) Probability (1-10) Severity (1-10) Risk

priority number Shirking 5 5 3 75 Contention 8 2 2 32 Changed demand of asset 2 8 6 96 . . . . . … … … … …

35

5.2 Stepwise approach

In this paragraph a step-wise approach is provided which can be used as a guideline for managers when constructing maintenance contracts. With this tool maintenance contracts can be constructed in a structured way by considering different options and their corresponding risks. Hereby maintenance contract risks can be discovered and assessed before contract closing. Table 4.2 will be used as a base for the stepwise approach introduced here.

36 Figure 5.1 Schematic representation of the introduced stepwise approach

Stepwise approach for maintenance contract risks assessment

How What

New maintenance contract has to be set up

Determine outsourcing risks of the involved asset in collaboration with

stakeholders

Assess risks Use FMEA, Table 5.1

Arrange risks Use RPN of FMEA analysis

Choose a suitable contact type

Use characteristics of the contract types as described in

section 2.3

Cover the risks Are there any risks that need more attention in the chosen

contract type?

Yes Include maintenance contract

aspects of table 4.2 that can reduce the risks in the

contract. See also section 4.2 for possible imperfections in maintenance contracts Are the important risks covered suffciently? No Set up the contract Yes No

Contract ready for tendering Maintenance

contract

Look at table 4.2 and discuss maintenance aspects with

stakeholders

37

6 D

ISCUSSION

38

7 C

ONCLUSION

39

8 R

EFERENCES

Alexander, M., & Young, D. (1995). Strategic outsourcing. The McKinsey Quarterly, 1, 48–70. Alexander, M., & Young, D. (1996). Outsourcing: Where’s the value? Long Range Planning,

29(5), 728–730.

Aron, R., Clemons, E., & Reddi, S. (2005). Just right outsourcing: understanding and managing risk. Journal of Management Information, 22(2), 37–55.

Aubert, B., Patry, M., & Rivard, S. (1998). Assessing the risk of IT outsourcing. System Sciences, 685–692.

Barthélemy, J., & Geyer, D. (2005). An empirical investigation of IT outsourcing versus quasi-outsourcing in France and Germany. Information & Management, 42(4), 533–542.

Brudney, J. L. (2004). Exploring and Explaining Contracting Out: Patterns among the American States. Journal of Public Administration Research and Theory, 15(3), 393–419.

Doig, S. J., Ritter, R. C., & Speckhals, K. (2001). Has outsourcing gone too far? The McKinsey

Quarterly, 4.

Hodge, G. A. (2000). Privatization: An International Review Of Performance (p. 312). Westview Press.

Hoecht, a., & Trott, P. (2006). Outsourcing, information leakage and the risk of losing technology‐based competencies. European Business Review, 18(5), 395–412.

Horenbeek, A. Van. (2012). Maintenance service contracts and business models: A review. Horenbeek, A. Van, Ostaeyen, J. Van, & Pintelon, L. (2010). Maintenance Service Contracts

and Business Models : a Review.

Huizinga-Heringa, J. C. (2010) Besluit externe veiligheid buisleidingen. Retrieved from https://zoek.officielebekendmakingen.nl/stb-2010-686.html

Kaya, M., & Özer, Ö. (2009). Quality risk in outsourcing: Noncontractible product quality and private quality cost information. Naval Research Logistics, 56(7), 669–685.

Lay, G., Schroeter, M., & Biege, S. (2009). Service-based business concepts: A typology for business-to-business markets. European Management Journal, 27(6), 442–455.

Lisnianski, A., & Frenkel, I. (2008). Maintenance contract assessment for aging systems. Quality

and Reliability Engineering International, 24, 519–531.

Lugtigheid, D., Jardine, A. K. S., & Jiang, X. (2007). Optimizing the performance of a repairable system under a maintenance and repair contract. Quality and Reliability Engineering

International, 23(8), 943–960.

Martin, H. H. (1997). Contracting out maintenance and a plan for future research. Journal of

40 Marttonen, S., Viskari, S., & Timo, K. (2013). The missling link between maintenance contracts and flexible asset management. International Journal of Procurement Management, 6(6), 649–665.

Meier, H., Roy, R., & Seliger, G. (2010). Industrial Product-Service Systems—IPS2. CIRP Annals -

Manufacturing Technology, 59(2), 607–627.

Pinjala, S. K., Pintelon, L., & Vereecke, A. (2006). An empirical investigation on the relationship between business and maintenance strategies. International Journal of Production

Economics, 104, 214–229.

Rahman, A., & Chattopadhyay, G. (2008). Cost estimation for maintenance contracts for complex asset/equipment. In Industrial engineering and Engineering management (pp. 1355–1358). IEEE.

Rahman, A., & Chattopadhyay, G. (2010). Modelling Cost of Maintenance Contract for Rail Infrastructure. In International Conference on Industrial Engineering and Operations

Management.

Relph, A., & Parker, D. (2014). Outsourcing: a strategic risk. Management Services, 58(3), 20–24. Salma, B., Lyes, K., Abderahman, E., & Younes, B. (2007). Quality Risk in Outsourcing. 2007

International Conference on Service Systems and Service Management, 1–4.

Sanders, N. R., James, L., West, E., Locke, A., Moore, C. B., & Autry, C. W. (2007). A Multidimensional Framework for Understanding Outsourcing Arrangements. The Journal of

Supply Chain Management, 3–15.

Sclar, E. D. (2001). You Don’t Always Get What You Pay For: The Economics of Privatization. Straub, A. (2009). Cost savings from performance‐based maintenance contracting.

International Journal of Strategic Property Management, 13(3), 205–217.

Teece, D. J. (1988). Capturing Value from Technological Innovation : Integration , Strategic Partnering , and Licensing Decisions. Interfaces, 18(3), 46–61.

The Mendeley Support Team. (2011). Getting Started with Mendeley. Mendeley Desktop. London: Mendeley Ltd. Retrieved from http://www.mendeley.com

Tirole, J. (1998). Theory of industrial organization. MIT Press.

Wang, W. (2010). A model for maintenance service contract design, negotiation and optimization. European Journal of Operational Research, 201(1), 239–246.

Weidenbaum, M. (2005). Outsourcing: Pros and cons. Business Horizons, 48(4), 311–315. Welborn, C. (2007). Using FMEA to assess outsourcing risk. Quality Progress, (August), 17–21. Yao, T., Jiang, B., Young, S. T., & Talluri, S. (2010). Outsourcing timing, contract selection, and

41

9 A

PPENDIX

I.

Interview Protocol

Wat is het belang van de asset voor uw bedrijf, welke impact heeft de asset als het gaat over de opdrachtgrootte, of afhankelijkheid voor het bedrijf?

Was er voor het afsluiten van het onderhoudscontract enige informatie over de onderhoudsbehoeften van de assets? Bijvoorbeeld eerdere onderhoudshistorie, of onderhoudseisen opgegeven door de bouwer/producent van de assets. Is dit ook gebruikt voor het opstellen van het contract?

Was er voor het afsluiten van het contract enige informatie over de failure rate van de assets, bijvoorbeeld eerdere historie, of betrouwbaarheid opgegeven door de bouwer van de assets? Is dit op enige manier meegenomen in het onderhoudscontract?

Contractuele aspecten

Is er een vereiste beschikbaarheid van de assets besproken in het contract? wanneer dit niet het geval is, zou dit zinvol kunnen zijn?

Zijn de kosten van downtime voor het afsluiten van het contract bepaald, en zijn deze in het contract opgenomen als boetes of compensatie? Als dit niet het geval is zou dit zinvol zijn voor deze asset?

Is de looptijd van het contract van invloed op het onderhoud de assets, en op welke manier? Zijn onderhoud strategieën zoals preventief onderhoud en correctief onderhoud bij het opstellen van het contract bepaald, wanneer dit niet het geval is zou dit eventueel beter zijn als dit in het contract wordt opgenomen?

Zijn er eventuele vervangingsonderdelen voor de asset op voorraad, en welke partij is daar verantwoordelijk voor?

Welke partij voert de inspecties uit, en is er afgesproken hoe vaak en op welke manier die inspecties worden uitgevoerd/ wat de kwaliteit van die inspecties moet zijn?