The whens, whys and hows of contract maintenance

The popularity of outsourcing in industrial markets continues to grow as competitive pressures and demand to do more with less have driven many companies to innovation to reduce costs.

By Nathan Wood, GreenWood Inc. June 15, 2008

The popularity of outsourcing in industrial markets continues to grow as competitive pressures and demand to do more with less have driven many companies to innovation to reduce costs. Plant management has the responsibility for continuous improvement and finding ways to improve overall operations. Competitiveness is an ongoing challenge. Doing so to achieve Lean operations often brings added pressure to reduce costs related to training, hiring and administration throughout the organization.

Maintenance is no exception.

Progressive companies have found that outsourcing noncore competencies improves both their near- and long-term economic outlooks. Rather than considering outsourcing their maintenance function as a means to rid themselves of a problem, management has learned that such an approach is a smart business move. Functions that once took a chunk of management and administrative time and effort are now shifted to the maintenance contractor, allowing plant management and other personnel to focus on operational and throughput issues. These companies have embraced the numerous advantages outsourcing their maintenance — whether totally or partially — brings by gaining access to world-class capabilities, a flexible resource base and shared risk.

However, before embarking on such a journey of change, serious consideration must be given to the impact outsourcing will have on the company and what it will accomplish. Focus should be given to the expected benefits, including cost savings, reallocation of internal resources in key operational areas and efficiency gains from a balanced, well-trained and experienced maintenance work force.

The right choice

Companies with high-value capital assets and those that often have ongoing capital improvement projects are excellent candidates to pursue a maintenance outsourcing solution. When companies decide to outsource their maintenance function, they must first consider who can best perform the job for them by undertaking a due diligence. This is one of the most critical steps in pursuing a contract maintenance solution, and such a process will unearth information about potential contractors to determine who has similar management styles for people, processes, value systems and business philosophies. The issues managers should consider include:

Experience — A contractor that has relevant experience will understand market conditions, influencing factors, unique skills required and why things within the industry happen the way they do.

Safety — A contractor that does not have a comprehensive safety program should be removed from the list. A safe working environment is essential for meeting performance objectives, and safety should never be compromised.

Resources — Contractor and company resources should be able to blend together to create a unified maintenance team, with complementary skill sets for successfully executing the scope of work.

References — Reference checks are crucial as they represent the “proof” of a contractor’s ability to perform. Checks should include calls and site visits to get a sense of the maintenance organization’s culture.

Flexibility — Managing spikes of work activity is critical to controlling costs. Companies should consider contractors that are flexible — those who can easily adjust to varying work levels. Equally important is how the ebb and flow of work fits a company’s culture and work style.

Management style — A greater opportunity for success exists when the contractor management and company management work from the same page. Differences in management philosophy can make working together a major challenge. Good contractor candidates understand how to identify differences and remove barriers so each can operate on common ground.

Stability — Efficiency comes from consistently doing things the right way. A company should ensure its contractor candidate has a proven track record of success without deviations from stability, reliability and dependability.

Making a concentrated effort to properly qualify contractor candidates will bring companies closer to finding one that recognizes their culture and how they will seamlessly integrate into such an environment. A due diligence that reveals which maintenance contractor will best match the company and its people, ways of doing things and value system is a big step closer toward realizing the benefits of outsourcing maintenance and forming a genuine contractor partnership.

Bringing it all together

When a maintenance contractor has been selected, the customer and contractor enter one of the most critical areas of the pending transition. It is at this point that alignment between the contractor and customer takes place and where expectations are clearly communicated in preparation of the change.

The alignment process begins with management-level meetings to ensure both parties have a clear understanding of the key project drivers, company strategy, objectives, culture changes and overall vision of moving to an outsourced maintenance model. Definition and understanding of the needs regarding the work, people, responsibilities, reviews, plans and goals are mutually discussed and agreed upon. A transition plan and schedule must be developed, and discussion must take place to identify potential problems, issues or concerns and how they will be addressed should they arise. This essential activity represents the first steps taken to initiate change in the maintenance organization.

By aligning the new contractor with the company’s management and departmental teams, issues of maintenance personnel at all levels are addressed. Pay scales, seniority, benefit packages and retirement plans are common topics that are discussed and documented with a clear implementation plan. Careful consideration and attention is given to each employee affected by the transition to ensure their questions and concerns are fully addressed. It is the common goal of the customer and contractor to make certain they have a cultural fit, that their teams can work together through the transition and then on an ongoing basis.

Progress checks for ongoing success

Periodic review meetings also should be scheduled with management and departmental personnel as progress checkpoints. Because communication is the key to creating successful contract maintenance environments, personnel must be kept abreast of the project status and also have opportunities to provide input.

Moving to an outsourced maintenance model is an opportunity for companies to realize the benefits of being Lean, agile and able to get the job done with a world-class workforce. Outsourcing delivers more than cost saving benefits as companies gain operational flexibility in staffing without administrative headaches. Creating unified teams that work safely together without losing sight of values, vision and purpose is a key ingredient to outsourcing success. When a business determines this is the right move for them, and the proper steps are taken with due diligence and alignments, change will be significantly smoother and more seamless throughout the company.

Author Information
Nathan Wood is a vice president at Greenville, S.C.-based GreenWood Inc. and has extensive field operations experience with several GreenWood project sites, holding responsibilities in welding, pipe fitting, instrumentation, painting, demolition and general maintenance. He can be reached at (864) 244-9669 or .

Strategic maintenance more than acronyms and alphabet soup

You’ve heard and probably used all of the acronyms: PM, PdM, TPM and RCM, among others. All are tried, and depending on whom you talk to, true programs for plant maintenance. Yet, so often they become the subject of, as Vesta Partners’ Terry Wireman put it during Noria’s Lean, Reliable and Lubed 2008 Conference and Expo, “alphabet soup jokes.” Wireman, senior vice president, strategic development for Vesta, spoke about using them as part of comprehensive maintenance and reliability strategies during the conference, held May 20-22 at the Nashville Convention Center in Nashville, TN.

Wireman began the session with an exercise that exhibited the pervading, if not the prevailing, attitude most often seen in plants today. Opening the floor for a brief exercise in free association, he asked the attendees to volunteer comments that described what they thought are general feelings about maintenance. True to form, many of the responses were less than glowing: What’s that? Non-value-added. Necessary evil. Expense.

Building a comprehensive strategy around maintenance and reliability first requires a change in this perception. Companies must begin to see that maintenance can be something that brings value to the organization.

“Maintenance isn’t a necessary evil,” Wireman said. “More and more companies today are starting to focus around their maintenance and reliability practices, because it is a competitive weapon.”

The way to make use of that competitive weapon, Wireman contended, is to see the true value that it brings. Rather than view maintenance negatively, look forward at what proper maintenance can bring: things like maximizing return on assets, increased capacities and profit margins.

“Most companies today don’t understand that their futures literally hinge on whether or not they’re going to be successful with their maintenance and reliability practices,” Wireman said.

Developing a strategic plan for maintenance requires earnest thought and relevant, hard data, Wireman suggested. If companies are to be successful with maintenance, they should have a three-to-five-year plan for it, and it should be dove-tailed to the company’s three-to-five-year plan for business, Wireman said. And there’s a big reason that accompaniment is important.

“If you don’t have access to the corporate three-to-five-year plan, you could be over-maintaining or under-maintaining your assets based on what the corporation figures on doing with them in the next three to five years,” he said.

Developing the strategic plan for maintenance should include mission and vision statements, Wireman said, as well as goals, and an organizational structure with roles and responsibilities delineated.

Wireman noted that the transition from being an organization that relies on reactive maintenance to one that installs a best practices-based maintenance strategy is evolutionary. And while the technical aspects of the change are usually not overly complex, the hard part comes with implementing the change within the workforce.

“What’s tough is changing the culture to make that transition,” Wireman said. “That’s the real hard part. Technically it’s easy. Changing the culture is the hard part.”

—Kevin Campbell, Senior Editor