Reliability and Maintenance
Management Consultant
Idhammar is president of
IDCON, Raleigh, NC, a reliability and
maintenance management consulting firm,
specializing in education, training and
implementation of improved operations,
reliability, and maintenance management
practices. |
Contract Maintenance or not?
by Christer Idhammer, IDCON
With few exceptions, most mills I visit ask me
what I think of contract, or outsourcing, of
maintenance. In this month’s column I would like
to elaborate on what kind of maintenance should
or should not be contracted out and the reasons
for choosing either option.
Variability in workload. The better you manage
the workload of your own resources, the less
need you will have for contract maintenance. In
weekly and daily maintenance activities, your
workload should not vary much if you have
disciplined priorities and a good preventive
maintenance system in place. Even areas such as
maintenance workshops and scaffolding services
should experience very few urgent requests,
which justifies keeping only a minimum crew, if
any at all, for such services in-house.
Large variations in workload will lead to poor
utilization of resources and overstaffing. This
often leads to discussions about contract
maintenance. However, contracting maintenance
resources will not change anything. The
contractor must provide a better system for
people to work in. Otherwise, they will not be
more effective than your existing system. If
this is the case, you must ask yourself why you
cannot improve the system yourself when the
contractor can. |
The answer may be that you have tried many times without
sustainable success. Your organization might be in
gridlock because of politics, ingrained union practices,
and so on. A situation like this can lead to an “act of
desperation.” In other words, your organization has lost
its power and ability to improve as fast as a contractor
can (or at least promises to), so this becomes the
reason why your maintenance is contracted out.
Temporary scheduled increase in workload.
During scheduled shutdowns and major outages, it is
natural that you contract out work. It can be very
cost-effective to not only contract the resources for
executing the work, but to also have them plan and
schedule major outages. However, periodic shutdowns—for
example, every five to seven weeks—of a paper machine
can, most probably, be managed better by your own
shutdown planners.
Core business philosophy. Contract maintenance suppliers
often argue, as a selling point, that maintenance is not
a core business. Well, if you are a pulp and paper mill,
or any other manufacturing plant, I would like to
challenge that statement.
Why would maintenance not be a core business, while
operations and manufacturing are considered core
businesses? In fact, I believe that one of the best ways
of approaching outsourcing is to have a manufacturing
contract that is not limited to maintenance alone.
In looking at maintenance contracts alone, you should
look upon “equipment reliability tasks” as a core
business. You can always question if it makes good
business sense to have your own carpenters, painters,
people for scaffolding, masons, tinsmiths, and
blacksmiths. Having the resources a phone call away and
no invoice to explain will lead to more use of these
resources than is needed. I sometimes wonder how many
unnecessary paint jobs—and bookshelves, tables, and
other carpentry work—have been done just because the
resources were available and the requestor of the work
did not need to pay the full cost of it.
Equipment reliability is the result of maintenance work,
and it includes such essential elements as maintenance
prevention, including lubrication, filtration,
alignment, cleaning, and operating practices. It also
includes preventive maintenance activities such as
vibration analysis, basic inspections, and so forth. I
believe all equipment reliability activities should be
performed with in-house resources, unless you contract
out all maintenance on an equipment reliability
performance and cost basis.
Lack of skills. If your organization does not frequently
use certain special skills, it is necessary to contract
for these skills. Even if you train your own people in
specialty skills, they cannot maintain them because they
do not use them frequently enough.
The present and the future shortage of skilled
craftspeople, especially in the U.S. pulp and paper
industry, might be one of the best sales arguments for
maintenance contract suppliers—if they have these
resources to offer. Also, it is not unheard for unions
to hold back their own members from receiving training.
This fact has never made sense to me, since it should be
in their interest to support training of members so that
they are competitive with contractors.
Over the 30 years I have been in this business, I have
been frequently asked about whether to contract
maintenance or not. I would hear these questions more
frequently when less capital work was available and
supplier companies began seeking work other than capital
project work.
In the last two years, the push for maintenance work
among suppliers has been strong. Only the future will
show how many will remain in this business long term. In
this column, I would like to continue to elaborate on
what kind of maintenance you should or should not
contract out and the reasons why, as well as the
characteristics of a good maintenance contract.
INCENTIVES AND GOALS. If you consider outsourcing
maintenance, I advise you to set up a contract that
includes an incentive for the contractor to continuously
perform better.
SERVICE. If your contract is based on buying service
alone, there is no real incentive for the contractor to
perform better. The more hours they sell, the more money
they make, and they can sell more hours if your
maintenance needs are reactive. Only the fear of losing
the contract will motivate the contractor to perform
better.
RELIABILITY. If your contract is based on delivering
results, you can create a win-win situation for yourself
and the contractor. In most mills, results should be in
the following order of priority after safety and
environmental issues:
Reliability of equipment.
Cost of delivering reliability.
If there is an incentive for a contractor to deliver
reliability, it naturally follows an incentive to
prevent maintenance and to perform preventive
maintenance, plan maintenance, schedule maintenance, and
so forth. In summary, they need a disciplined process in
place and a good system to support it.
In selecting a contractor, I suggest that you not only
look at their rates, but that you spend the most time
evaluating their maintenance philosophy (if they have
one), what reliability and maintenance process they will
implement, and how they will measure results. Go into
detail on the basics of how they would decide whether to
prevent—or not prevent—component failures, how planning
will be done, how scheduling will be done, which key
performance indicators will be used, continuous training
of their people, and so forth. This is important,
because you must remember that the only thing a
contractor can do differently than you is that they can
implement a more efficient work system. They can often
do this quickly, or at least they can promise to do it
quickly. Seldom will a contractor bring in a crew with
superior skills to your own.
LONG-TERM CONTRACTS. A maintenance contract should be
long term—no less than five years and preferably longer
than that. There are many reasons for this. Two of them
are included in what Dr. Deming called the seven deadly
diseases common to U.S. management. They are “Lack of
constancy of purpose” and “Mobility of top management.”
My observation is that one phenomenon leads to the
other. New managers are called in for fast and,
unfortunately, often temporary results. They often
change the organization, perhaps only because they want
to bring in their buddies, make some cut backs, and then
move on to another place before the long-term effects
are noticed. The front line of the organization, where
the actual actions of new directives have to take place,
sees this as a constant change of direction. They start
talking about the program of the month and,
consequently, they do not change anything and the
results of management efforts will be absent.
If this goes on for some time, no sustainable results
will be achieved. In this situation, I think a long-term
maintenance contract offers a possible solution. The
contract has to be founded on the right principles and
work processes, because, when these are not changed for
a long period of time, your contractor can help
eliminate the “lack-of-constancy-of-purpose phenomenon.”
With good leadership, the work processes and your
results should continuously improve. It could be done
without a contractor, but not in a system where a new
mill manager or maintenance manager means a new program.
HEALTHY COMPETITION. Almost without exception,
maintenance departments have never had true competition.
They have monopoly on most work in the mill. A
contractor should be seen as a competitor to your own
organization. As long as you are competitive,
outsourcing of maintenance is not a valid alternative.
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