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Maintenance Management. Industrial Service Strategy and Its Implementation and Execution

This document discusses industrial service strategies and their implementation and execution. It compares maintenance and management (M&M) contracts to performance-based operation (PBO) contracts. While the contracts have similar goals and contents, PBO contracts focus more on tail-end production and are more flexible and responsive to changing needs and market conditions over time. Effective strategy implementation requires clearly defining relations between parties, predicting potential issues, and monitoring performance indicators to reduce gaps between planned and actual outcomes.

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Svetlana Marmutova
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76 views

Maintenance Management. Industrial Service Strategy and Its Implementation and Execution

This document discusses industrial service strategies and their implementation and execution. It compares maintenance and management (M&M) contracts to performance-based operation (PBO) contracts. While the contracts have similar goals and contents, PBO contracts focus more on tail-end production and are more flexible and responsive to changing needs and market conditions over time. Effective strategy implementation requires clearly defining relations between parties, predicting potential issues, and monitoring performance indicators to reduce gaps between planned and actual outcomes.

Uploaded by

Svetlana Marmutova
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Lappeenranta University of Technology

BH50A1300 MAINTENANCE MANAGEMENT

Written assignment

Industrial service strategy and its implementation and execution

Student Svetlana Marmytova


e0378340

Lappeenranta, 2010
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Table of contents:
1. Introduction.
2. Industrial service strategy and its implementation and execution
3. Discussion and findings
4. References

Introduction
During last century industry production grows with high temps. Also energy consuption grows
every year. New conditions dictate new approaches to project acceptability and design. Now it is
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necessary to provide engineering project acceptability according to energy efficiency, ecological,


social and energy reliability. This list of requirements can be changed depending on the kind of
project, location, the kind of investors and kind of product. Energy production demands a system
consideration. It is necessary to meet many, in most cases opposite, requirements.

Industrial service strategy and its implementation and execution


Old industries faced with the production tail-end phase. This phase increase operational cost due to
declining production and stagnant or increasing operational and maintenance (O&M) cost. Some
essential arrangements should be taken in order to extend industry production lifetime: operational
expanses (OPEX) reduction and/or production volume raising. These goals are achievable if the
involved parties will cooperate in getting control of the OPEX and perfomance optimization.
Industries becomes more dependent on the service supply conditions, that’s why these conditions
should be determined and clearly described for every production participant in every production
stage.
Therefore it becomes increasingly important to negotiate industrial service contract carefully. Not
only service strategy but service strategy implementation should be defined and considered in
detail. With the industry development it becomes necessary not only to formulate the service
strategy, although it is also important, but to define exactly the way of its implementation and
execution.

Figure 1. An overview of service strategy process phases.


Figure 1 shows the stages of the strategy developing and the list of the influences factors. There are
two big considerable sides of the strategy development: market, sources utilization and personal
performance and management. Functional strategies are dealing with the scope definition and
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market prediction. It is responsible for the resource productivity maximization. Organization


strategies in its turn are responsible for the personal productivity and personal management. This
two factors are connected to each other and have mutual influences. Financial strategy
implementation is impossible without proper working forces management. Proper working forces
organizational planning is impossible without clear financial strategy.
There should be no influence factors appeared during operation, that can threaten the production
process. In that case in every project phase and steps of implementation the relations between
different groups of administrative mechanisms, organizations capabilities should be clearly
described and approved.
Implementation and execution phases are differentiated. The implementation phase are dealing with
the sources availability and detailed plan for strategy execution creation. The execution phase in it
turn are dealing with the sources utilization and production processes.
The case study aim is to display the implementation and execution process of the performance-
based service strategy framework.

Figure 2. A framework for the development of a performance-based service strategy.


Figure 2 illustrates the cycled scheme of the “required-achieved” gape decresing.
Maintenance and management contract and performance-based contract contents and involved
personal opinion were compared.
There are no essential differences in that stage of comparison. In both contracts there were defined
the list of features: scope of work, the method of payment, time-cost-resources focus,
subcontractors roles and issues, liability issues, requirements with respect to health, safety,
environment and quality . In the PBO contact developed conclusions are more flexible than in
M&M. An execution model has to be changed during the contract period. Client’s needs and
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expectations can be changed, gapes between the actual delivered services and required services has
to be improved during the operation period.
Comparison of the data, obtained by the personal interviews, shows that PBO contract are more
oriented on the producing process, reduction of operational expenses. It works more closely to the
costumers, than maintenance and modification contract.
Noticable differences can be given when compare project execution model (PEM) comparison. The
PEM is designed at the early stages of the project and followed the contract period. The PEM is
commonly developed to ensure the achievement of requirements and goals of the costumer, service
provider (contractor) and authority.
Figure 1 illustrates a typical project execution model for an maintenance and modification contract
as used in some of the companies in the Norwegian continental shelf.

Figure 3. A typical PEM for M&M contact.


Above scheme shows the main stages of the contract performance, so it depends on the kind of the
contract how changeable the PEM will be. During the performance period system definition and
detailing can changed, because the real performance processes possesses in large scale a probable
features, and the maintenance services are more predictable in its turn.
Maintenance and modification PEM during the project perfomance is more or less constant. And
PBO PEM in it turn changes in big term. PBO is more sensitive to the outcoming influences factors,
it deals more with real perfomance processes. The market behave forecast posesses in large scale a
probabilistic features, so it is hard to make an exact market forecast.
The real measurements of the service strategy perfomance was made by means of the list of
methods and perfomance indicators. It allows to obtain the information about the differences
between the real perfomance and stated in the contract. For example, M&M implementers and
executors used a computer system called “Synergy” for registering and handling the statistics of
“RUE” (reports of unwanted events/accident, etc). In some cases such problems were not
systematic and were just discussed on the working meetings.

Discussion and findings


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Although two compared contract has similar content and goals, there are some differences. PBO
contract is new and therefore it focuses more on the tail-end production. This new production
conditions can cause new cost focus and production regulation compared to the achieved stage.
It is essential to predict probable failure and undesired scenarios during the performance period in
both contracts. Strategy should be clear and achievable, and the relations between the performance
personal and involved parties should be transparent and described as well. It is aimed in the
reducing of the gap between the predicted and delivered services.

References
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1. Rajesh Kumar, Tore Markeset, Uday Kumar, “Implementation and execution


of industrial service strategy: A case study from the oil and gas industry”,
Journal of Quality in Maintenance Engineering, 2006.

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