Software

How contract maintenance can affect your CMMS

David Berger says consider these 3 options when evaluating alternative CMMS support.

By David Berger, P.Eng., contributing editor

As more companies consider outsourcing some or all of their maintenance operations, it has become increasingly important to evaluate alternative CMMS support options. Options range from giving the contractor complete freedom in selecting whatever CMMS they desire to building strict CMMS requirements into the contract. Consideration should be given to several potential issues such as technology platform compatibility, integration of applications, who owns which processes/assets/data, and data migration needs.

Option 1: Contractor adopts your CMMS

The first option to consider is for the outsourcer to adopt your CMMS. This works especially well when external staff simply replaces internal staff, but are now on the contractor’s payroll. This type of contractor tends to focus on the supply of maintenance personnel, including maintainers, specialists, supervisors, and even maintenance management if you so desire. In some cases, these contractors have no interest in providing anything but the people.

This option allows you to maintain control of the assets, processes, technology, and data. As well, by outsourcing the human resources, you have the following advantages:

  • access to a larger talent pool, which includes specialists that you may not be able to justify on your own
  • greater flexibility in meeting rising and falling demand, such as increasing staff levels for shutdowns, and decreasing staff during holiday season
  • performance and quality standards can be more tightly enforced through incentives and penalties built into the contract
  • ease of dealing with discipline issues, for example, replacing a non-performing maintainer the next day, assuming your contract allows it
  • potential pricing advantages because of the competitive process used to select a contractor — for example, lower labor rates and reduced overtime
  • depending on how the contract is worded, the contractor assumes all or some of the risk in the case of negligence or other liability issues.

On the other hand, the disadvantages of using an outsourced labor pool are:

  • it may be difficult to motivate contract staff to go the extra mile compared to employees on your payroll
  • knowledge gained by the contract staff stays with the contractor as opposed to transferred to your company, except for work order history in your CMMS
  • confidentiality of proprietary processes, equipment, product design, CMMS data, and configuration is difficult to enforce as contractors may work for your competitors, suppliers, or customers
  • depending on the wording of your contract, it may be difficult to pick and choose which staff will be assigned to your company and how long they will stay
  • there may be a cultural difference between contract staff and company employees
  • there may be fewer job advancement opportunities for company employees if fewer job positions remain after outsourcing much of the workforce
  • outsourcing may strain labor relations, especially if it is perceived as a way to circumvent employee contracts.

The CMMS can handle contract staff in different ways. The least sophisticated way is through a purchase order and invoice that provides only total dollars spent. Even if a detailed breakdown of contract labor hours is provided, if it does not appear on work orders, it is difficult to analyze equipment history. The more advanced CMMS packages allow contract staff to enter their time on work orders as if they were employees and then reconcile time entry with the contractor’s invoices.

Option 2: Contractor integrates its CMMS

Another option to consider is to partner with an outsourcer that provides more than just skilled resources. With this option, the contractor brings process knowledge and its own CMMS that supports it. Use of this option is common for specialty contractors, such as companies that manage your roof, HVAC, facilities, specialized equipment, or predictive maintenance. In some cases, the contractor’s CMMS is somewhat tailored to its specialty area. For example, a contractor might specialize in predictive technologies such as lubrication or vibration analysis. The data that is collected may be voluminous and may require sophisticated analysis tools to track and interpret readings and trend lines.

{pb}
David Berger, a Certified Management Consultant (C.M.C.) registered in Ontario, Canada, is a Principal of Western Management Consultants, based in the Toronto officeDavid Berger, a Certified Management Consultant (C.M.C.) registered in Ontario, Canada, is a Principal of Western Management Consultants, based in the Toronto office. David has written more than 200 articles on a variety of topics such as maintenance management, operations management, information technology, e-commerce, organizational design, and strategy. In Plant Services magazine, he has written a monthly column on maintenance management in the United States, as well as three very extensive reviews of maintenance management systems available in North America. David has done extensive work in the areas of strategy, information technology and business process re-engineering. He can be reached at david@wmc.on.ca.
Subscribe to the Asset Manager RSS feed

The contractor may also use a CMMS to manage work orders, spare parts inventory, and equipment history. This builds on the advantages of Option 1, which is a staffing contract only. In Option 2, the contractor will also take responsibility for collecting and analyzing data in order to improve maintenance operations. You can also build incentives and penalties into the contract to motivate contractors in meeting performance and quality targets.

In most situations, you retain ownership of the specialized assets and the contractor has a management contract to maintain it. Option 2 requires that the contractor integrates its CMMS with your systems so that you have a complete asset history. Integration typically adds a significant cost compared to Options 1 and 3, but it may be well worth it. Integration allows you to better analyze data from multiple sources to understand the bigger picture.

For example, vibration analysis data from your contractor would be useful in understanding the behavior of your rotating equipment as it relates to certain conditions of the product, process, asset, and environment. The state of roof maintenance may be important in developing a long-term capital plan. Integrating a contractor’s CMMS for managing a facility’s maintenance contract allows you to keep tabs on the timeliness of preventive maintenance (PM) work being done (for example, PM compliance, regulatory compliance); monitor the quality of work (for example, number of repeat work orders, ratio of planned to unplanned work); and ensure costs are properly managed.

There are many ways to integrate with your contractor’s CMMS. Factors to consider include what information is needed, how often, and at what level of detail; compatibility and complexity of the systems being integrated; and the cost of integration. Some of the variations on the integration theme are:

  • integration on a batch basis at a summary level (for example, updates to a dashboard)
  • integration on a batch basis, but at a more detailed level (for example, once a day your database is updated with changes to static or dynamic data)
  • integration on an online real-time basis at a summary level
  • integration at a detailed level, where your database is kept synchronized with the contractor’s database
  • a hybrid of the above, such as condition data integrated on a real-time basis, and work order history on a batch basis.

It may be that the contractor’s CMMS needs to integrate with your ERP system, with or without a maintenance module. If so, data would be ported at a more summary level, primarily for accounting purposes rather than providing a complete work history.

Option 3: Contractor CMMS becomes independent

Some companies prefer to outsource a full-service solution including people, processes, and technology. This option avoids the cost and hassle of integration, but introduces greater risk as there is less visibility into contractor activities, results, issues, and opportunities for improvement. Note that some contractors can still provide you with a terminal into their systems, as opposed to integrating with your systems.

Under Option 3, a contractor uses its own CMMS to manage the maintainers, management, spare parts, and specialized tools and equipment. The larger contractors can not only provide resources and expertise, but they can also provide the benefits of size and focus. For example, consider building into your full-service contract a requirement for reducing management fees each year by leveraging the contractor’s purchasing power for parts and equipment, as well as greater labor efficiency and effectiveness through their economies of scale.

Read David Berger's monthly column, Asset Manager.