Cost savings from performance-based maintenance contracting

Straub, A.

Cost savings from performance-based maintenance contracting

Title

Cost savings from performance-based maintenance contracting

Author

Straub, A.

Faculty

OTB Research Institute

Department

Sustainable housing transformations

Date

2009-05-04

Abstract

New procurement approaches combined with performance-based building approaches should reduce costs, but empirical qualitative and quantitative studies are lacking. Performance-based maintenance contracts give maintenance suppliers incentives to improve their way of working. Innovative, cost-effective solutions that meet the performance criteria can be achieved, especially if the principle of whole-life costing is being adopted. Indirect cost savings are expected as well. It enables maintenance contractors to assume responsibility for certain activities for which they are better equipped to perform than their clients. A calculation model was developed that calculates the net present value of the direct (product) and indirect (transaction) costs at project level for a competitive maintenance tendering approach and for performance-based maintenance contracts. The fi ndings show that performance-based maintenance contracts reduce both direct and indirect costs compared to a competitive tendering approach. Essential preconditions are an early supplier involvement and longer term contracts, giving opportunities for maintenance product and maintenance process improvements.

Subject

maintenance
performance-based contracts
transaction costs
whole-life costing

To reference this document use:

http://resolver.tudelft.nl/uuid:bc001a92-cd84-4bfa-9ba3-a50001bdcf61

Publisher

Vilnius Gediminas Technical University

ISSN

1648-715X

Source

International Journal of Strategic Property Management, 13 (3), 2009

Part of collection

Institutional Repository