Using performance specified maintenance contracts: Buyer/seller beware

Asset management is becoming more of a challenge to many agencies worldwide. With continuing pressure to reduce costs and provide better value for funds, many agencies are turning to different service delivery modes. One method of service delivery that is currently being used in Australia and New Zealand is the Performance Specified Maintenance Contract (PSMC). This paper summarizes the key benefits to utilizing the PSMC model based on experience in New Zealand. The primary success factors have been identified as people, technology, management practices, and innovative spirit. It is clear that a change in mentality is required in all the stakeholders prior to and during the contract. There must be a genuine spirit on the owner's behalf to allow contractors to recommend and carry out their work with limited interference. Alternatively, the contractor must take ownership of the road and provide leadership in all aspects of the maintenance and operations of the facility. There must be an effort to ensure that there is regular communication at all levels and a spirit of innovation to try new materials, processes, etc. The proper assimilation of technologies is also a critical component. More specifically, there is a need to apply technologies only in cases where they can provide technical and/or cost savings benefits. Consequently, this means that there needs to be a clear goal and objective to the application of the technology so that benefits and costs can be clearly quantified. The management practices center on achieving the Key Performance Indicators (KPIs). There must be a clear mechanism in place to provide incentives for achieving KPIs and an ability for the owner agency to reward the contractor if superior performance is achieved. Finally, the need to foster an innovative spirit throughout every aspect of the PSMC is critical to the long-term success and benefit of the contract. Overall, this paper shares some of the key success factors that have been observed through the experiences and reviews of the PSMC service delivery method in New Zealand. CE Database subject headings: analysis, assets, maintenance models, evaluations, performance characteristics