Industrial Maintenance Contracts

Industrial Maintenance Contracts: Definition And Tips

Industrial maintenance contracts are meant to ensure the durability of industrial assets as well as fair contractual practices

Faced with the emergence of industry 4.0, industrial maintenance services are undergoing deep change: technicians are expected to be more specialized and skilled in the context of a limited workforce. This new type of organization involves some drawbacks linked to various factors, including:

  • occasional work overload due to the lack of sufficient workforce;
  • overly specialized tasks;
  • human resources issues, career plans, etc.

That is why some companies are outsourcing part of their activity, either unskilled operations or highly specialized industrial maintenance operations (thermography for instance). The most outsourced tasks include painting, plumbing, carpentry, green space maintenance, general services, production-related activities, and regulatory tasks. On the other hand, the industrial maintenance of production supplies and equipment is generally managed internally as it requires an excellent knowledge of the production system. Also, carrying out systematic preventive and corrective maintenance and improvements should not be handed over to external service providers.

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Different types of industrial maintenance contracts

An industrial maintenance contract is an agreement between several parties governing the professional relationships between a customer and a service provider. It guarantees and protects the rights of the parties in case of litigation. There are two types of maintenance contracts: best endeavors obligation, or obligation to achieve a result.

The best endeavors obligation implies for the service provider to deploy any human, material and immaterial mean and to perform concrete tasks in order to carry out the intervention, without being committed to achieving a quantifiable result.

The obligation to achieve a result commits the service provider to achieve a service according to a qualified and quantified objective and has to prove them according to the conditions set out in the contract: equipment availability rates, deadlines, costs, environment, reliability, safety, etc.

Before opting for one type of contract over the other, you should take into account several criteria: field of intervention, the initial condition of the asset, future conditions of use, the company's maintenance policy, maintenance indicators, etc.

Implementation process

The proper implementation of an industrial maintenance contract includes several steps in order to guarantee the durability of the industrial assets. First, an initial inventory of the various elements to be taken into account has to be drawn up: technical documents, on-site resources, technical expertise, etc.

It is then essential to define different types of clauses and liabilities. Legal clauses are essential. They contain the name of the parties, define the purpose of the contract, as well as its terms (schedule, implementation, etc.), but also property rights, confidentiality, dispute settlement, liability, social legislation, etc.

Commercial clauses aim at defining the price of the service, the payment method, the guarantees, financial penalties, etc.

Special technical clauses are intended to lay down the technical provisions required to perform the service and provide a precise definition of the service or of the expected result. The latter is the most common one and gives the provider more freedom. It can be defined in terms of availability, potential use, rate, production capacity, etc.

Health and safety clauses may vary according to the nature of the intervention.

Complying with these clauses allows to establish a healthy contractual relationship between the parties involved by clearly defining their duties and obligations, and to meet normative obligations in force.

Financial aspect

Subcontracting and outsourcing certain services require a significant financial investment that must be controlled from the beginning. Cost-effectiveness and defining the right price calculation method are critical. There are 4 main price calculation methods:

  • Fixed-priced contract

The price is defined before the service is provided, and is independent of the means implemented by the service provider. Therefore, it is in his interest to pay particular attention to the initial inventory and to the specific technical clauses mentioned above.

  • Cost-plus contract

In this case, the price is defined after the performance of the service (either best endeavors obligation, or obligation to achieve a result) according to the means implemented and the time spent by the maintenance company: hourly rate, margin rate on supplies, staff involved, etc.

  • Guaranteed maximum price

The service provider guarantees that the client will not pay more than the maximum price.

  • Lump sum price

For each of the methods mentioned above, responsibility is assumed by only one party. Lump sum price provides a mid-way solution: both parties are sharing responsibilities, and thus the calculation takes into account a first flat-rate part, as well as a second part which is proportional to the additional means implemented, as in the case of the calculation of the cost-plus contract.

Improve your industrial maintenance contracts management

The emergence of next-gen CMMS solutions allows you to easily manage your industrial maintenance contracts: mobile and user-friendly, next-gen maintenance management platform Mobility Work helps you improve the management of your industrial maintenance contracts (service providers, equipment, spare parts, property assets, facilities, equipment under warranty).

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Mobility Work CMMS is based on a community of users who exchange and follow their plant’s activity thanks to the newsfeed

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Quickly identify your equipment under maintenance contract using tags: tag your equipment to find them easily and to share information with your colleagues, and follow all the interventions and tasks performed by the service provider directly on the equipment page.

Stay in touch with your service providers: find them among the community’s search results page, in the "company" tab, or add them clicking on "create a company". Feed the community’s contact list, and communicate easily with them.

You can also rate them according to several criteria: quality of the service, deadlines, etc., assign them a comment and talk about them with other users of the platform.

Watch our tutorial: "How to manage my maintenance service providers in my CMMS?"

Mobility Work helps you in your transition to industry 4.0 and facilitates your exchanges with various players from the industrial maintenance sector. For more information, do not hesitate to watch our presentation video.

You are interested in maintenance management and would like to learn more about this subject in order to increase your productivity and save costs? Let's plan a free online training with our team!

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