Contract Maintenance

By Marilyn Michelson | Aug 15, 2005
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For electrical contractors, maintenance means more than sweeping the warehouse floor. Service work is becoming an increasingly important and lucrative part of their business. Call it what you will-contract maintenance work, sustaining work, ongoing service work or outsourcing-it is when company uses an outside contractor to do work on their building, often to replace a once-permanent maintenance staff and often as a cost-cutting measure. This contractual agreement is usually a combination of emergency service and routine maintenance.

Of course, when a new batch of customers looks to a specific contractor for its expertise and support, it enhances the contractor's reputation and business, which is where contracted employees can be useful. A company sometimes hires contractors for their particular expertise, which helps the company complete a project and allows company workers to focus on what they do best.

Contract maintenance--such as moves, adds and changes (MACs), power-use evaluations and on-site maintenance at government facilities-has been around for a long time. The news about high-tech work/jobs being outsourced is usually viewed as bad news, but companies can view maintenance as part of their business or as add-on work, and use outsourcing as a management tool to help improve productivity.

There are many reasons why a company might want to hire outside maintenance. First, it could mean lower long-term costs, especially for companies with limited in-house resources. They would need to allocate resources to critical maintenance operations while using the same resources to keep their core business going.

An outside contractor, on the other hand, could be called in for their ability to handle specialty work. Second, it may cost more for a company to subcontract, but the subcontractor's skill in a particular field could ensure better work than the company's employees. Through their expertise in a particular field, subcontractors could actually help the customer improve its business processes.

Finally, subcontracting allows a company to focus on its core activities. Management would be freed from worrying about the inner workings of a noncore activity and could focus on their main area of competence.

The contractor also benefits from this type of work because, for example, MACs may be lower-margin work but can also mean low risk and low staff involvement. The contractor can receive a reasonable income and still have other staff available for more profitable work.

Since a company's facilities department usually doles out the maintenance agreements, contractors who form good relationships can be the beneficiaries of a mobile work force. For instance, a facilities worker may remain with one company for a few years and, after starting a new job, might contract with electrical contractors with whom trust had already been forged and whose quality work was a given.

Subcontracting work possibilities

A company will determine whether it needs to subcontract work by assessing what needs to be done. It might also look at what kind of skills and knowledge are required, especially after completing a major construction project and finding it needs ongoing support. Though there could be competition for this work, the bidding process is often eliminated because the contractor has already worked at the customer's site and an all-important trusting relationship has been formed.

The type of work subcontracted out can cover facility maintenance, upkeep of a manufacturer's production equipment, security work or electrical work. For example, a major real estate firm invited local electrical contractors to submit competitive bids and then offered a one-year service agreement to the bid winner: a contractor that specialized in new construction, maintenance, design-build and fiber optics. The bid winner was selected because of its low negotiated rates for daytime, overtime and weekend work.

The real estate company not only saved money through outsourcing, but also realized a side benefit with the relationships built with the local electrical contractors it hired. The electricians became familiar with the company's practices and procedures, and the company knows most of the contractor's foremen and apprentices. To put this into perspective, businesses often pay higher rates for a one-time call to an electrician, but by negotiating rates beforehand, this real estate company increased its reliability and lowered labor costs.

It is not a question of whether a customer's electrical power system equipment will fail, it is a question of when. Ideally, the “when” will be put off for a long time. To assist today's maintenance managers in prolonging the inevitable, there must be a proactive maintenance specification tailored to the needs of the installed electrical equipment. Part of that proactive maintenance specification is finding the right subcontractor.

Maintenance contracts at industrial, commercial and institutional facilities are growing in popularity. More contractors are performing on-site maintenance work for industrial facilities. It is clear that those industrial facilities can cut the cost of having to employ on-staff electricians, by farming out the maintenance of their electrical systems to outside contractors.

Some firms provide full-service contract work; they manage the project and provide the subcontractors. In this way, both parties can derive more benefits from the contractor's services. The organization can spread the contractor's services across different areas/departments as needed. If it is a “time and materials” agreement, the contractor is kept busy more hours of the day and is provided with more hourly wages. Another plus might be if the work was out of the country-the workers could be from the same culture and use the same language to interact seamlessly.

Contractors will especially see the benefits in wages. The work can be paid at a higher rate than some companies pay their own staff. As companies shrink their staff sizes, the outside contractor will play a more active role in the installation of new equipment.

The subcontractor may also be scheduling and dispatching mobile (wireless) workers. Eugene Signorini, a senior analyst with the Yankee Group, a Boston technology-consulting firm, said the mobile worker market will grow from $1 billion to approximately $2 billion by 2006. That kind of mobile technology will probably accelerate as companies subcontract their internal plant and building maintenance work to outsourcers. Signorini also noted many mobile technicians still use paper solutions.

“Of the almost 6 million field-service workers in the U.S., fewer than 1 million of them are using wireless data field-service solutions,” Signorini said in Mobile Enterprise magazine.

Advantages abound

When outlining the advantages, tell potential customers that outsourcing will give them a chance to focus on their core business, save them money (in the end), bring in high-quality workmanship and deliver reliability.

A company can consolidate costly purchase orders (e.g., for parts to complete the work) and analyze the service and equipment performance from a detailed repair history supplied by the contractor. In addition, outsourcing could enhance the company's current maintenance program with 24/7 support.

To balance the advantages the company gains, a contract could cover possible delays, a lack of familiarity with site-specific problems, control over the people who handle the outsourced tasks, possible conflicts of interest, and more. And after the work is completed, the contract could cover 1) the company's loss of in-house expertise and experience, 2) the difficulty and cost of replacing a skill or job that had been outsourced, and 3) any disagreement over ownership of physical or intellectual property.

In the end, contractors help themselves and their customers by providing expert support service. Call it contract maintenance or sustaining work, this can be the final spoke in the wheel that helps a company optimize its performance and meet the demands of its market. EC

MICHELSON, president of Jackson, Calif.-based Business Communication Services and publisher of the BCS Reports, is an expert in TIA/EIA performance standards. Contact her at or [email protected].


About The Author

Marilyn Michelson, president of Jackson, Calif.-based Business Communication Services and publisher of the BCS Reports, is an expert in TIA/EIA performance standards.





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