The contracting-experience of maintenance/operation work in our group can today be considered as rich with the first generation of contract implemented more than 15 years ago. The incumbent contract was started in 1997, so it is now into its 4th year. Certain improvements that have already been implemented has had a large impact on our contract culture e.g. performance indicators. The next re-tendering is now approaching and with this borne in mind, the author will discuss through various sections of this report the following main points: firstly, an overview of the trends today in this area; secondly, comparing these trends with implemented practices; and finally, what can be future development in the outsourcing of the maintenance/operation of the Cooling & Ventilation services

Wilhelmsson, M

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EUROPEAN ORGANIZATION FOR NUCLEAR RESEARCHORGANISATION EUROPÉENNE POUR LA RECHERCHE NUCLÉAIRECERN - ST DivisionPresented at the 4th ST WorkshopChamonix, France, 30 January - 2 February 2001CERN-ST-2001-0571st February 2001NEW TRENDS IN THE OUTSOURCING OFMAINTENANCE/OPERATIONSERVICESM. WilhelmssonAbstractThe contracting-experience of maintenance/operation work in our group can today beconsidered as rich with the first generation of contract implemented more than 15 years ago.The incumbent contract was started in 1997, so it is now into its 4th year. Certainimprovements that have already been implemented has had a large impact on our contractculture e.g. performance indicators. The next re-tendering is now approaching and with thisborne in mind, the author will discuss through various sections of this report the followingmain points: firstly, an overview of the trends today in this area; secondly, comparing thesetrends with implemented practices; and finally, what can be future development in theoutsourcing of the maintenance/operation of the Cooling & Ventilation services.21 INTRODUCTIONA review has been undertaken in preparing ourselves for another tender process that is aiming toproduce a contract for the maintenance and operation of our cooling and ventilation equipment atCERN. Although, the in-house experience is relatively rich we found it important to study whichtrends reign outside CERN in the outsourcing of technical services on comparable industry sites. I willexplain below the results of some of these findings, and discuss how they are applicable and relevantin our own environment.2 WHAT DOWEWANT TO OUTSOURCE, ANDWHY?The first criterion that probably comes to most people mind on this topic, is the core-activity issue.“Never outsource a core-activity!” Then you enter into endless discussion on what the core-activitiesreally are.As the maintenance/operation of the cooling and ventilation is a service towards a core-activityof the laboratory (which I hope you agree with me that the accelerators are), and as such, it will beclosely associated with this core-activity of CERN. Is it therefore wrong to outsource this service? Ithink that a firm position against the outsourcing of such activities is simply impossible with theoverlaying policy in the reduction of the number of CERN-staff.We frequently hear about the irreplaceable commitments that the CERN-staff has towards theperfect functioning of our accelerators or our machines. The factual difference between the CERN-staff‘s employment conditions and those of most of our contract-staff does, of course, not help in thetransmission of the loyalty towards these core values of our laboratory. I don’t believe that we shouldconcede to this. There are, after all, plenty of examples from outside, where contract staff have thesame motivation as their own personnel. To make it happen, or to come closer, we must evolve incertain fields of which I will I give a couple of examples below:- The present perception held of contract workers, (in that they are less qualified, educated, skilledetc. than CERN-staff) must change.- Areas where we really need highly qualified contract-personnel, we must be ready to admit andspecify this as well as be ready to pay for what it cost on the marketplace.- The partnership concept towards common performance-objectives, discussed further below, wouldhelp in this context.3 PARTNERSHIPThe partnership-concept in contracting of operation and maintenance services is probably the issuethat has evolved most during the last five years (since our previous re-tendering). I will therefore,develop some ideas, which I feel are important, and discuss how these could be adopted in our area.I can give a few subjective definitions of partnership, with no pretension to be absolutelycomplete:- A contractual relationship to enable both parties to face the same way.- Working together to identify mutual objectives.- Jointly seeking to resolve problems, non confrontational.- Providing continuous improvements of joint benefits.What comes across is certainly the idea of common objectives, and therefore common results. Iwould in this context draw the conclusion that the monitoring of these results is an entirely neutralactivity. If we would adopt a secretive approach towards the monitoring of performances, we can beassured that the confidence between the two parties quickly will be lost.3The key issue is to have service level agreements that are clearly defined at the beginning, thusavoiding the risk of false expectancies between the parties. A typical service level agreement can bedefined as from the time of a telephone call, until the moment when the on-call technician is on site, orthe overall downtime of a certain type of equipment specified as less than a set value.All these criteria should, at best, be defined when the contract is signed. This is so that thecontractor can make sufficient resources available for the contract fulfillment. Furthermore, we shouldhave some key performance indicators, which in a simple and unambiguous way translate theperformance into real numbers. I would here underline the very positive feedback we have sinceimplementing some performance indicators into our present contract. It is important to attach a small,but significant, financial incentive/penalty to those results. I would, however, recommend refrainingfrom too weighty incentives/penalties, as those are probably not enforceable from legal point of view,and can in addition lead to inappropriate behavior.However well the contract is defined, there is nothing wrong to come back to the service levelagreements as well as the performance indicators. All services evolve in time, especially in alaboratory environment as ours, and it would be wrong if the contract agreements do not follow. Weshould, in this context, bear in mind that a service level can both decrease as well as increase.It is important to understand that a partnership relation between the service-supplier and theclient, as an alternative to a more confrontational contract relation, does not allow any easing towardsthe full delivery of the service according to the requirements in the contract specification.Before leaving the partnership issue I would highlight the necessity of very regularcommunications between the two parties, and at all levels, so that any concern, are addressed wellbefore it becomes a crisis.4 MONITORINGThe monitoring of the contract is an imbedded process in the management tool for all activities relatedto the maintenance and operation of the concerned equipment. In our case, the equipment are thecooling and ventilation systems for all CERN’s accelerators and experimental areas. The tool used forthis is generally known as a Maintenance Management System (MMS). The MMS consists of a hugedatabase with description of all assets (equipment), programs for the planned and correctivemaintenance as well as modules for spare-parts stores, job-cards etc.It is important that the contract agreements are well covered for by this MMS, and especially thecalculation of the mentioned key performance indicators.There is no golden rule where this system should be sitting, at the client’s site or at thecontractor’s site. The main user of this MMS can well be the contractor, and examples can be foundwhere the outsourcing company in fact, is the owner of the system. In our case this would be ratherunpractical as the database is common to several services, operating with several contractors. BothCERN and the contractor must, however, possess solid knowledge concerning the MMS, as well asqualified operators. It represents, for the contractor, the main day-to-day management tool. And forCERN, the number of qualified operators must enable us to sufficiently well, understand, monitor andenforce the service level agreements. A main issue for people operating this system is to choose whichinformation should be presented to the decision makers. Frequently, key-points can be lost underneatha mountain of irrelevant data. To avoid this happening a balanced score sheet (a list of key parameters)containing no more than 10-12 main points can be used.5 RISKSOutsourcing of such important services as the operation of cooling plants is, of course, not withoutrisks, and an effort to analyse those risks can prove to be a very good investment. I will here onlymention a few, which I consider are the most important ones.4We must consider that a tender process on the European marketplace does not protect us atCERN from problems due to labour-conflicts. This can lead to a dysfunction of the contract and can,as a consequence compromise the running of our machines. There is a fine balance of how much in-house expertise we need to keep, so that minor disorders of this type can be covered for.An increased contract-duration, from the present maximum of 5 years, would in my opinionimprove the stability, from contract-employees point of view, and therefore improve the overallqualification of the contractor’s personnel.Another risk to be considered is the reduction of hands-on knowledge, on various specializedequipment, which follow the decrease of CERN staff in favour of an outsourcing policy. These areskills, which have developed with a whole generation of CERN technicians, during the building,commissioning and operation of the PS, SPS and the LEP-accelerators. Once again, a core of master-technicians must, in my opinion, be kept, so that a continuing excellence on the reliability of theseservices can be assured. Furthermore, the quality control process has improved: the level ofdocumentation, the methods, the communication etc. Quality control can therefore be clearly seen tobe of central importance in the replacement of the more traditional “man-memory-experience”.6 CONCLUSIONSIn the preparation of an important re-tendering, as for the described maintenance and operation of thecooling and ventilation activity, there is certain analysis which can be of valuable assistance. Oneconcerns the content of the outsourced services, and which resources should be kept in-house. I find itessential not to exposed such a vital activity of CERN to certain risks on the labour-market as well assaving certain key-personnel for the know-how on the more critical equipment.Alternative management methods through the partnership-concept have been shown to besuccessful in several examples, and should continue to be developed in our environment. This subjectis not unique for CERN as a customer of outsourced services. Looking at examples in comparableindustrial areas e.g. power- or water utilities, we can find that the trends towards more result-orientedcontracts based on service level agreements gains territory in comparing to the more traditionalagreements based on work-hours. These findings confirms our policy, followed during the presentcontract-period, with a remuneration model which allows a sharing of benefits due to rationalisationand increased performance in the execution of the contract obligations.With these observations in mind, I think we can confidently head-on for a new market survey inorder to find suitable candidates, in our member states, which match our requirement and can deliverthe optimum services for another period of five years.

New Trends in the Outsourcing of Maintenance/Operation Services

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