Cost Savings From Performance‐based Maintenance Contracting

Straub, Ad

doi:10.3846/1648-715x.2009.13.205-217

Cited by 43 publications

(46 citation statements)

References 15 publications

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“…There are similar PBL success stories dealing with projects in the for-profit sector. For instance, one recent study of a major Dutch housing project showed that life cycle cost was reduced by 20 percent using a PBL approach (Straub, 2009).…”

Section: Background On Pblmentioning

confidence: 99%

Explaining the effectiveness of performance‐based logistics: a quantitative examination

Randall

Nowicki

Hawkins

2011

The International Journal of Logistics Management

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Purpose -Performance-based logistics (PBL) strategies are providing governments and for-profit organizations with a contractual mechanism that reduces the life cycle costs of their systems. PBL accomplishes this by establishing contracts that focus on the delivery of performance not parts. PBL establishes a metric based governance structure where suppliers make more profit when they invest in logistics process improvements, or system redesign, that reduces total cost of ownership. While work has been done to outline an overall PBL theoretical framework, the underlying theory explaining the enablers that lead to organizational and team-level, team-goal alignment associated with the PBL governance structure requires testing. The purpose of this paper is to quantitatively test previously posited relationships between enablers of PBL and PBL effectiveness. An additional objective is to explore any differences in PBL effectiveness between different business sectors. Design/methodology/approach -A multiple regression model was developed, tested and validated to explain the effectiveness of PBL. The model was externally validated with exploratory cross-sectional survey data of 61 practitioners. Findings -This study strongly supports recent PBL theory explaining PBL effectiveness. Key antecedents include investment climate, relational exchange, PBL leadership, and business sector. Further, government organizations lag behind their commercial counterparts in PBL effectiveness and PBL leadership. Practical implications -PBL business arrangements are more effective in more favorable investment climates. Thus, leaders should welcome new ideas, empower employees, and encourage entrepreneurship. Since PBL effectiveness increases with relational exchange, building trust and communicating with suppliers is key. Leadership is also important to PBL effectiveness. Leaders should accept risk, focus on long-term affordability and performance, and align activities to achieve end-user goals. Originality/value -This research is the first quantitative test of previously posited factors affecting PBL effectiveness. Additionally, this research unveils key differences in business sectors' use of PBL strategies.Keywords Logistics management, Leadership, Performance-based logistics, Investment climate, Sustainment, Outcome-based contracting, Post-production support, Logistics, Supportability Paper type Research paper IntroductionThe post-production logistics and product support costs associated with sustaining large-scaled, complex systems such as aircraft fleets, rail, and power generation facilities quite often exceed two to three times the research, development, and production costs associated with these systems (Berkowitz et al., 2003). Adding complexity to this costly reality is the fact that as systems age post-production logistics and support costs tend to increase (MaClean et al., 2005). These costs represent a significant logistics-related segment of the economy. For instance, the US commercial airline industry spends in ex...

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Section: Background On Pblmentioning

confidence: 99%

Explaining the effectiveness of performance‐based logistics: a quantitative examination

Randall

Nowicki

Hawkins

2011

The International Journal of Logistics Management

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“…Performance-based contracting focuses the government's attention on a set of outcomes, allowing the contractors to determine the inputs and the process, and linking the outcomes to monetary rewards (Goldsmith and Eggers 2004;Heinrich 1999). While this mode of contracting may save costs (Straub 2009) and generate data for resource allocation decisions (Heinrich 1999), several problems have been noted. The performance standards are often not well-designed (Heinrich 1999), the sanctions are rarely executed in response to inadequate performance (Cohen and Eimicke 2008;Van Slyke 2007), and the democratic process of service delivery may be undermined (Chan and Rosenbloom 2010 Irrespective of the theoretical underpinnings of contractor performance measurement, the latter remains among "the most serious management challenges" facing public managers (Kelman 2002, 312).…”

Section: Introductionmentioning

confidence: 99%

What is the Effect of Performance Measurement on Perceived Accountability Effectiveness in State and Local Government Contracts?

Amirkhanyan

2011

Public Performance & Management Review

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Designing and implementing performance measurement systems in public contracts is not an easy task. Little guidance has been available on which specific measures work better in producing certain managerial benefits. The objective of this study is to evaluate the effect of different performance measurement practices on accountability effectiveness in government contracts. The findings suggest that the overall scope of performance measurement has a positive impact on the government's ability to effectively manage contracts. More specifically, measuring costs, client impact, service timeliness and disruptions, as well as specifying the detailed processes for service delivery are associated with higher accountability effectiveness.On the other hand, evaluating quality, client satisfaction, and using informal monitoring techniques has a negative impact on perceived accountability effectiveness. The results of this study provide motivation for the contract managers to optimize performance monitoring and reduce transaction costs by relying on the measures that are more likely to improve contract implementation.

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“…Mossel and Straub's (2009) survey of tenants of social housing in the Netherlands also reveals the benefits of proper maintenance; these benefits include a sustained quality and an enhanced market value of the residential buildings. Opting for a performance-based maintenance contract, which is aimed towards meeting performance criteria set by clients, compared to the conventional competitive tendering also proved to be a cost-saving act, as it eased both indirect and direct costs (Straub 2009). In the meantime, previous studies have shown that an effective maintenance system will only become a reality if the stakeholders play their role in the maintenance system.…”

Section: Introductionmentioning

confidence: 99%

How Does Communication Influence the Perceived Performance of Maintenance Services in Multi-Storey Public Housing?

Yusof

Abdullah

Najib

2014

International Journal of Strategic Property Management

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Currently, debates on the performance of maintenance services in multi-storey public housing have been matters of great concern. Previous studies have proven that a close relationship between the residents and the management team is vital to enhance the performance of maintenance services, but limited studies have been geared towards the influence of communication on the performance of maintenance services. This study aims to examine the influence of communication between the residents and the management team on the performance of the maintenance services. A survey was conducted with the residents of multi-storey public housing in Penang, Malaysia, who were selected using stratified random sampling. A descriptive analysis, Pearson product-moment correlation, and multiple regression analysis were used to analyse the data. The results show that there is a significant and positive relationship between effective communication and the residents' perceived performance of maintenance services. Two communication attributes, "satisfaction with the feedback" and "accuracy of information", are the determinants for the performance of maintenance services.

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Cost Savings From Performance‐based Maintenance Contracting

Cited by 43 publications

References 15 publications

Explaining the effectiveness of performance‐based logistics: a quantitative examination

Explaining the effectiveness of performance‐based logistics: a quantitative examination

What is the Effect of Performance Measurement on Perceived Accountability Effectiveness in State and Local Government Contracts?

How Does Communication Influence the Perceived Performance of Maintenance Services in Multi-Storey Public Housing?

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