| Pub. Date | :August, 2021 |
|---|---|
| Product Name | : The IUP Journal of Operations Management |
| Product Type | : Article |
| Product Code | : IJOM10821 |
| Author Name | : Venkata Ravi Ram Pinninti and TVK Bhanuprakash |
| Availability | : YES |
| Subject/Domain | : Management |
| Download Format | : PDF Format |
| No. of Pages | : 14 |
Of the two functions in Operations and Maintenance (O&M), traditionally it was maintenance that lent itself for outsourcing. Needing intermittent equipment specialists' intervention, maintenance was a 'natural' for outsourcing one-off needs or annual contracts. All this while, operations was always considered "too critical" to be outsourced. However, what was once unthinkable has slowly crept in: the outsourcing of operations. Considering the criticality of the operations function to the availability of the plant, this paper proposes the factors that must be evaluated before a contractor is finalized. These include ability to maintain and flag critical plant performance indicators. Since the economic cost of failure to perform has direct material impact on the plant financials, the contract has to be drawn in a manner that would encourage only the serious players to bid. Non-operational but non-negotiable factors like strict compliance to statutory, safety and environment requirements act like filters to ensure right contractor selection. Also discussed in this paper are the contract process, goals and key performance indicators that would eliminate chances of contract dispute at a future date. The first author was responsible for implementation of one of the first outsourced operations management contracts in India.
Of the two functions in Operations and Maintenance (O&M), it was always maintenance that lent itself for outsourcing. While operations was always considered "too critical" to be outsourced, the unthinkable has slowly crept in-outsourcing of operations function itself. While generally accepted in petrochemical industry in India, a wave of O&M contracts in the power sector was unleashed with the advent of independent power companies. Many promoters had the financial power but no expertise in managing