In my previous blog, I explained how to build a structured repository of your assets. Knowing your asset-related contracts and their terms and conditions is a second important step to getting the fundamentals in place for effective maintenance management.
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Setting up your contract management repository
Without a proper contract management repository, you and your organization are at high risk and not in full control of supplier obligations, associated costs, contract terminations, or regulatory compliance. A structured contract registration allows you to proactively manage suppliers, validate contract-related costs and performance, ensures timely contract cancellation or change, and delivers valuable information to improve contracting policies. Setting up your contract management repository starts with an inventory of contract categories, such as activitybased contracts, performance contracts, or framework agreements and the contract applications including maintenance, services, procurement, lease, or any other. It’s important to keep in mind that for any contract you have to collect, register, and maintain a set of basic data, such as:
- Internal information such as contract owner, department, and cost center.
- Supplier information such as company details, address, and contact person.
- Contract status information such as active, in negotiation, for approval, or terminated.
- Date information such as start date, notice, end date, or cancellation options.
- Asset reference, which links the contract to one or multiple assets in your asset repository.
In addition to basic data, the contract category determines the next level of contract data and information. For an activity-based maintenance contract, you have to register information about:
- Individual activities that are contracted.
- Timing and eventual frequency of the activities.
- Associated budget for the contract or fixed cost per activity.
Performance contracting is a completely different concept for outsourcing maintenance, so the performance contract includes different types of data and information, such as:
- Performance definition in terms of availability and quality of assets.
- Detailed service levels, times to start, and times to complete.
- Performance measurement methods, supplier bonus or penalty agreements, and billing parameters.
3 starting points for registering your contracts
It goes without saying, the more complex contracts are, the more complex the registration and contract management process will be. In all cases, you will need to start with the registration of your basic contracts. Once you have your basics in place, the contract management process will help you to evolve to the next level of maintenance contracting and outsourcing. However, when registering any type of contract, keep these three starting points in mind:
- Link contracts to your asset repository, as that will immediately support your reactive and planned maintenance processes and allows you to make more and improved analyses.
- Implement alerts and notifications in your process or contract systems that will immediately help you to timely process contract cancellations or renewals.
- Link all digital or scanned contract documents and files to the contract to ensure upkeep of an accurate, single database for all contract information.
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