Service maintenance

General product description

Within the scope of service relations (SR), the Contractor is responsible not for the execution of certain works but for the conformity of serviced equipment to specified requirements for its condition at set time intervals (1 year, 3 years, 5 years or more). Thus, the Contractor independently plans its actions towards the object under service and coordinates them with the Customer when necessary (for example, if the equipment shutdown is required). Regular maintenance works scheduled by the Customer or external bodies are an exception. 
The Contractor accepts emergency failure risks for objects under service, as well as their management. In case of emergency (revealing of defects) at the object under service, the Contractor immediately starts its elimination regardless of causes. However, if the failure occurred due to the Customer's fault, the Customer should reimburse the Contractor's losses (if a different risk management system is not specified by the service contract).
The estimation of the Contractor's activity is made on the basis of assurance/non-assurance of required characteristics for the object under service during the effective contract period (and after its expiration within the warranty period). 
Change-over to service maintenance consequently changes the subject of payment. The Contractor receives guaranteed license fee for maintaining the object of service in operational state.

Benefits for the Client:
The advantages of service maintenance, in comparison with traditional repairs, are mainly connected with the nature of service itself. According to the contract, the Contractor receives a fixed amount to be spent on service maintenance of objects. Thus, the Contractor is interested in decreasing the quantity of disturbances (each new operation reduces the Contractor's margin) and in improving the quality of works (the Contractor pays for any defect that occurs due to poor service quality). The Customer is also interested in reducing the number of repairs and in service quality improvement.

The basic advantages of service are:
1. There is no need to diverse significant resources (financial, human) to control the Contractor. The Contractor acts solely for the benefit of the Client and regulates its own actions.

2. The Client can concentrate the resources, which were primarily meant to be spent to control the contractors' activity, on the solution of more important problems such as management of the assets life cycle. Thus, the Client acquires a new scope of functions and expands its intellectual capitalization.
3. Reliability of equipment grows, and the number of serious defects goes down.

4. The Contractor undertakes most of the risks connected with the object under service - not only by covering the ensuing damage but also by preventive measures.
5. In case of long-term service period, the Client gets an opportunity to attract the Contractor's investment resources to improve the production process (to increase equipment productivity and to reduce operational expenses).
6. The Client gets rid of problems connected with the presence of non-core business (that is, service maintenance).
7. The value chain is beginning to be formed for the Client's end-users. This chain may gradually involve other participants: raw materials and material suppliers, equipment manufacturers, etc. The competitive ability of this chain is much higher than that of a separately taken organization.