Researcher: Peter Uijttewaal
Project Duration: April 2021 – October 2021
Project Partner: Strukton
Research Summary:
Asset owners are increasingly shifting from traditional maintenance contracts to performance-based maintenance contracts, because of their benefits compared to the traditional contracts. This shift in contract type also means a shift in responsibility distribution. In the traditional contract, the asset owner is responsible for the asset management and the contractor only executes the maintenance, whereas in a performance-based contract a greater portion of the asset management is shifted to the contractor. Therefore, in performance-based contracts, the contractor should find the balance between the performance of the assets, the cost of the maintenance, and the risks that affect the previous two. Since cost overruns are present, it turns out that contractors often find it difficult to establish this balance. This research investigates the cost overruns present at a Dutch railway maintenance contractor, as the contractor struggles in finding the balance between performance, costs, and risks. Investigating the cost overruns should help the contractor to be able to balance performances, costs, and risks better. Document analyses, (in-depth) interviews, and an expert panel were utilised for investigating the cost items with a cost overrun, identifying the causes for the cost overruns, and establishing risk responses. The research showed eight different cost items that were classified as riskiest. Furthermore, several causes for the cost overruns were established, divided into nine categories. These categories entailed: mistake client; changed method client; mistake tender; changed method contractor; external factor; contractual condition; condition of assets; mistake field; efficiency in the field. The research provided three different ways to respond to risks of cost overruns: risk transfer, risk mitigation, and risk retention. It can be concluded that the PBM-contract used for the Dutch railway maintenance does not express its potential benefits, which is not beneficial for the contractor, client, and the assets.