Maintenance Contracts: Review, Analyze, Optimize

Methodology

An optimal maintenance strategy must be aligned with a company’s strategic business objectives. Cratos’ best in class four step approach analyzes an asset’s term-maintenance contract and identifies misalignments between the intended business strategy and the current maintenance program. Optimization cannot occur until the maintenance program and its underlying term-maintenance contract are properly aligned with the assets strategic business objectives.

Benefits

  • Recasting parts demand to future operational demands reduce costs in >40% of Maintenance Contracts
  • Aligning current operation, future service demand and contract fees consistently improves Cash flow/NPV
  • Taking advantage of current competitive market pricing creates millions in value
  • Stranded inventory can be monetized and re-applied to capital project improvements
  • Contract flexibility can be obtained, allowing Owner to capture/benefit from market opportunities & changes
  • Improved optimization based on fleet size and operating profile
  • Understanding of potential capital requirements at contract end
  • Reduce risk of contract dispute due to unclear title language/understanding

Target—Where do you want to be?

Step 1

Cratos’ process begins by interviewing key stakeholders in your organization and, then, outlining the strategic business objectives for a given asset. Our unique blend of business and technical expertise provides your working team an effective moderator approach to define the optimal maintenance program that delivers on this strategy. Alignment is a critical requirement. A company’s strategic business objective too often get lost in translation as the strategy cascades down an organization.

Current Situation —Where are you now?

Step 2

Begins by recognizing and grasping your current situation. This involves reviewing the maintenance contract(s) and baseline of unit condition, inventory on the shelf and in operation, outage and repair reports, TILs, upgrades, and configuration. Through this analysis, a baseline is created.

Analyze —Identify the Gaps

Step 3

Applying Cratos’ contract analysis process, we methodically identify gaps between business strategy and maintenance. This eliminates inefficient or ineffective structures. Through this detailed FMEA approach, we apply our process to identify gaps where value can be extracted. Value is clearly identified in categories of reduced technical or commercial risk, stranded inventory or inventory gaps, misalignment between contract costs and operating revenue, market vs. contract price, contractor compliance, and a multitude of other areas.

Optimize—Define and Extract Value

Step 4

The final step is a detailed review of the diagnosis and recommendations. We work with your technical and legal/risk team to focus and target efforts to address agreed upon key items, extracting the hidden value and improving the owner’s return on investment. Cratos’ proprietary approach provides the roadmap to achieve true optimization…. Alignment between the maintenance program and your asset business strategy.