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Brings together the issues of maintenance planning, project management, logistics, contracting, and accounting for shutdowns.

Includes hundreds of shutdown ideas gleaned from experts worldwide.

Contains procedures and strategies that will improve yo
Managing Maintenance Shutdowns and Outages
(1 - Contractors - How to Integrate External Organizations)

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   by Joel Levitt
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Industrial Press Inc.
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Some common contract terms

Addenda - Changes made to the contract after bidding but before bids are received. They might be changes to dates, added drawings, or answers to questions that came up in the pre-bid meetings.

 

Incentive- Penalties - Bonuses are paid for meeting milestones and penalties for missing them. As mentioned, be sure you use the right kind of incentives. You might find yourself paying both an incentive for early completion and also paying for rework of their rushed work. Any of the contract types can include these features

 

Stipulation - the contractor agrees to changes to the contract made after an award but before the contractor starts work.

 

Change order - changes to the scope of work made after the contractor starts work. The change order is a written request from the owner that will have a cost associated with it. If the change is massive, then a supplementary agreement is advisable.

 

Supplementary agreement - is a large change to the original contract (maybe a complete rewrite) and must be signed by both parties.

 

The story of Contracting

It is best to start the contractor story at the beginning. Getting the contracts signed is the last stage of a potentially lengthy process. Procurement of significant amounts of labor, parts and labor, or design and build services, is preceded by significant amounts of preparation. If money is no object it doesn’t have to be this way. In the Manhattan project the major contractors signed on before they even knew what they were bidding on. (Allis-Chalmers signed on to build 5000 compressors before they knew the specifications)!

 

In the PMBOK Guide (in resources section) procurement management is divided into six areas or phases:

 

•Procurement planning - what to buy, when to buy it.

 

•Solicitation management - Preparing the bidder list, getting bids, quotes, proposals, as appropriate

 

•Sourcing - Choosing who to use

 

•Contract administration - Managing the contract after it is signed.

 

•Contract closeout - Completion of the work and settlement of the contract including payments and resolution of all outstanding items

 

Steps of Contracting

In one instance, the cost to prepare the documents and follow through on the process exceeded $250,000 (in addition to the cost of the shutdown!). The organization had to hire experts to listen to the different people in the company and define and formulate the problem scope, determine the depth of the problems, write the specifications, and review the responses. The team also thought through many different scenarios and tried to word the contract to avoid any problems they could think of.

 

Team members also had to attend all the pre-bid meetings. The process took about a year, with people from different disciplines working on it (including a whole team from the owner, but not all full time, of course).

 

Not all contractor procurements are so complicated. Some have only a few steps. If the contractor is also responsible for engineering there might be a few more steps. Some of the steps (after the organization has agreed to the scope of work) might be:

 

  • Preparing the specifications and drawings for the bid, including design if needed (if design is included in the bid then the specifications will show what is to be designed in detail). Define work to be contracted, based on the work orders and job packages. The better the definition at this stage the better the job will go. This definition is another word for scope of work. Make sure the scope also includes special conditions (such as working 200 feet off the ground; special requirements (code welding); built-in non-productive time (for instance, security access into an airport). The contractor should be aware of safety training requirements, PPE, and site rules, as they impact the contract. The contractor then bids on the scope of work usually as expressed by drawings, specifications, or both.

 

The second technique commonly used on outages is to hire a given number of qualified trades-people from a contractor on a time and materials basis. They can be hired with and without supervision. This approach is common where the outage consists of many smaller jobs and the contractors have worked in the facility many times before.

 

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