Contract forms part 1
What is an installation management contract?

March 10, 2023

There are many municipalities that struggle with the question: What type of contract is best for me to conclude with a contractor for the management and maintenance of the assets of the public space? Commonly used contract forms are a ‘Best-efforts contract’ or a ‘Work-order management contract’.

An important drawback of these types of contract is that you do not use the contractor’s knowledge and experience to determine the most optimal maintenance. The contractor’s focus is solely on efficient and timely execution of the maintenance. With an Installation management contract, you can let the contractor help think about how to improve the maintenance.

In this series of articles we explain how this works and what role the maintenance concept plays in it within our software tool Clarify.

What is an installation management contract?

In management and maintenance we have 3 levels:

  • Strategic (Business plan, Strategy & Policy) – directing the organisation and activities
  • Tactical (Multi-year plan, Cost-effectiveness and Adjustment) – organising the organisation and activities
  • Operational (Performance and Resources) – performing/executing the organisation and activities

The three levels are directly connected to each other (image 1).

Image 1

The contracts that municipalities conclude with the maintenance parties cover one or two of these levels:

  • The Best-efforts contracts and Work-order management contracts are limited to the Operational level.
  • An Installation management contract differs from these by also covering the Tactical level.

An Installation management contract addresses 2 levels:

  • Tactical level – The design of the management vision, in which the municipality remains fully responsible at the strategic level (including determining policy, objectives, performance and the risk acceptance and costs).
  • Operational level – Here the contractor takes responsibility for carrying out the preventive and corrective maintenance.

The critical success factor of an Installation management contract lies in the Tactical management (image 2).

Image 2

In Tactical management, municipality and contractor work closely together to keep improving the maintenance. The contractor takes the initiative for this, as if the installations were their own property. Because the maintenance is largely set up in a risk-driven way, we substantiate all proposed improvements in a simple way from the triangle of Performance, risks and costs (image 3).

Image 3

In the next part of this series we will go into the management vision that the installation management contract addresses.

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