InHouse Versus Contracted Services

Maintenance can be handled in-house or through a fixed-price, complete-service contract that can include repair, overhaul, and/or equipment replacement insurance, or through as-needed service by a time-and-materi-als service contract. Complete service contracts are often structured on a flat rate per machine run-hour over the life of the equipment, with inflation adjustments included. These contracts can take much or all of the responsibility of maintenance and repair from a facility, adding a degree of stability and security to the investment, although usually at a cost premium.

Service contracts can cover specified functions or can be completely comprehensive. Complete service contracts inclusive of all maintenance as well as overhaul and/or replacement are readily available from project developers, manufacturers, or local contractors. Service contracts can be designed for complete cradle-to-grave service, ideally allowing a facility to simply generate profits or execute their mission without having to absorb any maintenance responsibilities. These are, however, generally only practical for larger types of equipment or abundant quantities of similar smaller equipment.

In-house maintenance programs can often be handled least expensively if the facility staff has the technical expertise. In-house or as-needed maintenance tends to cost less in the early years of a project, when only routine maintenance is required. After a system has been in operation for several years, maintenance costs are higher due to increased incidence of repair and eventual overhaul and/or replacement requirements.

In general, in-house or as-needed maintenance may cost less over the life of the project than service contracts. This, however, is a higher risk option that could result in higher life-cycle costs. Facilities that have qualified technicians and experience in project maintenance will often opt for complete responsibility, which typically produces higher profitability. In such cases, even greater emphasis should be placed on the development of OM&R manuals and training programs. Facilities seeking to make secure financial returns on the project without added responsibilities will more likely contract for complete service. This also involves a risk analysis. When considering, for example, catastrophic failure of a major system, it may be difficult for a small facility to absorb the potential cost impact, and the incremental cost of insurance for such an event may be relatively high. A large facility with numerous sites might be better suited to absorb this risk. A large manufacturer with a large portfolio to spread the risk over, however, may be even better suited to take on this risk for, of course, a cost premium. A common trade-off between these strategies is for a facility to perform daily operations and routine maintenance, and then contract out for long-term service and overhaul or replacement.

Renewable Energy 101

Renewable Energy 101

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable. The usage of renewable energy sources is very important when considering the sustainability of the existing energy usage of the world. While there is currently an abundance of non-renewable energy sources, such as nuclear fuels, these energy sources are depleting. In addition to being a non-renewable supply, the non-renewable energy sources release emissions into the air, which has an adverse effect on the environment.

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