outsourced maintenance works contract management under …... · technical kpi’s on sliding scale...

Information Class: Proprietary

Outsourced Maintenance Works Contract Management under NEC TSC model

NEC Asia-Pacific Users’ Group conference

10 November 2015

Chris Cheung


Contract Management under NEC TSC model

1. Business Needs & Identification

2. Preparation

– Setting Up Contracts

– Choosing NEC Partners

3. Implementation

– Governance & People

– Administration

– Managing Delivery

4. Review and Learning

Slide 2




2. Preparation



3. Implementation


– Administration



Slide 3


1. Business Needs

Business Needs in GBG

– Safety performance

– Operational Excellence

– Cost management

Challenges in Power Station

– Retirement trend & unstable

contractor workforces

– Aging plant & equipment

– Managing numerous maintenance work from planning to execution

– Contractor bearing all risks in maintenance tasks

Slide 4


1. Business Needs: Vision

Slide 5

Mix of CLP and different

contractors in maintenance, high

worker turnover complicating

safety and quality control

Traditional

Less Critical Systems maintenance taken up by

Partnering Contractors; CLP resources on

managing and maintaining critical systems,

alongside with asset management and engineering

Partnering

Information Class: Proprietary Slide 6

2007

2008

2010

Learnt from UK power stations about benefits of NEC partnering contract

GBG Senior Management approved the pilot run of NEC partnering contract in CLP

Two pilot contracts: • Integrated Facility Management • Coal Mill Maintenance

1. Business Needs: Identification

Jan

FebM

arApr

May

Jun

Jul

AugSep

OctNov

Dec

HK

$

Planned Year To Date Actual


2007

2008

2010

Learnt from UK power stations about benefits of partnering contract

GBG Senior Management approved the pilot run of partnering contract in CLP

Two pilot contracts: • Integrated Facility

Management • Coal Mill Maintenance

2012

Wider application after successful pilot run

1. Business Needs: Identification




2. Preparation



3. Implementation


– Administration



Slide 8


Long Term Contract: 5 years

Partnering in nature:

– NEC : Collaboration tool for contractors as if they are one of CLP’s sections

– Ownership & Flexibility: 1 PO for whole year’s services

– Annual Budget but not Lump-sum, i.e. Target Cost for the whole year’s services

– Risk sharing, i.e. pain or gain share within the service period

Performance driven:

– Clearly define the Safety and Technical Key Performance Indicators (KPI)

– Closely monitor cost expenditure vs Target Cost by both parties

– Pain/Gain share linked to Safety and Technical KPI’s on sliding scale

Slide 9

2. Preparation: Setting Up Contracts


2. Preparation: Setting Up Contracts

Turbine and Generator Auxiliaries

Coal Plant and FGD Auxiliaries

Balance of Plant (BOP) BP & CPA

Electrical and Instrumentation

Safe Access and Associated Services

Specialized Ancillary Services

Balance of Plant (BOP) CPB

Boiler and HRSG Auxiliaries


Expression of Interest

Credentials Presentation

Relationship Workshop

Tendering

Pre-qualification process

Assess contractor’s

company and financial

background

Assess contractor’s safety and technical

capabilities

Evaluate contractor’s partnering

intent

Evaluate contractor’s

proposal on safety, technical and

economic aspects

11

2. Preparation: Choosing NEC Partners


2. Preparation: Choosing NEC Partners

Contractor Partners Responsible System

Kum Shing E&M Ltd. Boiler and Heat Recovery Steam Generator Auxiliaries

Wai Luen Development Ltd. Turbine and Generator Auxiliaries

Hargreaves Industrial Services (HK) Ltd. Coal Plant and Flue Gas Desulphurization Systems Auxiliaries

M Y Cheng & Co. (Engineering) Ltd. Balance of Plant

Control Automation Ltd. Electrical and Instrumentation

Cape Hong Kong Fuji Co. Ltd. Safe Access and Associated Services

Fugro Technical Services Ltd. Specialized Ancillary Services

CLP Engineering Ltd. Balance of Plant

On 19 November 2013




2. Preparation



3. Implementation


– Administration



Slide 13


GBG NEC Management Team provides strategic direction and leadership

Partnering CRO (PCRO) collaborates with NEC Partner to set performance targets, monitor performance achievements, and drive for continuous improvement.

Departmental CRO (DCRO) is the key departmental representative, who consolidates the departmental needs and monitors the departmental performance. DCRO also supports and deputizes PCRO’s duties

RO monitors the NEC Partner’s performance toward safety, technical, cost and quality for his/her task .

Frame

wo

rk & P

roce

du

re O

wn

er : G

ED / C

&P

To

deve

lop

framew

ork an

d p

rocess d

etails for co

nsisten

ce and

con

tinu

ou

s imp

rovem

ent

3. Implementation: Governance & People


Champion

Partnering CRO &

Departmental CROs

ROs

Senior Management

Resident Representative

Work Team: - Planner - Safety Officer - Engineer

Oversight of NEC contract Business relationship management Partnering development & cultural change

Technical Best Practices

Best Practices Sharing & Development Platforms

SHEQD

GA

CPPS

GED

Leading Party

Safety Management

Productivity

Innovation & Quality

Business Practices

BPPS

Lead

ersh

ip

Leve

l Ex

ecu

tio

n

Leve

l M

anag

eria

l Le

vel

Safety Practices Technical skill & knowledge exchange Quality improvement Cost management

Safety culture development Technology advancement Productivity improvement Cost improvement Innovation culture development

CLP NEC Partner

3. Implementation: Governance & People


Generation Partnering Contract System (GPCS): – Newly developed IT system for NEC

– “Open Book” principle: captures all cost elements under the contract

– Communicates with other IT systems, such as work planning (EWMS), purchase-to-pay systems (EFMS) and contractor’s entry system (TES)

Internal Procedures: – Outline the operational process for key

activities under NEC contract, e.g. Target Cost setting, Compensation Event, Pain/gain sharing, etc.

– Align with the requirements stipulated in CLP’s policies and procedures, such as CMAM and POI

– Define the roles and responsibilities of key stakeholders , including GBG NEC Mgt Team, Champion, PCRO, DCRO, etc.

Slide 16

Key Risk Preventive Control T Control to be Tested

Automated Control Detective Control

Contractor dCRO / RO CROBH of GED / Commercial

Remarks

Appendix 4: Payment Verification (1)

Email to dCROand CRO for Payment Application(1) Complete

data input in IT System

(2) Relevant supporting documents stored in the Shared Folder*

(1) dCRO follows up with relevant teams (i.e. RO) in the dCRO’sdepartment for task review (5% sampling check)

(2) dCRO/RO review & accept/reject each task (i.e. WO)

Clarify with the Contractor for any query before acceptance

Respond promptly to the query and Update in the Shared Folder

CRO reviews and accepts/rejects the following items (5% sampling check): :(1) Resident Team (2) Workforce record(3) Inventory record

Roles Responsibilities

dCRO / RO

Task review - Manpower requirement- Use of special equipment- Use of Material / subcontractor

CRO - Resident Team attendance record- Workforce timesheet vs TES record- Sampling check on the Inventory record

Legends*: refer to the format of Shared Folder

R7 C7bC7a C7c

R8 C8a C8c

If task and items are accepted and endorsed in the IT system, dCRO informs CRO

4

R9 C9a

C8b

3. Implementation: Administration


Performance Payment

Relationship Risk

Slide 17

3. Implementation: Managing Delivery

• Keep “Defined Cost” component in the IT System as an “Open Book” approach.

• RO to review the work reasonableness

• PCRO to keep the overall process control

• Conduct quarterly survey to measure Partnering Behavior attributes such as mutual objective, problem solving, open & transparency, continuous improvement and innovation

• Measure the performances and review monthly with PCRO and quarterly with Mgt Team

• Escalate to Champion and Mgt Team if adverse performance

• Compensation Event (CE) as a NEC tools to cater any risk

• Provide channel, i.e. PCRO and Champion for any early warning

• Contract Audit to provide further verification




2. Preparation



3. Implementation


– Administration



Slide 18


* Reference to “Good practice contract management framework” (2008) by Office of Government Commerce (OGC) and National Audit Office (NAO)


Governance

Structure

People

Administration Delivery

Management

Strategy & Development

Slide 19

• Leadership from Senior Management Team to implement change and development

• Champion by Department Head to manage the partner’s performance

• Right CRO, in term of authority, competency and attribute

• Right partners, in term of capability and partnering behavior

• Cultural and operational change for all the users

• Need for training and development

• New procedures and New IT system require more communication, training and dedicated person to walk through for both CLP staff and NEC Partners, e.g. payment process, CE, etc.

• Keep communication with key stakeholders to review and adopt the best practices

• Supplier development to maintain the competitiveness in the market

• Contractor development to uplift the competency of the incumbent to take up more systems

• Overall strategy to review the direction in the next cycle, e.g. longer term

• Clear, understandable and agreed KPI to drive the performance and to measure the effectiveness.

• Payment process to strike the balance between control and trust under open book arrangement

• Need effort to bridge the cultural gap and change the mindset

• Close communication and involvement at all levels, e.g. PCRO, C&P, Champion, Director, to mitigate any potential risk

Contract Management Framework*


“Now this is not the end. It is not even the beginning of the end.

But it is, perhaps, the end of the beginning.”

Winston Churchill

outsourced maintenance works contract management under …... · technical kpi’s on sliding scale...

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