Operation Contracts

Process Technical Services (PTS) can provide experienced operators, mechanics, technicians, engineers, and supervisors to operate and/or maintain a process facility to service the needs of the owners. Usually, contracts are for a limited time sufficient to train the owner’s employees to perform the required functions. PTS will consider longer-term contracts.

The role of the contractor in operation contracts is to carry out operation and maintenance (with either quantity-based or performance-based contracts). The problem of how to determine and describe the tasks entrusted to the contractor arises differently with each new contract.

Quantity based operation contracts are based on the man-hours and the skill level of the personnel provided by the contractor. The relationship between the owner and the contractor, as well as the distribution of responsibilities, is the same as for a standard contract.

The difficulty is to carefully list all the types of works likely to be performed during the contract and to determine the approximate quantity, so that the contractor may set up an organization which is reasonably well adapted to the tasks to be performed.

With performance based operation contracts the nature of the relationship between the owner and the contractor is very different from what it would be for a standard contract. Even the choice of the work to be performed is left to the initiative of the contractor. For the owner, "it's the result that counts".

The responsibilities transferred to the contractor are therefore substantial. The process entrusted to the contractor may have serious hidden defects that may impact the work which will need to be carried out to keep the process in good working order. The longer the contract period, the more likely hidden defects will be revealed. It will therefore be necessary, for long-term contracts, to pay particular attention to the nature and the quality of the information provided to the contractor.

An operation contract that involves maintenance requires considerable information to be provided the contractor. The quantity and quality of the information varies from one contract to another. However, the following data must be provided:

• construction documents: design memos and calculations, reports on the construction itself, reports, etc.,
  
• documents relating to the equipment: characteristics, dates of purchase, guarantee certificates, etc.,
  
• maintenance log books, process data bases, equipment data bases, management systems, emergency and accident data, historic and forecast spending, etc.,

It may be necessary to add to the existing information by making a detailed expert appraisal of the process and its equipment and structures. It would be advisable for this appraisal to be carried out by an entity quite separate from the owner.

Generally, the contractor responsible for an operation contract will not have been designated at the time the expert appraisal was made. Therefore, it cannot be validated by the contractor without an opportunity to verify the information provided by the owner. It is therefore very important to provide, at the start of the contract, for a period during which the contractor may himself make a detailed inspection of the facilities Operation contracts should, of course, describe precisely what tasks are to be performed. It should be stressed that there is a close relationship between the maintenance and the operation of a process. Therefore, it is generally recommended to have a single contract for both maintenance and operation services rather than two separate contracts.

Like maintenance contracts, operation contracts can be quantity-based (time spent by the contractor's staff, number of personnel involved, etc.) or performance-based.

Performance requirements are, for example, number of outages per month, process utility, process yield, etc.