Property owners might have different strategies when it comes to outsourcing their facilities and assets maintenance contracts as well as their real asset refurbishment and re-capitalization contracts. Some property owners might have their own established business for managing maintenance work orders whether they were reactive or preventive for which their maintenance contracts will be limited to spare parts supply contracts. Other property owners might outsource some of the maintenance contracts that require the equipment vendor to maintain such as lifts, generators, and chillers among others. Finally, some property owners might outsource the complete facilities and equipment maintenance contracts to a specialized company. Similar strategies might also apply to real asset refurbishment and re-capitalization projects. For all those strategies, the property owner needs to have an integrated process for managing those contracts across their real estate and equipment assets portfolio.
Using a Project Management Information System (PMIS) like PMWeb which also has an asset management module to manage the different real estate and equipment assets maintenance processes, the property owner can use the cost and contract management-related modules to achieve the desired single version of the truth when it comes to monitoring, evaluating and reporting facilities and assets maintenance contracts. Achieving this objective far exceeds the requirement of simply capturing the details of those maintenance contracts and invoices issued and paid for progressed and completed works.
PMWeb PMIS will be used to implement all processes needed to capture the trust-worthy real-time auditable and traceable contract-related data as well as provide the single version of the truth when it comes to monitoring, evaluating, and reporting the performance status of facilities and assets maintenance contracts.
To have a comprehensive and integrated maintenance contract management system, the property owner needs first to define the Cost Breakdown Structure (CBS) that will be used to consolidate all maintenance contracts’ financial transactions as well as align those transactions with the property owner’s ERP application. Next, the property owner needs to come up with the estimated cost for all maintenance-related activities for each real estate and equipment they want to maintain. The cost estimate will become the basis for coming up with the maintenance budget for each location which when approved will become the baseline budget. The approved budget will also include a projection of the planned maintenance spending. The approved baseline budget will be maintained by using budget requests to manage all budget transfers and adjustments. The approved maintenance cost estimate will also become the basis for identifying the maintenance contracts that the property owner will use to invite bidders to submit their best bud proposals online to evaluate and select the successful bidder.
Only then the property owner will be ready to award the maintenance contracts which could be specific for a single location or master contract that covers multiple locations. For the awarded contracts, the property owner needs to manage all potential change orders and change orders that could result from either new scope of work or to cover additional works for the original scope of work to which the maintenance contractor is entitled to. In addition, interim invoices and payments for completed works will be part of the integrated contract management process. PMWeb also allows capturing actual costs from other records such as miscellaneous invoices and timesheets for the property owner’s team. All this cost and financial information will be automatically captured in the general ledger to enable having a consolidated cost worksheet report to provide the needed single version of the truth for facilities and equipment assets maintenance contracts.
Establishing the Cost Breakdown Structure
Using the PMWeb Cost Account module, the property owner needs to establish the cost breakdown structure (CBS) that will become the basis for consolidating all financial transactions associated with the maintenance contracts management. In addition, the cost breakdown structure (CBS) needs to be aligned with the property owner’s ERP application used to manage all financial operations across all business units of the property owner. PMWeb allows designing a cost breakdown structure that has up to 16 cost levels or groups.
Developing the Cost Estimate
Using PMWeb Cost Estimate Module, the property owner needs to capture the costs associated with all real estate and equipment assets maintenance activities. PMWeb Work Order module allows the development of the cost estimate for all preventive maintenance work orders using the maintenance tab for which those need to be added to the cost estimate along with the cost estimate with other maintenance activities. PMWeb allows creating the cost estimate by adding all cost items from the PMWeb cost database and resources, labor and non-labor, from the PMWeb resources repository. In addition, the cost estimate can be added from predefined work assemblies as well as imported from MS Excel where usually the property owner assets management team would like to create. The approved cost estimate will be used to generate the project budget as well as the procurement packages for the outsourced maintenance contracts.
Developing and Maintaining the Project Baseline Budget
The project budget will include all maintenance-related cost items and their planned spending. For each cost item, PMWeb allows capturing the amount in any desired currency for which the PMWeb Currency module will be used to set the exchange rates which could be static or dynamic. In addition, the budget spending projection for each budget line item will be defined by providing the start and end date of each item and the amount to be spent each month which can be added manually or by selecting one of the projection curves which include bell-shaped, linear, front-loaded and back-loaded. A workflow can be assigned to the budget to formalize the review and approval process to establish the project baseline budget.
All adjustments and transfers to the approved project baseline budget will be carried out using the PMWeb Budget Request module. This module allows capturing all adjustments and transfers within the same location or project or across multiple locations or projects depending on how PMWeb is set. A workflow will be assigned to the budget request to formalize the review and approval process of all changes to the approved project baseline budget.
Maintenance Contracts Procurement
The approved cost estimate will be also used to create the procurement packages for all outsourced maintenance contracts. Using the PMWeb Procurement module, each procurement package will include the scope of work to be outsourced, line items to be priced by the invited bidders, technical requirements that each bidder needs to respond to, and for which will be used by the property owner for the bids technical evaluation and the name of bidders to be invited to bid. The details of those bidders should be already added in the PMWeb Companies module. The property owner can also use the PMWeb Prequalification module to request all maintenance contractors submit their prequalification documents online.
Maintenance Contracts Online Bidding
PMWeb Online Bidding module will be used to invite qualified maintenance contractors to bid on the scope of work to be outsourced. This will enable the property owner to compare the received bids with the approved cost estimate to identify any discrepancies in what is estimated and decide on which contractor to award the outsourced scope of work.
Awarding Real Estate and Equipment Assets Maintenance Contracts
For each location which could include multiple real estate and equipment assets to be maintained, the property can create an unlimited number of maintenance contracts using the PMWeb Commitments module. For each commitment contract, the property owner can detail all terms and conditions as well as the contract line items which could be by what was estimated.
In addition, the PMWeb Master Commitments module can be used when the property owner has a master agreement with a maintenance contractor or assets spare part supplier which will be the basis for having the contracts for all locations. The master agreement will aggregate and summarize all commitment contracts made with the contractor or supplier.
Potential Change Orders
PMWeb Potential Change Order module provides the property owner facility and asset management team with a proactive process to identify any changes that could impact the awarded maintenance contracts. The property owner can decide if submitting potential change orders will be limited to their resources or if maintenance contractors will be also permitted to submit those change orders. If those potential changes have merit, then a formal change order will be generated otherwise it will be rejected.
PMWeb Commitment Change Order module allows the property owner to capture all approved and pending change orders that could impact the awarded maintenance contracts, both from the awarded contract value and planned completion date. A workflow can be assigned to formalize the review and approval process of all change orders. The workflow could include conditions to map the different approval authority levels when it comes to approving change orders. In addition, the attachment tab will be used to add all supportive documents to the change order. Those documents will be uploaded and stored on the PMWeb document management repository. In addition, links to relevant PMWeb records and imported MS Outlook emails are also possible.
Interim Progress Invoices
PMWeb Progress Invoices module will be used to capture the details of all interim progress invoices submitted by the maintenance contractors, spare parts suppliers, and other contractors. The progress invoices allow either adding the percent complete of work done for lump sum contracts or the quantities of supplied spare parts, resources, and other items for unit price contracts. The progress invoice values will be carried from the previous progress period to the follow-on progress period. A workflow can be assigned to formalize the review and approval process of all progress invoices.
PMWeb Miscellaneous Invoices module will be used to capture all actual costs incurred that are not part of the awarded commitments contracts. Those could be for example permits, insurance, and equipment rental among others. In addition, Miscellaneous Invoices are used to capture costs imported from third-party applications like the ERP application. A workflow can be assigned to the miscellaneous progress invoices to formalize the review and approval process of all change orders. The workflow could include conditions to map the different approval authority levels when it comes to approving invoices.
For property owner labor and non-labor resources deployed to perform the real estate and equipment assets maintenance activities, the PMWeb Timesheet module will be used to capture the actual hours spent every week for each resource. The timesheet can be aligned with each work order, that is to say, for each work the reported resources hours will be specific to the resources consumed on performing this specific work order. There will be a single timesheet for all resources spent on the work order during the specific week. PMWeb Timesheet module allows having different resource category charges for normal working hours, overtime hours, weekend hours, and holiday hours among others. Of course, the same concept can be applied to all other maintenance-related tasks performed by the property owner’s resources.
The data captured from the different cost and financial processes detailed above will be automatically stored in a single repository known as PMWeb Cost Ledger. This data provides a real-time single version of the truth on all facilities and assets maintenance contracts. PMWeb Cost Worksheet enables the property owner to create a consolidated spreadsheet that captures all these contract data.
PMWeb Define Worksheet module allows the property owner facility and asset management team to design the required cost worksheet layout. PMWeb allows having an unlimited number of cost worksheets where the property owner can select the fields to be displayed. The displayed fields can be also based on formulas that calculate their values from the captured contracts data.
Single Version of the Truth When Monitoring, Evaluating, and Reporting Facilities and Assets Maintenance Contracts Performance Status
Using PMWeb Business Intelligence Report Writer or third-party business intelligence applications like MS Power BI, Qlik, and Tableau among others, the property owner can design the desired form and format to monitor, evaluate and report on the performance status of awarded facilities and assets maintenance contracts. For example, the property owner might need to have an integrated report that consolidates the approved baseline and revised budget allocates for the maintenance contracts, original, revised, and projected at completion awarded maintenance contracts, actual cost invoiced to date, and actual payments made to date. What is important to understand is that as long as real-time trust-worthy granular data is available, a single version of the maintenance contract’s performance status can be produced in any desired form and format to meet the property owner’s reporting needs.
About the Author
Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with more than 35-year service record providing project management and controls services to over 100 projects with a total value of over US $5 Billion. Those projects included Commercial, Residential, Education, and Healthcare Buildings and Infrastructure, Entertainment and Shopping Malls, Oil and Gas Plants and Refineries, Telecommunication, and Information Technology projects. He is thoroughly experienced in complete project management including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training, and business development.
Bassam is a frequent speaker on topics relating to Project Management, Strategic Project Management, and Project Management Personal Skills. Over the past 35 years, he has lectured at more than 350 events and courses at different locations in the Middle East, North Africa, Europe, and South America. He has written more than 250 articles on project management and information systems featured in international and regional magazines and newspapers. He is a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP), an Earned Value Professional (EVP) from the American Association of Cost Engineers (AACE), and a Green Project Management (GPM).
Bassam holds a Master’s in Engineering Administration (Construction Management) with Faculty Commendation, from George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – from Kuwait University, Kuwait, and has attended many executive management programs at Harvard Business School, Boston, USA, and London Business School, London, UK.