Maintenance Contract Model for Complex Asset/Equipment

Abstract

Maintenance contracts received significant attentions in the past 15 to 20 years as it has huge potential to reduce the upfront investments in maintenance infrastructure, specialized maintenance facilities, and risks to the owners through expert services provided by the original equipment manufacturers and/or specialist maintenance providers. To make maintenance contracts more effective, there is a need to develop mathematical models and understand future costs that could be built into the contract price. In this paper, a conceptual model is developed for estimating cost of outsourcing maintenance of complex and critical asset/equipment taking into account both corrective and preventive maintenance as servicing strategies and risks and penalty costs associated with such contract. The developed cost models are analyzed using illustrated numerical examples.