based on a presentation by Darrel Howell, President, Tartan Canada Corp.
The huge numbers associated with heavy oil and oilsands capital development proposals make big news. Less well known, even within the industry, is that even more will be spent on maintenance and turnaround work on these projects. Maintenance is essential to preserve the original capital investment and keep operating costs from sky-rocketing. However, since maintenance costs may eventually over-shadow the original capital investment, it is necessary to carry out maintenance in as efficient, safe and harmonious a fashion as possible.
There is a need to carefully evaluate the business model that will be used with regard to maintenance. While there are many possibilities, the two main options are for the owner of the assets to directly manage the maintenance function, or for maintenance to be done by a separate organization, contracted for that purpose. While the latter option is increasingly popular, it raises all the issues associated with forming and maintaining any harmonious relationship. Is there compatibility? Do the two partners share a common vision and common values? Can a smooth, efficient, ethical arrangement be made by contracts alone?
One of the innovations developed to address these questions is the rolling term. The owner and the maintenance contractor might enter into a three year contract, but rather than wait until the end of the third year to negotiate a new contract, the partners evaluate the relationship every year. If the relationship is satisfying, one year is added to the contract to preserve its three-year horizon. As this continues, many find that communication between the partners is encouraged, and problem areas can be addressed and rectified within the term of the contract.