Modelling costs in maintenance networks

Abstract

Purpose

The purpose of this paper is to create a cost model at the general equipment level for industrial maintenance services.

Design/methodology/approach

The study is divided into two main sections. In the first phase the idea is to create a framework for a cost model with a literature review. The second, empirical part of the study is based on costing information from interviews and information given by network companies: a pulp mill, a maintenance company and an equipment provider. The maintenance of three different equipment processes is examined in the network through a case study, to get more specific information from real world situations to develop the model.

Findings

The findings concern the cost items that should be considered in the model, the structure of the model, and how the general cost model is constructed. During the research the model has been extended, and new cost categories included.

Practical implications

The cost model can be used in various performance measurement and decision‐making situations, such as maintenance service pricing, contract negotiations, outsourcing decisions, and life cycle cost management.

Originality/value

The cost model differs from traditional cost models. Earlier models have focused on the perspective of either the service provider or the customer, but not on both perspectives at the same time. However, in order to achieve a win‐win situation in a business network, open books practice is expected from each member of the network.

Citation

Sinkkonen, T., Marttonen, S., Tynninen, L. and Kärri, T. (2013), "Modelling costs in maintenance networks", Journal of Quality in Maintenance Engineering, Vol. 19 No. 3, pp. 330-344. https://doi.org/10.1108/JQME-05-2013-0022