Dissertation. How to implement Asset Management Control in a non-profit maintenance organization, on a cost effective manner

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Dissertation

“How to implement Asset Management Control

in a non-profit maintenance organization,

on a cost effective manner”

Master of Science

in

Asset Management Control

International Masters School

Student: H.W.G. Lobregt BSc Supervisor: Dr J. Stavenuiter

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Acknowledgements

This report is written in order to fulfill the requirements to obtain the Degree of Master of Science in Asset Management Control on the Hogeschool Zeeland. First of all I would like to thank my wife Emmie and my kids Mitchel and Daley for being patient during this dissertation phase and supporting me with my struggle.

Furthermore I would like to thank Dr John Stavenuiter for giving me the

opportunity to follow this master course and supporting me with his advice and for the cooperation during this dissertation phase. His criticism and experience force me to keep on track.

I also have to thank my colleagues Dave Sinay, for being a sounding board and for giving support in theoretical assessment during this

course/dissertation and Rob Oudelaar, Wim Nijenhuis, Ron Bromlewe, Albert Stam, Hidde Hylarides, Henk Broekhuizen, Martin Wouters, Wim Polle, Ruud Wilner, Reinoud van Kralingen, Ben Kersting for filling in the questionnaire. I hope this dissertation will contribute to the Asset Management Control process within the Royal Netherlands Naval Maintenance and Service Establishment

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Executive summary

The goal of the research is to find out how to implement Asset Management Control in a non-profit maintenance organization, in a cost effective manner. Sub-questions were:

Is there a way available yet to implement performance driven maintenance and system management approach (Asset Management Control) within a Defense Maintenance Organization?

The capital technical system forms the core feature of Asset Management Control (AMC). To achieve an effective capital asset, the activities in relation to design, production and maintenance have to be considered. Asset

Management Control aims to specify, organize, plan, direct and control these activities to achieve the most cost-effective solution. AMC is practically

supported by AMICO which is a software-tool that was specially developed to support the AMC theory. AMICO transparently combines performances and costs of actors and installations in view of the system‟s life cycle to provide management information on installation and system level.

For one class of Navy ships (M-Frigate class) a case is conducted to discover any improvements in management and organization to elucidate the working of AMC to the defense organization. This case consisted of setting up and testing a Life Cycle Management model for a period of two years. This case resulted in locating performance killers, cost drivers and figures of system and cost-effectiveness.

To find out whether AMC could contribute to the profit of Royal Netherlands Naval Maintenance and Service Establishment, the level up to which the Royal Netherlands Naval Maintenance and Service Establishment was already managing their maintenance had to be investigated.

This case is based on the ten improvement factors on which AMC was

developed. It appeared that AMC had room for improvement. It was estimated that Royal Netherlands Naval Maintenance and Service Establishment could save on specific parts of the operational costs by management according to AMC in the Design & Acquisition phase.

An analysis with the PRIMA program lists all strengths, weaknesses,

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participants. This is considered a success factor that should be monitored very closely by the organization. AMC can only become a success when all

involved actors are motivated and educated.

The implementation of AMC is considered to be beneficial to the Royal

Netherlands Naval Maintenance and Service Establishment when the success factors are closely monitored. AMC will provide insight in costs and

performance over the life cycle of a ship and is therefore considered to be a significant and beneficial tool for management.

The main conclusion and recommendation of this dissertation are that a maintenance approach should be implemented utilizing the following phases:

prepare an appropriate business strategy with directives; prepare and plan the implementation;

improve of the data systems and analyses

implement and continuously improve the maintenance organization by: o education and motivation of the employees.

A very interesting outcome of this dissertation is that in order to achieve the best results, Royal Netherlands Naval Maintenance and Service

Establishment organization need to put some effort into basic needs such as better definition of responsibilities within the Royal Netherlands Naval

Maintenance and Service Establishment, getting consensus about maintenance responsibility throughout the whole Defense Materiel Organization, and reinvestigate the structure and role of the changed management organization, which are the corner stone‟s of motivation according to General Berlijn [Berlijn, Leiderschap in de Krijgsmacht, 2008].

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5.3.1 Analysis ... 83 5.3.1.1System Plan ... 5.3.1.2 Life Cycle Management model ... 84 5.3.1.3 Contract management... 5.3.1.4 Service Level agreemen ... 85 5.3.1.5 Organizational Plan ... 5.3.1.6 Actor Definition Model ... 5.3.1.7 Resource management ... 86 5.3.1.8 Material Logistics Organization ... 5.3.1.9 Activity Plan ... 5.3.1.10Team Building ... 87 5.3.1.11Team Management ... 5.3.1.12Team Work ... 5.3.1.13 Control Plan ... 88 5.3.1.14 System Information Portal ... 5.3.1.15 Management Control... 89 5.3.1.16 System Cost Effectiveness ... 5.4 Summary of PRIMA Matrix ... 5.4.1 Points of Improvement ... 90 5.4.2 Procedures and directives ... 91 5.5 Summary ...

6. Conclusions and Recommendations ... 92

6.1 General ... 6.2 Organization Structure ... 6.3 Management Control ... 6.4 Case and contract ... 6.4.1 Case ... 6.4.2 Service Level Agreement ... 94

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6.6 Follow up activities ... 6.7 Recommendations ... 94

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Appendix 1. Resources Appendix 2. References

Appendix 3. Description of the Process Definition Matrix application Appendix 4. Relation to previous work

Appendix 5. Relation to the Program of the course Appendix 6. List of abbreviations and concepts Appendix 7. Questionnaire for PRIMA

Appendix 8. Questionnaire results for PRIMA Appendix 9. LCM model M-Frigate

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Table of Figures

Figure 1 The cost effectiveness diagram of Juran [1999] ... 14

Figure 2 The Logistic Process Cycle ... 15

Figure 1.1 The Netherlands Defence Materiel Organisation ... 18

Figure 1.2 Weapon Systems & Establishments ... 19

Figure 1.3 Sea System Branch ... 20

Figure 1.4The Royal Netherlands Naval Maintenance Establishment ... 21

Figure 2.1 Through Life Management ... 25

Figure 2.2 Actor relations during the CADMID stages ... 29

Figure 2.3 Support Options Matrix ... 30

Figure 2.5 Total Life Cycle Systems Management ... 34

Figure 2.6 The PBL Maturity Framework ... 38

Figure 2.7 PBL Implementation model ... 39

Figure.3.3.1 Layout of the study ... 49

Figure 4.1.1 Reduce cost ... 54

Figure 4.1.2 Improve Performance ... 55

Figure 4.1.3 Consider the combined cost ... 56

Figure 4.2.2.1 Performance Based Service Contract input ... 58

Figure 4.3.1 Integrated Maintenance case ... 60

Figure 4.3.8.1. System Portal M-Frigat ... 65

Figure 4.4.1 Analyze and control tool ... 67

Figure 4.5.1.1 Function Diagram from AMICO model M-Frigate ... 68

Figure 4.5.2.1 Installation Diagram from AMICO model M-Frigate ... 69

Figure 4.5.3.1 Activity Diagram from AMICO model M-Frigate ... 70

Figure 4.5.4.1 Cost drivers and Performance Killers ... 71

Figure 4.6.4.1 Development in the daily work of the Installation Manager .... 74

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Table list

Table 2.1 Through Life Management Successes ... 32

Table 2.2.1.1 Performance-Based Logistics Programs review ... .41

Table 5.4.1.1 Summarized results of improvements... 90

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Introduction

Asset Management Control:

a new concept for capital assets;

a management approach to manage and control, over the life cycle, all processes (specify, design, produce, maintain and dispose) needed to achieve a capital asset capable to meet the operational need in the most effective way for the customer/user.

But can it also give answers on the following questions: How to get the best value for money?

How to control the total cost of Ownership?

Which system cost effectiveness is really needed? How to improve performances and/or reduce cost?

Is there a way yet to implement performance driven maintenance and a system management approach within a Defense Maintenance

Organization yet?

These questions [Kirkels, 2004] have been in every one‟s mind, but finding the answers for large technical systems is not simple. The purchase price of an M- Frigate is known, but what is the price of a capital asset, e.g. during its Life Cycle.

The new concept of Asset Management Control provides an answer to these questions.

Organizations like the NL Defense Materiel Organisation feel the need to show the financial pros and cons of different investments. A number of models are available to establish the effectiveness of expenditure; the most popular is the model of Joseph M. Juran. His model divides system effectiveness in

availability, capability and dependability and costs has been specified by type.

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The AMC system approach aims to stimulate all logistic actors to fulfill their part in the most cost-effective way by showing the intended result and the impact of their contribution to the whole system. The Logistic Process Cycle is used to establish a relationship between costs and system effectiveness. The material logistic process has subdivided into eight process steps. Each step has to be in balance with the preceding and subsequent steps in the cycle, all related to the Integrated logistic Support/Life Cycle Management (ILS/LCM) analysis.

Figure 2: The Logistic Process Cycle [Stavenuiter, 2004]

A case was initiated to tackle the „problem‟ of implementing the ILS/LCM to primarily intend to realize a Competence Center for Integrated Maintenance. A Competence Center for Integrated Maintenance necessitates the Naval Maintenance and Service Establishment to be capable of entering into „business‟ performance contracts, made up of the following basic elements:

system definition (functions, capability); yearly service plan;

performance standards; a cost allocation report.

Why Integrated Maintenance?

Where the maintenance of the materiel is concerned, the Royal Netherlands Navy centers its focus on minimizing life cycle costs during assigned

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operational readiness. Methods and techniques have been developed for this purpose, allowing for the integrated management of the materiel life cycle. The Royal Netherlands Naval Maintenance and Service Establishment (RNLNMSE) tend to the maintenance of a large portion of the Royal Netherlands Navy (RNLN) materiel. The realization of Royal Netherlands Naval Maintenance and Service Establishment products and services was often segmented and differentiated. As a result, the Royal Netherlands Naval Maintenance and Service Establishment‟s product-focused management failed to fully fit in with the Royal Netherlands Navy ambition to approach

maintenance in an integral form. With the development and implementation of IM, the Royal Netherlands Naval Maintenance and Service Establishment is capable of offering products and services which fit in with the ambitions of the Royal Netherlands Navy and its own aim; „realize the required system

effectiveness at minimum cost‟.

IM enables the Royal Netherlands Navy to make „cost-effective‟ considerations with regard to maintenance. To that end, performance per ship (as system) is, at installation level versus maintenance costs, expressed in terms of active time, availability, reliability and capability. Expressing system effectiveness in this way it will be possible to enter into Service Level Agreements (SLA) per ship, per period, and the „customer‟ can base his choices on system

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1. The Netherlands Defence Materiel Organisation

The Defence Materiel Organisation (DMO) is the element of the Defence organization where a large number of civilian employees work alongside military personnel from the Navy, Army and Air Force to ensure the availability of virtually all of the defense materiel. The majority of the materiel logistic activities within the defense organization are carried out by DMO. The operational commands can concentrate fully on their core business, in the knowledge that DMO provides high-value materiel support. DMO is responsible for materiel logistics policy, new materiel, maintaining materiel and the

divestment of surplus materiel.

DMO makes no distinction among the Services: the parts of the organization are clustered around areas of expertise and types of materiel. The air force, for example, has a great deal of expertise in the area of helicopters; but the navy uses that type of materiel as well. Through concentration of expertise and project management from the Services around a single type of materiel, DMO is able to provide high-value expertise and quality to the operational

commands.

Director -General Defence Materiel Organisation

Directorate of Materiel policyt Directorate of Planning and _Control

Directorate of Personnel &

organisation Transition Manager

Directorate of Projects & Procurement

.Project Branch

Directorate of Weapon Systems & Establishment

Sea Branch

Facility Management Division

Safety Section

Department facilitaire matters

Land System Branch Procurement Branch

Air System Branch Defence Materiel _Codification Defence suppliers monitoring Division C2 Centre of Excellence . . .

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1.1 Weapon Systems & Establishment

The Directorate of Weapon Systems & Establishments is a combination of DMO tasks related to logistic upkeep of materiel. This relates to activities concerned both setting up and carrying out tasks. The directorate also

provides standards and expertise to the Directorate of Projects & Procurement to support the materiel projects. The directorate also carries out many projects on its own behalf. Those are all category 1 projects that were not mentioned above, and the regular divestment of materiel. The directorate‟s focus is the improvement and optimization of the readiness levels of materiel and weapon systems.

Maintenance, repairs and modifications to mainly surface ships, submarines and related military maritime systems.

Director -General Defence Materiel Organisation

Directorate of Materiel policyt Directorate of Planning and _Control

Directorate of Personnel &

organisation Transition Manager

Directorate of Projects & Procurement

.Project Branch

Directorate of Weapon Systems & Establishment

Sea Branch

Facility Management Division

Safety Section

Department facilitaire matters

Land System Branch Procurement Branch

Air System Branch Defence Materiel _Codification Defence suppliers monitoring Division C2 Centre of Excellence . . .

Figure 1.2. Weapon Systems & Establishments.

1.2 The Air Systems Branch

The Air Systems Branch ensures that weapon systems are suitable for the mission, function properly and are airworthy and takes care of safe use of weapon systems and the upkeep of weapon systems. Product management,

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configuration management, Integrated Logistic Support management (ILS) and Contract Management are among this branch‟s main tasks.

1.3 Land Systems Branch

The Land Systems Branch cost-effectively provides safe and high-quality materiel for all operational users of the armed forces, throughout the product life cycle. The branch has a philosophy of transparency and continuously shares information with clients, to harmonize mutual expectations. The wishes of the operational commands and their priorities are the key factor.

1.4 Sea Systems Branch

The Sea Systems Branch is active in technology areas that are unique for military maritime systems. The branch also serves as the all-Services expertise cluster for inter alia sensors, such as: radar, health & safety, environmental and chemical technology.

Maintenance, repairs and modifications to mainly surface ships, submarines and related military maritime systems.

Sea Systems Branch

Branch Staff Platform technollogy division Weapon system management division Centre for automation of mission critical systems Sensor and Weapons technology division Requirement s support &integration division Royal Netherlands Naval Maintenance & Services Establishment

Figure 1.3. Sea System Branch.

1.4.1 Core Tasks

The Sea Systems Branch carries out feasibility studies in respect of the

procurement of materiel, carries out research to system integration, and makes life-cycle cost analyses. Specifications and plans for the manufacture and delivery of sea systems also originate in this branch. The branch also provides support and advice with respect to procurement, construction and

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implementation of systems. The Sea Systems Branch develops modification programs and provides technical advice during divestment.

The high-value technological expertise within the branch enables the

composition of specifications for, for example, requirements, integration with existing or new sea systems, and analysis for modification programs. In this context, sea weapon systems means Multi-purpose and Air Defense and Command Frigates, Landing Platform Docks, supply ships, Walrus-class submarines and other sailing units.

1.4.2 Royal Netherlands Naval Maintenance and Service Establishment

Maintenance, repairs and modifications are the responsibility of the Royal Netherlands Naval Maintenance and Service Establishment. The establishment activities relate to all logistic and maintenance duties in respect of the

electronics and weapon systems on board. That is how the establishment ensures that the materiel readiness of the ships and submarines is kept at the desired level. It also provides technical advice and logistic support for the ships, anywhere in the world, and supports large materiel projects. The Royal Netherlands Naval Maintenance and Service Establishment comprise the Platform (ships), Sensors, Weapon and Command Systems (SEWACO), Special Products, and Logistic Services divisions.

A DIP Naval Maintenance Establishment Logistic Division Platform Branch Sensor Weapon & commando systems Special product division Sales Division Platform Division Electrical Systems Command Control & computers Onder water systems Above water systems Casco Systems

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The main tasks of the Royal Netherlands Naval Maintenance and Service Establishment are:

Consulting services to the internal customers;

Maintenance, Repair and Overhaul (MRO) services; Product Data Maintenance (PDM) services

The internal customers (operational users) are highly trained operators of military equipment within combat or combat simulated environments. In the recent years the complexity, costs and operational demands upon the capital assets have increased. Due to an increase of complexity, maintenance-related costs and operational demands upon the capital assets maintenance

management have become more important.

The DMO organization has adopted the Integrated Logistics Support (ILS) methodology in order to increase the efficiency of the capital asset life cycle.

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2. Theoretical assessment

Aim

In order to identify related developments with respect to Asset Management Control, a theoretical assessment was conducted. However, the assessment was, due to relevance, limited to the defense industry.

Approach

Research by literature, internet and seminars shows that there are different philosophies and concepts, although, not all developments are fully mature, we can acknowledge on basis of seminars and available publicized information [ Ref. 13, 25 and 27] that the US DoD and UK DoD developments gained most maturity and are originated on defense standards.

Results

In order to establish a shared vision, these concepts and philosophies are used and they have been summarized in the following paragraphs.

2.1 Through Life Management

"Historically, the functions of requirement definition, procurement management and through-life support have been organizationally separated, which makes it difficult to get the right balance between risk, cost, performance and through-life support." The Ministry of Defense’s Strategic Defense Review 1998.

The Strategic Defense Review launched what have become known as the SMART (Specific, Measurable, Achievable, Relevant, Time bound) Acquisition reforms, aimed at faster, cheaper and better acquisition and support of

equipment. At the heart of SMART Acquisition is a change to integrated management of the delivery of all aspects of capability, from identification of the need for the capability to its disposal. This approach is known as Through-Life Management [PBM handbook, 2001].

Through Life Management (TLM) is an integrated approach to all SMART Acquisition processes, planning and costing activities across the Whole System and Whole Life of the project and is illustrated in figure 2.1.

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Figure 2.1 Through Life Management [PBM handbook, 2001].

The MOD UK life cycle stages of a defence capability are;

concept (C); assessment (A); demonstration (D); manufacture (M); in-service (I); disposal / Termination (D/T).

The Through Life Management philosophy is adopted by the United Kingdom Ministry of Defense (MOD) and started with the development and

implementation of SMART acquisition.

SMART Acquisition, that is governed through the Acquisition Policy Board (APB), chaired by Minister (Defense Procurement), is a long-term MOD initiative to improve the way to acquire defense capability and to adopt a

through-life approach to acquisition, rather than concentrating resources on the initial procurement.

The aim of SMART Acquisition is;

"To acquire Defense capability faster, cheaper, better and more effectively integrated."

The objectives of SMART Acquisition are:

Through Life Management Plan (TLMP) Whole Life Costing (WLC)

Cost of Ownership (COO) Costed Project Plan

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to deliver and sustain defense capabilities within the performance, time and cost parameters approved at the time the major investment

decisions are taken;

to integrate defense capabilities into their environment within Defense, with the flexibility to be adapted as the environment changes;

to acquire defense capabilities progressively, at lower risk. Optimization of trade-offs between military effectiveness, time and whole life cost are maximized;

to cut the time for (key) new technologies to be introduced into the frontline, where needed to secure military advantage and industrial competitiveness.

To achieve the objectives of SMART Acquisition, that is “To acquire defence capability faster, cheaper, better and more effectively integrated”, it is vital that there is an integrated through life approach to managing projects. The

characteristics of a Through Life Management approach are:

- a whole life outlook; starting from the point that the Equipment Capability Customer (ECC) identifies the capability gap, and continuing up to the point of final disposal;

- a whole system outlook; taking a integrated approach to delivering all of the components of Military Capability, not just the Equipment;

- managing the Whole Life Costs of capability. Ensuring that investment decisions take full account of all the longer term implications of acquisition, in terms of operating, supporting, maintaining and finally disposing of equipment;

- proactive involvement of stakeholders throughout the process. Being realistic about what can be affordably achieved and agreeing this with the customers and other stakeholders;

- having a realistic, cost- defined, whole life plan - the Through Life Management Plan - and maintaining this throughout the lifecycle; - better informed decision making, through the use of the TLMP; - building all of these characteristics into IPT processes and working

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Hence, Through Life Management is the philosophy that brings together the behaviors, systems, processes and tools that will deliver these objectives.

By projecting the Through Life Management philosophies / concepts to the dissertation subject „Organizing performance based management for in-service support cooperation‟s‟ there should be ascertained that the application of performance based management within the MOD UK is supported by

Customer Supplier Agreements (CSA) between the Integrated Project Team (IPT) and (depending on life cycle stage) the Defence Procurement Agency (DPA) or Defence Logistic Organization (DLO). The CSA is an agreement between the Customer and Supplier setting out the working relationship

between them and recording other key project information such as deliverables required, and performance measures and targets.

There are two distinct types of CSA currently in use:

CSA (Acquisition) - an agreement between the Equipment Capability Customer (ECC) and an IPT for the procurement stages of a project (Concept through Manufacture); and

CSA (Support) - the comparable agreement prepared at the In-Service stage which manages output relationships between the Second

Customer and an IPT/ Business Unit.

The development of clear customer and supplier roles, and a defined

relationship between them, is fundamental to SMART Acquisition. What this means in practice is creating a more logical separation of customer and

supplier roles, and clearly defining the tasks and responsibilities which go with these. This will enable both customer and supplier to fulfill their roles more effectively. It will give the customer more real control throughout the acquisition life-cycle, and will provide the supplier with a clear and unambiguous

framework in which to operate, while maintaining the flexibility the supplier requires, meeting the agreed project deliverables.

The purpose of a Customer Supplier Agreement CSA is to make short and long term priorities, commitments and outputs between the parties explicit, to

describe clear and unambiguous Performance-Cost-Time (PCT) Targets, permissible tradeoffs, roles and responsibilities for the signatories and to

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clearly outline the behaviors that each party will demonstrate in the course of discharging their responsibilities under the agreement. Such a CSA will facilitate a better Customer Supplier working relationship.

The principles of all Customer Supplier Agreements should be: collaborative - A partnership agreement;

comprehensive but short - No more than 5 pages. If further detail is essential it should be placed in an appendix, including appropriate references to source documents;

broad In scope - High level with sufficient scope to identify and act on trade-offs;

output focused - Focus on outputs rather than inputs. During the

Assessment Phase these will be expressed in terms appropriate to the exploratory nature of the work. As the project progresses the outputs will become more specific;

measurable - Identify objectives and timescales with mutually agreed indicators to track performance;

dependencies - Identify any high level dependencies and other interactions which might impinge upon the project output;

a Working Document – With performance reviewed jointly as demanded by the short and long term objectives;

a Relevant Document – With a content review each year in the light of the annual planning round, or between rounds if there is a significant change in the situation, or a new project cycle phase calls for a redefinition of the outputs;

referred to in the TLMP and updated when changes occur during a planning round;

cost on a through-life basis, across all Lines of Developments using Cost Of Ownership data.

However, the research scope is limited to the in-service phase. As illustrated in figure 2.2 we can conclude that in-service support cooperation are managed by the Defence Logistic Organization (DLO)

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Figure 2.2 Actor relations during the CADMID stages.

The DLO Strategy is to transform logistic support to the Front Line by delivering improved reliability and availability. Underpinning the strategy is the need for an end to end and through-life view that optimizes logistic support solutions and provides opportunities and incentives for industry to align with DLO capabilities and responsibilities.

This transformation represents a shift from traditional support arrangements with separate contracts for maintenance, repair and overhaul, spares and post-design services, to an integrated approach that may include long-term

partnering arrangements with major Defense contractors. Furthermore, it is underpinned by the SMART Acquisition approach which encourages Integrated Project Teams (IPT‟s) to seek increasingly innovative support solutions in order to optimize levels of service and value for money to drive down the cost of ownership. Such solutions are collectively known as Contractor Logistic Support (CLS). They cover a wide spectrum of support solutions ranging from minimum contractor involvement („Traditional‟ model), where MOD-owned equipment and spares are supported through various contractual

arrangements, to maximum contractor involvement („Contracting for Capability‟ model), where the prime contractor provides a total support package. The full spectrum of options along this support continuum is illustrated in the Support Options Matrix (SOM) (see figure 2.3)

Concept Assessment Demonstration Manufacture In-Service Disposal

In-Service Date

Defence Procurement Agency Defence Logistic Organization (DLO) Integrated Project Team (IPT)

Equipement Capability Customer (Customer 1)

Integrated Project Team (IPT) Front Line Command

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Figure 2.3 Support Options Matrix (SOM) [Jones. 1994.].

In practice most solutions fall somewhere between the two extremes of this continuum and will include elements of both traditional and non-traditional support arrangements [Jones. 1994].

CLS is recognized as a cost-effective support strategy that has developed an increased drive under the SMART Acquisition initiative. Given the reality that

operational risk cannot be transferred but only managed, the application of

the principles and adherence to Integrated Logistic Support (ILS) methodology will significantly aid in-project risk management. While it is accepted that CLS solutions may be time constrained to limit risk, they must form a credible part of a complete Through-life Management Plan (TLMP) and support strategy.

Solutions must identify sustainable and competent organizations to cover ownership and Design Authority functions, ensuring that a project can be taken

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through its full service life to its eventual cost-effective disposal. Throughout this time, contractual arrangements will be required to provide incentives to industry to invest and deliver against constantly improving performance and cost targets, while still maintaining the flexibility of the MOD to respond to changes in both operational and budgetary priorities.

With respect to CLS solution - Contracting for Availability (CfA), the TES

department published a draft TES-RMG Guidance note in 2006 with respect to Contracting for Availability (CfA). The aim of this guide is to alert Project Staff to a series of significant issues relating to Reliability & Maintenance which should be considered during the Contacting for Availability process and addressed by Availability Contracts.

Contracting for Availability (CfA) is a commercial process which seeks to sustain a system or capability at an agreed level of readiness, over an extended period of time, by building a partnering arrangement between the MoD and Industry. The result of this process will be an Availability Contract, which should include incentives for both parties to improve efficiency and effectiveness over the life of the agreement. This is similar to a comprehensive Contractor Logistics Support (CLS) arrangement, which uses Availability as its principal metric. CfA can be applied to new capabilities and legacy systems in any environment, at various levels. Fundamentally it must address the

Availability of what, when and where.

CfA is a deceptively simple concept which can be extremely difficult to deliver, given the complexities and uncertainties which surround the Service

environments. The success of individual arrangements will stand or fall on the effectiveness of the resulting contract and the degree of cooperation between the MoD and Prime Contractor. CfA should be exploited as an opportunity to improve support to the User community and not be viewed as a flag of convenience for financial savings, manpower reductions or the abrogation of responsibilities. Finally, the successful implementation of CfA requires a wholesale change of attitude by all stakeholders, since it requires traditional support activities to be replaced by innovative processes based on need

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2.1.1 Results / findings

Some examples of Through Life Management successes are illustrated in table 2.1.

Table 2.1 Through Life Management Successes [PBM, 2001].

In the year 2002 the United Kingdom„s National Audit Office performed an audit with respect to the application of Through life Management at the Ministry of Defence [PBM, 2001] This audit was mainly focused on Through Life

Management within the Ministry of Defence excluding contractors from Industry and resulted in the following findings:

Through-Life Management is a key element of SMART Acquisition but not all aspects of the change it entails have been fully developed and managed coherently;

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There has been continuing support for Through-Life Management from senior management, but this has not always been consolidated into a clearly visible strategy across the Department and the definition and benefits of the change are not yet clear to some members of the acquisition community;

The enablers of Through-Life Management are not yet fully in place. Progress in setting in place tools and information sources to support Through-Life Management has not always been as quick as the Department would have liked and more remains to be done. Some mechanisms for engaging the defence acquisition community and

promoting Through-Life Management behavior are not yet fully effective, and measurement of progress and success has been patchy and is still developing.

Although the audit depicts all findings and recommendations, as well the „transformation to‟ as the „application of‟ Through Life Management, several findings and recommendations should be taken into account when

Performance Based Management cooperation is established. These are;

Clearly communicate the aims and benefits of Through-Life Management to all stakeholders related to the cooperation; align responsibility with authority;

make every effort to speed up the implementation of the Whole-Life Cost program and establish robust cost data for all projects to inform decision-making;

ensure that all members of the PBM cooperation acquisition community involved in the development and ongoing review of Through-Life

Management Plans have appropriate visibility of these plans;

clearly define the responsibilities of all members of the PBM cooperation in Through-Life Management, either by revising Customer Supplier Agreements or by developing alternatives such as the Responsibility Matrices in Through-Life Management Plans;

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Through-Life Management Plans are a prominent and integral part of Business Cases. Unfortunately, no accessible information was found with respect to successes with Performance Based Contractor Logistic Support (or CfA) related to Through-life Management.

2.2 Total Life Cycle System Management

Total Life Cycle Systems Management is the implementation, management, and oversight, by a designated Program Manager, of all activities associated with the acquisition, development, production, fielding, sustainment, and disposal of a DoD weapon system across its life cycle.

The Total Life Cycle Systems Management approach to system development is optimized if it targets, as a major end state goal, operations and

maintenance phase effectiveness and affordability. TLCSM is distinguished by the translation of force provider-specified levels of performance into deliverable capabilities that represent system readiness, availability, and logistics

supportability. An

overview with respect to the scope of Total Life Cycle Systems Management is illustrated in Figure 2.5 Total Life Cycle Systems Management

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With respect to Life Cycle Logistic it is fundamental to systems engineering to take a total life cycle, total systems approach to system planning, development, and implementation. Total life cycle systems management (TLCSM) is the planning for and management of the entire acquisition life cycle of a DoD system.

Because of TLCSM, the program manager should consider nearly all systems development decisions in context of the effect that the decision will have on the long term operational effectiveness and logistics affordability of the system. TLCSM considerations should permeate the decision making of all acquisition functions and communities, during all acquisition phases. In fact, TLCSM factors should be considered by the participants.

TLCSM encompasses the following concepts: single point of accountability;

evolutionary acquisition;

supportability and sustainment as key elements of performance; performance-based strategies, including logistics;

increased reliability and reduced logistics footprint; continuing reviews of sustainment strategies.

In executing TLCSM responsibilities, program managers should apply systems engineering processes and practices known to reduce cost, schedule, and performance risks. This includes best public sector and commercial practices and technology solutions

The program manager should apply a robust systems engineering methodology to achieve the optimal balance of performance and total

ownership costs. Effective sustainment of weapons systems begins with the development of a balanced system solution. The key is to apply the systems engineering processes

Consequently, systems engineering should be applied at the initial stages of program formulation to provide the integrated technical basis for program strategies; acquisition plans; acquisition decisions; management of

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test, and cost estimation efforts among all stakeholders. Likewise, the Systems Engineering Plan (SEP) should be established early in the program definition stages and updated periodically as the program matures. The overall systems engineering strategy should be addressed in and integrated with all other program strategies. Systems engineering enables TLCSM, and provides the framework to aid decision making about trade-offs between system

performance, cost, and schedule.

By projecting the Total Life Cycle Systems Management philosophies / concepts to the dissertation subject Organizing performance based

management for in-service support cooperations it can be concluded that the scope is limited to Performance Based Logistics during the sustainment phase. Therefore, Life Cycle Logistic in systems engineering is not further discussed.

PBL is the purchase of support as an integrated, affordable, performance package designed to optimize system readiness and meet performance goals for a weapon system through long-term support arrangements with clear lines of authority and responsibility. Application of PBL may be at the system, subsystem, or major assembly level depending on program unique circumstances and appropriate product support strategy analysis.

The essence of PBL is buying performance outcomes. It is procurement of a capability to support the war fighter versus the individual parts or repair actions. This is accomplished through a business relationship that is structured to meet the war fighter‟s requirements. PBL support strategies integrate responsibility for system support in the Product Support Integrator (PSI), who manages all sources of support. Source of support decisions for PBL do not favor either organic or commercial providers. Like traditional support strategies, PBL optimizes the best public and private sector competences based upon a best-value determination, evidenced through an appropriate analysis of the

provider's product support capability to meet set performance objectives. The major shift from the traditional approach to product support emphasizes how program manager teams buy support, not who they buy from. Instead of buying set levels or varying quantities of spares, repairs, tools, and data, the focus is on buying a predetermined level of availability to meet the war fighter‟s

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One of the most significant aspects of PBL is the concept of a negotiated agreement between the major stakeholders (e.g., the program manager, the force provider(s), and the support provider(s)) that formally documents the performance and supports expectations and commensurate resources to achieve the desired PBL outcomes. However, notice should be made that each PBL arrangement is unique and will vary from other PBL arrangements. A PBL arrangement may take many forms. There is no one-size-fits-all approach to PBL.

Performance Based Logistics starts with the PBL strategy. A PBL strategy focuses weapon system support on identified war fighter required performance outcomes, rather than on discrete transactional logistics functions. It should balance three major objectives throughout the life cycle of the weapon system:

delivering sustained materiel readiness;

minimizing the requirement for logistics support through the incorporation of reliability-enhancing technology insertion and refreshment;

continually improving the cost-effectiveness of logistics products and services. Careful balancing of investments in logistics and technology to leverage technological advances through the insertion of mature

technology is critical. The program manager should insure that the PBL strategy addresses war fighter requirements during peacetime,

contingency operations, and war.

The development of a PBL strategy is a lengthy, complex process, led by the program manager, involving a multitude of stakeholders. No two weapons system PBL strategies are exactly the same. Fundamental to the development and execution of a PBL strategy is the ability to understand and communicate the ability of the provider(s) to support across the spectrum of PBL solutions, to quantify the required elements of system performance included, and to

understand the practices and technology enablers that will be critical to meeting the required performance levels. The PBL Maturity Framework (see

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Figure 2.6 The Performance-Based Logistics Maturity Framework [PBL, 2006].

The PBL Maturity Framework captures the range of solutions that may be employed in a PBL strategy. Every PBL is not the same. The framework encourages program managers to strive for the “right” level of PBL maturity and not the minimum level. Associated with each level is a metric associated with the outcome the program manager is buying. The framework is

incremental, in that each level builds on the previous levels. A description of each level follows:

Level 1: These agreements make the supplier accountable for the delivery

speed required to meet customer requirements. This level focuses on logistics planning and transportation and is applicable to many commodities and parts. Logistics Response Time (LRT) is the preferred metric for Level 1 agreements. The time it takes the supplier to deliver the part or commodity to the

government should determine their payment. The government‟s requirement and terms of the contract will drive the supplier‟s behavior.

Level 2: These agreements focus on maintaining the required availability of

key components or assemblies, such as a wing flap or auxiliary power unit. Level 2 includes logistics planning and execution, configuration management and transportation. Under Level 2, a PBL provider may also make repair vs. replace decisions. The preferred metric for Level 2 agreements is Materiel Availability, measured at the point where the material is consumed. Availability

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of the component or assembly is also linked to delivery speed because it helps determine the reorder point, as does demand.

Level 3: These agreements transfer life cycle support responsibilities to the

PBL provider, assuring the operational availability (Ao) of the system. This level is typically applicable for systems and weapon system platforms. There is an additional focus on life cycle support, training, maintenance, repair and

overhaul. The appropriate metric is operational availability. The reliability of the equipment and supply chain processes will influence the availability of the system or platform. In Level 3 agreements, the PBL provider is assigned specific life cycle responsibility, solely or in partnership, for the breadth of processes that influence operational availability of the system.

Level 4: The PBL provider is assigned overall responsibility for the mission

effectiveness of the entire system. While each of the partnerships stages contributes incrementally more to downstream mission effectiveness, Mission Assured Logistics strives for Level 4 elements to assure that all critical

elements for success can be managed in an aligned and integrated manner. The appropriate metric is Mission Reliability, measuring success in achieving mission outcomes. Level 4 is applicable for complete weapon system

platforms.

The development and management of PBL arrangements consist of 12 discrete steps that can be applied to new, modified, or legacy systems, as

shown in Figure 2.7 Performance-Based Logistics Implementation model.

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The Performance Based Logistics methodology can be applied to new,

modified, or legacy systems and encompasses 12 steps. The intended outputs of these steps are:

integrate requirements and support;

form the Performance Based Logistics Team; baseline the system;

develop performance outcomes;

select the Product Support Integrator(s); develop a Workload Allocation Strategy;

develop a Supply Chain Management Strategy; establish Performance Based Agreements;

perform a Performance Based Logistics Business Case Analysis; award contracts;

employ financial enablers; implement and assess.

2.3 Results / Findings

Literature research with respect to PBL results / findings shows different interpretations and/or conclusions.

On request of the DoD, the US Government Accountability Office (GAO) performed a review with respect to DoD‟s implementation of performance-based logistics arrangements. The objective was to determine whether DoD could demonstrate cost savings or improved responsiveness through the use of performance-based logistics arrangements. The results are published in the Report to the Subcommittee on Readiness and Management Support,

Committee on Armed Services, U.S. Senate [Defense Management DoD, 2005]

GAO analyzed the implementation of performance based logistics arrangements for 16 weapon system programs.

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Military service Weapon system or component

Program office

Air Force C-17 Air Force Materiel Command

Air Force F-117 Air Force Materiel Command

Air Force JSTARS Warner Robins Air Logistics Center

Air Force C-130J Air Force Materiel Command

Navy ALR-67 (V3) Naval Supply Systems Command

Navy Auxiliary Power Units Naval Supply Systems Command and Naval Air Systems Command

Navy F-18 E/F FIRST Naval Supply Systems Command and Naval Air Systems Command

Navy F-404 Naval Supply Systems Command and

Naval Air Systems Command

Navy T-45 engines Naval Supply Systems Command and

Navy V-22 engines Naval Air Systems Command

Navy/Marine Corps

KC-130J Naval Supply Systems Command and

Army HIMARS Aviation and Missile Command

Army Javelin CLU Aviation and Missile Command

Army TOW-ITAS Aviation and Missile Command

Army TUAV Shadow Aviation and Missile Command

Table 2.2.1.1 Performance-Based Logistics Programs reviewed [Defense Management DoD, 2005]

The following was concluded;

DoD program offices cannot demonstrate that they have achieved cost savings or performance improvements through the use of performance based logistics arrangements. Although DOD guidance on implementing these arrangements states that program offices should update their business case analysis based on actual cost and performance data, only 1 of the 15 program offices included in the review have performed such an update consistent with DoD guidance. In the single case where the program office has updated its business case

analysis, it determines that the performance based logistics contract does not result in expected cost savings and the weapon system does not meet

established performance requirements. In general, program offices have not updated their business case analysis after entering into a performance-based logistics contract because they assume that the costs for weapon system maintenance incur under a fixed price, performance-based logistics contract will always be lower than costs under a more traditional contracting approach and because they lack reliable cost and performance data needed to validate assumptions used. Furthermore, the Office of the Secretary of Defense has not established procedures to monitor program offices to ensure they follow

guidance and update the business case analysis. Additionally, program officials say that, because of limitations in their own information systems, they typically rely on cost and performance data generated by the contractors‟ information systems to monitor performance-based logistics contracts. The program

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offices, however, have not determined whether the contractor provided data are sufficiently reliable to update their business case analysis. Although the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA) are most commonly used to monitor higher risk

contracts, such as cost plus contracts, they are potential resources available to assist program offices in monitoring fixed price performance-based contracts. In doing so, these DoD agencies have the capability to verify the reliability of contractors‟ information systems and collect cost and performance data needed to update the business case analysis. Until program offices follow DoD‟s guidance and update their business case analysis based on reliable cost and performance data, DoD cannot evaluate the extent to which performance-based logistics arrangements are achieving expected benefits and being effectively implemented within DoD.

With respect to these findings the GAO recommends to take the following two actions:

Reaffirm DoD guidance that program offices update their business case analyses following implementation of a performance-based logistics

arrangement and develop procedures, in conjunction with the military services, to track whether program offices that enter into these arrangements validate their business case decisions consistent with DoD guidance.

Direct program offices to improve their monitoring of performance based logistics arrangements by verifying the reliability of contractor cost and

performance data. The program offices may wish to increase the role of DCMA and DCAA in overseeing performance-based logistics contracts.

However, a White Paper called Performance-Based Logistics - The Changing Landscape in Support Contracting [PBL, 2006] shows that in spite of

unprecedented success in improving operational readiness and stemming rampant weapon system support costs, PBL continues to face resistance. In a recent General Accountability Office (GAO) report on PBL, 16 programs utilizing PBL support strategies were examined. GAO findings showed that 10 of the 16 exceeded the performance requirements specified in their PBL agreements, and the remaining 5 programs met all performance requirements A 100% success rate in terms of meeting the objective of „buying performance

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outcomes‟. No previous DoD support strategy has approached that level of success, yet GAO still found room to question whether the success “could be attributed directly to their use of performance-based logistics arrangements.” Clearly, there are still challenges ahead. DoD financial processes, particularly those that dictate the use of various „colors‟ (appropriations) of money are problematic. While most weapon system support costs are funded with „Operations and Support (O&S)‟ funds, full scope sustainment also requires Procurement and Research, Development, Test, and Evaluation (RDT&E) funding for modifications to counteract obsolescence and improve support processes. PBL transfers many of the „make or buy‟ decisions to the prime support contractor, yet DoD financial rules still require government managers to include separate appropriation funding requirements in contracts .

In other words forcing them to „estimate‟ what kind of support decisions the support contractor will make, and in doing so setting arbitrary boundaries that constrain contractor flexibility to make best value decisions.

Industry has done a great job in joining with DoD in utilizing PBL to deliver real results on today‟s battlefields. Systems such as the Stryker, F/A-18 Super Hornet, C-17, and Joint STARS have all historically demonstrated high mission availability rates in both Operations Iraqi Freedom and Enduring Freedom. Still, PBL has yet to be implemented on very complex „system of systems‟ platforms, such as Navy Carriers, or the developmental Army Future Combat System and Joint Strike Fighter programs.

PBL‟s concept of buying customer (war fighter) performance outcomes will be challenged with these user, variant, and in some cases multi-national systems. In spite of the doubters, there are PBL champions as well. On September 21, 2005, Ken Krieg, the new USD/AT&L spoke to the National Defense Industry Association (NDIA), and said, “Obviously, there are a number of tools, but one answer is Based Logistics. When Performance-Based Logistics, or PBL, is done right, it focuses energy on the necessary outputs and can provide both effectiveness and efficiency.” PBL has produced too many „wins‟ to warrant slowing its progress. DoD desperately needs

consistent operational readiness and more reliable, easily deployable systems in today‟s global engagement threat environment, and PBL has shown

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vigor, and work towards alleviating any remaining financial, statutory, or policy barriers that limit the full potential of PBL. DoD has made a commitment, through continued downsizing of the base and Depot infrastructure, to rely on public-private partnerships for weapon system support. There is indeed best value in utilizing the immense capabilities, flexibility, and entrepreneurial

approach of the private sector. PBL is the best available strategy that takes full advantage of those benefits, and should receive commensurate continued support and implementation emphasis

2.4 Summarized

The cooperation between the defense organizations and the industries has been motivated by shortening lead times, better control and increased

performances. Operational availability is the most important aim. PBL-contracts mostly concern the supply of spare parts and optimizing the maintenance process. The industry has their own stores on site and the spare parts are no property of the defense organizations, but they have been earmarked for the basis concerned. In the maintenance process the industry has been involved in the repair of specific components, which cannot be carried out in an efficient manner by the defense organizations. The defense organizations also show that they have specialists, carrying out highly technological work and that there were clear commitments between the defense departments, concerning

distribution of work.

PBL-contracts contain measurable objectives for performance improvement in the maintenance process in the field of lead times and costs. Experience from these organizations proves that it is wise to step by step develop PBL contracts with the industry and not in a short time. PBL contracts will improve

increasingly in the future. The contract has a maximum term of five years. Longer terms are cheaper, but not allowed by American law. The defense organizations have a positive attitude towards the cooperation with the industry. Problems in the implementation exist; however, they have mostly to do with overdue delivery of spare parts by subcontractors. A system of penalties and rewards has been included in the contract, depending on

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supplied performance. Most important condition for good cooperation is mutual trust and the willingness to share information.

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3. AMC Feasibility study

3.1 General

For this purpose a case Integrated Maintenance (“Integrale Instandhouding”) has been started. The aim of the case is to obtain experience in the

implementation of maintenance control by system-effectiveness and operational use of maintained systems. The Royal Netherlands Naval

Maintenance and Service Establishment responsibility and boundary conditions to the internal customers are described in a contract called a Service Level Agreement (SLA). The SLA describes the planned system performance in terms of active time, system-effectiveness, reliability and availability versus costs of installation during a fixed period. By describing the system

performance and costs in an SLA the customer has the means to optimize the balance of the system performance, costs and his operational needs. The pilot project has not answered all questions in order to be able to fully implement the ILS concept. The purpose of this dissertation is to research a structured

method of implementing a performance driven maintenance approach and system-effectiveness into a defense organization and to determine if this is a profitable approach.

Maintenance within the Royal Netherlands Navy (RNLN) was customer driven. The Royal Netherlands Naval Maintenance and Service Establishment have maintained the military equipment in accordance with an obligation of best intends described in a covenant, between the commander in chief RNLN and the maintainer. The maintenance is scheduled in accordance with the

operational schedule of the maintained equipment. The covenant describes the maintenance tasks, available budget, and resources. The maintenance

activities are mainly driven by input of the user/customer. This approach has no or minor reference to system or installation performances for control over the budget and resources assigned to the maintainer. The assumption is that this approach will not fulfill future demands due to an increase of complexity, maintenance related costs, and operational demands upon the naval ships.

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The applied research method for this dissertation is based on a feasibility study of used material (M- Frigate) and an organization analysis with a new

application PRIMA.

To be able to reach the goals set out in the aim of the dissertation, the following steps have been taken:

the research is based on a description of the standing organization of the Royal Netherlands Naval Maintenance and Service Establishment; desk research on organization theory:

o the desk research is focused on examining the literature regarding the available implementation methods;

o the data gathered during the desk research has been analyzed.

desk research on performance driven maintenance and system management (AMC approach) approach in a cost-effective way:

o the desk research is focused on examining the literature regarding the preferred organization to practice this AMC approach [TQM manual, 2006]

o based on the data of the desk research on AMC, this and the wishes of the organization, an organization for performance driven maintenance is defined.

based on the analysis recommendations for the implementation of performance driven organizing have been drafted;

the aim of the feasibility study is to validate the theoretical method as found during the desk research and to test the theoretical method in practice;

the data gathered during the feasibility study will be analyzed;

a questionnaire has been drafted based on the implementation theory of TQM manual and the comparison of the organization.

Target group: middle management, upper management, and potential partners in SLA.;

an analysis of the organization will be done with PRIMA (PRocess Improvement Application);

The results of this analysis shall be translated into a conclusion and recommendations.

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3.2 Tools

The applied research method for this dissertation is based on feasibility study and an analysis with the new software application PRIMA (Process

Improvement Application). This is very useful when a limited amount of time is available to address a complex strategic situation.

Feasibility studies examine the economic, marketing, technical, managerial,

and financial aspects of your proposed business idea. While independent, the study is based on information provided by you. Whether one is applying for a government-backed business loan, seeking funds for expansion or plant modernization, or deciding what steps come next in growing the business, a detailed feasibility study will provide the required ammunition to make one‟s case, or help adjust the proposal to meet the requirements of lenders and other funding sources.

What are the benefits of feasibility studies?

Implementing feasibility studies can:

map out for lenders your proposal‟s strengths and potential; realistically analyze the impact of expansion;

show you the pros and cons of your idea; analyze the business idea.

[www.ciras.iastate.edu/management/feasibilitystudies.ap]

After getting familiar with the topic, the feasibility study will be conducted. This will be done in the second part of the data collection period to get acquainted with the subject and to be able to do a more “in-depth” questioning.

The aim of this feasibility study will be: 1. gain knowledge about the subject;

2. collect new ideas about alternative solutions concerning the problems;

3. get feedback on ideas resulting from the literature study.

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possible. This will improve the quality of the feasibility study. Furthermore on-site observations will be carried out. These will consist of visits to the research “site”.

PRIMA

PRocess Improvement Application Analysis, (PRIMA). In view of this project, PRIMA analysis compares the situation in which AMC is implemented in the organization with the cons and pros.

A PRIMA analysis is mostly performed to identify success factors based on the environmental scan. In this case the PRIMA analysis is used to investigate the probability of success that AMC approach can have for Defense Materiel Organization. This may imply that some of the Defense Materiel Organization weaknesses can be opportunities for AMC approach.

3.3 Lay-out of the Study

A general plan of the research can be found in figure 3.2.1.

Figure.3.3.1 Lay-out of the study.

F i n d i n g s Which system

cost-effectiveness is really needed? AMC Review IM case Conclusions & Recom- mendations PRIMA Analyses & Results

How to control the Total Cost of Ownership? How to get the best value for money?

How to improve performances and/or

reduce cost?

Is there a way yet to implement performance driven maintenance and system management approach within a Defense Maintenance Organization? T h e o r e t i c a l A s s s e s m e n t R e s e a r c h D e f i n i t i o n

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3.4 Value of the study

The Value of the study in the Defence Materiel Organisation will be, to improve: the approach of Asset Management Control.

the management control of process-, organization-, personal- and information management aspects;

which AMC processes should be executed by each actor (based on acceptable risks) within this organization?

how to organize an organization where each actor can contribute his own specialty and autonomy of each actor is ensured;

information support environment.

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4. AMC review on the Integrated Maintenance Case

4.1 Introduction

The Integrated Maintenance project was initiated to tackle the „problem‟ of implementing the ILS/LCM. One of the final results of this project for that matter was primarily intended to realize a „Competence Center for

Integrated Maintenance‟ for the management of the Royal Netherlands Naval Maintenance and Service Establishment.

A Competence Center for Integrated Maintenance requires that the Naval Maintenance and Service Establishment are capable of entering into „business‟ performance contracts, made up of the following basic elements; system definition (functions, capability), yearly service plan, performance standards and a cost allocation report .

As far as the maintenance of the materiel is concerned, the Royal

Netherlands Navy centers its focus on minimizing life cycle costs during assigned operational readiness. Methods and techniques have been developed for this purpose, allowing for the integrated management of the materiel life cycle.

The Royal Netherlands Naval Maintenance and Service Establishment tend to the maintenance of a large portion of the RNLN (Royal Netherlands Navy) materiel. The realization of Royal Netherlands Naval Maintenance and Service Establishment products and services was often segmented and differentiated. As a result, the Royal Netherlands Naval Maintenance and Service Establishment‟s product-focused management failed to fully fit in with the RNLN ambition to approach maintenance in an integral form. With the development and implementation of IM, the Royal Netherlands Naval Maintenance and Service Establishment is capable of offering products and services which fit in with the ambitions of the RNLN and its own objectives; „realize the required system effectiveness at minimum costs‟.

IM enables the RNLN to make „cost-effective‟ considerations in regard to maintenance. To that end, performance per ship (as system) is, at

Dissertation. How to implement Asset Management Control in a non-profit maintenance organization, on a cost effective manner

Dissertation

“How to implement Asset Management Control

in a non-profit maintenance organization,

on a cost effective manner”

Master of Science

in

Asset Management Control

International Masters School

Acknowledgements

Executive summary

Table of Contents

Table of Figures

Table list

Introduction

1. The Netherlands Defence Materiel Organisation

2. Theoretical assessment

3. AMC Feasibility study

3.2 Tools

3.3 Lay-out of the Study

3.4 Value of the study

4. AMC review on the Integrated Maintenance Case

4.1

Introduction