Outsourcing Energy-Infrastructure Operations

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Equipment and Processing Report

Equipment and Processing Report, Equipment and Processing Report-08-15-2012, Volume 0, Issue 0

Service agreements, expert liaisons, and scorecards are important to consider.

Implementing highly reliable energy solutions at research and manufacturing facilities is a significant challenge for pharmaceutical companies. The traditional model has been to run a facility with the company owning, operating, and maintaining all equipment itself, thus assuming exposure to risk on issues such as equipment durability, fuel volatility, and maintaining the expertise required to keep the system working properly in-house. Pharmaceutical facilities, however, are increasingly embracing the outsourcing model, in which whole functions are contracted to a third-party vendor. Outsourcing services is a proven solution to optimize efficiency.

The outsourcing service provider can be contracted to operate and maintain complex energy plants and ancillary equipment, such as:

  • On-site generation and cogeneration assets

  • Steam, hot-water, and chilled-water systems

  • Mechanical refrigeration facilities

  • HVAC systems

  • Electrical systems

  • Safety systems

  • Plumbing/sanitary systems

  • General building maintenance.

After the outsourced service provider has been selected, the client and service provider should agree on a well-defined scope and clear objectives, which should be captured in a service level agreement (SLA). Using a risk-based approach, the scope and responsibility of the service provider can be built up over time, which will ensure client satisfaction, specifically around regulatory compliance. However, it is important that the client does not relinquish all responsibility, as the ultimate regulatory responsibility lies with the product manufacturer.

Identifying a key subject matter expert to serve as a liaison between the service provider and client will ensure compliance to quality and regulatory systems. The expert should also design escalation and process flows for change controls and equipment deviation, which pose the most risk to the pharmaceutical manufacturer. For the service provider, customer satisfaction and adherence to quality systems in this highly regulated industry are essential.

The client and service provider can develop a performance scorecard that is linked financially to the service agreement contract. Key Performance Indicators (KPIs) can include areas such as safe systems of work, system availability, and performance against schedule. Each line item can be linked to a performance metric, and each metric can be weighted with agreed-upon scoring criteria that is reviewed and scored on a periodic basis (e.g., monthly, quarterly). Linking the score to contract payments, by withholding an agreed-upon percentage each quarter, drives performance from the service provider’s point of view and ensures client satisfaction. As the relationship between the service provider and client evolves, or as business expands, it is common to review and adjust the KPIs.

Outsourcing maintenance allows the client to reduce costs without reducing core-business company headcount and, as the pharmaceutical company becomes the customer of the service provider, to more easily drive change and continuous improvement. Outsourcing also allows management to focus on developing and manufacturing the product rather than on the non-manufacturing activities involved in facilities engineering.

Mel Palmer is business development director for Veolia Energy North America and David Lyons is client operations manager at Dalkia Ireland’s Pharmaceutical & Healthcare division.