Australia’s largest manufacturer and maintainer of railway rolling stock engaged ORBIZ to support the renewal and mobilisation of a passenger-train fleet maintenance contract.
With the current contract for maintenance services expiring and the asset owner imposing commercial innovation in a prospective new agreement, our client recognised the need for specialist support.
The engagement would include developing a new commercial model in collaboration with the customer and developing and then mobilising new operating practices to deliver the contract.
The commercial model proposed by the asset owner required the contractor to provide a fixed supply of maintenance capacity each month. This model was a fundamental shift from current practices for both parties.
Due to the complexity of the proposed contract, the ORBIZ consultant was embedded as the overall bid manager, becoming key to negotiations and development of the associated intellectual property.
The consultant provided a seamless link between the commercial negotiation and operational practicalities by conducting and facilitating the development of operational and financial models in parallel appropriate to the stages of contract negotiation and execution.
The engagement started with collating accurate baseline labour efficiency data for each maintenance activity to develop capacity models and financial estimates for the negotiation. ORBIZ worked closely with the contractor’s financial and procurement teams to ensure the project costings were accurate and would produce a positive commercial outcome.
Accurate pricing options and forecast outcomes were negotiated with the asset owner whilst ensuring they remained comfortable and engaged throughout the process. Due to the depth of commercial support, the ORBIZ consultant provided the final Total Contract Value model approved via the contractor’s internal gate process.
The complexity of the contract led to the development of a comprehensive contract execution document; this ensured the consultant’s knowledge and the intellectual property developed during the negotiation were successfully transferred into the contractor’s organisation.
The handover document is a comprehensive but easy to read handbook for those required to deliver the contract. The handbook describes the various components of the contract in terms that the contractor’s workforce can easily interpret and follow.
Finally, a visual management centre was introduced to enable effective communication and contract management across the contractor’s delivery team.
- 5-year, $80-100M maintenance contract secured
- $3-4M per annum EBIT increase under the new contract
- The relationship between asset owner and contractor significantly improved