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Don’t assume more risk than you need to. Don’t leave money on the table. Instead employ an intelligent contract management platform.

Posted By: Siraj Taj, Principal ST Power Services

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Creating a contract management platform is the process of managing contract creation, execution and analysis to maximize operational and financial performance, while reducing financial risk to the power plant owner.


Developing a contract management platform can be a time-consuming and costly burden on the power plant Owner. It warrants a need for an effective and efficient management process to make sure owners receive the maximum value from the contract. An effective contract manager would then utilize the process to keep the OEM or aftermarket service provider honest to the terms of the contract while protecting the Owner from unnecessary additional costs.


In the absence of an intelligent contract management platform it is most likely that the Owner is leaving money on the table for parts and services that are typically covered under the contract. What’s worse, the money left on the table is directly improving the margin of OEM or aftermarket service providers.


Generally, the service contract assumes certain market conditions and the Owner’s operating model is relevant only for a foreseeable period, about 3 – 5 years.  It is a foregone conclusion that the contract will be outdated in relatively short duration because of changing market conditions that would invalidate the underlying assumptions of the service contract. Market shift should be an opportunity for power plant Owners to either renegotiate the contract or get more value for its buck.


The key to uncovering such opportunity is to understand the flexibility in your contract and adjust the terms to align with new market conditions.


The unfortunate reality is that OEM and aftermarket service providers benefit from changing market conditions because they have a stronger contract management team that understands the inherent gaps in the contract language. It behooves Owners to have a strong and dedicated asset management team that can effectively utilize the contract management process to closely monitor contract performance and not incur costs for parts and services not received.


The right contract management platform gives plant Owners critical tools to highlight potential risk and opportunities hidden in the contract due to shifting market conditions.


Another thing to keep in mind is OEMs are notorious for assuming no liability, even when it’s clearly stated in their contract. Most owners however, are focused on operation and maintenance, asset performance, and generating profits; Owners lose sight of keeping Service providers honest about their contractual obligations. Furthermore, third party Operation and Maintenance companies are not the contracting parties on a Service Contract for a particular power plant, so they rarely manage them while required to interface with Service providers for planned and unplanned maintenance work. Herein lies the gap.


ST Power Services has years of experience in profitably managing service contracts for both OEM and Plant Owners.  ST Power Services has the means and methods to effectively manage service contracts, monitor market conditions, mitigate potential risks, and avail opportunities to improve the overall performance of service contracts. ST Power Services knows how to leverage inherent gaps in favor of power plant owners.


Don’t incur additional costs when the terms of your contract may clearly state otherwise. Don’t leave money on the table simply because you don’t have time to effectively manage your service contract. You deserve higher value and lower risk from your service providers. Let ST Power Services get you the maximum value from Service Contract.

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