Economic, management and contractual considerations in outsourcing operation and maintenance work for commercial buildings

Operation and maintenance (O&M) work, which is influential to the performance of a building and its economic value, has received little attention. Outsourcing for O&M works from contractors who specialize in the works can be more economical than performing the works in-house and can lead to better performance. Since the economic downturn in the late 90s in Hong Kong, building owners have increasingly outsourced O&M work, but the purpose has been primarily to cut cost, with up-keeping building performance left as an afterthought. Guidelines available from the open literature on making outsourcing decisions are not tailored for building O&M work. The aim of this study is to help building owners make decisions on whether to outsource for O&M works by providing them with guidance on the critical considerations and good practices that should be taken to ensure value for money, and to avoid potential negative impacts on the performance of their buildings. The study focused on commercial buildings in Hong Kong. The empirical data was collected via a self-administered questionnaire survey in the first stage of the study. It has revealed that disputes are frequently found with O&M contracts where contractual responsibilities are vaguely defined by using common contract terms such as “fair wear and tear” and “vandalism”. In probing the key management, contractual and economic issues of outsourced O&M works, face-to-face interviews with practitioners in the second stage have revealed that O&M works are generally undertaken by a mix of in-house and outsourced resources, with the latter undertaking those requiring intensive labour resources or compliance with statutory requirements. Managing contractors are often employed to mediate various trades of O&M work, but bundling O&M contracts across building boundary, which in principle should be more economical, is not practiced in private commercial buildings. While effective communication among the in-house and outsourced O&M teams is generally regarded as highly important, sharing of O&M productivity information among the stakeholders remains limited.