Outsourcing total plant maintenance in Singapore petrochemical industry:a critical perspective

Abstract

There are many books suggesting the many benefits of outsourcing. A survey carried out in 2002 on twenty-four companies in the Singapore petrochemical industry showed that only about 10% of the companies outsourced total plant maintenance. Therefore, the research title was 'Outsourcing plant maintenance in Singapore petrochemical industry: A critical perspective'. There were three research questions that the research was examining. The first research question was the critical factors that were used in deciding the outsourcing of plant maintenance. The second research question was the factors that influenced the outsourcing critical factors. The third research question was how the research could help outsourcers to win outsourcing contracts. A combination of qualitative (case study) and quantitative (survey) approaches was selected in this research to meet two important objectives. The first objective was to provide a 'critical perspective' in the research by obtaining the feedback from different levels of management in the petrochemical companies and outsourcing organizations. The second objective was to improve the validity and rigor in the research by triangulating the data analysis of the qualitative and quantitative research approaches. In the qualitative approach eight cases were selected to represent newer and older companies and different types of maintenance outsourcing. In the quantitative approach forty respondents from the petrochemical companies and sixteen respondents from the outsourcer companies were selected because of the relatively large size of the petrochemical companies over outsourcing companies. The pattern matching technique (Yin 1994) was the primary data analysis used to match the interviewees' feedback on the seven outsourcing factors identified in the literature review. The hypotheses derived from the modified Zeithaml's gap model were tested on companies that outsource total plant maintenance and partial plant maintenance. The SPSS statistical software programme was used in the computation of the statistical results. The two critical outsourcing factors in deciding outsourcing total plant maintenance were outsourcing risks and service quality. The outsourcing risks factor was influenced by the company outsourcing culture and the service quality factor was influenced by the contractor worker experience in maintenance. The significance of this finding is the outsourcing risks may be lowered if the petrochemical and outsourcer companies have high commitment towards outsourcing. The service quality may be improved if the outsourcers hire better experienced and skilled workers. An outsourcing selection matrix was also developed to help both the petrochemical companies and outsourcers. The significance of this matrix is the petrochemical companies can use this matrix to decide outsourcing total plant maintenance. The outsourcers can also use this matrix to examine their strengths and weaknesses and give them a better chance of winning outsourcing contracts. This research also contributed to the existing research knowledge in the areas of service quality, outsourcing benefits and management commitment. One of the knowledge contributions was there is a relationship between service quality expectation and outsourcing benefits. The expectation may be lowered if the outsourcing benefits are high. The research implications for the Singapore government policies on encouraging more companies to outsource plant maintenance were also discussed. In conclusion, the research had examined and answered the three research questions. In addition, it also contributed to the existing research knowledge and suggested how the government policies could be changed to encourage outsourcing plant maintenance.