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PSS Contracts for Rail and Road Infrastructure
Linköping University, Department of Management and Engineering, Environmental Technology and Management. Linköping University, The Institute of Technology.
Linköping University, Department of Management and Engineering, Environmental Technology and Management. Linköping University, The Institute of Technology.
Linköping University, Department of Management and Engineering, Environmental Technology and Management. Linköping University, The Institute of Technology.
2011 (English)In: Functional Thinking for Value Creation. Proceedings of the 3rd CIRP International Conference on Industrial Product Service Systems, Technische Universität Braunschweig, Braunschweig, Germany, May 5th-6th, 2011 / [ed] Jürgen Hesselback & Christoph Herrmann, Springer Berlin/Heidelberg, 2011, 291-296 p.Conference paper, Published paper (Refereed)
Abstract [en]

The productivity development for rail and road infrastructure has been weak a long time; and explanation can be found in the traditional contracts used, with little room for incentives for innovation. This literature study investigates the use of the few realized PSS contracts within the rail and road infrastructure. The descriptions and the scientific reports are on a synoptic level and a majority of the reports are funded by the involved actors, showing that there is an interest for PSS contracts in the industry and indicating significant potential for further research in the area.

Place, publisher, year, edition, pages
Springer Berlin/Heidelberg, 2011. 291-296 p.
Keyword [en]
Rail infrastructure; Road Infrastructure; Literature review
National Category
Engineering and Technology
Identifiers
URN: urn:nbn:se:liu:diva-70261DOI: 10.1007/978-3-642-19689-8_51ISBN: 978-3-642-19688-1 (print)ISBN: 978-3-642-19689-8 (print)OAI: oai:DiVA.org:liu-70261DiVA: diva2:437477
Conference
The 3rd CIRP International Conference on IPS2 2011, May 5th-6th, Braunschweig, Germany
Available from: 2011-08-29 Created: 2011-08-29 Last updated: 2014-09-03Bibliographically approved
In thesis
1. Integrated Product Service Offerings for Rail Infrastructure: Potential Benefits and Challenges
Open this publication in new window or tab >>Integrated Product Service Offerings for Rail Infrastructure: Potential Benefits and Challenges
2012 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

Large amounts of different materials are used when building and maintaining railway infrastructure, and the environmental impacts from the upstream production stages are significant. Industry’s motivation to innovate is low, new products or methods are rarely used, and the lowest price is the main driver for selecting a tender.

Integrated Product Service Offerings, or IPSO, has been put forward in the research literature as a potential concept to, from a life-cycle perspective, reduce the environmental impact of products and services, increase cost efficiency and quality, and act as a driver for change. Therefore, this thesis attempts to answer to the aim: “Can the concept of Integrated Product Service Offerings improve the management of rail infrastructure and if so, what would such an implementation induce in terms of risk factors?” The Swedish rail infrastructure is used as a case to discuss the considerations and feasibility of such an implementation. Theories such as product development, information asymmetry and innovation are used to complement the literature focusing on IPSO. The empirical part of the thesis has been collected using individual interviews, group interviews and a survey approach.

The contracts currently used in the railway industry have several advantages, such as being a familiar business model that is straightforward to calculate for the contractors. However, they are not optimal for innovation due to e.g. detailed specifications, standards and technological and market lock-in effects. Technological and market lock-in, in combination with a lack of information transfer between different contracts and actors, are major disadvantages with the current practice. Furthermore, the buyer’s conservative business culture makes it difficult to implement new types of contracts since it is difficult to break old habits. Even though the providers are part of the same mature market, the organizational changes needed for them to fulfill IPSO contracts are not seen as a barrier.

A benefit with IPSO is the holistic life-cycle perspective that provides incentives for dematerialization, resulting in a more resource-efficient and durable infrastructure. IPSO requires improved information transfer, something which stimulates innovation as well as processes for evaluation of the contracts. Further benefits are potential incentives to get contractors involved in the design phase, where the major decisions about the life-cycle are made, in order to reduce the infrastructure's environmental impact and total life-cycle cost. The contractors hope that IPSO contracts will make the buyer focus less on e.g. the initial purchasing price and more on the total life-cycle cost in relation to quality in order to get the best solution.

The actors see themselves as parties with opposing interests. At the same time, IPSO will most likely imply more long-term cooperation, something that calls for common interests, shared risks and flexibility. The innovation possibilities with IPSO could benefit from loosening up the material handling monopoly that the buyer currently holds. Since the buyer is a dominant actor within the industry, this organization has major possibilities to introduce changes that the other actors would have to conform to.

Several challenges with IPSO are discussed, and most of them are derived from the risk and uncertainty aspects that come with long-term contracts and inexperience with a new business model. On one hand, the contractors request more flexibility; on the other hand, they are reluctant to take on more responsibility that could lead to increased risk. However, risk does not have to be seen as something completely negative, as it depends on how the contractors choose to deal with it. They can either develop the necessary skills and competence needed to identify and handle the risk in a strategic manner, foster a competitive advantage, or take the problems as they come in a more ad hoc way. A way to reduce risk and uncertainty seems to be to focus on transparency and information sharing between the actors and the contracts. This would also open up IPSO contracts for reinvestments, where the current lack of information concerning the condition of the facilities results in reluctance for IPSO contracts.

This research has focused on IPSO for rail infrastructure management, using the Swedish rail infrastructure as a case to discuss the considerations and feasibility of such an implementation. The conclusions, therefore, are valid for rail infrastructure in other geographical locations as well.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2012. 70 p.
Series
Linköping Studies in Science and Technology. Thesis, ISSN 0280-7971 ; 1515
National Category
Engineering and Technology
Identifiers
urn:nbn:se:liu:diva-73901 (URN)LIU-TEK-LIC-2011:54 (Local ID)978-91-7519-997-9 (ISBN)LIU-TEK-LIC-2011:54 (Archive number)LIU-TEK-LIC-2011:54 (OAI)
Presentation
2012-01-18, ACAS, A-huset, Campus Valla, Linköpings universitet, Linköping, 10:00 (English)
Opponent
Supervisors
Available from: 2012-01-16 Created: 2012-01-16 Last updated: 2012-01-16Bibliographically approved
2. Integrated Product Service Offerings for Rail and Road Infrastructure: Reviewing Applicability in Sweden
Open this publication in new window or tab >>Integrated Product Service Offerings for Rail and Road Infrastructure: Reviewing Applicability in Sweden
2014 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This research aims to explore and propose a more effective management of rail and road infrastructure and the possibility of a more resource-efficient road and rail infrastructure by applying business models based on performance and a life-cycle perspective.

There is a lack of efficiency in the Swedish rail and road infrastructure industries - at the same time as the availability of the rail tracks and roads is essential. Rail and road infrastructure have long lifetimes, around 40-60 years, and during these decades regular maintenance and reconstruction are needed to ensure proper function. Large amounts of resources are required to construct the infrastructure, and the overall environmental pressure depends substantially on this.

This research is largely based on interviews conducted with the buyer, contractors and design consultants for rail and road infrastructure in Sweden. Literature reviews have been conducted to develop the framework needed to analyze the empirical findings. This research contributes by building on theory in areas such as Integrated Product Service Offerings (IPSOs) and eco-design, and this abstract presents a brief summary of the overall conclusions.

Several challenges for rail and road infrastructure in Sweden have been identified, such as the lack of information and knowledge transfer between different projects and actors. This is due to e.g. the use of traditional short-term contracts and conservative cooperate cultures, creating sub-optimizations in management. Increased collaboration, through e.g. partnering, seems to be a promising way to increase the information and knowledge transfer between actors by increasing trust and interaction. In this way, management would be more effective, and by involving contractors in the design phase, more efficient technical solutions could be developed and used. Additionally, increased involvement by the design consultants and an iterative information loop between design, construction and maintenance could also be beneficial. The research indicates that increased cooperation increases trust. In this way, there is a possibility to remove the detailed requirements that prevent new ways of working.

Rail and road infrastructure have characteristics, such as the resources used and the importance of availability, that are well-suited for IPSOs. This performance-based business model with a life-cycle perspective provides incentives to optimize the use of resources and provide a holistic view for management that is lacking today for rail and road infrastructure. However, a long-term contract such as an IPSO creates uncertainties. The actors are risk-averse, which is an obstacle in the development of new business models and contract forms. Most of the risks and uncertainties identified are due to lack of experience. This implies that an implementation of IPSOs will have a steep learning curve. Additionally, risk allocation between the actors is important for effective management: too much risk for the suppliers will make them reluctant in developing new solutions, and they will use a risk premium to cover up for the risk.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2014. 106 + Appendix 1 and 2 p.
Series
Linköping Studies in Science and Technology. Dissertations, ISSN 0345-7524 ; 1613
Keyword
Integrated Product Service Offerings, Product Service Systems, long-term contracts, risk, life-cycle perspective, resource-efficiency
National Category
Environmental Sciences Infrastructure Engineering
Identifiers
urn:nbn:se:liu:diva-110015 (URN)10.3384/diss.diva-110015 (DOI)978-91-7519-260-4 (ISBN)
Public defence
2014-09-19, ACAS, A-huset, Campus Valla, Linköpings universitet, Linköping, 10:15 (English)
Opponent
Supervisors
Available from: 2014-09-01 Created: 2014-09-01 Last updated: 2014-09-04Bibliographically approved

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