1. “The practicalities of
monitoring outsourced
maintenance”.
Engr. Zafar I. Jami
Partner / CEO
Aircraft, Engines & Components’ Consultation
Services (AECCS)
Website: www.aeccs.com
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2. Aircraft Operator’s
Maintenance organization
E& M
E& M
Organization
Organization
On Wing
On Wing Off Wing
Off Wing
Maintenance
Engineering
Engineering Maintenance
Maintenance Maintenance
Rectifications
Rectifications
Periodic
Periodic & Repairs
In House
In House Out Sourced
Out Sourced
& Repairs
A Division Of
A Division Of Independent
Independent Time & Material
Time & Material
Airline
Airline Establishment
Establishment
P.B.C.
P.B.C.
Component
Component
Engines and APU.
Engines and APU. Exchange.
Exchange.
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3. Types of Outsourced
Maintenance (Off Wing)
•Performance Based
–Power By The Hour.
•Your own Engine /APU
comes back after repairs/
restorations.
–Component Exchange.
•Mostly for Components but
often for APU and small
Engines.
–Nose to Tail Programs.
•Can also include Heavy
Checks.
•Time and Material
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4. Performance Based
Contracts (PBC)
 Some of the popular contracts are:
 On Point Solutions GEAE
 FHA –Fleet Hour Agreement RR
 FMP –Fleet Mgmt. Program PWA
 Component Care Programs Various
 Gold Care / Component Exch. Boeing
 OEMs are usually in a better spot to win such contracts
on new fleets, but independent MROs and Third Party
Service Providers are also active in this area.
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5. Salient Features of
Performance Based
Contracts
 It’s a Long Term Commitment
 Preferably do it for the whole expected period of
operation in one Go.
 Operations should be within assumptions’
range.
 Provides Risk Mitigation (not elimination).
 Foreseeable Basic Costs (not total cost).
 Prediction accuracy ~70to 80%
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6. Some Myths and Facts
about PBC
Word of warning
Following are based on generic concept of a PBC/
Exchange Program. However, as these contracts are a
result of negotiations between the parties and keep
changing with experiences gained from other contracts,
all of the points mentioned may not be applicable to a
particular contract.
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7. Some Myths and Facts about PBC
Myth Fact
 I need not indulge in their  This is somewhat true in the
work-scoping issues-as it is in early period, but in the later
years, work-scopes can be
the interest of the Service toned down to the extent that
Provider to produce Best (Gold AD/Alert SBs too are not
Plated) Engines / incorporated if the compliance
Components, that would last dates fall beyond the contract.
It may be sensible to get some
longer. of them incorporated at cost.
 There can be a number of
‘hanging’ costs, that ultimately
 After paying their rates plus are Operator’s responsibility.
insurance, the operator is fully Sometime they can run in
covered for all Engine / millions.
Component related costs.
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8. Some Myths and Facts about PBC II
Myth Fact
•After entering into PBC, we do •Unless there is a tripartite
not have to pay the Maintenance agreement to this effect, MR
Reserves (M.R) to the Lessors, or Payments / Return Conditions are
worry about meeting their Return applicable . M.R Payments are
Conditions. adjusted at restoration shop visits.
•There is no need to monitor the •Monitoring always pays.
Engines going to the Shop under Specially as there is a chance
PBC, as the Service Provider is that, if not contested, the removal
responsible for everything. may be declared beyond the
scope of PBC, hence chargeable
to the customer .
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9. Component Exchange
Programs (CEP):
•Things to Understand
and Watch.
•Things to Monitor and
Control.
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10. C E P: Things to
Comprehend and Watch
 It is easier to include items in the program than to take them out.
 Start from a minimum list of components about which you are certain
that they have to be in it for a very long period.
 Give a realistic timeframe for delivery of the components, as after
that the clock for late delivery will continue till their receipt at the
Vendor. With a loose control this may easily reach up to 20% of
price paid to include the item.
 If the removal is unjustified, you not pay only for Test Charges but
may also have to pay for a good portion of shop visit cost.
 As you always get a different unit, your system should be capable
of handling it.
 Take care that you get Full Documents, including Back to Birth
history and AD / Mod status and promptly enter them in your system.
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11. C E P: Things to Monitor
& Control
 Shipments:
 Optimize & Monitor Shipment cycle through out.
 Discuss with all agencies involved before committing to the timeframe.
 Get confirmations at each stage as there are many a slips.
 Removal Planning:
 Try to plan removals on days that align with shipment schedules.
 Ensure availability of components as well as the aircraft concurrently.
 If cases of late shipments or AOG are high for a peculiar component,
plan for a standby unit/s (rent or purchase).
 Analyze & Control Removals:
 Ensure proper trouble shooting sequences are followed.
 Monitor & Control Unjustified Removals. But understand that this
cannot be brought to zero. NFF limits typically range between 5%
(majors) to 20%( minors).
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12. Time & Material Type
Outsourced Maintenance.
 Salient Features.
 Practicalities of Monitoring.
 Control of PMA parts / DER
repairs.
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13. Salient Features of a
Time & Material Type Contract.
 PLUS:
 Can be One Off.
 Flexibility in Operation
 You are in full control of the work scope
 Its easier to switch vendors and source spares.
 Can take advantage of Market improvements
 MINUS
 You assume all Risks beyond Warranties /Insurance
 Not easy to predict Costs.
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14. Practicalities of
Monitoring through Rep
 A Rep at the MRO is the most useful tool for
monitoring the outsourced work. But make sure
the following when planning to do so:
 Keep a provision to station the Rep (permanent or
visiting) in the Contract for on-site monitoring, and
define his functions. Without this the Shop may refuse
to let him monitor the work.
 The Rep should work in a manner that will not
interfere in Shop’s / Hangar’s functioning.
 Timely query and decision making is very vital
otherwise the delays & costs will be on operator’s
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15. Practicalities of
Monitoring ..II
 The Rep must know how long the Aircraft have
to be in the fleet, and give advice accordingly in
LLP selections and SB incorporation.
 Preparation for an aircraft’s or engine's
disposal / Lease return must start at least one
Shop / Hangar Visit in advance.
 Last, but not the least, it may be better to do
without a Rep than to assign someone who
lacks training, competence or aptitude.
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16. Monitoring Use of PMA
Parts and DER
Repairs:
 As these are getting into more expensive areas,
their use can now save $$$ Millions even on a
small fleet, but take care of the following:
 Your own evaluation should justify its usage.
 FAA’s acceptability does not imply acceptability by the
Regulatory Authority of country of registration.
 Ensure it does not affect Contractual obligations with
the OEM or the Lessor. This can give rise to
Warrantees and Lease Return issues.
 Always keep a track of their usage and monitor
their performance / reliability and pricing.
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17. Outsourcing and IT
Process
While Outsourcing reduces
Complexity of Engineering &
Maintenance setups, it
increases the need to
Monitor more actively, which
has a bearing on its IT
System and reinforces its
role in several areas.
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18. Outsourcing
and IT
•Changing Perspectives.
–What should be the Strategies ?
•How a good System can help?

19. Outsourcing and IT System - Areas needing
Enhancement
Shipment &
Receipt
ENGG. / IT
Airworthiness &
Reliability &
Invoice / Work
Decision Support
related Records
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20. Changing IT Perspectives
-Time and Material Contracts
Issues Strategy to deal with
–Too many Shipping and –Design an IT module for
Receipt Destinations to Ship / Receive and Follow-up.
follow-up. Use tools- Lean/ 6Sigma - to
Optimize.
–Varying Data Formats from –Try for directly up-loadable
each vendor. data formats.
– Differing Invoicing and –Good IT System with
payment methods. Scrutiny and Checks can help
a lot.
–Give your own basic
–Divergent Contractual contract. Add an IT module to
requirements warn of approaching
deadlines on either sides.
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21. Changing IT Perspectives
PBC-(PBTH/ C E P)..I
•Too many Parts and Serial •IT System be designed to
Numbers to deal with. ensure to
–Shipment and receipts have ―Have more check points than
penalty clauses. under T&M .
–Old parts may appear again or –Keep removed parts on system
their data may be required by a but with a Dormant status.
regulatory / investigating –Update new data before
authority. making them Active again.
•How to evaluate and monitor •Have a Decision Support System
Vendors’ performance.
•Define & Compare CTQs to
evaluate Vendors.
•Define and Measure vendors’
KPIs and feed it to DSS.
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22. Changing IT Perspectives
(PBTH/ C E P)..II
•Work scope control. •Make it a contractual
–Changes often not reflected requirement for vendor to
in operator’s documents. inform of any change and
update system ASAP.
•No Fault Found Removals •Enhance Capabilities of
need to be probed in greater Reliability Reporting System
details as these cost much more •System should bring to light
than in case of In-house NFF data (and costs)
Maintenance. retrospectively for mandatory
reviews.
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23. How AECCS can help.
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24. AECCS can help in …
 Maintenance Agreements:
- Between Customers and MRO Shops
– Agreements with Service Providers
– Component Exchange Programs
– Lease and Purchase.
 Leasing and Purchase
-Physical Inspection and Assessments
-Maintenance Reserves Management
-Optimally meeting Lease Return Conditions
 MRO / Engineering IT System
 Help in Evaluation and Selection
 Help in Resolution of Implementation and
Change Management issues.
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25. AECCS can help in …
-Shop Visit Services
 Maintenance Program Development
 MRO / Service Provider Evaluation and Selection.
 Work scoping of Engine /APU and Components
 Representation at or Liaison with MRO during
Engine and APU Shop Visits
 Scrutiny and Technical Review of Shop Visit
invoices
 Review & Disposition of Scrap and left-over
material after Shop Visits
 Review / Management of Maintenance Reserves
after Shop Visits
 Help in resolving issues with Warrantees and
Insurance.
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26. For further queries pl contact us at:
info@aeccs.com or visit our
website: www.aeccs.com
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