Large amounts of material are used for rail infrastructure causing significant environmental impact. At the same time the industry’s motivation to innovate is low and the lowest price is the main driver for selecting a tender. The concept of Integrated Product Service Offerings (IPSO), have in several business areas proven to be a mean with potential to reduce the environmental impact of products and services, increase cost efficiency and quality, and act as a driver for change. The business model is based on a life cycle approach and focuses on the function and not the product of an offering.  

The objective of this paper is therefore to investigate the potential benefits and challenges regarding resource efficiency and knowledge transfer from the provider and buyer perspectives when using IPSO for rail infrastructure. In order to this, theories such as resource efficiency, product development, knowledge transfer, networks and literatures focusing on IPSO are used to discuss the empirical findings. The empirical part has been collected using individual interviews and a focus group approach.

Among the main findings is that fact that the lack of information transfer and knowledge integration is a barrier for innovation and the buyer’s conservative business culture makes it difficult to implement new types of contracts. Since IPSO contracts require improved information transfer they could potentially stimulate innovation as well as processes for evaluation of the contracts. IPSO contracts provides a holistic life-cycle perspective and incentives for dematerialization, resulting in a more resource-efficient and durable infrastructure. By involving the contractors already in the design phase their knowledge could be used in a better way, creating a feedback loop from practice to design. The contractors hope that by introducing IPSO contracts the buyer would focus less on the initial purchasing price and more on the total life-cycle cost in relation to quality in order to get the best solution.

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. New competences in risk management and other types of calculation methods are needed but most of all a change in mindset. Some of these uncertainties also are connected to the inadequate documentation hindering IPSO contract working for anything but new investments.