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Integrated Product Service Offerings for Rail and Road Infrastructure: Reviewing Applicability in Sweden
Linköping University, Department of Management and Engineering, Environmental Technology and Management. Linköping University, The Institute of Technology.
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 [en]
Integrated Product Service Offerings, Product Service Systems, long-term contracts, risk, life-cycle perspective, resource-efficiency
National Category
Environmental Sciences Infrastructure Engineering
Identifiers
URN: urn:nbn:se:liu:diva-110015DOI: 10.3384/diss.diva-110015ISBN: 978-91-7519-260-4 (print)OAI: oai:DiVA.org:liu-110015DiVA: diva2:742222
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
List of papers
1. PSS Contracts for Rail and Road Infrastructure
Open this publication in new window or tab >>PSS Contracts for Rail and Road Infrastructure
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
Keyword
Rail infrastructure; Road Infrastructure; Literature review
National Category
Engineering and Technology
Identifiers
urn:nbn:se:liu:diva-70261 (URN)10.1007/978-3-642-19689-8_51 (DOI)978-3-642-19688-1 (ISBN)978-3-642-19689-8 (ISBN)
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
2. Integrated Product Service Offerings for rail infrastructure: benefits and challenges regarding knowledge transfer and cultural change in a Swedish case
Open this publication in new window or tab >>Integrated Product Service Offerings for rail infrastructure: benefits and challenges regarding knowledge transfer and cultural change in a Swedish case
2015 (English)In: Journal of Cleaner Production, ISSN 0959-6526, E-ISSN 1879-1786, Vol. 98, 166-174 p.Article in journal (Refereed) Published
Abstract [en]

The aim of this paper is to investigate potential benefits and challenges regarding knowledge transfer and cultural change from the provider and buyer perspectives when using IPSOs for Swedish rail infrastructure. Considering material use and the importance of availability of the tracks makes rail infrastructure an interesting candidate for a business model based on a life-cycle approach, which can result in a reduction in cost and environmental impact.

The concept of the Integrated Product Service Offering (IPSO) has in several business areas proven to be a means 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, which is based on a life-cycle approach, focuses on the function instead of the initial price of the product.

Among the main findings are the lack of information and knowledge transfer that act as a barrier for innovation, and that 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. By involving the contractors in the design phase their knowledge could be used in a better way, creating a feedback loop from practice to design.

The empirical part, focusing on the rail infrastructure industry in Sweden, has been collected using individual interviews and a group interview approach.

Place, publisher, year, edition, pages
Elsevier, 2015
Keyword
Rail infrastructure, Long-term contracts, Supplier–buyer relationships, Knowledge transfer
National Category
Environmental Sciences Production Engineering, Human Work Science and Ergonomics
Identifiers
urn:nbn:se:liu:diva-109976 (URN)10.1016/j.jclepro.2014.06.039 (DOI)000356194300017 ()
Available from: 2014-08-29 Created: 2014-08-29 Last updated: 2017-12-05Bibliographically approved
3. Scenarios for Resource Efficient Rail Infrastructure: Applying Integrated Product Service Offerings
Open this publication in new window or tab >>Scenarios for Resource Efficient Rail Infrastructure: Applying Integrated Product Service Offerings
2014 (English)In: PRODUCT SERVICES SYSTEMS AND VALUE CREATION: PROCEEDINGS OF THE 6TH CIRP CONFERENCE ON INDUSTRIAL PRODUCT-SERVICE SYSTEMS, Elsevier, 2014, Vol. 16, 13-139 p.Conference paper, Published paper (Refereed)
Abstract [en]

The rail infrastructure in Sweden, with its long lifetime, large amounts of materials used and traditional procurement, has escalating maintenance costs. What would occur if the infrastructure is instead procured as an Integrated Product Service Offering (IPSO)? This paper discusses scenarios for increased resource efficiency and more value for the money spent by applying an IPSO perspective to rail infrastructure. The best option depends on the conditions at the construction site as well as how much the availability of the tracks is valued.

Place, publisher, year, edition, pages
Elsevier, 2014
Series
Procedia CIRP, ISSN 2212-8271 ; 16
Keyword
Rail infrastructure, maintenance, availability, product service systems
National Category
Environmental Sciences
Identifiers
urn:nbn:se:liu:diva-109977 (URN)10.1016/j.procir.2014.06.001 (DOI)000345448900023 ()
Conference
6th CIRP Conference on Industrial Product-Service Systems (IPSS)
Available from: 2014-08-29 Created: 2014-08-29 Last updated: 2015-01-08Bibliographically approved
4. Partnering – a Way to Reach Resource-Efficient and Effective Road Infrastructure Projects through Increased Information and Knowledge Transfer?
Open this publication in new window or tab >>Partnering – a Way to Reach Resource-Efficient and Effective Road Infrastructure Projects through Increased Information and Knowledge Transfer?
(English)Manuscript (preprint) (Other academic)
Abstract [en]

The construction industry is behind other industries when it comes to efficiency, and partnering has been discussed as a way to increase the cooperation in and technical performance of projects. For partnering to be successful several different aspects have to be in place, among them information sharing and trust. The objective is therefore to investigate implications of partnering as a way to reach more resource-efficient and effective road infrastructure projects through increased information and knowledge transfer.

The article investigates a road project realized using less time than estimated as well as achieving a lower total cost than budgeted. Partnering resulted in a close collaboration and increased trust among the actors, and the co-location of the actors led to the exchange of information and especially informal communication. Information was easily accessed and transferred between the actors, and the cooperation facilitated knowledge transfer between the different functions. This cut the lead times on information transfer and decision making, especially in the integrated construction and design phase, making the project more efficient. Also, solutions adapted for the site were chosen thanks to the active design approach. Instead of spending time on remaking poorly-adapted designs, time could be spent on other things, making the process more effective as well. The success of the project suggests that partnering could be a way forward in the road infrastructure industry. However, even more resource-efficient solutions could have been chosen if the project had a life-cycle perspective.

Keyword
Buyer-supplier collaboration, partnering, resource efficiency, road infrastructure, knowledge transfer, information transfer
National Category
Environmental Sciences
Identifiers
urn:nbn:se:liu:diva-109979 (URN)
Available from: 2014-08-29 Created: 2014-08-29 Last updated: 2015-01-07Bibliographically approved
5. Identification of Risks Related to Integrated Product Service Offerings of Rail Infrastructure
Open this publication in new window or tab >>Identification of Risks Related to Integrated Product Service Offerings of Rail Infrastructure
2014 (English)In: Through-life Engineering Services / [ed] Louis, Rajkumar Roy, Springer, 2014Chapter in book (Other academic)
Abstract [en]

Among construction companies in Sweden, incentives for development, increased efficiency and raised competence are low. In Sweden, construction contracts are currently used to a large extent, and have shortcomings concerning weak incentives for development of procedures. The over-detailed specifications cause major obstacles for the rail infrastructure industry in terms of technical development. There is clearly a need for change, and it is now in the strategy of the Swedish Transport Administration (STA) to get as much railway as possible for the money it spends. This includes increased productivity, level of innovation and competition, as well as a will to think more from a life-cycle perspective and increase cost efficiency. Changes in the business model is one of the strategies mentioned to reach these goals.

Performance contracting could increase the drivers for change within the industry and thereby increase cost efficiency and quality from a life cycle perspective. This type of contracting is also known as an Integrated Product Service Offering, or IPSO, and implies that one actor has the responsibility to deliver a result and therefore has incentives to optimize the use of energy and material. An IPSO has a lifecycle perspective, and the combination of products and services can be combined into an optimized solution for the customer, as well as give the manufacturing company the possibility to have control over the product throughout its whole life-cycle. PSS provides the supplier with the opportunity to increase the value of the solution for the customer by integrating components in new ways, as well as incentives for the supplier to realize a more economical and environmental development when considering the whole lifecycle. More money spent on the construction, and thereby improved quality, could result in reduced cost for maintenance work. On the other hand, too high a cost for construction can never be motivated by future savings for the maintenance cost.

New business models such as IPSO contracts create challenges such as uncertainty concerning forecasting costs at the bidding phase of the contract. With a business model focusing on delivering a result, a lot of the risk previously carried by the user is now assumed by the provider, and it can be difficult rededicating and controlling the risks and uncertainties. In this case the term “risk” is defined as the threat of loss from an unwanted event, to include financial, performance or timescale loss. Risk assessments, including forecasting and economic development, are very important for these long-term contracts and both the supplier side and the buyer side have to be considered. For longterm performance contracts risks caused by uncertainties arise in the bidding stage. Key uncertainties for a IPSO contract are performance, operation, training, engineering, affordability and commercial uncertainties.

In cooperation with the STA, the DORIS (Development of integrated product service Offerings for Rail Infrastructure Systems) project investigates the potential use of IPSO contracts for rail infrastructure. So far, only one such contract has been realized; this was partly funded by private capital, and no such initiatives are currently planned. This limited experience in the industry calls for more thorough research. In line with this, the aim of this paper is to identify potential risk components when using IPSO for rail infrastructure for both the provider and buyer perspectives. Furthermore, the paper seeks to investigate how these risks can be potentially reduced or avoided.

Place, publisher, year, edition, pages
Springer, 2014
Series
Decision Engineering, ISSN 1619-5736 ; 2014
National Category
Engineering and Technology
Identifiers
urn:nbn:se:liu:diva-73900 (URN)978-3-319-12110-9 (ISBN)
Note

On the day of the defence date the status of this article was Manuscript.

Available from: 2012-01-16 Created: 2012-01-16 Last updated: 2015-01-07Bibliographically approved

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