Title

Beyond labor rates: How to get more value from Maintenance & Inspection in oil & gas

Section
Reports
Summary

By Andrew Mumby and Richard Stonehewer

For oil & gas operators, Maintenance & Inspection (M&I) Services is one of the largest operating costs across refinery and production assets. Yet many organizations face the same challenge: significant spend on M&I does not necessarily translate into consistent contractor performance, predictable costs, or improved operational outcomes.

In many cases, the problem is where commercial attention is focused. Sourcing approaches often concentrate heavily on labor rates during contract award. But the total cost and performance of M&I are shaped earlier on – through planning, definition, and commercial model design – and can be influenced long after a contract is signed. 

Our work with maintenance, operations, and commercial teams across the oil & gas sector points to a consistent lesson: negotiating the lowest labor rate alone will rarely deliver the full value available. Capturing that value instead comes from applying commercial expertise throughout the entire contract lifecycle.

This article shares five often-overlooked lessons from the field for oil & gas operators looking to improve maintenance performance, contractor productivity, and long-term value.

Five lessons from the field

1 Define the work before going to market

Successful maintenance begins with high-quality planning, work package definition, and engineering input. Poorly drafted Statements of Work, inconsistent hand-offs, and unclear assumptions introduce uncertainty before suppliers even begin the work. That uncertainty is priced into contracts and frequently returns as scope growth, contract variations, and operational inefficiencies.

2 Evaluate total cost and outcomes, not labor rates alone

Across almost every maintenance sourcing process, attention tends to zone in on hourly labor rates. However, total delivery cost is also shaped by planning quality, crew composition, supervision, productivity, first-time-right execution, consumables, and effective scheduling. The best-performing contractors are not always the cheapest; they are those that consistently deliver the best operational outcomes and continue to improve this over time.

3 Keep commercial teams involved beyond contract award

Sourcing strategy, commercial models, and supplier selection create the foundations for value generation. But whether that value is actually realized depends on how the contract is managed after award – from planning and governance to contractor management and continuous improvement. The strongest organizations bring commercial, maintenance, and operations teams together throughout the contract’s lifecycle to ensure that the value agreed on paper is realized and sustained in practice. 

4 Use performance data to understand cost drivers

Many organizations understand what they spend but have limited visibility of what drives that spend. Looking beyond invoice values to measures such as productive time on tools, crew utilization, supervision ratios, work execution, and supplier productivity gives operators a clearer understanding of what is driving maintenance performance and cost. Better data enables better decisions.

5 Build continuous improvement into the contract lifecycle

Leading operators treat maintenance contracts as operational partnerships, using regular governance, supplier performance reviews, and lessons learned to identify opportunities for continuous improvement throughout the contract lifecycle. This allows commercial models and ways of working to evolve over time, improving productivity and operational performance while addressing the underlying drivers of cost, rather than simply pushing for lower day rates.

Enabling performance across the contract lifecycle

So, what does this look like in practice? The opportunities, and the role of commercial teams in capturing them, vary across each stage of the contract lifecycle.

Contract lifecycle stage How commercial teams create value
Strategy Challenge demand, benchmark the market, and identify opportunities to improve operational performance.
Scope definition Match the commercial model to the work, using a blend of T&M where the scope is not clear and developing outcome-based SoWs where the scope is already clearly defined.
Sourcing & award Evaluate delivery models, productivity assumptions, innovation, and total value – not just labor rates.
Mobilization Establish governance, KPIs, reporting requirements, and performance baselines from the outset.
Delivery Create a solid baseline for data reporting and jointly review productivity, crew mix, supplier performance, commercial mechanisms, and opportunities for continuous improvement.
Renewal Use operational insight and lessons learned to reshape future contracts, rather than extending existing arrangements or taking the same scope back to market.

Looking ahead

As oil & gas operators continue balancing cost, reliability, and operational risk, the way Maintenance & Inspection contracts are structured and managed can have a significant impact on both cost and operational performance. 

Capturing the full opportunity therefore requires an integrated approach from across the business. By combining commercial insight with operational experience, operators can maintain greater control over how work is scoped, bought, and delivered, driving continuous improvement throughout the life of a contract.