Critical contractual issues of outsourced operation and maintenance service for commercial buildings

Abstract

Purpose – Building operation and maintenance (O&M) service, which embraces a wide range of specialist trades, has been increasingly outsourced through discrete contracts. This paper aims to study the issues critical to outsourced O&M contracts for commercial buildings. Design/methodology/approach – The paper takes a transaction cost approach to analyse the findings from face-to-face interviews with 22 O&M practitioners in Hong Kong. Findings – The analysis revealed that they practitioners generally had limited understanding about the concepts of contract. Lacking a standard form for O&M contracts, some contracts were formed rather loosely and irregularities in contract conditions are common. Disputes frequently arise from the scope of work although the practitioners considered well defined work scope is paramount to a successful contract. Research limitations/implications – Besides the need to study how to improve practitioners' knowledge about O&M service contracts, further studies are required to investigate which or which combination of the contract concepts would be suitable for particular types of O&M contracts where their scale and complexity are dependent on the trade of work required to serve the building. Originality/value – This paper uncovers a number of contractual issues that are critical to the performance of outsourced O&M service for commercial buildings.