Khalifa Port – the first automated container terminal in the Middle East – is currently being constructed in Abu Dhabi to serve as the main artery for Abu Dhabi’s continued growth. With 16m water depth alongside and an annual handling capacity of 2 million TEU, the port is well set-up to handle the largest vessels. At the time of writing (October 2011) the Automated Stacking Cranes (ASCs) are being erected.Abu Dhabi Terminals will transfer container operations from Port Zayed, the largest port in Abu Dhabi where ADT is currently operating. Though the experience gained from running this facility brings the necessary advantages, it also poses some unique challenges on:
- Staff transition strategy and capability building
- Process changes in key functional areas, and the consequential change management
- Aligning two organizations; creating value from synergies.
This article focuses on the transition strategy for the technical organization. It also outlines the potential conflicts that exist when developing a technical strategy in a low labor cost environment.
Key challenges in running Port Khalifa effectively
The challenges originate from the fact that the equipment used in Port Khalifa utilizes the latest technologies, which in turn require highly skilled labor for maintenance. In addition, the ASC maintenance activities have greater impact on operational performance relative to RTG terminals.
An effective maintenance organization requires the following five elements:
1. Maintenance processes must be mapped and aligned with other functional organizations.
2. Maintenance staff must operate effectively, calling for skills, knowledge and experience.
3. The Computerized Maintenance Management System (IBM Maximo) must fully support these processes, and allow management to drive performance at different organizational levels.
4. Maintenance plans describing what needs to be maintained,
how and when. The plans should also avoid over-maintaining.
5. State of art equipment, parts and facilities to carry out the maintenance activities.
The gaps that drive the transition strategy are mapped through simple questions: Do we have these elements in place today? To what extend do we want to develop these further? The fifth element concerns state-of-the-art equipment, parts and facilities. They have the lowest possible total cost of ownership, while also meeting the operational needs in terms of availability and reliability. This can only be achieved by having the operations, technical and procurement functions work together as a team.
Value of teamwork in procurement, technical and operations functions
The influence on the total cost of ownership (TCO) should be seen in relation to the different steps in the asset lifecycle (Figure 1). When analyzing the breakdown of TCO for container handling equipment, dependent on the asset and labor costs, roughly 30–40% of the TCO is the actual investment size. However, after development of the technical specifications and supplier selection, 70–80% of the TCO is determined as this governs the purchase price, maintenance costs and fuel consumption. A further 5–10% is determined during fabrication where extensive quality control mechanisms are required to drive TCO down. This demonstrates two facts:
1. Technical Asset Management strategies can (only) influence 10–20% of the TCO once the asset has arrived in port.
2. Solid teamwork between procurement, technical and operation functions is an absolute must!
When analyzing maintenance costs, labor costs are 60–70% in Northern Europe, while only 20–30% in low labor cost countries. This brings a dilemma: Should you buy cheap low quality assets in low labor cost countries, and expensive high quality assets in high labor cost areas?
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