Pragma-Shell facilities management contract off to a great start

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Petrochemicals giant ShellSA Marketing in December awarded a five-year contract for the maintenance and management of its retail facilities and assets to Cape-based asset-maintenance company Pragma. According to Pragma director Karl Nepgen, the contract value is based on a combination of a fixed management fee, plus mark-up on minor capital projects for site improvements and restoration of standards. He says the budget value managed may vary according to budgeting constraints.

The contract forms part of a broader Shell Global process aimed at standardising and aligning its Africa business with the rest of the world. Pragma`s initial focus will be on Shell`s operations in South Africa, Namibia, Botswana, Lesotho and Swaziland.

"In terms of this facilities management contract, Pragma will be responsible for the creation and operation of a call centre through which all incoming calls, customer or dealer requests and notifications will be managed," says Nepgen. "Once calls have been logged, appropriate service providers or Shell personnel will be appointed to address the particular queries and action any requests or complaints, with Pragma managing the process, work execution and outcomes.

"Outside the call centre environment, we will also be responsible for the management of all third-party contracts, including the financial aspects, engineering management, quality control and the supervision of health, safety, security and environment compliance for all maintenance and project work to be performed at every Shell retail site."

The project is being launched with a three-month asset-identification and condition survey across Shell`s 860 retail sites in southern Africa, including forecourts, fuel pumps, service areas, bulk storage containers and shops. During this period, all the company`s assets are being identified and bar-coded and their physical conditions assessed. A complete asset register will be created with the information gathered, and will play a key role in the efficient and cost-effective maintenance and management of Shell`s assets.

Pragma began working on the contract in January 2006, during which the team was assembled and infrastructure at Pragma`s Durbanville offices expanded to provide additional required capacity. "The `go-live` date was 3 April, and the first three months of operation are allowed for stabilisation," Nepgen says.

A dedicated team of 15 Pragma personnel will be based in Cape Town, from where the Shell call centre will be run, and the entire facilities-management contract coordinated. "We have established a presence in both Namibia and Botswana, by recruiting competent local engineers for our team of dedicated field engineers," Nepgen reports. "The rest of the engineering team is spread around the major South African centres, and the whole team is managed centrally by a Cape Town-based engineering manager."

He comments that Pragma uses information and communications technology based around its On Key asset management software to keep the team connected, which remains an innovation focus area for continuous improvement.

Shell Oil Products Africa construction process engineer Graham Holding says the awarding of this contract is in line with Shell`s global vision to streamline the maintenance processes for its retail outlets. "The key strategy is a move to a global management of the network, supported by a consistent set of processes using best practices from within and outside Shell," he says. He adds that Pragma will use its knowledge of maintenance delivery mechanisms to provide a continually improving customer value perception for the company`s retail outlets.

"They will also improve the asset performance of our retail equipment and infrastructure, thereby minimising the total cost of ownership while achieving structural cost reduction in the maintenance of our network," Holding details.

Nepgen explains that Shell`s internal business case was that it expected to reap various benefits from the contract, including better service for Shell customers through reduction in equipment downtime, improvement in asset performance and simpler operation for Shell employees by allowing them to focus on the company`s core activities.

"In addition to this, we believe that this contract will bring about better asset-information management - resulting in better control of what equipment belongs to who, better maintenance work planning and control- thus delivering more effective maintenance with faster response times and reduced costs, and focused financial management, providing optimisation of maintenance expenditure and guaranteed savings," he details.

"We also expect it to benefit Shell through improved contractor management, leading to better quality and value of work by contractors, focused health, safety and environment management, which, in turn, will lead to safer and healthier working situations for contractors, employees and clients alike, and ensure legislative compliance."

He also says there will be an improved public image of Shell`s service stations as everything at the retail sites will be in good working order and will be looking good too. According to Nepgen, this contract is the biggest outsourced asset management deal ever embarked on by Pragma Africa. "We see outsourced asset management as a huge opportunity within the market, and believe that this deal will showcase our ability to deliver on a large scale and demonstrate our commitment to improve the performance of our clients` assets," he says.

When asked how Pragma secured the contract with Shell, Nepgen responds that central to the company`s success has been its superb asset and maintenance management record over the past 16 years, in various industry segments, including fuel retailing. "Shell has actually been a client for the past seven years, although Pragma previously only provided an outsourced service for call centre operation and asset data administration, using our On Key asset management software system, for its South African retail assets," he states.

"During this time, Pragma was instrumental in implementing various asset-management best practices for Shell Retail Engineering, based on our proprietary asset-management improvement programme framework, which gave Pragma the benefit of a very good working knowledge of Shell`s retail assets, the engineering business processes, its dealer network, and the national contractor network."

He says another major factor was Pragma`s highly structured and integrated engineering management approach. "Pragma`s roots lie in engineering, and most of the people working at the company are qualified engineers, who all have a passion for the well structured management of physical assets and the associated information which is vital in today`s complex and competitive business place," Nepgen details. "This gives Pragma a distinct advantage within the industrial asset-management environment.

"The final factor is our strong BEE credentials, with 30% of Pragma Africa being owned by our BEE partner, Nokusa Investments."

Interview by Matthew Hill
Contact: Louis Volschenk

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