Review of Quantitative Methods for Designing Availability-Based Contracts

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Review of Quantitative Methods for Designing Availability-Based Contracts

Journal of Cost Analysis and Parametrics

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Understanding the total life-cycle cost is an essential part of all sustainment contracts. Sustainment constitutes 70% or more of the total life-cycle cost of safety-, mission-, and infrastructure-critical systems. For many types of systems, availability is the most critical factor in determining the total life-cycle cost of the system. To address this, availability-based contracts have been introduced in the governmental and non-governmental acquisitions space (e.g., energy, defense, transportation, and healthcare). As a result, in the new service-oriented environment, formulating contracts in cost effective ways (for both the customer and the contractor) is of great importance for pricing, negotiations, and transparency. Meanwhile, the development, implementation, and impact of contract and avail-ability requirements within contracts is not well understood. This article reviews quantitative studies that address the critical elements for designing availability-based contracts. Assessments of current methodologies ranging from optimization- to simulation-based methods in domains of practice that utilize availability-based contracts are included, and research gaps are identified.


Amir Reza Kashani Pour is a Future Faculty Fellow of Clark School of Engineering and Ph.D. student of Mechanical Engineering Department at the University of Maryland, College Park. His interests include modeling and optimization for high-availability cyber-physical systems, system fault diagnosis and prognosis and production economics. He has an M.Sc. of Electrical Engineering with focus on control theory.

Peter Sandborn is a Professor in the Department of Mechanical Engineering and the Director of the Maryland Technology Enterprise Institute (Mtech) at the University of Maryland. Dr. Sandborns research interests include electronic part obsolescence management, prognostics and health management for electronic systems, and system life-cycle and risk economics. He received a Ph.D. in electrical engineering from the University of Michigan.

Qingbin Cui is an Assistant Professor of Civil Engineering at the University of Maryland. He has been working in the field of public private partnership, project procurement and delivery, sustainable materials and infrastructure. He holds a Ph.D. in Civil Engineering from Purdue University.