UC Equipment Maintenance Insurance Program

Case study

Background

The University increasingly relies on equipment and technology for mission delivery. Thus, the University must be prepared to maintain operational continuity in part through the avoidance/minimization of service disruption caused by machinery failure or breakdown.

In the medical centers, the impact of a service interruption in critical medical equipment resulting from machinery failure can be catastrophic and potentially fatal. The resulting reputational, financial, compliance, patient confidence, and legal consequences would severely impact the University’s fundamental mission of patient care. Across the UC research enterprise, equipment failure could result in loss of research data and withdrawal of research funding. Within the campus environment, if we cannot rely on our equipment to provide student learning opportunities, we will not be able to attract and retain top‐flight students, and the institution will shrink. These are serious risks.

Goal

Risk Services at the UC Office of the President (UCOP) aims to provide a systemwide management tool that allows all departments, regardless of size, to manage and plan for scheduled preventative equipment maintenance and resumption of critical functions as quickly as possible after a machinery breakdown. The tool will allow systemwide sharing of equipment reliability, repair costs, and vendor service metrics – key information to assist future equipment planning and annual running cost analysis.

Successes

UC San Francisco (UCSF) participated in an initial study of the UC Equipment Maintenance Insurance Program (UCEMIP) program. In a few short months UCSF realized $257,000 of potentially $3 million in annual cost reductions. UCSF has achieved enhanced efficiencies regarding maintenance tracking and assessment of equipment maintenance costs and frequency. Our collective experience has shown significant efficiency improvement and cost savings:

Enhanced reliability of key mission‐critical equipment from a mission continuity perspective, leading to improved strategic equipment planning;

25% discount on original manufacturer maintenance contract cost;

Minimal transition time/operational impact owing to retention of preferred service vendors;

Systemwide analysis of equipment reliability and operational maintenance costs to support strategic systemwide procurement process and Equipment Life Cycle Management;

Quality Assurance/Control, maintained through enforce‐ ment of original contract performance specifications;

Administrative efficiency through management of both scheduled preventive maintenance and emergency repairs; and

Enhanced/consolidated equipment maintenance data via internet‐based management reporting system.

Challenges

Widely used in the corporate sector, equipment maintenance insurance has evolved over the past five years owing to the availability and flexibility of internet‐based equipment maintenance/management reporting systems. Equipment supplier and end‐user interests are not always aligned, which often resulted in less than optimal oversight of equipment maintenance. We anticipate initial resistance from both vendors and end‐users; however, guaranteed 25% savings on the cost of equipment maintenance should ensure early adoption of this program.

Initial investment

UCEMIP is part of a suite of Enterprise Risk Management solutions. There is no additional administration or data management cost; only applicable insurance premium per contract.

Fiscal results, current and anticipated

The UCSF pilot study generated $257,000 of potentially $3 million in annual cost reductions. The conservative systemwide estimate of potential savings is $30 million.

Current action and next steps

UCEMIP implementation is straightforward. Each campus:

  1. Creates departmental lists of existing maintenance
    contracts and renewal dates;

  2. Identifies key stakeholders including procurement, risk
    management, and strategic sourcing; and

  3. Provides information to UCOP Risk Services teams.

Subsequently, the vendor creates a campus/medical center database plan. Experience shows that some action items identified by departments are broad in scope and can be grouped into a campus‐level plan.

Concluding statement

UCEMIP exhibits what the University can achieve when we export a solution launched at a single campus, enhance it for broader use, and implement it systemwide. UCEMIP achieves administrative efficiency by implementing a common solution to a common challenge.