Customer-oriented risk assessment in network utilities

Abstract

For companies that distribute services such as telecommunications, water, energy, gas, etc., quality perceived by the customers has a strong impact on the fulfillment of financial goals, positively increasing the demand and negatively increasing the risk of customer churn (loss of customers). Failures by these companies may cause customer affection in a massive way, augmenting the intention to leave the company. Therefore, maintenance performance and specifically service reliability has a strong influence on financial goals. This paper proposes a methodology to evaluate the contribution of the maintenance department in economic terms based on service unreliability by network failures. The developed methodology aims to provide an analysis of failures to facilitate decision-making about maintenance (preventive/predictive and corrective) costs versus negative impacts in end customer invoicing based on the probability of losing customers. Survival analysis of recurrent failures with the General Renewal Process distribution is used for this novel purpose with the intention to be applied as a standard procedure to calculate the expected maintenance financial impact, for a given period of time. Also, geographical areas of coverage are distinguished, enabling the comparison of different technical or management alternatives. Two case studies in a telecommunications services company are presented in order to illustrate the applicability of the methodology.