As a novel contracting approach, the performance-based contracting (PBC) utilizes defined performance goals and structured incentives to improve the system availability and reduce the cost by tying the compensation to the service supplier to the system performance outcome. In this paper, two new CBM optimization models within the PBC framework are proposed considering the impacts of destructive inspections on the system degradation behavior. The average maintenance cost rate and the system availability within the contract horizon are estimated. Under the inspection-based replacement scheme, the objectives are to maximize the expected profit rate to the supplier and/or the resulting system average availability. A solution procedure based on the non-dominated sorting genetic algorithm (NSGA-II) combining with the weighted sum method (WSM) is introduced to derive the optimal CBM policies. Numerical examples and sensitivity analysis are conducted to examine the applicability of the proposed models.
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