Maintenance expenses are most of a facility’s fixed operation cost. Thus, maintenance managers must ensure that the money spent on asset upkeep provides the optimum results. To do this, managers should master the task of balancing cost and quality. Reducing maintenance costs can decrease the quality of maintenance, resulting in productivity losses and more costs in the future.
On the other hand, spending too much on high-quality maintenance may be unnecessary, wasting capital that could have been spent on other areas of the business. In this post, we investigate how maintenance managers develop, evaluate, and improve their budgets and utilize them for optimum benefits.
Why Optimize Maintenance Budgets?
Having an optimized maintenance budget provides the following benefits:
Helps You Stay on Track with Goals
An optimized budget identifies specific annual maintenance goals and the things needed to achieve them. Your goals are your roadmap, and your budget is the car that gets you there.
Evaluates Previous Expenses
A budget lets managers compare actual expenses against the planned expenses, allowing for better planning and allocation of the succeeding budget. This can double as a guide pointing you were to dig deeper with root cause analysis.
For example, if you spend twice as much on lubricants as you budget for, then you can investigate you lubrication program. Do you have undetected leaks? Are your lube route unorganized causing technicians to lubricate assets more than necessary?
Could you extend the time between oil changes? Start asking these questions and you will find ways to optimize your maintenance and your budget further. Join us for an educational webinar with guest Tim Dunton from Reliability Solutions and learn the 5 Steps to Maintaining a Successful Lubrication Program.
Helps Adjust Maintenance Strategies
A budget provides insight into current maintenance strategies or methods. It helps managers identify which are working to reduce costs and improve quality and which are not.
Makes It Easier to Ask for a Budget Increase
A budget that was appropriately allocated and received optimum results has a higher chance of getting an increase. As a maintenance manager, having clear data to back up your request will go a long way with management.
Typically, the people approving your budget requests are not deeply familiar with maintenance and its impact. But they are good with data. So, showing how your budget supports the bottom line by increasing productivity, decreasing downtime, and more will help them understand.
Flexible Against Changes
A budget allows for easier allocation of maintenance costs in case of business expansion, new asset acquisition, or a shift in operations.
Prevents Over or Under-maintaining
An optimized budget prevents excessive or inadequate maintenance, both of which result in high operating costs and reduced revenue.
Costs to Consider for an Optimized Budget
An optimized maintenance budget starts with proper planning. Below are the essential costs to include in a maintenance budget:
- Operating expenses – these include all the costs needed to run the maintenance operations such as staff salary and benefits, utilities, supplies, transportation, etc.
- Planned capital expenditures – this part of the budget is allocated for scheduled replacement of assets or tools, equipment modifications, and other special projects.
- Planned maintenance costs – these are the costs of labor, materials, and other requirements for accomplishing scheduled maintenance tasks.
- Unplanned maintenance costs – these are the additional costs that arise from emergency maintenance tasks.
- Analysis and calibration expenses – these are costs paid to perform oil analysis, calibration, and other third-party testing necessary for asset and equipment maintenance.
- Maintenance contractor costs – this part of the budget is for hiring contractors to perform tasks or execute special projects that cannot be done in-house.
- Software and other licenses cost – these include the cost of management, inventory, or communication tools used by the maintenance team.
- Buffer costs – a portion of the maintenance budget to be used in case other allocations run short.
Ways Maintenance Managers Can Optimize Maintenance Budgets
To ensure that budgets are optimized to reach their set goals, managers can follow these steps:
1. Streamline the Process
Removing bottlenecks and improving efficiency results in more work done for the same cost. A streamlined maintenance process also prevents errors that often lead to costly solutions.
2. Train Staff
Providing the necessary training for staff and employees saves the cost of hiring contractors or highly skilled workers. Proper training in the maintenance process also improves worker efficiency.
3. Analyze and Adjust Wrench Time
Evaluating the amount of time spent on maintenance tasks lets you analyze schedules, identify problem areas, and adjust procedures to improve maintenance performance.
4. Group Assets
Assets require different maintenance tasks and grouping them according to these requirements means improved scheduling and implementation of tasks. Grouping assets also makes assigning and adjusting the budget easier.
5. Optimize Preventive Maintenance (PM)
Ensure that PM tasks are assigned only to the asset that needs PM. Evaluate each asset to determine if the degree or frequency of PM tasks needs to increase or be cut down. The priority should be PMs (Preventive Maintenance) that bring the most value or make the greatest impact.
Optimizing Your Budget With CMMS
A computerized maintenance management system (CMMS) is the ideal tool for maintenance managers to optimize their budgets. The cost of a CMMS like Redlist is far outweighed by its many benefits. Such benefits include:
- All-in-one platform – CMMS software lets users store and share files, generate maintenance reports, issue work orders, collect data, etc. Having an all-in-one platform makes maintenance work more efficient and less prone to errors.
- Tracking and analyzing expenses – CMMS digitizes work orders and tracks the resources used to accomplish them. Thus, managers do not need to manually record and analyze budgets for projections and adjustments.
- Organizing information – CMMS lets you collect asset information to better understand and plan every asset’s maintenance requirement.
- Results-based analysis – CMMS provides result-based budget optimization through accurate historical data recording and computerized calculations.
For more on Redlist’s benefits in maintenance budget and management, schedule a free demo today!
