When maintaining a facility, it is necessary to keep in mind how much money is being used for maintenance. From maintaining the building to machinery or operations, effective maintenance planning is required to cover all the expenses. But how do you plan and maintain a maintenance budget? What information should you include and how do you keep the costs to a minimum?
Creating a maintenance budget can be a complex task. In this article, we are going to explore what maintenance planning and budget are, what are the things to consider while creating one, and how to reduce it.
What is maintenance budget?
A maintenance budget is a document that outlines the costs associated with the facility that are required to meet the maintenance objectives of the year. Your maintenance management budget must display an overview of the cost expected with each maintenance strategy and how they are implemented for individual assets or asset groups.
Creating a maintenance budget is crucial for any organization and is a way to plan how to use finances for equipment improvement and efficiency. The budget planning should include a detailed breakdown of where and how the money is going to be spent with the purpose categorized. It also helps in reviewing and monitoring where and why any deviation occurred and what steps should be taken.
Types of maintenance budget
The two most common types of budget for maintenance are operating budget and project budget.
The operating budget includes all the costs associated with the maintenance of the facility and the assets in it. It involves the cost of labor, materials, tools, and all the skilled labor/contractors that are associated with each department.
The project budget specifies the money allotted exclusively for one maintenance project, such as repair for a big machine. It is not inclusive of the operating budget as it requires a detailed report of all the costs incurred to complete the project.
What to include in maintenance budget planning?
One of the most important aspects of maintenance budget planning is what to include in the budget. Not including the necessary things and putting aside enough budget can put your operations and facility maintenance at risk. Simultaneously, putting aside too much money which could have been used elsewhere is also a waste.
You need to calculate total maintenance costs and make sure the following things are included in the budget planning:
- salaries of maintenance managers and technicians
- cost of employing new staff, if needed
- cost of training and development
- estimated price for tools and equipment
- contracts with the suppliers
- estimates cost of energy consumption
- miscellaneous expenses such as scheduled inspections, repairs, etc.
An asset or asset group's history plays a crucial role in creating budget planning for the facility. You need to know which asset/machinery requires more attention or what are the causes of breakdowns. All these things are needed to avoid reactive maintenance which can hinder the stipulated budget.
Key points to keep in mind while creating a maintenance budget
1. Plan for proactive maintenance but also prepare a reserve fund for emergencies Proactive maintenance is constantly keeping a lookout for your facility and assets. It is an essential way to keep things in proper working condition and also to avoid costly emergency repairs. Experts suggest that avoiding maintenance could cost companies 30 percent more than what preventive maintenance would have cost. Thus, allocating funds for timely maintenance is just you avoiding bigger expenses in the future.
But there are times when reactive maintenance cannot be avoided. For example, seasonal damage or natural disasters may lead to breakdown. To avoid such emergency costs, keep a portion of your budget for sudden breakdowns.
2. Analyze historical data Analyzing data from previous years helps in forecasting future expenditures. Some elements you should look for while analyzing historical maintenance data are:
- Are there any variations in your budget?
- How many sudden breakdowns were there? Where did you spend the most? assets, locations, or contractors?
- What was the breakdown of preventive and reactive maintenance?
- Were there any new technologies implemented that increased or reduced your expenses?
Using this method, companies can be sure that they are making data-backed decisions.
3. Consider seasonal maintenance Every facility needs more maintenance at a certain season for varied reasons. Whether it is the cost needed for snow removal or to keep the AC in proper condition, variations can occur throughout the year.
Be proactive and do budget planning keeping in mind the seasonal variations that might affect your facility or assets. Prepare for emergencies that may occur most preferably during peak summers or winters.
4. Remember the 'hidden costs' Sometimes, there can be some hidden costs that facility managers don't take into consideration as they are minuscule. These costs can be training of new technicians or staff, license costs, liability insurance, etc.
Reviewing data from the previous year can tell you where you spent and from where these hidden costs arrived. Asking your facility managers how they handled these hidden costs which you initially did not consider can also help you in budget planning.
5. Asses you assets The state of your assets is the next thing you must evaluate. This will assist you in setting budget forecasting. A range of techniques, including visual inspections, condition monitoring systems, and predictive maintenance tools, are available for evaluating the assets.
6. Develop a maintenance plan Once all the assets have been accessed and the data have been analyzed, it is finally time to do maintenance budget planning. The plan must give an overview of where the funds will be used and in what frequency.
5 Ways to Reduce Budget With Effective Maintenance Planning
1. Do asset-based planning/preventive maintenance
Regular inspection and servicing of assets helps in increasing their life span and you can fix minor issues before they turn into major ones. Doing asset-based budget planning by looking into historical data on asset repairs will help in predicting costs for maintenance. This way, you can make risk-based decisions and reduce costs.
2. Make a standardized plan
Having a set and thoroughly recorded method for determining, organizing, scheduling, and carrying out work is the foundation for increased consistency. This can improve productive maintenance for the organization to get the work done on time with minimum halt and thus, a reduction in unplanned costs.
3. Use a computerized maintenance management system (CMMS)
CMMS plays an important role in today's advanced technology and fast-paced work environment. You can monitor your maintenance tasks, spot patterns, and project your needs with the use of a CMMS. This information can help you decide on your budget planning with greater knowledge and greater efficiency.
4. Establish and track leading indicators
While investing in technology to save time and money is a great idea, it is also important to monitor and review key indicators to demonstrate results. These metrics also assist in maintenance budget optimization. Some of the metrics that must be taken into consideration are:
- total work backlog
- planned work backlog
- percent planned work
- percent scheduled work
- percent weekly schedule complete
5. Train your staff
A well-trained staff is what the priority should be of every organization. They will be better suited to spot any small issues and prevent breakdowns by practicing preventive maintenance. By training and investing in your staff, organizations are limiting sudden damage and the need for costly repairs. Thus, reducing the budget for reactive maintenance.
Key Takeaways
Creating a maintenance schedule and budget planning is not an easy task. If you are just starting your operations you may not even have enough historical data. But taking all other key points of creating a maintenance management plan and making contingency plans will be worth it in the long term.
Remember to consult facility managers, finance managers, and procurement managers while creating a budget. This will ensure that you don't miss out on anything you might need to spend on and it creates transparency in the organization as well.
