by Jim Osborne
Most will agree that maintaining facilities and equipment by preventive maintenance to obtain optimum value from your investments is a solid business approach. However, preventive maintenance has been more promoted in principle than in practice. It is hard to determine the financial relationship between the cost of preventive maintenance and returns of other cost savings initiatives.
Figuring out where to start can be the most daunting task when trying to decipher the value of preventive maintenance. It is estimated that repair and maintenance costs can be around 15 percent of total expenses. In fact, most organizations claim that its preventive maintenance programs are not executed correctly. There are a few things you can do to determine what impact preventive maintenance has on your organization.
Understand Your Preventive Maintenance Program
First, you need to determine what is your preventive maintenance program. Do you have one? What does it consist of? What is involved in your preventive maintenance program: facilities, equipment, or vehicles? Once you understand what your program entails, you can evaluate what is the current financial impact.
Conduct a Financial Analysis
Take the current state of your preventive maintenance program and develop a model/budget that shows expenses for the last year and projected expenses for the next year. The key is to understand what is the current cost of your preventive maintenance program.
Develop a Preventive Maintenance Program that has Impact on the Bottom Line
This might be a little more difficult. As mentioned earlier, preventive maintenance is a logical business approach but showing future financial impact is complicated. A good start might be to take your data from your analysis and work with someone in your financial group to see how your organization assess depreciation and expenditures. Together you can develop an analysis that shows financial impact for your company.
The value of preventive maintenance can be found when your facilities aren’t impacted by unscheduled downtime, minimizing costly repairs, and your equipment lasts longer. By developing an effective preventive maintenance program your organization can avoid expensive capital outlay, and the longer the capital expense can be delayed your return on investment will only continue to increase.