Cost and Maintenance: How To Improve Maintenance Cost Management Plans

Cost and Maintenance: Implementing Strategies for Managing Maintenance Costs

Consider an orchestra preparing for a big concert. 

Each instrument plays a crucial role in executing the performance, and failure to properly maintain the instruments can have a devastating impact. If just one of them isn’t working properly or is slightly off-key, it throws off the entire concert. 

Your business operations are like an orchestra. Even the smallest hiccup in maintenance can send your whole organization into a tailspin. 

What if there was a way to keep your equipment — and your organization — running hassle-free?

Follow us as we delve into the intricacies of maintenance cost management. We’ll explore what maintenance costs entail and why they’re vital for business sustainability, as well as present actionable strategies for maintenance departments to streamline their cost management processes.

What Are Maintenance Costs?

Maintenance costs are the financial resources needed to maintain business operations. Because maintenance costs vary from business to business, it’s the company’s responsibility to categorize and define what constitutes maintenance costs for their company.

What are some examples of maintenance costs?

1. Physical assets: This includes the expenditures associated with preserving the equipment, tools, and supplies essential for business operations, including software. It encompasses costs for replacement parts, repair supplies, testing tools, and other essential materials. 

2. Labor costs: This refers to the resources allocated toward compensating maintenance personnel engaged in repair, service, and upkeep activities. It extends beyond salaries or hourly rates and includes benefits, training, and development costs. 

3. Ongoing maintenance: This includes expenditures directed toward preventive maintenance and repair costs.

4. Equipment downtime: This is the financial impact resulting from unexpected equipment failures, leading to productivity losses and revenue downtrends.

5. Operational overheads: This represents indirect expenses such as utilities, facility maintenance, and administrative overheads that are essential for sustaining operations. 

Hidden Costs of Maintenance

Without a proper maintenance strategy, your organization can suffer from lower product quality, reduced asset lifespan, increased downtime, wasted resources, and safety issues.

With these issues comes higher overall maintenance costs:

• Lower product quality might lead to a decline in customers who have expected a certain standard from your product. 

• Reduced asset lifespan may result from a lack of preventive maintenance. 

• Increased downtime caused by poor maintenance can result in a loss of thousands of dollars per hour.

• Wasted resources happen when assets are poorly maintained, making them hard to operate or resulting in defective products.

• Safety risks result from poorly maintained equipment that experiences equipment breakdowns.

What Is Maintenance Cost Management?

Maintenance cost management can be thought of as a strategic process of budgeting maintenance expenses. 

This involves the delicate balance of minimizing costs while ensuring optimal production ability and avoiding downtime. 

While cutting corners on maintenance may appear to save costs and time initially, it often results in significant long-term losses — which is why implementing a robust maintenance cost management strategy is key.

Why Is Cost Management for Maintenance Care Important?

For maintenance teams, preventing downtime is paramount. Equipment or software failures can severely disrupt business operations, sometimes bringing them to a halt until the issue is resolved or repaired. 

Just as the conductor’s careful planning ensures a seamless symphony, a well-executed maintenance cost management plan ensures that your business operates at peak performance — avoiding inefficiencies and unplanned downtime.

This is where UpKeep comes in.

With our digital maintenance cost management system, we empower business owners to:

• Streamline their maintenance processes

• Optimize resource allocation

• Proactively identify and address potential issues before they escalate

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How Do You Control Maintenance Costs?

To manage maintenance expenses, implement a comprehensive and well-thought-out maintenance cost management plan. Learn about several strategies you can consider to help optimize resource allocation and prevent unplanned downtime.

9 Cost Management Strategies for Maintenance Departments

#1: Prioritize Preventive Maintenance

Consider the maintenance of your business equipment akin to the regular maintenance and upkeep of your vehicle. 

Just as neglecting maintenance for your car can lead to costly breakdowns and potentially dangerous situations on the road, failure to perform regular maintenance of your business equipment can result in similarly costly and hazardous impacts. In both cases, routine check-ups are essential to ensure smooth operations and prevent unexpected failures. 

Similar to how car maintenance is based on mileage, asset preventive maintenance is based on operating hours. By adhering to the amount of time the equipment was used, you can ensure it receives the necessary attention at optimal intervals. 

If you schedule preventive maintenance solely based on the calendar (i.e., every 90 days), it can result in:

• Over-servicing: If the equipment was not used frequently during that time, it could lead to inefficiencies in both time and cost. 

• Under-servicing: If the equipment was used more frequently than normal in that time, it could result in a potentially dangerous situation and a more costly fix.

At UpKeep, we understand the importance of avoiding both over- and under-servicing of equipment. Request a demo and see how our UpKeep Meters features allow business owners to create preventive maintenance tasks based on mileage, machine cycles, or other units of measure. 

#2: Monitor Maintenance Expenses

Similar to creating a budget, the first step in effective cost management for maintenance is monitoring your expenses. Utilizing a software program, like UpKeep, can greatly aid in this process. 

Routine monitoring of maintenance expenses can help you:

• Gain insights into spending patterns

• Discover deviations

• Identify areas for potential cost savings

• Execute any necessary adjustments

• Make informed decisions for your maintenance budgets

#3: Create and Utilize Maintenance Checklists

Checklists are utilized everywhere, from aircraft safety to surgical procedures and more. Their widespread use is a testament to their effectiveness in ensuring tasks are completed accurately and efficiently. 

When creating maintenance checklists, consider the following elements:

• Dates: Include the date of the last inspection and the date of completion of the checklist. 

• Personnel: Record the name of the individual who performed the last inspection and the name of the person completing the checklist. Be sure to include contact information and a space for a signature for verifications.

• Identifying information and location: Include the serial number of assets and all necessary storage details (room number, bin number, lot number, etc.).

• Comprehensive list: List all the parts that need to be examined during the maintenance inspection. 

• Concerns: Leave a space to note any concerns or issues identified during maintenance, with the option to include photos. 

#4: Invest In the Right Equipment and Follow Recommended Maintenance Guidelines

As a consumer, you are always faced with the dilemma of buying a cheaper product versus a more expensive (likely better quality) product. When it comes to purchasing a piece of equipment for your business, this decision is critical. 

Here are some things to consider:

• Quality vs. cost: Opting for a cheaper piece of equipment may seem cost-effective initially, but it often leads to more frequent breakdowns and higher maintenance costs. On the contrary, a more costly piece of equipment is a bigger investment up front, but it will likely cause you fewer headaches down the road. 

• Repair vs. replace: When faced with repair decisions, consider the cost and time involved in replacing the equipment. Assess technological advancements to decide whether investing in a newer model would be more beneficial in the long run. 

• Adherence to maintenance guidelines: Proper use of equipment and adherence to manufacturer maintenance guidelines are crucial. Ensure your staff is trained to use equipment correctly to avoid damage and prevent increased maintenance costs. 

#5: Maintain Thorough and Updated Inventory and Spare Parts Records

You need a system that allows you to always know what you have in stock without the need for manual counting. This prevents over-ordering and saves both space and money. The cost of excess inventory can have a major business impact, with estimates suggesting that 20-30% of inventory is dead or obsolete. 

By utilizing a digital system, you can streamline inventory management and spare parts tracking. 

UpKeep’s inventory management software provides businesses with powerful insights to better control costs and ensure a sufficient supply of inventory is in stock. We’ll even alert you when parts are running low so you have time to order more before running out.

#6: Generate and Utilize Maintenance Reports

By keeping thorough records, businesses can effectively track expenses and identify areas where equipment maintenance may be impacting their bottom line. 

Businesses can make data-driven decisions with reports that provide valuable information on:

• Maintenance expenses

• Equipment reliability

• Workforce reliability

• And more

Utilizing maintenance reports allows businesses to gain insights into their maintenance operating and equipment performance. For example, reports can identify equipment that is constantly requiring costly repairs or causing frequent downtime. 

Reports can also justify the return on investment for facility management leadership. By presenting detailed insights into maintenance expenses and productivity, businesses can demonstrate the tangible benefits of their maintenance efforts. 

UpKeep helps streamline the process of generating and utilizing maintenance reports with our customizable report functions. Request a demo to experience how you can tailor your specific needs and priorities in your reports. 

#7: Invest In Your Personnel

Investing in personnel is paramount for ensuring safety and productivity. Proper training is essential to prevent accidents and injuries caused by improper use of machinery or equipment. Moreover, inadequately trained personnel can inadvertently cause damage to the equipment, leading to costly downtime and repairs. 

Initial training should be mandatory and cover the proper operation and maintenance procedures for all equipment relevant to the role. Ongoing training is equally as important to keep personnel up to speed. Part of the training should focus on empowering employees to identify issues associated with the equipment. 

#8: Build Time for the Unexpected Into Your Maintenance Schedule

Breakdowns or maintenance issues are inevitable — regardless of the quality of equipment, level of training of operators, and diligent preventive maintenance. 

By acknowledging this inevitability and incorporating time for the unexpected into their maintenance schedules, businesses can better prepare for unforeseen events. 

Understanding that unexpected breakdowns will occur enables businesses to remain calm and make informed decisions when faced with maintenance challenges. By having contingency plans in place and building flexibility into the schedule, maintenance teams can respond quickly and effectively. 

#9: Embrace Modern Technology and Software Options

As a business owner, it can be hard to embrace new technology, especially when existing systems seem to be getting the job done, albeit, maybe not the best. 

However, it’s important to recognize that embracing modern technologies can significantly enhance the efficiency and profitability of operations. 

Computerized maintenance management system software (CMMS), like UpKeep, offers a comprehensive solution to streamline maintenance operations and alleviate some common headaches associated with costs and maintenance. Businesses can reduce human error, improve organization, and leverage real-time data to inform business decisions. 

How To Determine if Your Maintenance Cost Management Plan Is Successful

Determining the success of your maintenance cost management plan involves analyzing key performance indicators (KPIs) to assess the efficiency and effectiveness of your maintenance operations.

While it’s ultimately up to the business owner to define success, there are two main factors to consider:

1. Total maintenance hours: It’s crucial to compare the number of hours spent on maintenance across different categories to evaluate the effectiveness of your maintenance efforts. These include:

• • Preventive maintenance

  • Repairs

  • Emergency costs

1. Total costs: Beyond the dollar amount, it’s essential to examine the breakdown of maintenance across the following categories:

1. Replacement parts

2. Labor 

3. Operating

4. Estimated replacement

UpKeep: Helping Maintenance Teams Optimize Maintenance Costs By Offering Tools for Tried and True Strategies

Building a cost management plan for maintenance departments can be complex, but with a trusted CMMS like UpKeep, the process is simple. 

Our comprehensive software allows maintenance teams to be effective and cost-efficient through:

• Centralized viewing of maintenance tasks, work orders, and asset tracking

• Reporting capabilities to help make informed decisions on cost management

• User-friendly mobile interface for streamlined operations

• Collaboration capabilities among maintenance teams, improving communication and coordination

Let UpKeep help optimize your maintenance costs. Request a demo today.

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