Defining Maintenance Costs

Share on linkedin
Share on twitter
Share on facebook
Share on email

One universal measurement of maintenance performance, and perhaps the measure that matters most in the end, is the cost of maintenance.

Unfortunately maintenance costs are often used to compare maintenance performance between companies or between plants within the same company.

One other problem is that there is typially no standard for measuring maintenance costs.

Each company, usually each plant within a company and often each department within a plant develop their own definition of “maintenance costs.”

For this reason, maintenance cost comparisons should always be accompanied by a clear definition of what is included and excluded for each plant included in the comparison.

If you are in the process of defining maintenance costs, or believe that your definition needs updating, the following table may be of help.

Type of cost (materials and labor)

Recommended cost category

Preventive maintenance Maintenance
Corrective maintenance (repair or replacement of failed components) Maintenance (unless its a capital replacement)
Lubrication (a specific PM task) Maintenance (In some plants this is a Production cost)
Contracted preventive and corrective maintenance Maintenance
“Maintenance” work done by Production employees. This can included cleaning, inspections, replacement of “production” components (e.g. filter media, etc) and perhaps some lubrication. Production – but remember to take these costs into account when making comparisons
“Non-working” maintenance labor (e.g. maintenance safety meetings, waiting time, etc) Maintenance
Maintenance supervision, planning and administration Maintenance
Non-capital plant improvements. This includes both process and reliability improvements Probably maintenance, however its a good idea to include an “improvement” category in Work Order codes to allow improvement costs to be identified
Capital improvements and replacements Capital (but remember that the definition of “capital” also varies widely)
Disposal of obsolete and surplus stock and inventory adjustments (where inventory is working capital) A special expense account, separate from other costs and not in the maintenance budget

There are other specific activities that may be performed by Maintenance people and these should be considered and defined, such as snow removal, reading utility meters, etc.

A clear definition is important so that cost trends can be identified, which is the “comparison” that is of the greatest value. The definition becomes critical if costs are used as part of an incentive, for example, where maintenance is contracted to an outside company.

Related Articles:
Visible and Invisible Maintenance Cost Savings
“Focus on Reliability”
Reliability Improvements Drive Down Maintenance Costs

Related Articles

Torbjörn Idhammar

Torbjörn Idhammar

Want weekly Reliability & Maintenance Tips?

Best practices. Common sense. Pratical tips.
All designed to help you and your team keep your plant running

IDCON © 2020 All rights reserved

Free Download & Video

8 Steps to Successfully Implement Preventive Maintenance

Reduce your costs with an effective PM program