Technique: Benchmarking

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When it comes to benchmarking, a popular measurement is maintenance cost (MC) as a percent of Estimated Replacement Value (ERV).

The data from our SIMATM database shows that the MC/ERV for process industry is:

 Maintenance Cost as a Percent of Estimated Replacement Value (ERV)
Low High
Total 1.5 % 6.3 %
Labor 0.6 % 2.4 %
Material 1.0 % 4.1 %

The average total MC/ ERV is about 4.5 %. Many corporations use this number as part of their maintenance performance evaluation. The question is if the number itself tells you anything about your plants maintenance performance? The assumption would be that a lower MC/ ERV number represents maintenance efficiency.

IDCON has seen low MC/ERV represent both efficient maintenance organizations and poor maintenance performance. Our recommendations if you use the number:

  1. Track the number over time, any manager can make short term maintenance cost cuts. This doesn’t mean long term performance improves.
  2. Track the number together with other numbers. If you have a higher MC/ERV, but a low production cost, you may just have different accounting rules than your competitor, or you spend more on maintenance to make gains in overall production reliability.
Torbjörn Idhammar

Torbjörn Idhammar

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