The Financial Case For Maintenance

If you manage a facility you have surely heard that it is smart to perform maintenance on your equipment, but now let’s take a look at the numbers and make a financial case for it. 

First, when it comes to servicing mechanical equipment, there are two maintenance strategies that are usually deployed – reactive maintenance and preventative maintenance. Reactive maintenance is most closely aligned with the theory “if it isn’t broke, don’t fix it”. Maintaining your equipment this way will save money in the short term but will cost you in efficiency loss and premature equipment failure in the long term. 

As the term ‘preventative maintenance’ suggests, this method utilizes a strategically designed maintenance program that keeps your equipment running safely and efficiently. Preventative maintenance can be further broken down into time-based and conditioned-based maintenance. 

A time-based maintenance strategy ensures general maintenance tasks are executed routinely in an effort to avoid larger, costly repairs in the future. This strategy is generally implemented on a continuous schedule (quarterly, semi-annually, annually). While this maintenance strategy has a significantly better payback then reactive maintenance, the condition-based strategy can save even more. 

A condition-based strategy focuses on run time and condition monitoring to determine when maintenance is needed. Condition-based maintenance may require additional measurement devices to be installed with your equipment and therefore may have a higher upfront cost as compared to the other two strategies.  Another way to understand condition-based maintenance is to think about your car. The oil light comes on as sensors in your engine continually monitor the oil’s contents, letting you know you need to change the oil in your car. This allows you to perform the maintenance when it is needed instead of on a fixed schedule.  

LET’S DO THE MATH 

A study done by the US Department of Energy evaluated the cost to operate equipment based on which maintenance strategy you followed. 

US Department Of Energy Cost Per HP Per Year Chart

 As you can see, there is a significant savings as you move from the left to the right. Considering your facilities major equipment will last well over 10 years, these numbers can quickly make the financial case for implementing these maintenance strategies. Not sure if you trust this study done by the US Department of Energy?  Let’s look at another example done by the Building Owners and Managers Association (BOMA International). 

This study focuses specifically on a 20-to reciprocating rooftop air conditioner with a 14-year expected life.    

As you can see, the poorly maintained unit (Curve 1) resulted in a 9-year life with degrading efficiency (rising energy use and cost) throughout. The well-maintained unit on the other hand (Curve 2) achieved the manufacturers expected life of 14 years, while also maintaining a high level of efficiency. 

Boma later goes on to say that because the “system” associated with Curve 2 was well maintained, at year 14, the failed compressor can be replaced, leading to an extension of the overall system by another 7 years. 

THE NUMBERS ON ENERGY EFFICIENCY 

A study done by The New Building Institute examined maintenance strategies and their effect on equipment lifespan. This study concluded that reactive maintenance (run-to-fail) can increase energy use by between 30 and 60 percent, while also shortening the lifespan of the equipment. These results were directly in line with the findings from the BOMA study discussed in the previous section. 

Another key study was done by the U.S. Department of Energy Operations and Maintenance (O&M). This study was released as a Best Practices Guide to help all federal building managers make sound, cost-effective decisions. One of the key conclusions from the study was that energy savings can amount to as much as 18% when proper preventative maintenance strategies are put in place.    

When optimal efficiency is achieved, your company will benefit from an increase in fuel and energy savings. This means more money in your pocket while your aged equipment keeps running like the day it was installed.

CONSERVATION

In the modern world, mechanical equipment costs are expensive. The better your company cares for its equipment, the longer it will last. Equipment that has been treated with routine maintenance will have a longer service life and will provide increased profit. This is evident in the number of maintenance managers making the switch to a scheduled preventative maintenance strategy. Preventative maintenance is undoubtedly the best approach to take with your equipment for optimal long term success. Not only will your equipment provide outstanding reliability, but your company’s persistent success will be proof of this maintenance ritual.

Talk to us about our preventative and predictive maintenance agreements so you aren’t reacting to equipment failures, but instead preventing them! We hope this article will help you make the financial case for maintenance. 

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