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How to Make a Maintenance Budget

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Make a Maintenance Budget

The main objective of a maintenance budget is to assist you in planning, prioritizing, and managing your equipment maintenance work so that you can use the money at your disposal effectively. In this article, we are going to define a maintenance budget, the different budgets you can make, and how you can create one.

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Maintenance budget defined

This is a document that is created to lay down the cost of achieving your annual maintenance goals. The budget should give a laid-out plan of the costs of the types of maintenance that you are preparing to do like reactive maintenance and preventive maintenance. It also includes the kind of maintenance strategies that you want to apply to different equipment.

Making a budget is a way of figuring out the amount of money that you require for equipment improvement. It involves a detailed laid out plan of how you plan to use your money with every expense divided according to its use.

The maintenance budget also serves the purpose of introducing goals and strategies for monitoring how the money is being spent. It helps you understand and review the reason why you have deviated from the actual costs and serves as a vital tool for measuring the effectiveness of your team.

Importance of a maintenance budget

Making a detailed budget is very complex and many elements need to be put into consideration, many stakeholders are involved, and massive data needs to be reviewed. Due to this complexity, some managers are tempted to use the previous year’s budget and add what is necessary. This is not the recommended approach given the high chances of failure.

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Thanks to smart companies and the availability of big data the maintenance budget can be created using accurate data available to regulate your costs, boost performance, and ensure proper allocation of resources for maintenance purposes.

Proper budget creation reduces guesswork and improves trust with organizations’ departments and also reduces the risks of getting into an emergency that you cannot attend to.

Types of maintenance budgets

For facility managers, the two common types of budgets are a project and operating budget.

The biggest one is the operating budget since it includes the total costs of maintaining equipment in each organizational department. Factors included are costs of machinery and tools, labor, materials, and outbound skilled technicians you require to do the work.

A project budget on the other hand involves budgeting the cost of time to time maintenance activities like repairs on an important asset. It is usually not in the operating budget due to the amount of detail in the budget. All the costs are factored into the project budget.

Challenges are expected in the creation of a maintenance budget

You are likely to encounter two main challenges during maintenance budget creation:

Lack of accurate data and miscommunication among departments.

  • Insufficient maintenance information

Data will help you forecast when machinery will break down and the amount it will cost you to repair so that you can make informed choices on the maintenance strategy and budget appropriately. It is impossible to make a dependable budget without accurate information on your assets.

  • Miscommunication between departments

All departments in an organization are geared towards the common company’s goal but sometimes mishaps happen. The budget objectives are based on machinery-oriented data like asset failure rates, machinery maintenance history, work orders, and machine criticality which are not relevant to the finance department whereby the main focus is accounts data. This can make it hard when you need to make budget changes. Since everyone is focused on their duties to the overall company goals it can be difficult for every department to understand your needs.

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Definition of maintenance budgeting planning

Making a reliable maintenance budget is hard without planning. The planning process looks like this:

  • Making the incomplete tasks of the previous year a priority.
  • Taking note of new maintenance duties that need to be done in the current year and budgeting their cost.
  • Consider the maintenance tasks that you performed the previous year but are not needed this year.
  • Check the expiration dates of the current maintenance tasks.
  • Get the quotation for new maintenance tasks.

You should also consider if you have the relevant maintenance strategy for your machines and make appropriate adjustments to your budget.

How to make a maintenance budget

You cannot make your current budget based on past data but it also plays a big role. You should check your previous budgets and put into consideration these factors:

  • If you were within the budget.
  • What machinery, locations, and contractors used more of your budget than you expected.
  • The ratio of reactive to preventive maintenance.
  • If you are incorporating new methods or technologies that altered money use.

Once you have the relevant information from your historical data you can prepare for corrective and preventive maintenance based on the malfunction rate of your machinery, its location, and its condition when you choose the amount to allocate to reactive maintenance.

Check out the season’s factor. Put into consideration the expenses of weather-related repair tasks like snow removal, heating system, power loss, and air conditioning maintenance.

You should also leave some room for hidden costs that might come up in the year. You might be required to add new software, buy new repair tools, or new machinery that might help you save money in the future.

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In summary, having a maintenance budget at hand is sometimes an underestimated section of asset management. It lays down the expected expenses for meeting your annual maintenance goals. It should involve the expenses for all the types of maintenance and how they will be applied to various assets within the organization.

Shabbir Ahmad is a highly accomplished and renowned professional blogger, writer, and SEO expert who has made a name for himself in the digital marketing industry. He has been offering clients from all over the world exceptional services as the founder of Dive in SEO for more than five years.

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