How to Create a Maintenance Budget?

A well-planned maintenance budget makes a massive difference when planning maintenance activities, prioritizing them based on your organization’s maintenance goals. If you plan to establish a comprehensive maintenance budget and don’t know where to start, we are here to help!

What is a Maintenance Budget?

A maintenance budget is a process that requires a thorough analysis of financial information and maintenance goals. It is part of the operating budget set for a single financial year for maintenance purposes and helps control maintenance costs and improve focus on maintenance goals. A well-designed maintenance budget focuses on labor, spare parts, and other miscellaneous costs for completing the work orders and replacing worn-out equipment.

Types of Maintenance Budgets

Project budget and operating budget are two common types of budgets. The operating budget includes tools, equipment, labor, contractors, and materials needed to keep your assets running on an ongoing basis. On the other hand, a project budget outlines the costs of a one-time maintenance project, such as upgrading a large piece of equipment. Given the higher need for details, the project budget isn’t a part of the operating budget.

Challenges of Creating a Maintenance Budget

There are two primary challenges of creating the maintenance budget, including communication gap between different business departments and lack of accurate data.

Inaccurate Data 

Data is essential for determining an asset’s lifespan or predicting when an asset is likely to break down. In addition, it helps calculate how much repair and maintenance will cost so that you can make an informed decision about the maintenance budget. In simpler words, it’s impossible to create a proper maintenance budget if you don’t have accurate data available.

Communication Gaps 

Every department in a business works in unison to achieve the same goals, but it is common to have communication gaps between teams. Businesses need to understand that communication and collaboration are crucial to making intelligent budget-related decisions. The seamless flow of information such as work order details and maintenance history between relevant teams goes a long way in drafting an accurate maintenance budget.

What is Maintenance Budget Planning?

Maintenance budget planning is all about creating a reliable and fact-based budget, which includes prioritizing the tasks that weren’t completed in the previous fiscal year, documenting new maintenance tasks, and factoring in tasks completed ahead of time. In addition, it includes checking the expiration of current maintenance contracts and requesting quotes for maintenance contract renewals.

How to Create a Maintenance Budget?

Basing your maintenance budget on the previous financial years plays a critical role in its accuracy. Start by looking at the maintenance budgets from the past five years and consider the following factors;

• Did the maintenance go over budget or remain under budget?
• Which locations, contractors, and assets surpassed the set budget?
• What was the preventive to reactive maintenance ratio?
• Did the company implement new technologies and practices for changing spending habits?

These questions will help gain insights from historical data, and they will help plan for corrective and preventive maintenance, depending on the assets’ failure rate. It is also essential to determine the asset’s age, location, and criticality when planning a preventive maintenance budget.

It is also worth considering the role of seasonality in your maintenance budget. For example, equipment such as heating and air conditioning systems are more likely to break down during certain times of the year. Not to forget, you have to keep room for hidden costs that can pop up during the fiscal year. For instance, you might have to pay for new tools and software. Therefore, allowing for these unexpected costs in your maintenance budget will make it much more accurate.

Wrapping up

A maintenance budget is perhaps the most underestimated aspect of asset management. A computerized maintenance management system (CMMS) can help you gain access and insights into critical data you need to determine maintenance costs and asset performance. At BriskForce, we offer cutting-edge CMMS to help you better manage your assets and maintenance activities. Start your 14-day free trial or get in touch with us to learn more.