How to Tackle Maintenance Budgeting
A computerized maintenance management system (CMMS) is an application that allows for effective management of all types of maintenance activities. This includes maintenance budgeting for expenses such as labor, parts and miscellaneous costs for completion of work orders, replacement of equipment at the end of its useful life, as well as tracking of special projects and purchasing.
Operating a maintenance department cost efficiently without having a plan that outlines the working budget is difficult. Often decisions are based on guesswork or emergencies with no real data to show when, where or how maintenance was performed in the past and what is needed in the future.
Both planned, corrective and emergency maintenance costs should be included in the budget. Preventive maintenance costs are easy to forecast as they are planned activities. Scheduling specific assets for planned maintenance (daily, weekly, monthly or quarterly) or by meter frequency using a CMMS can help generate an estimate of costs for future maintenance budgeting. Unplanned maintenance costs are the most unpredictable because corrective or emergency issues cannot be foreseen. However, collecting data that is provided by your CMMS can help provide a history of assets which may be experiencing problems and an average historical cost. Hopefully, scheduled maintenance can be established to prevent unplanned problems or planned replacement of assets at the end of their useful life.
In addition to maintenance costs for assets, a budget can be established for special projects and staff skills training.
Using CMMS for budgeting, users can establish cost limits by month or defined accounting period and fiscal year using . Budget account numbers, called cost centers or general ledger account numbers, will be established by the organization’s Accounting Department as this will be part of the overall income statement. Once a budget has been established for a maintenance cost center, the next step becomes tracking the budget. Being able to immediately identify when a budget account is being exceeded is crucial. A CMMS can help in the following ways:
- Apply purchases made for any capital expenditures or special project to the appropriate budget account
- Apply purchases made for any parts and supplies to the appropriate budget account
- Apply the costs of the work being performed to a budget account including labor, parts, supplies and miscellaneous costs.
Maintenance Budgeting Analysis
Analyzing collected data for maintenance budgeting is important to the bottom line of any company. For many organizations, maintenance is a large expenditure, but it can controlled with the proper processes in place. A fully-implemented CMMS is one of the important tools that can be utilized for this purpose.
A budget analysis, generated by the CMMS, can help the company with some major decisions such as:
- Whether the forecasted budget was accurate and if not, why not. Knowing this information means these mistakes can be avoided in the future.
- Determining whether the maintenance budget needs to be increased or decreased based on collected data.
- Identifying if the budget is adequate for various maintenance areas or accounts and re-allocating if necessary.
- Provide the ability to drill down into data at all levels including the specific asset and all its associated repair costs such as labor, parts, supplies and miscellaneous costs. These can then be lined up with the budget forecast for accuracy.
Importance of Data
The vast amount of data collected using a fully-implemented CMMS is not just data that can be used for historical purposes. Although the history that is collected is extremely important for budget forecasting, real time data is equally as important and your CMMS should be capable of collecting both.
Maintenance management will be responsible for gaining approval from upper management for any budget increases. Having all of the proper data from the CMMS using reports and graphs to back up this request is a powerful negotiating tool.
At the same time, these reports can help maintenance management detect the problems taking place in the department and steps taken to correct these. Over time, the data will positively reflect these changes which can be easily noted by upper management.
Another important feature of a quality CMMS are real-time dashboards for the quick and easy generation of graphs and reports. At the same time, the tools found in the dashboard will allow for a variety of reports for a great visual presentation and ones that can be created with real time data. This customized tool can be used by maintenance staff, maintenance management and upper management to keep their finger on the pulse of maintenance activities.
Relying on the Right CMMS
DPSI, a global leader in CMMS and EAM solutions since 1986, provides the features and functions necessary to effectively manage your maintenance management needs. Not only do we provide CMMS software, we provide the services to ensure that you are successful including project planning, implementation assistance, upfront and ongoing training, customer support, a customer user advisory board and ongoing enhancement of our software. Contact DPSI to learn more about effective maintenance budgeting and CMMS/EAM solutions.