Budget Development

You can't operate without some sort of budget. Minimally, you need money for labor (employees or contracted services) and materials (items in house that you already own or buying parts and materials next year).

If you run maintenance with or without a computerized maintenance management system (CMMS), the issues are very similar. However, if you have a CMMS, budget development may be much easier and the system itself may need some "year end" attention.

So, if you have a computer based system, you may not need to read this. You already have your budget done, right? And, it was based on the following, right?


Financial reports

Account Summary Report with Year To Date (YTD) totals for each valid account (account numbers and descriptions provided by the Accounting Department), which are arrived at by the CMMS accumulating all Work Order and Purchase Order activity. Sorted by Account Number and totaled at the bottom. This shows you how much money you spent from each bag of money the front office provided access to.

Equipment Cost reports

Equipment Cost Summary reports, with YTD totals for each piece of Equipment that you have done work on during the year. This listing should specify total labor costs (employee and contractor) and total materials costs (from stock or purchased as needed) as well as the combined total. The equipment/assets should be sorted according to the most costly equipment to maintain, to the least costly. The individual totals reflect the cost to maintain those pieces of equipment and the accumulated total should reflect the cost of doing the maintenance work in the current year. Also, the total will not likely match the total of the Account Summary, because it is not likely that all parts and materials purchased throughout the year, were used......but, remain in the storeroom/stockroom.

Inventory reports

Inventory Cost Summary report should total how much money you have tied up in repair parts, materials, supplies and spares. This should make up the vast difference between the totals generated for the two preceding reports. Trending the "total" value will provide feedback as to the effectiveness of your efforts to standardized parts/materials, consolidate vendors, control inventory traffic and support a proactive maintenance program (predictive, preventive, TPM, RE, etc).

Failure Analysis reports

Various reports should be available to identify those pieces of equipment that need more maintenance resources and those that require less (so you can appropriately make adjustments to your budget requests, based on facts). Coupled with the Cost to Maintain reports, the CMMS should be able to produce Failure Rate and Mean Time Between Failure (MTBF) reports. These reports can identify how often pieces of equipment fail (availability) and how long they'll run after fixed (dependability). Those pieces of equipment with high maintenance costs, may or may not have high failure rates or short MTBFs. It is also possible to spend too many resources on maintenance efforts that achieve marginal, if any, added benefits.

Manpower projections

With your preventive maintenance data as a base, the CMMS should be able to project the manhours of "preventive"/ "repetitive" work. Coupling this with a projection of the current backlog, the system should be able to reasonably project your workload for next year.

Materials projections

Assuming that your CMMS has the capability of, and that you have estimated the materials for, "preventive"/"repetitive" work, the system should also be able to, at least, project the dollar value of pats and materials need for the execution of these tasks.

Outside resources

By analyzing Purchase Orders from the previous year, you should be able to determine how much of that manpower and materials had to be obtained "from the outside".

Armed with this information, and the ability to "drill down" into the work order or purchasing data that forms the foundation of the reports, you should be able to make pretty reliable decisions as to what money you need for what. Just remember those "special projects" and capital improvement. Don't let them slip a budget by you that include this kind of work without an account number (and money) that will pay for it. Ask Peter. He'll pay Paul.

Article submitted by Glen Veno

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