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Getting a Grip on Maintenance Costs with Asset-Based Budgeting

Maintenance adds value by providing available, reliable, safe and eco-friendly production equipment. Yet, fulfilling this task involves costs that can account for a significant part of a company's overall expenditure. Nevertheless, few maintenance organizations truly have a grip on their maintenance costs. The maintenance budget, in particular, is not always arranged intelligently. All too often, maintenance budgets are drawn up as an extrapolation of the budgets of previous years (historical budgeting). When this happens, there is no relationship with the planned maintenance activities necessary to achieve the agreed performance in terms of uptime (asset utilization) and safety, health and environment (SHE). This makes it difficult to predict and rectify variances from the maintenance budget. As a result, the maintenance budget has no control function and is used purely as a readily available "pocketful of money."

A more accurate way of budgeting is asset-based budgeting.

Read the whole article about Asset-Based Budgeting

Tip provided by Remco Jonker, Partner, Mainnovation 

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