How much should I be spending on maintenance for industrial equipment and assets?

Although this is a complex question that can involve many metrics to answer accurately, it’s important to start setting world-class reliability goals to foster continuous improvement. One such goal is to strive for spending 3 percent or less of your replacement asset value (RAV) annually on maintenance costs. Here are the details.

Definition of Metric

According to the Society for Maintenance and Reliability Professionals, this metric takes the amount of money required to maintain your assets and divides it by the RAV of those same assets. Since it’s measured as a percentage, this metric can be used to level the playing field between facilities that are different sizes and values.

The annual maintenance cost value should include labor, contractor fees, end-of-life expenses, and costs occurred by downtime, but it should not include capital costs for expansions or improvements. The denominator should reflect the amount required to replace the asset and maintain the current production requirements as well as the costs of facilities, related assets, and utilities to keep the asset running.

Some Cautions

It’s important not to only rely on a single metric in determining best-in-class performance. This percentage should be used as one important indicator of how a facility is performing and serve as a tool to help you target improvement areas.

In addition, the 3 percent target is a reasonable goal for those facilities that have mature maintenance practices in place. If your facility is a third-quartile level, you’ll need to spend a higher percentage in order to maintain your assets. Some studies indicate that lighter, simple, non-industrial facilities will spend fewer dollars than heavy, industrial industries when it comes to maintenance, especially in the lower quartile segments.

Sample Calculation

If your facility spends $3 million on maintenance costs annually to take care of an asset base that has a value of $100 million, your percentage would be right at 3 percent, which for top quartile businesses, would be considered world-class for this metric. You may want to consult with professionals to establish the best reliability-centered maintenancegoals for your particular facility.