Maintenance Q&As

How much should I be budgeting on maintenance at my facility?

Answered May 18 2019

There are a few different ways to estimate maintenance budgeting for a facility per year – the two that we’ll discuss here are the replacement value of the facility and the maintenance cost per square foot.

1. Current replacement value
The first method of determining a maintenance budget is annually measuring the cost of maintenance against the facility’s replacement value. What this means is that we are attempting to understand the cost of maintenance against how much it would cost to completely replace every asset in a facility.

For starters, a general replacement asset value percentage (%RAV) for most industries is anywhere from 2-5%, meaning that the cost of maintenance at a facility shouldn’t exceed 2-5% of the facility’s replacement value every year. If the value is much higher, it would be more efficient to replace equipment rather than maintain it.

%RAV is a useful way of creating a generalized budget for a facility. However, it can be a bit limited if you only rely on general industry figures – for this reason, it’s useful to understand your industry’s typical replacement asset values and benchmark accordingly.

2. Maintenance per square foot
In the event that %RAV isn’t a useful figure for your facility, maintenance costs can be measured by the square foot to gain an understanding of how much money yearly maintenance activities might potentially cost.

This can also differ by industry, so it’s important to look into what the typical maintenance cost per area is for your organization’s needs. For example, for something like office facilities, a typical maintenance cost per square foot in USD is $2.23 per sq. foot, whereas other facilities quote the average cost as $1.63 per sq. foot.

Ultimately, both of these techniques are useful for giving maintenance planners a general ballpark idea of a maintenance budget. It’s also possible to continually track these metrics (especially %RAV, which needs to account for asset lifespan and depreciation) to improve and optimize a maintenance budget.

Asset Management Questions & Answers