SMRP Best Practice Metrics Business & Management

1.5 Annual Maintenance Cost

As a Percent of Replacement Asset Value (RAV)

A. Definition:

The metric is the amount of money spent annually maintaining assets, divided by the
Replacement Asset Value (RAV) of the assets being maintained, expressed as a percentage.

B. Objectives:

This metric allows one to compare the expenditures for maintenance with other plants of
varying size and value, as well as to benchmarks. The RAV as the denominator is used to
normalize the measurement given that different plants vary in size and value.

C. Formula:

Annual Maintenance Cost per RAV (%) = Annual Maintenance Cost ($) X 100
Replacement Asset Value ($)
D. Component Definitions

Annual Maintenance Cost Annual expenditures for maintenance labor (including

maintenance performed by operators, e.g., TPM),
materials, contractors, services, and resources. Include
all maintenance expenses for
outages/shutdowns/turnarounds as well as normal
operating times. Include capital expenditures directly
related to end-of-life machinery replacement (this is
necessary so that excessive replacement – vs. proper
maintenance – is not masked). Do not include capital
expenditures for plant expansions or improvements.
Ensure maintenance expenses included are for the
assets included in the RAV in the denominator.
Maintenance costs are for activities on work orders.
(i.e., tie to work order)

Replacement Asset Value (RAV) Also referred to as Estimated Replacement Value

(ERV). The dollar value that would be required to
replace the production capability of the present assets
in the plant. Include production/process equipment as
well as utilities, support and related assets. Do not use
the insured value or depreciated value of the assets.
Include replacement value of buildings and grounds if
these assets are maintained by the maintenance
expenditures. Do not include value of real estate – only
improvements.

© 2006 SMRP Page 1 of 2 Rev 0

Prepared by: Robert DiStefano Date: June 10, 2006
SMRP Best Practice Metrics Business & Management

1.5 Annual Maintenance Cost

As a Percent of Replacement Asset Value (RAV)

E. Qualification:

1. Should be measured annually.

2. This is a lagging indicator.
3. Typically used by corporate managers to compare plants, by plant managers,
maintenance managers, operations managers, reliability managers, vice presidents.
4. Can be used to determine standing of a plant in a four-quartile measurement
system, as best in class plants with high asset utilization and high equipment
reliability in most industries spend less money maintaining their assets.
5. Cannot rely on this metric alone, since lower maintenance cost does not necessarily
equate to best in class.

F. Example Calculation:

If Maintenance Spend is $3,000,000 annually, and the Replacement Asset Value (RAV) is
$100,000,000, then the Annual Maintenance Cost as a Percent of RAV would be:

Annual Maintenance Cost per RAV (%) = Annual Maintenance Cost ($)/ X 100
Replacement Asset Value ($)

= [ $3,000,000/$100,000,000] x 100

= 3%

SMRP Metric 1.5 and its supporting definitions are similar or identical to the indicator
E1 in standard EN 15341

This document is recommended by EFNMS as a guideline/supporting document for the

calculation of the E1 indicator.

© 2006 SMRP Page 2 of 2 Rev 0

Prepared by: Robert DiStefano Date: June 10, 2006