MDP331s: Maintenance Planning &

Scheduling

Maintenance Cost

Ahmad Sayed Saif-Eddine

Ahmad_saif@eng.asu.edu.eg
 Agenda
• Quick Review
• Definitions
• Maintenance Costing Reasons & Factors
• Maintenance Budget Types, Preparation Approaches, and Steps
• Cost Estimation
• Maintenance Cost-Related Indices
• Cost Data Collection
• Reference

2
Definitions
 Definitions

• Maintenance
Maintenance cost isCost:
simply costs
described thatas the labor and
include lost
materials
opportunities expense
in uptime,needed
rate, yield, to maintain
and quality due
equipment/items
to nonoperating in satisfactory operational state.
or unsatisfactorily operating
equipment in addition to costs involved with
• equipment-related
Life Cycle Costing, Gordondegradation ofPublishers,
and Breach Science the safety of
New York,
people, property, and the environment. 1989.

Glossary of Reliability and Maintenance Terms, Gulf Publishing Co.,

Houston, Texas, 1997

[1] 4
 Definitions

• Fundamental Maintenance Costs were classified

into 4 areas:
o Direct costs.
o Lost production costs.
o Degradation costs.
o Standby costs.

[1] 5
Maintenance Costing Reasons &
Factors
 Maintenance Costing Reasons

• Compare
Determinecompeting approaches
maintenance to maintenance
cost drivers
• Provide feedback to upper level management
Prepare budget
• Improve
Provide productivity
input in new equipment/item/system
design
• Provide input in equipment life cycle cost studies
• Control costs
• Make decisions about equipment replacement
• Compare maintenance cost effectiveness to
industry averages
• Develop optimum preventive maintenance policies
[1] 7
 Factors Affecting Maintenance Costing

• Asset condition (age, type, condition, …)

• Operator expertise & experience
• Company policy
• Type of service
• Skills of maintenance personnel
• Operational environment
• Equipment specifications
• Regulatory controls

[1] 8
 Maintenance Budget Types,
Preparation Approaches, and Steps
 Maintenance Budget Types

• Operating Budget
• Project (Appropriation) Budget

[1] 10
 Maintenance Budget Preparation Approaches

• Historical Approach
• Zero-based Approach

[1] 11
 Maintenance Budget Preparation Steps

• Collect
Estimateinformation
the amount on of material
trends required
over the by
past few
department, particularly high-cost & high-volume
years
items input from the accounting department about
• Seek
• cost
Estimate
trendsoverhead expenses
& improvements
• Seek
Distribute
inputexpenses
from thebyoperations
weeks & total
groupthem forplans
about each
month
for the coming year
• Get
Establish separate
information oncumulative cost charts
sales by product for every
& department
important variable
• Determine (material,
maintenance labour, overhead,
labour-hours by skill…)&
• department,
Update individual & total costs
particularly periodically
for high repair &costs
plot
them on appropriate charts
equipment
[1] 12
Cost Estimation
 Maintenance Labour Cost Estimation

Cem = LR*(1+BR)*TAH
• Cem: Cost per Employee
• LR: hourly Labour Rate
• BR: Benefit Ratio
• TAH: Total Number of Annual Hours

TLC = Cem*N
• TLC: Total Labour Cost
• N: Number of employees
[1] 14
 Corrective Maintenance Labour Cost Estimation

• CMal: Corrective Maintenance Annual Labour

cost
• SOH: annual Scheduled Operating Hours
• LCH: corrective maintenance Labour Cost per
Hour
• MTBF: Mean Time Between Failures
• MTTR: Mean Time To Repair
[1] 15
 Maintenance Material Cost Estimation

TCS = WI + IC + (IR*T*PDC) + (A*PDC)

• TCS: Total Cost of Stock or Store at the repair time
• WI: Worth of the inventory Item after n periods
• IC: Inventory Cost per item
• IR: Inflation Rate of purchase cost per month
• T: Time of keeping stock item in inventory, in
months
• PDC: value of the inventory item cost, including
Purchase and Delivery Costs
• A: Allowance for the item’s entire shelf life
(deterioration, spoilage, obsolescence, theft)
[1] 16
 Maintenance Material Cost Estimation

PDC = w*PP*(1 + Ls + Lu) – SM

• w: Weight/other unit of quantity of material
used
• PP: Purchase Price of material per unit
• Ls: Losses due to Scrap, Skeletons, chips, …
etc.
• Lu: Losses due to the Unused stock returned to
inventory that is too small for future use
• SM: unit price of Salvaged Material

[1] 17
 Maintenance Material Cost Estimation

WI = PDC*(1 + i)n
• i: Interest rate for a specific period
• n: Number of interest periods

• FSC: annual Floor Space Cost per square meter

• B: Bin size expressed in square meters
• NB: average Number of items stored in Bin
• Y: number of Years item normally spends in
inventory
[1] 18
 Maintenance Building Cost Estimation

BC = NCM*ICPCM
• BC: Building Cost
• NCM: Number of Cubic Meters needed for
maintenance buildings
• ICPCM: Initial Cost Per Cubic Meter

[1] 19
 Maintenance Equipment Cost Estimation

CME = RDC + NME*UPC

• CME: Cost of Maintenance Equipment
• RDC: Research & Development Cost associated
with the maintenance equipment
• NME: total Number of Maintenance Equipment
• UPC: maintenance equipment Unit Procurement
Cost

[1] 20
 Production Facility Downtime Cost Estimation

PFDC = Si + Cr + RCr + RL + Cc + Cp
• PFDC: Production Facility Downtime Cost
• Si : Salary of Idle operator
• Cr: Cost of Renting a replacement unit (if
any)
• RCr: Replacement Cost of Ruined product
• RL: Revenue Loss
• Cc: Costs associated with Customer
dissatisfaction, loss of goodwill, … etc.
[1] • Cp: Costs associated with late Penalties, … 21
Maintenance Cost-Related Indices
 Maintenance Cost Ratio

• Rmc: Maintenance Cost Ratio

• TMC: Total Maintenance Cost
• TCS: Total Cost of Sales

[1] 23
 Maintenance Labour Cost to Material Cost Ratio

• Rlm: maintenance Labour cost to Material

cost Ratio
• TMCl: Total Maintenance Cost associated with
Labour
• TMCm: Total Maintenance Cost associated with
Material

[1] 24
 Maintenance Cost to Total Output Ratio

• Rmo: Ratio of total Maintenance cost to total

Output
• TMC: Total Maintenance Cost
• TO: Total Output usually expressed in units
(MW, ton, litre, … etc.)

[1] 25
 Maintenance Cost to Total Manufacturing Cost
Ratio

• Rmm: Ratio of total Maintenance cost to total

Manufacturing cost
• TMC: Total Maintenance Cost
• Ctm: Total Manufacturing Cost

[1] 26
 Maintenance Cost to Value of Facility Ratio

• Rmv: Ratio of total Maintenance cost to Value

of facility
• TMC: Total Maintenance Cost
• TCI: Total Cost of Investment in plant and
equipment

[1] 27
 Maintenance Cost to Total Man-Hours Worked
Ratio

• Rmh: Ratio of total Maintenance cost to total

man-Hours worked, specifically, the cost of a
maintenance hour in unit cost
• TMC: Total Maintenance Cost
• TMH: Total Man-Hours worked

[1] 28
 Preventive Maintenance Cost to Total Breakdown
Cost Ratio

• Rmb: Ratio of total preventive Maintenance

cost to total Breakdown cost
• TPMC: Total Preventive Maintenance Cost
including production losses
• TBC: Total Breakdown Cost

[1] 29
Cost Data Collection
 Cost Data Collection

• Labour Costs
• Equipment Costs
• Costs of Spare Parts & Supplies
• Overhead Costs

[1] 31
Reference
 References

[1] B.S. Dhillon, “Engineering Maintenance: A

Modern Approach”, CRC Press, 2002.

33
Thank You
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