If there is one topic that captures senior managers’ attention, it’s profitability. If you’re trying to build a comprehensive work program and move to a more-planned environment, then your success in winning support for these will hinge on how well you can demonstrate a positive impact on the maintenance budget and ultimately a significant improvement to the company’s overall bottom line.
A detailed work program and corresponding multiyear budget entered into your CMMS can help you answer questions such as, “How many people will be needed over the next few years, and what skills will they need to have, to accomplish all of the maintenance and non-maintenance work anticipated?” More-sophisticated CMMS packages also let users drill down on a budget and work program to see what happens if adjustments are made to individual job plans.
How can you create and manage a better, more-comprehensive budget? Start with these six key steps.
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Define budget work types
A high-level, multiyear budget should provide a summary for each of the following maintenance work types:
- UBM – Use-based maintenance, triggered by a time interval, a meter reading, or an event.
- CBM – Condition-based maintenance, triggered by a condition falling outside of a defined upper control limit, lower control limit, or trend.
- FBM – Failure-based maintenance, triggered by the inoperability of an asset.
- Cases: Corrective work – A case is initiated when the unexpected happens. Sometimes corrective work is required to address the problem in the short-term, such as temporarily fixing an unexpected pipe leak.
- Cases: Work to prevent recurrence – Once a case is investigated, analyzed, and risk-assessed, there may be a need for additional work (such as a new inspection) to prevent recurrence.
The maintenance budget should also include non-maintenance work types such as capital projects, demand work, safety meetings, travel time, and training.
Maintenance management should allocate a certain percentage of their budget to improvement projects, such as Lean, Six Sigma, or CMMS upgrade or replacement. In addition, there should be a line item for contingency, as no one can be 100% accurate in budgeting, especially across multiple years. However, contingency should be carefully managed, with escalating approval levels required whenever contingency dollars are requested.
Define budget reporting periods
Although not necessarily on a single report, possible columns on the budget that define comparative reporting periods are current month, year-to-date, and rolling 12 months. For each period, the budget should report on original estimate, latest estimate, actual, and variance, for dollars and percentage breakdown. As well, current year can be compared to the same period last year. Finally, future years can be budgeted and compared to the current year plan, for at least one to three years out. Some asset-intensive companies with extensive regulatory requirements may wish to prepare budgets for a longer time horizon, such as five, ten, or more years into the future.
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Start with critical job plans
Building a comprehensive budget starts with establishing job plans for all maintenance work to be done over the next few years, under the assumption that maintenance work should be 100% planned. Starting with the most critical assets, determine which maintenance policy (i.e., UBM vs. CBM vs. FBM) provides the right balance of risk and cost. Develop detailed job plans accordingly, outlining tasks, steps, skills required, estimated hours, materials and special tools needed, safety procedures, and so on.
Forecast time-based equivalence for all maintenance policies and cases
A frequency should be established for all job plans. This is straightforward for UBM, but it should also be forecasted for CBM and FBM in order to establish a budget. For example, you might not know when a given light bulb will fail, but you do expect to replace lights in your plant every 5 years or 20% each year. With respect to case work: Cases are typically forecasted based on previous experience. Your goal should be to reduce the number of cases over time. Investigating cases should help you improve your work program and see fewer surprises.
Adjust as needed, but maintain tight control
Numerous factors will play on your long-term plan, forecasted failures, and even your short-term schedule. These include aging factors such as environmental conditions, throughput, number of setups/changeovers, quality of raw material, and operator adjustments; equipment utilization; adherence to maintenance schedule; and operator/maintainer errors. If forecasts change and less maintenance is required, the unused budget allocation should automatically flow to the “contingency” line item. If the budget needs to increase, a formal approval and escalation process should be established to ensure tight control over the contingency budget, for each cost center and across the enterprise. Changes should be approved based on a balance of cost versus risk, after reviewing options such as deferring work, using external vs. in-house resources, or transferring work to another work center.
The CMMS should provide extensive drill-down capability to uncover the detail supporting the budget summary, trends, and variances reported. This requires a breakdown of labor hours and dollars, material costs, contract labor hours and dollars, contract material costs, special tools, overhead, and so on. There also should be a breakdown by period, G/L account code, trade/crew, shift, project/outage, maintainer, work type, work order, and job plan.
Hold people accountable
No matter how good your systems and reporting capability, the key is always your ability to hold people accountable for what the reports reveal. The budget and variance reports must drive behavior change, from senior management (e.g., provide adequate funding in support of the budget), to the shop floor (e.g., timely entry of accurate data).
