How to Justify Money on PMs

It's Costs More to Not Spend Money

Maintenance departments are often the first to have their budgets slashed or be denied approval for increased funding. This is often on account of the people in charge of finances up the chain of command being quite unaware of how much money is actually being saved by a properly maintained facility. The term no news is good news is very true when it comes to maintaining your facility.

Any good facility will have a well-planned and executed PM program. These hourly, daily, weekly, monthly, quarterly and yearly tasks tend to have something in common. You change a part before it fails, or perform an action to extend the time between services. Now to those without anything between their ears, it makes no sense to change parts on a perfectly good machine if it has not failed. It seems like a waste of money.

You can easily spend thousands of dollars every month just on belts and filters. Add in gearbox oil changes, bearing grease and water treatment chemicals, and this number can reach 10s of thousands per month even for a moderately sized property. Cutting down active maintenance time by increasing preventative activities is always the smarter decision.

But how can you justify spending money on something that's not broke?

Same Belt 3 different outcomes

Example 1:

A factory with 100 production line workers has a smart manager. Every three months all belts are changed for the motors driving conveyors in a factory. The factory manager understands the importance of this and allows mechanics to schedule these repairs by utilizing downtime that is already built into the schedule. Thus production never stops.. There are 20 belts and it takes roughly a half hour each to change. Each belt costs $10, total cost of this PM is $200 and 10 man hours. Production lines never stop from broken belts in this plant. $800 and 40 man hours per year spent.

Example 2:

A sister plant with the same setup doesn't see the need for PMs. The plant manager never informs mechanics of when there will be downtime and won't approve the budget for parts for something that isn't broken. During production one day, the line stops. The conveyor isn't moving. Maintenance is called in to assess. They discover the broken belt but are unsure if they even have it in stock. They eventually find it and get to work. Luckily the total time down was only 1 hour. It took longer than in example 1 to find the parts and travel around the property. Since this was unscheduled work, all 100 employees will have to stay for an hour of overtime to make up for the lost time.

These employees normally make $20 an hour. Since it is now overtime, they are being paid an additional $10 for the hour they worked. This costs the company an extra $3000 and 100 man-hours in time lost.

This begins to happen once a week since the plant manager figures it's a one-off thing. The mechanic though has got an idea of where the parts are now, so he radios a coworker to grab the part while he works on disassembly. Now it's only a half-hour job, but production still needs to recover. The situation is better but it now costs $1500 and 50 man hours.

This has now become the new normal and costs the company $78,000 a year in labor and 2,600 man-hours from the time waiting between breakdowns.

Example 3:

The third sister plant with the same attitude as example 2, to an extra degree. This plant manager will only allocate money for parts after something is already broken. Never keeping the most common parts in stock. PMs have been ignored and a breakdown finally happens. A mechanic takes the company truck to the supply house to grab the belt. He's only allowed to grab one, even after asking for permission to buy spares. Round trip with traffic took an hour. Install took a half hour. This failure cost $4,500 and 150 man-hours.

Lessons are always learned the hardest. A breakdown occurs next week but this time it was midnight on a Friday night. No supply houses are open until 8 am Monday morning. Each shift has 100 production workers who still had to be paid, whether there was work or not, due to their contract. Monday morning at 9 am it was finally fixed. The plant was not running for 57 hours but still had to pay the employees. $114,000 and 5700 man hours were wasted. But that wasn't all. The plant had to make up for time lost, they had to pay for an additional $171,000 in overtime to make up for it. That week the company lost in total $285,000 along with 5700 man hours. And that was for only one week!

Conclusion 

These examples aren't that extreme. In the real world, it is often way worse during these scenarios. Bigger plants with much more employees. Parts are often on backorder for weeks, and sometimes months at a time. The people allocating your budget are blissfully unaware of how the world of parts and machinery actually works. While the examples in this piece were fictional, they are inspired by true events with concrete numbers for ease of understanding.

If you're having issues getting budgets and have reports on actual failures at your plant, use these examples as a guide when doing your calculations to present how much you will actually save the company if allowed to do your job properly. I always find it funny and amazing how a few hundred dollars in parts and a few hours during scheduled downtime can save more money than most of us will make in a year.