Page 286 - Improving Machinery Reliability

Maintenance and Benchmarking Reliability 257

Maintenance Cost Vs. Replacement Asset Value:
Another Maintenance Spending Benchmark*
Maintenance costs compared to replacement asset value (RAV) has become a
widely accepted macro measure of performance, especially in North America. The
consensus of a number of respected maintenance and reliability professionals is that
the amount of money that should be spent on maintenance labor, materials, and out-
side services is directly related to the amount it would cost to rebuild the plant, in
today’s dollars. Only the costs of noncapitalized maintenance work are included.
Costs of turnarounds or major rebuilds that are expensed every so many years should
be allocated evenly over the years between such events. All maintenance expendi-
tures, including salaries for management supervision and staff, and other mainte-
nance overhead, should be included. The cost of land, roads, underground utilities,
etc., is not included in the RAV.
Companies typically calculate RAV by adding a yearly inflation value to the origi-
nal cost of the plant. They increase RAV by the value of expansions and modifica-
tions and decrease it by the value of decommissioned equipment. This figure should
be validated against the financial basis the company uses for property insurance.

ANNUAL MAINTENANCE COSTS
AS A PERCENTAGE OF PLANT REPLACEMENT VALUE
+ +
4.97
+ + + + +

3.88 3.89 3.93
+ +
+ + 3.66 3.60
+ 3*14+ 3.08 + 3-00 2.94 +
2.86
2.64 + 2.56 + 2.48
+ 2.1 4 2.07
1.73 +
1 1.12
0 !I 5 1 !/ b i0 : 1: 13 :4 15 16 17 18 19 20 21 22 :3
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Figure 4-9. Annual maintenance costs as a percentage of plant replacement value.
(Courtesy of HSB Reliability Technologies, as published in Maintenance Technology,
July-August 7996.)
*Raymond J. OBiverson, HSB Reliability Technologies, Kingwood, Texas, as reported in Mainte-
nance Technology, July-August 1996. Adapted by permission.