A maintenance budget helps you to plan, manage, and prioritize your maintenance activities so you can be as effective as possible with the money you have.
So, what is a maintenance budget, what different budgets can you create, and how do you prepare one?
What is a maintenance budget?
A maintenance budget is a document that you use to set out the expected cost of meeting your maintenance objectives for the year. Your budget should provide an overview of the expected costs for each of the different maintenance types you plan to do, such as preventive and reactive, as well as any other maintenance strategies you use, and how they apply to different assets or asset groups.
Creating a budget is your way of putting your case forward for the money that you need to improve equipment and efficiency. It should include a detailed breakdown of how you intend to spend the money, with each expense categorized according to its purpose.
But more than that, your maintenance budget should also serve as a way of introducing targets and mechanisms so you can monitor how you are spending your money. It can help you evaluate and understand why you have deviated from the expected costs and serve as an important tool for measuring your team’s effectiveness.
Why is a maintenance budget important?
Creating a comprehensive maintenance budget can be a complex process with lots of elements to consider, different stakeholders to involve, and a mass of data to sift through. Given its complexity, the temptation for some maintenance managers is to use the previous year’s expenditure and then add a bit. But given the potential consequences of getting it wrong, that’s not always the best approach.
In the era of big data and smart companies, you should create your maintenance budget using the best data and information available to control your costs, improve performance and efficiency, and ensure the best possible allocation of your maintenance resources.
Reducing the amount of guesswork involved when creating your budget also improves your credibility with other departments, while reducing the chances you run into an emergency you can’t cover.
What are the different types of maintenance budgets?
For facility and maintenance managers, the two most common are an operating budget and a project budget.
The operating budget is the big one as it includes all of the costs associated with maintaining the assets within every department of the business. You should include the cost of labor, materials, tools and equipment, and any skilled contractors you want to bring in to complete the work.
You use a project budget to determine the costs of one-off maintenance projects, such as extensive repairs on a major piece of equipment. This is not included in the overall operating budget due to the level of detail required. Like the operating budget, you should factor in all of the costs to complete the project.
What challenges can you face when creating a maintenance budget?
There are two major challenges you’re likely to face when creating your maintenance budget: a lack of accurate maintenance data and communication gaps between departments.
Insufficient maintenance data
Data is what helps you predict when an asset will break down and how much it is likely to cost to maintain and repair so you can make informed decisions about your maintenance strategy and budget accordingly. You cannot create a reliable budget without accurate data about the historic maintenance and reliability of your assets.
Communication gaps between departments
The departments in your business are all pushing toward the same overall goals, but sometimes it might not doesn’t feel like it. Your budgetary decisions are based on asset-centric data such as maintenance history, failure rates, equipment criticality, and work order details, none of which is relevant to the finance team, where they only care about account-oriented data, and that can make it challenging when you need to request budget adjustments. Because everyone is focused on their specific path to the overall goals, it can be hard for anyone to understand your priorities.
What is maintenance budgeting planning?
Creating a robust and credible maintenance budget is impossible without plenty of planning. This is what the planning process typically looks like:
- Prioritize any tasks that you were not able to complete in the previous year
- Make a note of any new maintenance tasks you need to perform this year and calculate their cost
- Factor in any maintenance tasks that you did last year but do not have to do this year
- Check to see when your current maintenance contracts expire
- Get quotes for new maintenance contracts
You should also think about whether you still have the right maintenance strategy in place for each asset, and update your budget accordingly. That may mean reducing your budget for preventive maintenance and setting more money aside for repairs.
How do you create a maintenance budget?
Most maintenance teams know that you can’t base your entire maintenance budget on past fiscal data, but it does play a part. You should look at your maintenance budgets from recent years and think about:
- Whether you were under or over budget
- What assets, contractors, or locations accounted for more of your budget than you intended
- What was the ratio of preventive to reactive maintenance
- Whether you implemented any new practices or technologies that changed how you spent money
Once you have the necessary insights from your historic data, you can then plan for your preventive and corrective maintenance based on the failure rates of your assets, while also setting aside a budget for reactive maintenance. Look at the age of your assets, where they’re located, and their criticality when you decide how much to set aside for reactive maintenance.
Seasonality is something else to think about. Consider the cost of weather-related maintenance tasks such as snow and ice removal, power losses, heating system maintenance, and air conditioning upkeep.
Finally, don’t forget to leave some wiggle room in your budget for the hidden costs that could crop up throughout the year. For example, there may be fees to pay for new software, tools that you need to replace, or new maintenance equipment that saves you money in the long run.
Where can you find a maintenance budget template?
You can list all of your maintenance tasks along with their costs in a simple maintenance budget template. You will have to adapt the template to meet your needs but it can be a helpful starting point. Alternatively, you can choose to use computerized maintenance management software (CMMS) and apps that allow you to build your facilities maintenance budget in a central location where you can access all of the information you need.
How can Hippo CMMS help?
Hippo CMMS® is packed with easy-to-read graphs and figures that unlock the insights to help you take control of your maintenance budget. You can see who’s doing what and how much it costs so you can make budgeting decisions driven by data.
Hippo CMMS also provides you with a history of assets that have experienced problems. You can create a maintenance budget analysis so you can drill down into a specific asset and all of its associated costs.
Having all of this data, graphs, and reports at your fingertips can also be a powerful negotiating tool, helping you to gain approval from upper management for any maintenance budget increases.
What’s next?
Hippo’s here to help you get the solution that works best for you, from answering your questions about everything related to maintenance to helping you book a live software demo.
Executive summary
A maintenance budget is one of the most underestimated parts of your asset management. It sets out the expected cost of meeting your maintenance objectives for the year. It should include the expected costs for all of the different maintenance types and how they apply to different assets or asset groups.
You can create an operating budget to forecast your costs for all of the maintenance across the business, or a project budget, which is concerned specifically with the costs associated with a one-off project. You can create a maintenance budget by looking at historical budgets, determining your maintenance strategy for each asset, and factoring in seasonality and hidden costs.
You can prepare your budget on a template that you adapt to suit your business. Alternatively, you can use a computerized maintenance management system (CMMS). It gives you access to all of the data you need to determine who’s doing what, how much it costs, and what assets have caused you problems in the past. It can also be a powerful negotiating tool, giving you quick access to graphs and reports that help you justify your budgeting decisions.
