Annual maintenance budget estimation for a plant system

Abstract

Purpose – The purpose of this paper is to propose a methodology to evaluate the annual maintenance budget (AMB) for a plant system as a percentage of its asset replacement value (ARV). Design/methodology/approach – Variables influencing the budget for the plant system are identified and modeled in terms of a plant maintenance Budget digraph. The nodes in the digraph represent the function of budget influencing variables and edges represent the degree of influence among these. The plant maintenance budget function is derived from the equivalent matrix of the plant maintenance budget digraph and is used to evaluate the AMB for the plant system as a percentage of its ARV. The presented model is illustrated with an example. Findings – The proposed methodology enables the maintenance managers and practicing engineers to evaluate the AMB for maintenance tasks based on plant specific variables that can vary from one plant to another, without resorting to general rules-of-thumb method of budgeting or to expert judgment. Research limitations/implications – The methodology suggested does not claim to cover all aspects of budgeting and is confined to direct maintenance costs. Practical implications – A fair estimation of AMB for a plant system gives an appropriate direction to maintenance actions and ensures that the assets will be kept in healthy and reliable state. This is desirable because it will ensure that maintenance resources are appropriately benchmarked and the resources are utilized judiciously. This ensures maintenance effectiveness. Originality/value – The paper presents a structural approach to budgeting for maintenance tasks. This approach is valuable for plant managers, with ease in implementation.

Budgeting: A Strategic Approach To Achieve Value For Money In Maintenance Management

“…org/10.15405/epsbs.2019.05.02.32 Corresponding Author: Sylvia Gala Mong Selection and peer-review under responsibility of the Organizing Committee of the conference eISSN: 2357-1330 333 organization potentially lost in revenue. Since the interruption and downtime are unavoidable for servicing the equipment and building, the maintenance manager needs to reflect the financial benefits of forecasting beforehand before the equipment or building breaks or requires laborious maintenance (George Prieskorn, n.d.;Gupta & Gandhi, 2014). Therefore, through budgeting toward the regular preventive maintenance can offer a long way to save time and value for money.…”

“…The concerns on the rapid changes of the maintenance strategies and resources have forced the organization to reflect the proactive maintenance management to encounter not just for the cost-saving measure but also any maintenance issues arise. Significantly, budgeting is a crucial element in the maintenance management that controls the economic value of the organisation (Gosavi et al, 2011;Gupta & Gandhi, 2014;Puķite & Geipele, 2017). The budget for maintenance needs to be well-planned and well-addressed the maintenance required to indicate the capability of the organization to carry out the maintenance works.…”

Evaluating maintenance budget for an AC plant under its contextual conditions

“…Appropriate maintenance driven by allocation of right resources, such as spares, manpower, working tools, equipment, support infrastructure, etc. ensures it (Gupta et al, 2014;Earle, 2003;Asjad et al, 2013). Financial implication of the resources ranges between 2.5 and 3.5 per cent of asset replacement value (ARV) and is based on operational data of organizations that have proven themselves leaders in their respective fields (Gulati and Smith, 2009).…”

“…Lai et al (2008) researched to conclude that the operation and maintenance costs of an air conditioning (AC) plant is significant portion of FM costs; therefore, evaluation of AMB of an AC plant gains importance and is attempted in this paper. Gupta et al (2014) proposed the use of graph-theoretical approach (Harary, 1994) to scientifically evaluate the maintenance budget and avoid subjectivity in the budgeting exercise, which is intrinsic to expert judgment. They identified the variables affecting the maintenance budget and modeled their varying degree of mutual influences, including estimation of the unique values of the variables based on the plant contextual specifics.…”

Key Strategies to Overcome Cost Overruns Issues in Building Maintenance Management

“…The acknowledgement of significant repairs should be made accessible at the perfect time through financial means. Lately, the budget for maintenance plans was regularly not decided efficiently, and a few different planning techniques are being used (Gupta et al, 2014;Yusuf et al, 2013). Therefore, the management needs to select the best budgeting method to equalize the needs of maintenance with the fund's allocation.…”