A maintenance plan is critical to ensure a company’s assets are reaching optimal performance and to protect the health and safety of employees. By having a maintenance strategy, asset-intensive companies can gain insight into when their assets need to be repaired or replaced and prevent a breakdown or other workplace incidents that can lead to unplanned downtime, costing time and money.
Still, many companies don’t realize the money that can be saved by investing in an effective maintenance strategy. It’s an investment that can continuously pay off in the short, medium and long term life of the operation.
In this article, we look at how to understand the true cost of your strategy from a budget perspective, including the benefits of zero-based budgeting, and how the latest asset management software can help asset-intensive organisations achieve the best results for their operations.
Establishing the true cost of the maintenance strategy
For a maintenance plan to achieve the best results, it should be built into the overall company budget, including operating and capital expenditures.
The broader budgeting strategy gives companies valuable insight which, in turn, enables them to plan for short and long-term expenditures. It provides the true cost of the maintenance strategy. For instance, a short-term maintenance cost on the operating side might be replacing truck components, such as batteries, while a long-term capital expense might be purchasing a new truck fleet. Both should be part of the broader budget plan.
For some companies, creating a holistic, long-term budgeting plan seems like a ‘nice to have’ when it should really be a ‘must-have.’ While it’s easy to get caught up in the short-term budget needs, the long-term costs can be more expensive without a well-thought-out maintenance strategy.
As many of our clients have come to realize over the years, a sound maintenance plan helps companies manage expenses and optimize their assets for as long as possible.
Zero-based budgeting strategy
The right budgeting strategy can also help companies control maintenance costs.
Many companies are shifting away from traditional maintenance budgeting (year-on-year) to zero-based budgeting (ZBB). As the name implies, ZBB starts from a zero base and analyses every function for its needs and costs. It ensures all expenses are justified for each new period.
ZBB can be an asset manager’s best friend since the figures stand on their own; providing decision-makers with accurate, informed figures rather than those that are assumed based on past experiences or a ‘gut feeling.’
The engineering consulting firm Ausenco has used the ZBB strategy with several clients over the years, calling on asset management software to facilitate analysis. For instance, ZBB was used to help a gold mining client in Papua New Guinea seeking to replace its aging mobile fleet. Ausenco produced a 10-year capital replacement plan for the company, providing it with much-needed insight to move forward with the budget decision.
Ausenco also supported a large multinational client with its transition to zero-based budgeting as part of a broader Maintenance Improvement Project, ensuring its maintenance budgets were fully justified and transparent. As a result, the client benefited from increased knowledge of Reliability Centred Maintenance (RCM), reliability engineering, activity-based budgeting and lifecycle costing.
Using the right technology for budgeting
Ausenco saw the value of asset management software early on and has used it to help many asset intensive companies proactively manage their maintenance plans, with a goal of maximizing return on investment and improving cost-to-revenue ratios. Orien is built on the global success of Ausenco’s Rylson8 software and brings the benefits of these tools to a simple to use, cloud-based platform.
Our platform can help any asset intensive business analyse their assets over their predicted life cycle, providing decision-makers with information they need for budgeting and production.
A well-informed proper lifecycle budget can help companies understand what their operational and capital requirements are for asset maintenance, and asset disposal and replacement. It enables an informed decision for the long term on expenses ranging from labour — maintenance and operational— to operating costs such as parts and utilities. These insights can help manage costs and operations by ensuring there is no oversupply or undersupply of resources, both human and materials.
Orien also removes a lot of the manual budgeting work, enabling finance teams to delve deeper into particular systems and discover the true costs of the operation and how they form part of the broader budget – with a simple generation directly from their live maintenance strategy. It’s the perfect tool to help your company optimise its assets while controlling costs, reducing risk and ensuring the company is poised to take advantage of its next growth opportunity.
In our next article, we look at how mining organisations can determine the efficiency of a maintenance strategy, including ensuring it’s the right fit for the operation.
Orien is a cloud-based asset management solution relied on by the world’s largest asset-intensive industries. Developed by Ausenco in collaboration with leading industry experts, Orien makes it easy to consolidate, collaborate on, and control maintenance strategies and budgets across your organization to keep assets working for you. Orien’s clients manage lifecycle costs and reduce uncertainty by understanding the critical activities that keep their operation running. With teams located worldwide and 24/7 support, Orien puts you on the path to better asset performance.
Our team of experts are ready to help, reach out to Jon Garnaut to learn more.