Let's face it; budget preparation isn't our favorite time of the year. Yet, many maintenance managers face an evolving management system and year-to-year budget.
Supply chain issues?
Responsive Maintenance strategy?
All you can do is put your best effort into establishing general guidelines, anticipating equipment failures, and setting aside enough capital for unintended consequences or unexpected emergencies. It's essential to accept that budgets are calculated estimates for income and expenses. Budgets should be considered as helpful guides that map out future success plans.
For maintenance managers, the goal is to come under budget. Here are four tips for creating a well-rounded budget.
1) Gather Data
Take out the guesswork when creating maintenance budgets. A maintenance budget based on guesswork will undermine the credibility of the maintenance department and, essentially, be a waste of time.
Data is critical for an accurate maintenance budget. Gathering data helps maintenance teams avoid the pitfalls of guessing future requirements. Gathering data also avoids rushing future decisions and allows the maintenance team to make decisions based on the correct information to target the root cause of maintenance issues.
- Equipment Criticality
- Maintenance History
- Failure Data
- Worker History (e.g., turnover rate, employment rate, etc.).
- Purchasing History (materials, contracting, etc.).
QUESTION: What data points would you add to this list?
2) Communication Alignment
Every organization has three primary issues: 1) Communication, 2) Communication 3) Communication. Awareness of the language barrier between departments, e.g., maintenance vs. finance, is critical to formalizing a workable budget.
Finance teams need forecasted costs summarized into the overall chart of accounts. Maintenance teams are tasked with creating budgets in terms and details to present to the finance team. To remove all doubt, ASK the finance team what kind of information they need to perform their job and what kind of details they require for financial planning.
3) Controllable Costs
Did you order too much material for a job? Was the maintenance contractor a low-performer, which caused you to pay for the same job twice? Did you order low-grade equipment? Where can you identify wasteful spending? Which piece of equipment is inefficient, constantly breaking down, and negatively impacting operational efficiency?
Maintenance teams can gain their company a competitive advantage by eliminating wasteful spending.
4) Request Quotes
Lastly, gathering quotes for next year's maintenance can empower a budget with accurate pricing and predictive maintenance costs. Our project estimators are willing to schedule a no-obligation site walk-through and provide a quote for current or future industrial projects.
ADDITIONAL BUDGET QUESTIONS TO ASK:
What are the salaries of maintenance managers and technicians?
What are the costs of hiring new staff (if necessary)?
What are the costs for training and workshops throughout the year?
What is an estimate for the price of materials, tools, and parts?
What is the cost of contracts that we have with external suppliers?
What is the cost estimate for energy costs?
What other expenses do we have for next year? (periodic inspections, insurance, etc.).