Maintenance Budgets

How modla's platform can produce budgets for maintenance and capital intervention plans. Background and common questions included.

Setting maintenance budgets with modla

Maintenance budget setting is a time consuming and complicated undertaking, and a frequent point of contention between maintenance and finance teams. With modla's platform, you can produce detailed maintenance budgets for a single asset or hundreds of assets in minutes. The analysis consists of four easy steps:

  1. Choose the appropriate asset class.
  2. Customize the asset's specific inputs such as conditional and environmental considerations. 
  3. Import a breakdown of maintenance costs e.g. consequences of failure including monetized risk, cost of routine maintenance tasks and capital interventions.
  4. Select and run the appropriate analysis and download the report.

With our advanced analytics you can produce maintenance budgets for several scenarios:

  1. Current or OEM recommended strategy
  2. Optimized strategy
  3. Run to fail strategy
  4. Any combination of tasks and planning intervals

Our approach produces maintenance budgets built up from a failure mode level. Your provided cost breakdown can be simple, or detailed enough to satisfy budget setting techniques such as zero-based budgeting. Regardless, our platform and analyses allow you to forecast costs by asset down to a failure mode level or even for specific events e.g. costs related to unplanned bearing failures. 

The unreliability of maintenance budgets

The uncertainty and differing viewpoints of maintenance budgeting is the predominant cause of disputes between maintenance and finance teams. Fundamentally both departments have the same goal, to maximise the value they produce for the business. 

However, finance teams typically achieve this by minimizing and tightly controlling costs. In contrast, maintenance departments must uncover value among constant trade-offs e.g. does the reduction in downtime costs outweigh the increased cost of proactive maintenance required to increase availability.

Moreover, finance teams need a well-delineated budget to manage cash flow and ensure funds are available as required. However, by its very nature, it is impossible to say when exactly unplanned failures might occur. Add in condition-based maintenance and the variability of maintenance activities and costs become nearly unmanageable. 

Lastly, many budgeting techniques such as incremental budgeting are ill-suited to maintenance budgeting. Incremental budgets are produced by simply inflating or deflating the previous years budget. This works well if the primary cost drivers are well understood and do not fluctuate. The actual cost of maintenance activities vary wildly as assets age and different failure modes are brought forth due to changing environmental conditions or operating practices.  

How modla reaches a common ground

Modla's platform and probabilistic approach offer common ground for both finance and maintenance teams. Our strategy optimisation allows maintenance teams to effortlessly trade-off various maintenance strategies and their associated risks. Moreover, the analysis can be rerun as more information comes to light e.g. updated condition assessments. This allows maintenance teams to put forth a budget that represents the most economical trade-off between risk and cost based on the most up to date information.

We model assets and their underlying failure characteristics based on Subject Matter Expert (SME) opinion and industry data. The probabilistic approach provides finance teams with a cost breakdown that accounts for the likelihood of various events and failures. The allows finance teams to model cash flow based on a much more comprehensive approach. Furthermore, the costs are built up from a failure mode level providing detailed insights into how costs are derived. The approach supports comprehensive budget setting techniques such as zero-based budgeting.