Calculating True Costs of Deferred Maintenance

Preventive maintenance saves money plain and simple, and the reasons for it should be abundantly clear. Common sense dictates a small investment upfront can save money in the long run. But when budgets are tight, boards and managers  may be tempted to forego this investment with the hope that major repairs do not come up.  

How should you decide what to spend on maintenance costs? What is the best way to make that decision now without really knowing when and how much that future cost will be? For that you should consider David Tod Geaslin’s Inverse-Square Rule for Deferred Maintenance Effort. In his words: 

“When an organization attempts to reduce maintenance costs by reducing maintenance spending, maintenance costs will be reduced until spending falls below the minimum needs of the machines. 

When maintenance spending falls below the minimum funding required and the machines are operated to failure, the results will be an exponential costs increase that is INVERSE to the expected savings.”  

So, what does that mean? As Geaslin says,  

“THE RULE - If a part is known to be failing but operated to failure, the resultant energy required to overcome the breakdown event to the entire organization will be the square of the cost of the primary failure part. If the breakdown event escalates, the energy required to recover from the breakdown will continue to square at each successive level of failure.” 

Applying these principles has been shown effectively to work very well as a useful tool to decide when to choose between deferring maintenance and executing an early intervention effort.  

To determine for yourself how well the Inverse-Square rule can serve your organization’s budgeting, examine your own equipment’s historical breakdown events and verify the rule. 

If you know the cost of the primary part that is failing today and square that amount, you will have calculated the cost of repairing a complete breakdown of that part. Having such a method to calculate what those true costs of differing maintenance are, you can eliminate the uncertainty of deciding how to accurately weigh the cost of an unknown future event.