5 Hidden Costs of Deferring Maintenance
For every dollar saved by deferring maintenance, there comes a four dollar increase in future capital renewal costs.
Every year, billions of dollars in needed maintenance repairs to facility assets are deferred. Inadequate funding is the most often cited reason for deferring maintenance, closely followed by insufficient staffing. But there are other factors.
Maintenance managers and personnel may not fully understand all of the tasks that are necessary to properly maintain building assets. Assets may have been installed in a way that makes maintenance difficult or impossible. And those setting the budget may not understand the full cost of deferring maintenance.
Studies of organizations show that on average, for every dollar "saved" by deferring maintenance, there comes a four dollar increase in future capital renewal costs. Those are the direct costs for that specific asset. There are additional indirect costs that may have an even larger impact. Over the life of that asset, those additional costs may total more than 15 times what would have been spent on the maintenance had it not been deferred.
If managers are to be successful in changing the culture that results in deferring maintenance, they must present a case that lays out all of the costs of deferred maintenance, from emergency repairs to collateral damage.
The ideal maintenance program is a proactive one — maintenance personnel perform the necessary tasks when needed. And when the asset approaches the end of its service life, its replacement is scheduled. But deferring maintenance changes the process from proactive to reactive.
With reactive maintenance, the asset picks the time when it needs emergency service or total replacement. This can cause disruptions during peak occupancy periods or complete shutdowns of portions of the facility. When this happens, the maintenance department is under pressure to fix the issue, even if it requires the use of overtime for maintenance personnel or contracting with outside services.
If parts must be ordered or if the asset must be completely replaced, there will be additional expenses that must be added to the cost. Delays as a result of part or replacement asset availability can require that operations be moved to another area of the facility. In the event of a failure of a HVAC or other similar system, temporary replacement systems may have to be brought in at an additional expense. When the asset controls the timing of its repair or replacement, costs will always be higher and there will be disruptions.
Shorter asset life
All building assets have a finite service life. While there are many factors that impact the actual service life in a particular application, one of the most important is how well it has been maintained. Without proper maintenance, the service life of practically all facility assets will be shortened.
For example, pealing wood trim paint on the exterior of a building will allow water to penetrate the wood, leading to cracking, splitting, and decay. Failing to inspect the trim on a regular basis and stretching the paint cycle out several years may save some money today, but it will only allow more damage to take place. Eventually, the damage will require that the wood be replaced.
The same thinking applies to building mechanical systems, where a very common practice is reactive or run-to-failure maintenance. Consider building HVAC and domestic water pumping systems. A typical centrifugal pump in these applications requires periodic lubrication, inspection of seals, vibration monitoring, alignment checks, and other routine maintenance tasks. A well-maintained centrifugal pump can easily operate for 20 to 30 years. That same pump under run-to-failure maintenance practices can fail in as little as five years.
Reduced equipment efficiency
The impact on energy efficiency resulting from the deferral of maintenance is most noticeable with building mechanical systems. Proper maintenance of these systems is particularly important if energy costs are to be minimized.
For example, if boilers are to operate at peak efficiency, there are a number of maintenance tasks that must be performed on a regular basis. The boiler must be tuned regularly to ensure that the proper amount of air is being introduced. Too little air and the fuel is not fully oxidized. Too much air and heat are lost up the stack.
Boilers also require periodic cleaning to remove soot from the fireside of the boiler tubes or heat exchanger. Similarly, the waterside of the boiler must be cleaned to prevent the buildup of scale. Soot and scale both interfere with the transfer of heat within the boiler, reducing its efficiency. Skipping even one annual cleaning can reduce a boiler's operating efficiency by two to three percent.
Safety and health risks
Deferring maintenance on a wide range of building assets can cause harm to employees and visitors. Some are obvious, like failed floor tile that poses a trip hazard. Others may be less obvious, like the buildup of mold behind water damaged walls. Skipped or irregular cleaning of building HVAC systems can lead to the buildup of mold, mildew, and pathogens within the systems that then are distributed throughout the building. Even simple things, like door closers that are not properly adjusted, can cause injury should the door slam closed on a person's hand.
A poor working environment due to poor air quality or frequent breakdowns of assets will damage employee productivity. Visitors will see and sense these deficiencies, too, and the organization's reputation will be damaged.
Deferred maintenance can also lead to compliance issues with local code and regulatory officials. Spot inspections or complaints from building occupants can lead to failed compliance inspections, fines, and bad public impressions. In more severe cases, they can lead to mandated shutdowns of the facility until items have been corrected.
The impact of deferring maintenance is not limited to just that asset. Often, it extends well beyond. Consider the situation of a failing roof. The roof has been leaking and in need of replacement for some time, but funds are not available. So, maintenance personnel make patches to the areas where leaks are reported. But in spite of their efforts, additional leaks will occur, and some may go unreported. Additional repairs are made, and while the leaks may have been temporarily stopped, they will have caused collateral damage.
Water damage to roof insulation and decking may now require that sections be replaced. Ceiling and walls may now have to be repaired or replaced due to water damage. Structural elements exposed to the water may have corrosion or rot damage necessitating repairs. Water damaged lighting fixtures and electrical wiring will have to be replaced.
Collateral damage can turn a single, maintenance issue into a nightmare. Not only will the organization have to pay for correcting the original maintenance issue, but they will also have to pay for repairing or replacing all other assets damaged, and they will have to do so on an emergency basis further increasing costs. If the collateral damage is serious or extensive enough, managers may lose the use of the impacted space for an extended period of time while materials are ordered and repairs made, yet another cost increase.
Avoiding the deferred maintenance trap
If facility managers are to be successful in reducing the total cost of deferred maintenance, they must build and present their case to those controlling their budget. They must present sound evidence that supports the budgeting of maintenance projects today, rather than deferring them to some future time.
How big is the deferred maintenance issue in your facility? Numbers talk. Remember you are competing with other departments for a limited pot of funds. Start with an assessment of the facility, including mechanical and electrical systems, the building envelope, the building interior structures and finishes, and the building site. The facility assessment should evaluate the condition of each of the assets and identify any deficiencies. Rate the critical nature of the asset and the seriousness of each deficiency. Finally, develop a budget for its repair or replacement, along with an estimated timeframe for the work.
Having a list of needed repairs along with projected costs isn't enough. In most cases, there will be so many items and they will be so costly that those who set the budget may choose to ignore them, thinking maintenance is just crying wolf. To help present your case, give them examples from the past that show how deferring a particular repair or replacement action resulted in additional repair costs, disruptions to operations, or compromised safety. Presenting solid data that shows the scope of the issue and how it has impacted the organization in the past will strengthen your case.
James Piper, Ph.D., PE, is a writer and consultant who has more than 35 years of experience in facilities management. He is a contributing writer for Building Operating Management.