A maintenance budget is how facility and maintenance managers project and control costs. Through budget planning, they set out the expected cost of meeting their annual maintenance objectives. Budget planning is a multi-step process, but the key to creating accurate spending forecasts is access to reliable data. The only way to properly plan budget allocations is with a clear picture of past maintenance activities.
What is a maintenance budget?
A maintenance budget is a document that you use to set out the expected cost of meeting your maintenance objectives for the year. Your budget should provide an overview of the expected costs for each of the different maintenance types you plan to do, such as preventive and reactive, as well as any other maintenance strategies you use, and how they apply to different assets or asset groups.
Creating a budget is your way of putting your case forward for the money that you need to improve equipment and efficiency. It should include a detailed breakdown of how you intend to spend the money, with each expense categorized according to its purpose.
But more than that, your maintenance budget should also serve as a way of introducing targets and mechanisms so you can monitor spending. It can help you evaluate and understand why you have deviated from the expected costs and serves as an important tool for measuring your team’s effectiveness.
Why is a maintenance budget important?
Creating a comprehensive maintenance budget can be a complex process with lots of elements to consider, different stakeholders to involve, and a mass of data to sift through.
Given its complexity, the temptation for some maintenance managers is to take the previous year’s expenditure and then add a bit. But given the potential consequences of getting your budget wrong, that’s rarely the best approach.
In the era of big data and smart companies, you should create your maintenance budget using the best data and information available to control your costs, improve performance and efficiency, and ensure the best possible allocation of your maintenance resources.
Reducing the amount of guesswork involved when creating your budget also improves your credibility with other departments, while reducing the chances you run into an emergency you can’t cover.
What are the different types of maintenance budgets?
For facility and maintenance managers, the two most common are the operating budget and the project budget.
The operating budget is the biggest, as it includes all the costs associated with maintaining the assets within every department of the business. You should include the cost of labor, materials, tools and equipment, and any skilled contractors you want to bring in to complete the work.
You use a project budget to determine the costs of one-off maintenance projects, such as extensive repairs on a major piece of equipment. This is not included in the overall operating budget due to the level of detail required. Like the operating budget, you should factor in all the project’s costs.
What challenges can you face when creating a maintenance budget?
There are two major challenges you’re likely to face when creating your maintenance budget: a lack of accurate maintenance data and communication gaps between departments.
Insufficient maintenance data
Data is what helps you predict when an asset will break down and how much it is likely to cost to maintain and repair so you can make informed decisions about your maintenance strategy and budget. You cannot create a reliable budget without accurate data on the maintenance and reliability of your assets.
Communication gaps between departments
The departments in your business are all pushing toward the same overall goals, but sometimes it might not feel like it.
Your budgetary decisions are based on asset-centric data such as maintenance history, failure rates, equipment criticality, and work order details, none of which is relevant to the finance team, where they only care about account-oriented data, and that can make it challenging when you need to request budget adjustments.
Because everyone is focused on their specific path to the overall goals, it can be hard for anyone to understand your priorities.
What is maintenance budgeting planning?
Creating a robust and credible maintenance budget is impossible without plenty of planning. This is what the planning process typically looks like:
- Prioritize any tasks that you were not able to complete the previous year
- Make a note of any new maintenance tasks you need to perform this year and calculate their costs
- Factor in any maintenance tasks that you did last year but do not have to do this year
- Check to see when your current maintenance contracts expire
- Get quotes for new maintenance contracts
- You should also determine if the current maintenance strategy in place for each asset is still the best match. You may find yourself reducing your budget for preventive maintenance and setting more money aside for repairs, for example.
How do you create a maintenance budget?
Most maintenance teams know that you can’t base your entire maintenance budget on past fiscal data, but it does play a part. You should look at your maintenance budgets from recent years and think about:
- Whether you were under or over budget
- What assets, contractors, or locations accounted for more of your budget than you intended
- What was the ratio of preventive to reactive maintenance
- Whether you implemented any new practices or technologies that changed how you spent money
Once you have the necessary insights from your historic data, you can plan for your preventive and corrective maintenance based on the failure rates of your assets, while also setting aside a budget for reactive maintenance. Look at the age of your assets, where they’re located, and their criticality when you decide how much to set aside for reactive maintenance.
Seasonality is something else to think about. Consider the cost of weather-related maintenance tasks such as snow and ice removal, power losses, heating system maintenance, and air conditioning upkeep.
Finally, don’t forget to leave some padding in your budget for the unpredictable but inevitable costs that crop up throughout the year. For example, there may be tools that you need to replace or new maintenance equipment that saves you money in the long run but comes with upfront costs.
How can you get your facility budget approved?
Getting approval for any budget is a challenge in most businesses, but particularly where there’s lots of competition for funding. Add to that the fact the rest of the organization tends to see facility and maintenance departments as cost centers, and the need for clear justifications for the final figures in your budget becomes clear.
Look at the costs from previous years
Looking at your past financial records helps you understand what each of the different services involved in maintaining your facility costs. If your previous costs have remained steady or gradually increased over the years, it is easier for you to create a relatively accurate prediction for the year ahead.
However, if costs have fluctuated noticeably over the last few years, it could mean there are services that you’ve been paying for that you don’t need. It could also mean there are places you should be spending but aren’t. Find the sources of those fluctuations to help you decide es lie and decide whether you need those services over the coming year.
Think carefully about your cost base
Once you have a rough estimate of your facilities budget based on previous years, the next step is to think about your costs for the year ahead. To do this, break your costs down into those that are fixed, variable, and seasonal.
Fixed costs
You should already know your fixed costs for the year. If they’re not, talk with your vendors for an estimate of the costs over the next cycle. Your fixed costs will include things like landscaping, window cleaning, and HVAC maintenance. They’re not likely to change and can form the basis of your budget.
Variable costs
Your variable or unknown costs are more difficult to account for. They include one-off repair and routine maintenance costs. Although they fluctuate from year to year, there are steps that you can take to make them more predictable. Looking at the variable costs you’ve incurred over the past few years and matching those with the expenses that you foresee over the next year will help you create a more reliable estimate.
Seasonal costs
Breaking down the monthly and quarterly costs from previous years helps you identify any seasonal changes. You can then work these into your budget for the upcoming year. For example, landscaping costs may rise in the summer and utilities costs increase in the winter. Understanding the impact of seasonality helps make better predictions about not only how much you are going to spend but also when you are going to need the funds.
Talk to your team and other departments
There are many elements involved in maintaining every part of a facility. That’s why it’s always wise to canvass the people who manage the other departments across the organization. Their insight will help you understand their priorities and highlight costs that you may not have accounted for.
It’s also important to speak with the operations and maintenance team.
Find savings where you can
There are usually some quick wins that help to bring the cost of building maintenance down. For example, switching to energy-efficient lighting might mean buying fewer replacement bulbs.
Although there are risks to switching from tried-and-true products, you can always start a conversation with suppliers about ways to cut costs. In some cases, you can save by agreeing to buy larger lots, but be careful. Saving money up front doesn’t help when you end up having higher carrying costs.
You can also look at your labor and delivery costs. If you’re seeing a lot of unplanned overtime for maintenance techs, you need to rework your preventive and predictive maintenance programs.
Ideally, the team does their scheduled inspections and tasks during regular shifts using parts and materials that arrived long before the team needed them. If you can avoid reactive maintenance that forces you to authorize overtime and rush deliveries, you can better control costs.
Use technology to reduce manual work
There are also areas where spending money saves you money. Cutting back on regular maintenance programs might make your facility budget more palatable to executives, but it only leads to increased costs down the line.
Instead, invest in ways to increase your proactive maintenance, including implementing preventive maintenance software. With the right cloud-based facility management solution, you stay on top of smaller inspections and tasks to extend the life cycles of your systems, while also reducing the risk of costly downtime.
Modern platforms also help you to organize the team and work schedules more efficiently, manage part lists and inventory counts.
Where can you find a maintenance budget template?
You can list all your maintenance tasks and their costs in a simple maintenance budget template. You have to adapt the template to meet your situation and needs, but it can be a helpful starting point.
Alternatively, and this is the option that saves you time while delivering a more accurate budget, you can use asset management software and mobile apps that help you build your facilities maintenance budget in one central source of truth, where you can access all the information you need and make everything available to your team and the rest of the organization.
By Jonathan Davis
Jonathan writes about asset management, maintenance software, and SaaS solutions in his role as a digital content creator at Eptura. He covers trends across industries, including fleet, manufacturing, healthcare, and hospitality, with a focus on delivering thought leadership with actionable insights. Earlier in his career, he wrote textbooks, edited NPC dialogue for video games, and taught English as a foreign language. He hold a master's degree in journalism.
