Risk-Based Budgeting for Maintenance

Overview

Overall, the goal of developing a maintenance budget is to ensure that the site’s maintenance and reliability needs are met in a cost-effective and efficient manner, while also ensuring that the maintenance budget is aligned with the organization's overall financial goals and objectives. Risk Based Budgeting (RBB) allows the site to rank “Major” maintenance repairs based on the risk that the equipment poses to the site in the coming fiscal year. By using this method, it drives dialogue with decision makers on the specific work activities that will reduce the risk to the environment, people and the profits of the site.

Description of Service

Below are the typical steps involved in the process:

1. Analyze Work History Data – The consultant will work with the site to review up to 5 years of historical data to determine equipment that may benefit for a “Major” repair in the coming fiscal year.
2. Perform Risk Assessment on the Assets – This is where the consultant and the site’s subject matter experts (SME) will assess the risk if the repair does not occur in the coming fiscal year. This typically accounts for consequences related to safety, the environment, cost, and downtime.
3. Summary Budget – The findings for these “Major” repairs will be compiled and combined with other budget elements that are more fixed in nature (yearly HVAC contracts, snow removal, external inspections, etc.)
4. Report Out to Leadership – This draft budget will be presented to leadership to discuss the overall risk of removing specific “Major “repairs. This will help define the final scope of the upcoming fiscal year budget.
5. Tracking Repairs – This defined “Major” repairs will then the tracked in the CMMS/EAM system. This is typically done using codes that are tracked on repair work orders. (E.g., revision codes in SAP)

Duration

A typical engagement will be one/two week(s) based on the size and complexity of the facility. While this exercise can be performed virtually, it is recommended that the consultant work with the team onsite for greater context and availability to data and site personnel. If performed onsite, the consultant will arrive on site on Monday afternoon and will work with the team through Thursday afternoon. This will be repeated for a second week if necessary, depending on the number of repairs that need to be analyzed. A report out to leadership will be conducted at the end of the process. This can also be done virtually or onsite per the site’s preference.

For more information, contact us at info@prelical.com