Hidden Costs of Deferring Maintenance

Deferred MaintenanceEvery year, essential maintenance repairs for facility assets worth billions of dollars are postponed. The primary reason is often insufficient funding, closely trailed by inadequate staffing. However, the complexities go beyond financial constraints.

Maintenance managers and personnel might lack a comprehensive understanding of the necessary tasks to adequately upkeep building assets. Installations may have been executed in a manner that complicates or renders maintenance impractical. Additionally, those responsible for budget allocation may not grasp the full extent of the costs associated with deferred maintenance.

Research into various organizations reveals a concerning trend: for every dollar seemingly “saved” through deferred maintenance, there is a subsequent increase in future capital renewal costs for that specific asset. These costs can far extend beyond direct expenses, potentially accumulating significantly over the asset’s lifespan, well surpassing the initial maintenance expenditure.

Hidden Costs Explained

Emergency Repairs

The shift from proactive to reactive maintenance introduces a domino effect. Assets determine the timing of repairs or replacements, often leading to emergency services during peak occupancy, necessitating overtime for maintenance personnel or external service contracts. Delays in parts or asset availability can incur additional expenses, potentially requiring temporary replacements and causing disruptions.

Shortened Asset Life

Neglecting routine maintenance accelerates wear and tear, significantly shortening the service life of building assets. For instance, deferring necessary repairs on a conveyor belt can result in increased wear and tear, potentially leading to unexpected breakdowns or failures. The longer maintenance is deferred, the greater the risk of conveyor malfunctions, disruptions in operations, and the need for expensive replacements. Regular maintenance, in contrast, can prevent such issues, ensuring the smooth and reliable operation of the conveyor system.

Reduced Equipment Efficiency

Deferring maintenance compromises energy efficiency, notably evident in building mechanical systems. Skipping essential tasks, such as boiler tuning and cleaning, diminishes system efficiency, increasing energy costs. Even a single missed annual cleaning of a boiler can lead to a two to three percent reduction in operating efficiency.

Safety and Health Risks

Neglected maintenance poses risks to occupants and visitors, from tripping hazards to the build-up of mold and pathogens in HVAC systems. Poor air quality and frequent breakdowns can harm employee productivity, tarnishing the organization’s reputation and potentially resulting in compliance issues with local codes.

Collateral Damage

Deferred maintenance doesn’t confine its impact to the neglected asset alone. A failing roof, for example, can lead to water damage affecting insulation, decking, ceilings, walls, structural elements, lighting fixtures, and electrical wiring. The resultant collateral damage transforms a single maintenance issue into a complex and costly nightmare.

Loss of Competitive Edge

In a competitive business landscape, the external appearance and functionality of a facility can be a crucial factor in attracting clients, partners, and investors. Deferred maintenance leading to a visibly deteriorating environment can erode the organization’s competitive edge, potentially hindering business growth and partnerships.

Technology Obsolescence

Technological advancements impact facility operations, and deferring maintenance may lead to the obsolescence of existing systems. Outdated technology not only hampers efficiency but also requires more costly upgrades or replacements when deferred maintenance is finally addressed, adding another layer to the long-term financial impact.

Community Perception and Relations

The community surrounding a facility forms an integral part of its ecosystem. Neglecting maintenance can affect the perception of the organization within the community, potentially leading to strained relations. Proactive maintenance not only showcases a commitment to community well-being but also helps in maintaining positive public relations.

Insurance Premium Increases

Insurance providers assess risk factors when determining premiums, and deferred maintenance increases the likelihood of accidents or damages. Consequently, the organization may experience a surge in insurance premiums due to the higher perceived risk associated with inadequately maintained facilities, leading to unexpected financial burdens.

Regulatory Compliance Risks

Deferring maintenance increases the likelihood of non-compliance with evolving regulations and standards. This poses not only legal risks but may result in fines and penalties. Staying ahead of regulatory requirements through proactive maintenance is crucial for avoiding legal entanglements and maintaining a positive organizational reputation.

Escaping the Deferred Maintenance Trap

Successfully addressing the pervasive issue of deferred maintenance demands a proactive and strategic approach by facility managers. To reduce the overall cost of deferred maintenance, it is imperative to articulate a compelling case to those who are controlling the budget. This necessitates presenting concrete evidence that advocates for allocating funds to maintenance projects in the present, rather than postponing them to an uncertain future. 

In the competitive landscape of budget allocation, facility managers must quantify the deferred maintenance problem within their facilities. Numbers speak volumes in this context, especially when competing for limited funds against other departments. Initiating a comprehensive facility assessment, covering mechanical and electrical systems, the building site, and the building exterior and interior structures, is an important first step. This assessment should meticulously evaluate the condition of each asset, identifying deficiencies and rating their critical nature and seriousness. Subsequently, create a financial plan for either repairing or replacing it, complete with a projected timeline for the necessary work.

However, merely presenting a list of repairs and their projected costs may not suffice. Budget setters may be inclined to overlook these needs, dismissing them as exaggerated cries for attention. To strengthen the case for proactive maintenance, facility managers should complement their data with compelling examples from the past. Highlighting instances where deferring a particular repair or replacement action resulted in additional costs, operational disruptions, or compromised safety serves as a powerful argument. Solid historical data showcasing the tangible impact of deferred maintenance strengthens the case for immediate budget allocation, emphasizing the long-term benefits of prioritizing proactive maintenance over short-term financial savings.

Frequently Asked Questions About Deferring Maintenace

What is deferred maintenance?

Deferred maintenance refers to postponing necessary repairs and upkeep of facilities, equipment, or infrastructure, often due to budget constraints or inadequate resources.

Why is deferred maintenance a concern?

Deferred maintenance can lead to increased repair costs, shortened asset lifespan, safety hazards, and disruptions in operations, impacting overall efficiency and costing more in the long run.

What are the hidden costs of deferred maintenance?

Hidden costs include emergency repair expenses, shortened asset life, reduced equipment efficiency, safety and health risks, collateral damage, impacts on the competitive edge, technology obsolescence, employee morale, and community relations.

How can facility managers escape the deferred maintenance trap?

Facility managers can break free by presenting a comprehensive case to budget controllers, conducting thorough facility assessments, showcasing past examples, and emphasizing the urgency of addressing maintenance needs promptly.

What are the benefits of proactive facility management?

Proactive facility management helps prevent costly issues, extends asset lifespan, maintains a positive workplace environment, enhances safety, improves energy efficiency, and fosters a positive organizational image.

How often should preventive maintenance be conducted?

The frequency of preventive maintenance depends on factors like the type of equipment and usage. It’s generally recommended to follow manufacturers’ guidelines and conduct regular inspections and maintenance tasks.

Can deferred maintenance lead to legal issues?

Yes, neglecting maintenance can result in non-compliance with safety codes and regulations, leading to legal liabilities, fines, and potential legal actions against the organization.

Additional Resources

CMMS Articles & Directories

Asset Management Terms and Definitions

Maintenance Terms & Definitions Glossary

Customer Testimonials

Customer Case Studies

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