Deferred Maintenance...at what cost?
Before delaying maintenance, know the true costs.
By Kellie D’Andrea
Deferred maintenance is the term often used when maintenance doesn’t get performed for a long period of time. Retailers are often faced with budgetary constraints, limited resources and, in some cases, limited knowledge that often lead to a decision to defer maintenance to save money, time or just because they didn’t know the consequences. But at what cost does deferring your maintenance really have?
According to participants in a recent online survey, “Results of putting off maintenance too long can range from simple component failure to major pieces of equipment dying much too soon to the failure of the entire location, not to mention the inconveniences and embarrassments that go along with it.”
When evaluating deferred maintenance it is important to not only look at its estimated value but to also focus on the liability it represents. As time goes on, liability increases and estimating future responsibility is often a difficult task. Certain systems impact different areas of your location and you need to not only take assertive wear and tear into consideration, but the risk to your contents and to the people who are in your stores. What is your risk down the line when major equipment breaks down or systems fail? Sometimes deferring maintenance isn’t the best solution and educating the finance department in the risks associated with that decision as well as the benefits of a preventative maintenance program is critical to the success of obtaining the necessary funding.
Deferred maintenance comes down to a financial decision — spend money now or spend money later. One goal of the facilities manager is to ensure that there is funding available in future periods to support regular maintenance and to cover the backlog of deferred maintenance items. By making an effective business case and educating your financial team, you will lay a strong foundation for financial discussions and secure the necessary funding required to maintain your stores.
Some tips to help you with your business case:
Finance people speak a different language
They are very factual and numbers focused. Rarely will the emotional or “gut” feel work when trying to appeal to them for budget approval. You will need to talk numbers. Be prepared to discuss facts and just the facts. There are many models online that you could use to plug in your numbers to financially argue your point, but for that to work, you must know what numbers to plug in. You need to be able to evaluate the current cost of the maintenance request and compare it to the liability of deferring maintenance — at what cost in the future will this have, replacement for example. If your finance manager concludes that it could wait until next period, ensure that this amount is placed in your budget and estimate a cushion for possible replacement.
Use historical data
Finance managers love trending data and it will add credibility to your financial predictions. Look for examples in the past that prove your point: What were the long term cost versus the current period spend and use these examples in your business case.
Estimate the risk potential
As a result of deferring maintenance, will there be a hazard or liability that may be incurred? Will revenue decline because of declining customer experiences? How about employee morale? There are many ways to argue risk; you just need to identify where the potential for risk may impact.
In today’s economy, businesses are looking for ways to reduce expenses and hold on to enough cash to sustain through these tough times. Although deferred maintenance may seem to be a very effective way to cut cost, it is actually a cost avoidance tactic that most likely will cost you twice as much down the line. Incorporating an ongoing preventative maintenance program with a trusted provider is one of the most efficient and effective ways to streamline your process and to reduce expenses. Partnering with a company who understands your constraints and has the ability and positioning to work strategically with you, will yield you desired results each and every time.
Kellie D’Andrea is executive vice president of NEST International, a national facilities maintenance and management company focused on bringing solutions to the retail industry. For additional information, please go to www.enternest.com or call (800) 611-6378. |
