Maintenance Business

What is the maintenance business?

Maintenance is the combination of all technical and associated administrative actions intended to retain an item in or restore it to, a state in which it can perform its required function. Many companies are seeking to gain a competitive advantage with respect to cost, quality, service and on-time deliveries. The effect of maintenance on these variables has prompted increased attention to the maintenance area as an integral part of productivity improvement. Maintenance is rapidly evolving into a major contributor to the performance and profitability of manufacturing systems. Some see maintenance as the “last frontier” for manufacturing.

In most businesses, success is easily measured by looking at the bottom line; but what’s the bottom line in the maintenance business? To better understand how to evaluate maintenance business performance, it’s helpful to examine how businesses generate profits. Quite simply, businesses generate profits by providing goods or services at a minimum cost and sold at a fair market price. Revenues generated from sales must exceed the costs. It is important to note that the customer determines the fair market price. In the maintenance business, the customer pays for value; price is part of the value equation along with quality and timeliness. So, as we look at the maintenance business, price is something that cannot be ignored. For example, if internal electricians are charged to the department at $45.00 per hour and the comparable skill for an external resource is $30.00 per hour, it will not take long before outside electricians are being used.

If you’re the type who can (and likes to) do just about anything around the house–mend a leaky faucet, nail down those sagging shingles, paint a wall, unstick a sticking door, repair a broken cabinet or build a garbage can enclosure, then this might be just the business for you. You’ll be on-call in your neighbourhood for all those jobs that aren’t quite big enough to hire an expensive contractor but are beyond the homeowner’s expertise or time constraints. This is a business with room for growth: According to the U.S. Census Bureau, Americans spent nearly $43 million on home maintenance and repairs in a single recent year. The advantages to this business are that you can work from home, you can start on a shoestring, you’re always doing something different, and it’s gratifying. People are delighted when you can save them money by doing the job yourself and appreciative of skills that they don’t possess. You’ll need a variety of home-repairs skills–everything from minor plumbing to minor electrical to painting and carpentry. You’ll want people skills because you’ll be dealing with a variety of personalities on their home turf, and a good sense of logistics to help you determine which jobs to schedule in what order.

We have a wide range of property maintenance Melbourne services at Hitch Property Constructions. 

Four types of maintenance

There are four main types of maintenance.

Maintenance Business

Preventive maintenance (PM)

Preventive cleaning of a C-130J Hercules at Kessler Air Force Base. 

PM involves periodically inspecting, for example, a factory’s machinery, and fixing small problems before they develop into major ones.

The main aim in PM is for the machine, device, or equipment to make it from one scheduled service to the next without any major failures. Specifically, failures that neglect, fatigue, or normal wear might cause.

Scheduled maintenance (SM)

SM is a scheduled service that a competent individual carries out to make sure that something is operating correctly. With regular SMs, equipment is less likely to break down unexpectedly. SM is pre-planned.

When you buy a new car, the seller will tell you when to bring it in for a service. This is an example of SM. If you don’t take your car for its scheduled services, its depreciation will accelerate, i.e., its value will decline more quickly.

Predictive replacement (PR)

PR refers to the replacement of something that is still working. In most cases, there are tax benefits.

According to Wikipedia:

“Usually it’s a tax-benefit based replacement policy whereby expensive equipment or batches of individually inexpensive supply items are removed and donated on a predicted/fixed shelf life schedule. These items are given to tax-exempt institutions.”

Condition-based maintenance (CBM)

CBM refers to carrying out maintenance when the need arises. In most cases, people opt for CBM when one or more indicators show that a device is going to fail.

When the performance of something in, for example, a factory, is deteriorating, the factory manager may opt for CBM.

Wikipedia says that CBM “was introduced to try to maintain the correct equipment at the right time. CBM is based on using real-time data to prioritize and optimize maintenance resources.”

The Market

Your customers will be mostly homeowners, but you can also target owners or managers of small apartment buildings or condominium complexes who don’t have a maintenance person on staff, and small shopkeepers and real estate agents who may need help with vacant property. Deliver flyers detailing your services to potential customers by tucking them under doormats or making them into door hangers. (Don’t place them in mailboxes–the U.S. Postal Service gets very upset about this.) Place ads in your local newspaper and your neighbourhood Yellow Pages. For small-business commercial customers, hand-deliver fliers or brochures and explain your services. You may not get any takers the first time you visit, but don’t get discouraged. A repeat visit or two can often seal a deal.

Needed Equipment

In some states, you’ll need a contractor’s license, so be sure to check with your local contractor’s board or commerce department before you start. You’ll want to be bonded. And you’ll need the handyperson’s stock-in-trade: hammers, screwdrivers, pliers, wrenches, grip vices, flashlights, a cordless saw, a stepstool and ladder, and paintbrushes and rollers. You should also have a pager so customers can reach you during the day and a pickup truck for making house calls.

Looking for comprehensive services on property maintenance? Look no further! Hitch Property Constructions has you covered.

The business of maintenance

Maintenance is a business within the manufacturing business. In many cases, maintenance costs are among the three largest expenses for a manufacturer.

All of the fundamental systems involved in the maintenance business must be in place and functioning.

Maintenance managers must make decisions that will yield greater maintenance efficiency and profitability.

As indicated in the graph at the bottom right, the cost of condition-based, predictive maintenance (PdM) can reach a point of negative return. The cost of PdM must always be weighed against the benefits. The cost-to-benefit ratio for PdM can vary based on the process. For example:

  • What is the cost per minute of process downtime?
  • Can the process be backed up? Is it in cycle time?
  • Will a process failure cause safety concerns?
  • What failure modes will the predictive tool forecast?
  • Are these historic failure modes?
  • What resources are needed to collect predictive data?

This simple method of determining the cost-to-benefit ratio will help in making short-term decisions. But if we are to be competitive in the business of maintenance, we must go another step further and ask the longer-term questions like:

  • How can I apply PdM tools in a cost-effective manner?
  • How can we build a predictive tool into a machine’s controls?

Maintenance should not allow the process of answering these questions to stop because we can’t afford the predictive tools today. The potential for efficiency and cost savings in maintenance that predictive tools possess should be an incentive for us to find a way to collect the required data and develop predictive tools that are affordable, and cost- effective. No one argues that the future of the maintenance business is the application of condition-based, predictive prognostic tools.

Maintenance business leaders will never stop their quest to eliminate reactive, breakdown maintenance. Reactive maintenance has costs associated with it that go beyond simple downtime costs:

  • Spare parts: A strong predictive program allows for only a just-in-time spare parts inventory.
  • Morale: Breakdown maintenance is stressful and fatiguing.
  • Safety: Breakdown maintenance results in more injuries (per hour worked) than planned maintenance.

To be maintenance leaders, we must never stop moving toward smarter, cost-effective maintenance systems.

Check out Hitch Property Constructions for a huge range of Melbourne property maintenance services. 

Managing Maintenance as a Business

Timeliness can be measured by average time to respond to a certain class of maintenance activities. Many maintenance operations have set goals for responsiveness, given the nature of the work. For example, for emergency work, a goal might be one week. Again, these goals are established in concert with the customers. It has also been discovered that the type of work may not be the only determining factor; in many cases, the equipment may determine a response time frame. For example, a breakdown in an operating room air filtration system is significantly more important than a breakdown of a hospital bed. Thus, our response goals are dependent upon not only the nature of the work but the equipment as well. The average time to respond can be calculated by capturing the elapsed time between request receipt and the commencement of work. Once calculated, this measurement is indicative of how well maintenance is satisfying customers’ expectations of timeliness.

Schedule compliance is another means of monitoring customer timeliness expectations. In this metric, the scheduled start date or promise date of the work order is compared to the actual start date. Again, a simple calculation of actual versus promised; either it was started on time, or it wasn’t. Customer communications and managing expectations are paramount.

Quality of work is not as easily measured as timeliness; however, quality can be measured through customer complaints, work review and repeat work. If the customer is not satisfied, it is hoped that the dissatisfaction will be acknowledged in some form. In many cases, the customer is required to sign a completed work slip accepting the quality of the work performed. Although this is a satisfactory form of acceptance, has satisfaction truly been measured? Perhaps the best way to ensure quality is through a work review program where supervisory personnel review the quality of the work performed. These are formal programs that when properly conducted, can provide valuable feedback regarding customer satisfaction and employee skills. A rating system is typically employed, which recognizes the quality of the work and level of customer satisfaction. Finally, if particular work activity is frequently being requested, it may be indicative of a multitude of problems. Remember, in the eyes of the customer, if it keeps breaking, it’s because it was not fixed and therefore, is a maintenance responsibility.

Price is always a topic for debate. How many times have you heard, “If I had known it was going to cost that much, I wouldn’t have done it!” or “What do you mean it costs $490 to replace that bulb!” Customers do not like surprises, and they demand fair pricing. Admittedly, in most internal maintenance operations, the customers find out what it costs after the fact and not before. It is amusing that as private citizens, we would not have someone perform any work without having some idea as to what it might cost, and then, we may even attempt to mitigate or negotiate. In the internal maintenance business, how often are estimates provided? Are there established hourly rates for providing service for both labour and materials? How do these rates compare with external rates? Determining price performance is addressed largely by comparing the book rate versus the actual rate. The book rate is a blended average of hourly labour rates inclusive of benefits. In contrast, the actual rate is calculated by taking total labour dollars of direct activities (actual work time). The book rate is a quick comparison to the outside rate, whereas the actual rate reflects utilization and rate.

As we examine our maintenance business, we must also identify our ROI. Identifying, quantifying and realizing benefits, is the goal of any business. Within the maintenance business, we can usually categorize benefits materializing in the areas of labour utilization/productivity, materials management and equipment productivity. Strategies for achieving savings in each area can range from simple to complex. However, experience has shown us that the simplest strategies yield the highest results.

As we continue to look for the elusive ROI for the maintenance business, companies have discovered that the greatest opportunity lies with improved equipment productivity. These savings manifest themselves in the areas of increased equipment uptime/availability, improved product/service quality and finally, improved equipment/service reliability. Again, upon closer examination of each of these categories, additional distinctions can be made. For example, in the area of increased uptime, savings can be realized through the implementation of programs resulting from:

  • Breakdown analysis
  • Failure analysis
  • Rationalizing PM frequencies
  • Predictive maintenance
  • Planning and scheduling of work

Likewise, in the area of improved quality, opportunities for improvement exist when specific actions are taken in:

  • Failure analysis
  • Preventive Maintenance programs
  • Predictive Maintenance Programs
  • Breakdown Analysis

And finally, looking at possible strategies for improvement in the area of improved equipment/service reliability, possible opportunities exist in:

  • Improving the PM program
  • Improving the PDM program
  • Failure analysis supporting a corrective maintenance program
  • Breakdown analysis supporting a corrective action program

Achieving an acceptable return on investment for the maintenance business is as critical as helping the maintenance customer achieve their return on their maintenance investment. The maintenance business is customer-oriented and must provide value to the customers. The symbiotic relationship which exists between the maintenance business and its’ customers is a win-win situation. When the maintenance business is operating at peak performance and efficiency, then the maintenance customers will realize the value of their services as well as reap the rewards.

Managing maintenance as business involves managing expectations and balancing costs and service. Identifying maintenance cost drivers is an important factor is the cost and service-balancing act. Maintenance costs are largely attributable to labour, materials and contract services. Material costs can effectively be managed and controlled through inventory management practices, procedures and policies. Thus, we can reduce the volatility of the balancing act by concentrating on labour and contract services. What drives labour cost is simply a matter of supply and demand. The demand portion is determined by the amount of work needing to be performed and when it needs to be performed. Understanding this will determine the supply side of the equation. Time to revisit our mission statement! Is the maintenance business mission to provide resources when needed, or is it to accomplish the work when resources are available? Each response yields a different set of requirements. Therefore, “how much” and “when” are critical drivers. Is there a seasonality to demand? Are there periodic shutdowns? Are there slow periods or accessible periods for maintenance? Can the existing workforce be supplemented with contract labour? The real cost drivers can easily be determined once everyone agrees on the mission.

All too often, the concept of maintenance management is thought of as synonymous with computerized maintenance management systems; that by implementing a computerized maintenance management system, results will magically appear. Long before computer systems, there were successful businesses because attention was paid to customers and the implementation of effective business processes to provide goods and/or services to those customers. To achieve success in managing the maintenance business, identification, development and implementation of core business processes are essential. CMMS is only a tool to support the processes. No matter how big or small the maintenance function, there is no substitute for basic process implementation. Ask yourself, if you cannot define the basic processes, how can appropriate application software be selected? After all, one of the basic covenants of effective maintenance planning is determining the right tools for the job based upon the work and tasks to be performed. For those who have implemented a CMMS, which came first: the system or the process?

Managing the maintenance business presents the challenge of operating most service type businesses. Striking the fine balance between service and cost demands the best practices supported by the best tools. The effort required to implement a computerized system does not translate to results; effort put forth in the implementation of the right processes will yield results. In the final analysis, it’s results that count.

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