Question:
How do your organization manage the maintenance budget?

Choices:
Maintenance has/controls over the 100% of the Maintenance Budget
Each Department budget has an account to "pay" Maintenance for the services
Other

 

I haven't seen a maintenance dept has no buget of its own and has to be paid by other depts. Who pays for the maintainers' salary? HR?

Of seven votes (up to now), two have an organization where other departments "pay" to Maintenance Engineering for maintenance jobs.
Until one of those members response your question Josh, I would say Maintenance pay the technicians' salaries.
The thing is: if a repair job requires bringing an external contractor, order some materials, rent a special equipment, etc. which department account cover those charges:
* a Maintenance Department account(s)?
* an Operations (equipment owner) account(s)?
When time for next year's budget review, who plan how much money is required at that account: Maintenance Manager or Equipment Owner Manager?

This message has been edited. Last edited by: Eugene,

quote:

who planS how much money is required

The maintenance manager gives the numbers to operations manager who has to go look for funding.

quote:

if a repair job requires bringing an external contractor, order some materials, rent a special equipment, etc. which department account cover those charges:

Equipment owners account

If Maintenance knows in advance that they need contractors to amortize seasonal workload peaks,
funds are allocated on Maintenance Budget, just like other things like safety items, salaries, training, tea coffee and sugar, equipment owned by maintenance, tools, office supplies etc.

Svannels, have you worked in both types of organizations? What are the PRO's/CON's of each one in your H opinion?

I'm familiar with Maint Dept has its own budget including for contractors and also shutdowns. Maint may ask budgets for modification or arising works from the requestor dept if the amount is quite big and the requestor may still have some money. To prevent the maint budget from bursting unnecessarily.

We used to have a budget for gas turbines under operations but later transferred to Maint for proper budgeting because Maint knows the scope of work.

However, have to know the limits of the maint budget. Eg maint of office buildings is NOT covered under maint budget so their costs have to be charged to the requestor's budget.

I think the above scenario may be valid only if Maint dept is an equal partner in the organization which also doesn't really have a combined O&M dept. I would imagine without its own budget, Maint would be lacking influence to control the total maint cost, unless if this figure is small. Also even if the Maint Mgr provides a budget to the Oper Mgr, the former is still responsible for controlling and monitoring the expenditure throughout the year.

Anyway, what is the rationale for asking requestors to pay for maint services, to understand your view point?

No Eugene I have worked for one type of organization.

Each Department has his own operating budget to pay its employees, training and all other stuff that comes with running a group of people.

Beside that the maintenance department is also responsible to indicate to the equipment owners (our clients) how much money they have to allocate to keep their equipment running. These are the so-called norm budgets. Some calls that a zero based budget.
When the budgetting round for the coming year starts and we know the targets, we indicate how much money we will probably spend on the equipment. We group the equipments and based on history we give estimates (conservative, worst case scenarios). The key is not to spend on trivial things. We administrate the money allocated by the equipment owner for maintenance. Just like they also have money for chemicals, engineering projects and other operational items.
The main advantage is that maintenance is not just an spectator in the game. If the money pit runs dry, the owner has to request additional funds.
I would not say that maintenance is paid by its clients, but we have our operational budget under control. The budget allocated for maintaining equipment is a shared responsability of both client and maintainer.

Although in our CMMS we have a tarif for each craft, we do not use it in our financial reports.
The most important things are the parts, services and hired contractors. These are direct costs the company have to pay for.
The internal labor costs are only used for comparison when we need temporary manpower. A wise old consultant told us when implementing our CMMS that it would be stupid to start charging internal rates from department to department, because we are all paid from the same money pot. It would only lead to confusion and give the beanies room to make fantastic calculations to prove that everything should be outsourced. (And you won't have full control of the quality of the contractors workforce)

About internal budget transfers, yes if there is no issue with budget being burst at the end of the year, then no need to transfer. But if one of KPIs is budget compliance, substantial expenses have be properly transferred or fixed amounts. It's from the same pot but the responsibilities are delegated.

The idea of both operator & maintainer responsible for the total equipment budget seems interesting. Any big savings from this practice? Under which cost centre will the equipment budget fall, operations?

The cost center will fall under operations.

The savings, Operations don't like to spend, and don't want equipment down, so they actually hold the brakes when it comes to spending.

With those brakes on, they will not enter meaninless notifications at the system.

Perhaps not so because notification is raised by operators, not by the operations mgr who applies the brakes.

Making Operations controls equipment maintenance budgets may be good for ownership but it may also create bureacrasies such as those brakes when many have reorganized to flatten the org structure. I hope the Maintenance Mgr has equal chance for promotion as the Plant Mgr or GM.

Promotion chances? That depends on how the Maintenance Manager "sells" himself/herself. Need to show he/she can handle other business areas besides technical roles as Maintenance or Engineering Manager.

This message has been edited. Last edited by: Eugene,

Hi guys newbie here. I have worked in both types of maintenance operations. The Pro's of maintenance having a separate budget of their own is they can manage the manpower levels without interference from external departments. The pro of having operations control the money and "paying" for maintenance is that operations has a vested interest in keeping maintenance costs low, much like an automobile owner who perfroms regular maintenance to prevent major breakdowns. I would not profess to support one option over the other but in the organizations I worked in Operations were a lot more cooperative with maintenance in the latter scenario.

Our company, maintenance dept. have budget for maintain equipment in the plant such as corrective/preventive and modification work...but i'm not agree this method because production dept. is not ownership in organization.