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The Hidden Price of Deferred Maintenance and How To Avoid It

As a building manager or facilities professional, you understand the value of maintenance. Maintaining your systems and equipment keeps them functional. 

But when should you prioritize maintenance? 

It turns out there are a couple of different approaches. You can either plan your maintenance ahead of time or wait for something to break before fixing it, a practice known as deferred maintenance. 

Unfortunately, abiding by the rule of “If it’s not broke, don’t fix it” can result in equipment failure, safety hazards, and severe long-term costs. 

Here, we take a look at the actual price of short-term savings in terms of maintenance. 

Why Maintenance Is Crucial

When we use the term maintenance in this guide, we are referring to facility maintenance

Facility maintenance is the process of increasing a building’s utility by servicing assets such as:

  • Machinery 
  • HVAC systems 
  • Boiler units
  • Interior rooms 
  • Parking garages 

Facility maintenance refers to upkeep done on commercial buildings, including offices, hospitals, and universities. Care done on real estate and residential buildings is known as property maintenance

Examples of facility maintenance include:

  • General building repairs 
  • Air conditioning maintenance 
  • Pest control 
  • Exterior painting 

When it comes to facility maintenance, a building manager can take one of two approaches: preventative or deferred. 

Preventative Maintenance 

Preventative maintenance (PM) involves scheduling routine maintenance work on machines and systems to prevent equipment failure and unexpected downtime. 

In other words, preventative maintenance means performing maintenance before equipment problems happen.

Preventative maintenance plans include mandatory equipment tasks and inspections. Minor repairs discovered during a review can be promptly fixed to reduce the workload of regularly scheduled maintenance. 

Deferred Maintenance

Deferred maintenance (or reactive maintenance) occurs when scheduled repairs are delayed and added to a backlog of work orders, usually due to current budget constraints or conflicting priorities. 

Sometimes referred to as run-to-fail maintenance, deferred maintenance plans usually wait until there is a problem with a piece of equipment or a system before repairing it. 

Maintenance is also deferred when there are not enough people to carry out the repairs or if the work would interrupt regular business.

Maintenance tasks for non-critical equipment and systems are often the first to go when managers face budget limitations.

The True Costs of Deferred Maintenance

Deferred maintenance can help project managers balance the budget or adjust their schedule based on available resources. 

However, too much focus on short-term savings often leads to much more serious long-term losses.  

Let’s take a look at the implications of deferred maintenance for your facilities and your business.

Short-Term Costs to Your Facilities

Facility managers often delay non-critical repairs to reduce immediate maintenance costs. However, deferred maintenance can still result in short-term costs.

When you skip routine maintenance, your equipment loses efficiencies and could even break down, causing unplanned downtime.

The money you “save” by deferring maintenance often pops up somewhere else on your balance sheet. 

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Let’s take a look at short-term efficiency by using an HVAC system as an example. Routinely replacing or adding (retrofitting) AC parts can save you up to 35% in energy costs each year.

Equipment failure and unplanned downtime due to deferred maintenance have more severe consequences. According to Aberdeen’s research, the average cost of unplanned equipment downtime is a whopping $260,000 per hour.

Unplanned downtime results in loss of revenue and productivity. It also leaves your business liable for detection, containment, and recovery costs.

Long-Term Costs to Your Business

Delaying routine maintenance tasks burdens your business with lower functionality and costly long-term expenses. Decreased efficiency that you saw in the short-term adds up to higher costs over time. 

Additionally, deferred maintenance contributes to shorter equipment life cycles and a dangerous compounding effect. 

Your physical assets (systems and equipment) have finite life cycles. They endure wear and tear from use over time. 

There are four stages in equipment (or asset) life cycles

  • Planning 
  • Purchasing
  • Operating/maintaining 
  • Disposing

As long as your equipment is functional, it’s useful. However, once repair costs get too high, it’s time to replace your equipment. 

Ignoring short-term maintenance can lead to total system failure and more expensive repair costs. With deferred maintenance activities, you’ll end up replacing equipment sooner than you planned. 

Over time, these shorter life cycles add up. Instead of paying the lower cost of routine maintenance, you have to invest in new equipment more often. 

In addition to shorter asset life cycles, your business will also suffer from the weight of an increasingly large deferred maintenance backlog. 

Deferred maintenance compounds at 7% each year. Unfixed repairs create more problems as time goes on, sticking you with more frequent (and expensive) repairs.

More Expensive Emergencies

Deferred maintenance puts you at risk of equipment emergencies. Emergency maintenance is required when system failures create immediate threats for lives, property, or other assets. 

Examples of emergency maintenance needs include:

  • Fires 
  • Septic tank backup 
  • Broken water lines
  • HVAC failure in situations with extreme temperatures 

Unlike routine maintenance projects, emergency maintenance is a reactive process. Frequently these repairs require stopping normal operations until it’s safe to begin again. 

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Repairs for emergencies can easily cost double (or more) than scheduled maintenance. Unfortunately, given the nature of emergencies, these costs can’t be avoided once a situation arises.

Increased Health Risks

As a facility manager, you’re not the only one who experiences the consequences of deferred maintenance. When you routinely delay routine maintenance tasks, you put your occupants at risk. 

Deferred maintenance leads to more frequent emergencies as well as a higher chance of injury and health risks. 

Injuries caused by poor maintenance range from slips and falls to amputation and brain trauma. 

Ignoring tasks as small as lighting replacement and handrail repairs put your occupants in danger, and leave you liable for expensive legal fees

Moreover, failure to stick to a regular maintenance schedule can lead to poor air quality, mold, and mildew. 

Indoor dampness, which unaddressed leaks or roofing issues can cause, is associated with a 30%-70% increase in the prevalence of health conditions such as asthma, upper respiratory infection, and bronchitis.

As a facilities manager, it’s your responsibility to provide a safe environment for your occupants. Ignoring routine maintenance to save costs creates consequences for anyone in your building.

Regulatory Fines and Penalties

Various industries and governments mandate specific safety standards for buildings detailing issues from equipment safety to building sanitation. 

The Workplace Regulations 1992 lists requirements for lighting, indoor temperature, windows, drinking water, and other areas. 

You need to check your industry-specific rules to ensure you’re staying compliant with more specific regulations. Failure to meet health and safety requirements can result in hefty regulatory fines or other penalties.

Avoiding the Dangers of Deferred Maintenance

Although deferred maintenance offers short-term flexibility and cost-savings, the long-term consequences are grave. 

So, how can you avoid relying on deferred maintenance and save money in the long term?

This is where preventative maintenance comes in. 

Creating a Preventative Maintenance Plan

As stated before, preventative (or preventive) maintenance plans use a routine maintenance schedule to predict and prevent catastrophic equipment failure. 

A complete preventative maintenance plan includes four primary tasks: inspect, detect, correct, and prevent. 

Here’s how each task breaks down. 

  • Inspect. Routine facility inspections ensure that equipment remains safe to use and is working as the manufacturer intended. In particular, reviews help you reduce workplace injury.
  • Detect. During an inspection, you can detect systems and equipment malfunctions. Regular assessment empowers you to detect repairs before they become large or cause total failure. 
  • Correct. Once an issue is detected, preventative maintenance plans include performing minor repairs promptly.
  • Prevent. Taking notes from each routine inspection helps building managers find ways to prevent future repair needs. Preventative measures increase the lifetime efficiency and safety of your assets.

When creating a preventive maintenance plan, familiarize yourself with the owner manuals of all of your equipment and find the recommended maintenance schedule. 

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Most of your assets need to be inspected at regular time intervals. For example, light bulbs should be checked every three months. 

For some assets, a usage-based interval is appropriate. However, this is more common for manufacturing equipment or vehicles.

In addition to following manufacturer recommendations, you should include the following in your preventative maintenance schedule: 

  • Regular cleaning of property and assets
  • Lubrication of moving equipment parts
  • Replacement of defective parts
  • Internal training for relevant employees
  • Implementation of energy efficiency measures 
  • Discussion with equipment operators/employees who work with systems

It may take some planning to put your schedule together, but once completed, it stays consistent.  

Benefits of Preventative Maintenance

Preventative maintenance empowers your facilities to run smoothly and safely. Furthermore, it will enable you, as the building manager, to better predict costs associated with repairs and downtime. 

Let’s take a look at the benefits of employing a preventative maintenance approach. 

  • Reduce or eliminate the need for emergency repairs
  • Longer useful life of assets
  • Increased efficiency of assets
  • Smaller repair costs
  • Reduce or eliminate unplanned downtime
  • More workplace safety and compliance

As you can see, the benefits of preventative maintenance far outweigh the costs of routine inspection and repairs. 

As a result, it’s better to have a regular maintenance schedule and avoid expensive and unpredictable emergencies. 

Let’s Wrap it Up: Hidden Price of Deferred Maintenance and How To Avoid It

It may seem easier to delay repairs when you have to balance several priorities and stick to a predetermined budget. However, it can be hard to predict when you’ll pay the price of short-term savings, not to mention how much you’ll pay. 

Budgeting time and money for routine inspection and preventative maintenance saves your business time, productivity, and money. 

Maddy Osman is a Contributor at Hourly. Hourly is a people platform that helps small businesses save time and money by seamlessly connecting the dots between workers’ compensation insurance, time cards and payroll.