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Return On Investment Calculations for Predictive
Maintenance Programs

APPLICATION NOTES

Below is a typical example of how the ROI calculation works. You can also download the actual spreadsheet (Excel format) from our website. Download roi.xls

SECTION I: Enter past few years of maintenance costs

Enter your EQUIPMENT BREAKDOWN and REPAIR or REPLACEMENT cost including labor.

1995 $100,000 <-enter dollars

1996 $100,000 <-enter dollars

1997 $100,000 <-enter dollars

Enter your Preventative Maintenance cost including labor and material.

1995 $250,000 <-enter dollars

1996 $250,000 <-enter dollars

1997 $250,000 <-enter dollars

Enter the dollars per hour of unscheduled downtime of a typical machine.

This includes total lost profit resulting from the loss of production of this machine.

This figure would be zero if the plant has spare machinery to replace the downed unit.

This example is $3000 for 2 MMSCF per hour

$/hr $6,000 <-enter dollars

Enter the hours of unscheduled downtime.

1995 87 <-enter hours

1996 87 <-enter hours

1997 87 <-enter hours

Your average maintenance cost per year is: $872,000

SECTION II: Estimates for potential reduction in maintenance costs

Enter potential reduction in breakdown repair/replacement costs (percent).

27 <- enter percent - (industrial median is 27% range is 7% to 60%)

Enter potential reduction in preventative maintenance costs (percent).

74 <- enter percent - (industrial median is 74% range is 50% to 98%)

Enter potential reduction in unscheduled downtime (percent).

40 <- enter percent - (industrial median if 40% range is 33% to 45%)

SECTION II calculations: potential cost reductions

	average	% reduction	reduction
Breakdown cost per year	$100,000	27%	$27,000
PM cost per year	$250,000	74%	185,000
Downtime cost per year	$522,000	40%	$208,800
TOTAL SAVINGS PER YEAR $420,800

 

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