Plant & Works Engineering

Budget failures: David Tod Geaslin looks at what triggers a maintenance budget failure.(MAINTENANCE MATTERS)

Maintenance departments are not being allowed to stock an adequate supply of spare parts, hire enough qualified people, or spend maintenance money when the machines demand it. Instead, they are being forced to spend money in specific lumps of time (budgeting) and if those time periods do not meet the minimum needs of the machines, maintenance budgets explode dramatically.

This has come about because existing budgeting techniques work well in every other business discipline except maintenance. If management attempts to impose fiscal discipline on accounts payable, they cut their budget by 10% and watch to see if the cut is too deep. In an A/P department a 10% reduction in funding will produce 10% fewer checks unless a more efficient way is found to produce at a lower cost. If detected that the cuts are too deep, they bump them up a little and that becomes their new budget set point.

This MBA technique works well for budgeting the accounting, marketing, finance, and HR departments because reductions in input will produce approximate reductions in output. Small changes in initial conditions upstream will produce approximately small changes downstream with a small failure potential. …

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