WORK MANAGEMENT

5.5.38 Maintenance Material Cost

 WORK MANAGEMENT METRIC

5.5.38 Maintenance Material Cost

A. DEFINITION
This metric is the total cost incurred for materials, supplies and consumables needed to
repair and maintain plant and facility assets for a specified time period, expressed as a
percentage of the total maintenance cost for the period.

B. OBJECTIVES
The objective of this metric is to monitor the contribution of maintenance material costs
to total maintenance costs. This value can then be compared to industry benchmarks
and analyzed for cost reduction opportunities.

C. FORMULA
Maintenance Material Cost Percentage (%) =
[Maintenance Material Cost ($) ÷ Total Maintenance Cost ($)] × 100

D. COMPONENT DEFINITIONS
Maintenance Material Cost
The cost of all maintenance, repair, and operating materials (MRO) used during the
period. This includes stocked MRO inventory usage, outside purchased materials,
supplies, consumables and the costs to repair spare components. Include materials
used for capital expenditures directly related to end-of-life machinery replacement so
that excessive replacement versus proper maintenance is not masked. Do not include
material used for capital expenditures for plant expansions or improvements.

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PAGE 1 of 4 Publication Date: June 6, 2010
Revised: June 30, 2012
Total Maintenance Cost
Total expenditures for maintenance labor (including maintenance performed by
operators, e.g., total productive maintenance (TPM), materials, contractors, services,
and resources. Include all maintenance expenses for outages/shutdowns/turnarounds
as well as normal operating times. Include capital expenditures directly related to end-
of-life machinery replacement so that excessive replacement versus proper
maintenance is not masked. Do not include capital expenditures for plant expansions or
improvements.

E. QUALIFICATIONS
1. Time basis: Monthly, quarterly and/or annually
2. Used by corporate managers and executives, as well as plant managers,
maintenance managers and human resources managers to compare different sites.
3. Useful for developing trends in the distribution of maintenance spending.
4. Useful to compare to maintenance labor cost in order to get an idea of potential
improvement areas. A high percentage of material cost to labor cost may indicate
an ineffective PM/PdM program, while a high percentage of labor cost may indicate
a lack of effective planning.
5. Useful for comparing the organization’s performance relative to industry
benchmarks.

F. SAMPLE CALCULATION
For a given plant, maintenance costs for the year were:

Internal Maintenance Labor $8,144,000

Maintenance Staff Overhead (supervisors, planners, etc.) $2,320,000
Contractor labor $1,125,000

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PAGE 2 of 4 Publication Date: June 6, 2010
Revised: June 30, 2012
Annual Equipment Maintenance Contracts $ 96,000
Janitorial Service Contracts $ 380,000
Maintenance Materials $9,992,000
Total Maintenance Cost $22,057,000

• Maintenance Material Cost Percentage (%) =

[Maintenance Material Cost ($) ÷ Total Maintenance Cost ($)] ×100
• Maintenance Material Cost Percentage (%) = ($9,992,000 ÷ $22,057,000) × 100
• Maintenance Material Cost Percentage (%) = 0.453 ×100
• Maintenance Material Cost Percentage (%) = 45.3%

G. BEST IN CLASS TARGET VALUE

50%

H. CAUTIONS
This Target Value is valid for prevailing labor rates in the United States and Canada.
Lower labor rates in other parts of the world may drive this percentage significantly
higher.

I. HARMONIZATION
This metric and its supporting definitions are similar to EN 15341 Indicator E11.

Note 1: The difference is that EN 15341 has a broader definition and includes
depreciation of maintenance owned equipment and facilities in "Total Maintenance
Cost" (office, workshop and warehouse).

Copyright © 2010 SMRP. All rights reserved.

PAGE 3 of 4 Publication Date: June 6, 2010
Revised: June 30, 2012
Note 2: It is assumed that operating materials (“O” component in MRO) is only for
maintenance purposes.

This document is recommended by the European Federation of National Maintenance

Societies (EFNMS) as a guideline for calculating the E11 indicator.

Additional information is provided in the document “Global Maintenance and Reliability

Indicators” available for purchase as a publication in the SMRP Library.

J. REFERENCES
Marshall Institute. (2007), Establishing meaningful measures of maintenance
performance. Retrieved from http://www.marshallinstitute.com
Mitchell, J. (2002). Physical Asset Management Handbook (3rd Ed). Houston, TX.
Clarion Technical Publishers.
Wireman T. (2010). Benchmarking best practices in maintenance management (2nd
ed.). New York, NY: Industrial Press, Inc.
Wireman, T. (1998). Developing performance indicators for managing maintenance.
New York, NY Industrial Press.

Copyright © 2010 SMRP. All rights reserved.

PAGE 4 of 4 Publication Date: June 6, 2010
Revised: June 30, 2012