(Read Part 2 of the “Unexpected Equipment Downtime” series.)
Collateral Cost…
What is COLLATERAL COST? Typically unavoidable, an expense received in association with another cost, but usually secondary or subordinate. So what are some of the collateral costs of unexpected equipment downtime?
Rental Costs
It’s inevitable that some of your lost hours will need to be covered by rental equipment. If you estimate that only half of the total 360 hours would need to be covered by a rented machine at about $80 per hour, you’re adding over $14,000 to the annual cost of unexpected downtime. This brings our total to about $25,000…for one machine.
(If you manage a fleet of rental equipment, this expense will obviously not apply, but the cost of field swaps most certainly will. So be sure to add that to your total costs.)
Job Delays
When a machine goes down unexpectedly on your or your customer’s job site, it’s going to take some time to get out a replacement. There’s also set up time and the time it takes to remove the down machine. That’s labor costs and transport costs. And on top of all of that, you’re still looking at the actual cost of a job delay, which could easily be in the thousands of dollars. If we stay conservative we can easily see another $5,000 added to our total cost. Now we’re up to $30,000 and still climbing.
Worker Productivity And Morale
It’s more than just job delays. When a machine goes down, workers that were reliant on the down machine performing a task have to either stand idle or move to a different job, one they may not be best suited for. The down machine can also cause disruptions for management, which can spiral into even more inefficiencies.
Now, add in morale issues caused by workers not having the right tools to complete the work they were hired to do. This one is not as obvious, but it can certainly add to the overall problem. Let’s keep the estimated cost in this category very low, say $2,000 per year. That brings us to an annual cost of unexpected downtime for one machine of $32,000.
I hope you’re enjoying the Equipment Downtime series. Continue reading Part 4, Part 5, and consider downloading my exclusive whitepaper on the subject.
