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Why you should consider a risk-valuation model for facility maintenance

Budget constraints, demanding production / operational schedules, shifting priorities.

These are just a few reasons why facility maintenance is either done on a very reactive, absolutely necessary basis, or simply deferred into the future.

Yet Neil Roach (COO, Painters USA) and Trent Borth (Capital Reliability & Seeds Asset Integrity Leader, Corteva Agriscience) propose a different approach—a predictive, risk-valuation model. This model actually saves money and time over the long-run, while protecting the value of important assets.

“For executives who may be inclined toward a run-to-failure or set-it-and-forget-it philosophy of maintenance, a risk-valuation model puts a price tag on that thinking and may extend a manufacturer’s warranty and the life of the asset.”

They discuss a risk-valuation model and give examples in a recent article published on facilitiesnet.com. Following is a summary of some of their ideas, with a link to the full article at the end.

Maintenance based on a piecemeal approach

Many companies handle maintenance on a piecemeal, per location basis, letting each site tackle their maintenance problems independently of one another. Neil and Trent give the example of a procurement office being contacted by multiple site managers on the same day. Their typical response is to create RFPs based on a scope of work written by each facility, often with “data” that is mostly anecdotal, supported by conversations with local contractors or suppliers, yet lacking in uniform specification criteria. Procurement decisions usually are based on the lowest bid. Work proceeds, with different products and vendors, and no uniform approach.

Maintenance based on asset condition

Some businesses prioritize maintenance by assigning a number that reflects the condition of a particular asset. For instance,1 could mean renovate, 3 improve, and 5 maintain. This does offer a view of the condition of a building or piece of equipment, but without additional detail or context when multiple assets share the same number ranking.

Bottom line is that a lack of company-wide standardization reduces an organization’s ability to forecast and plan for maintenance cycles and costs.

Maintenance based on risk valuation

The predictive, risk valuation approach that Neil and Trent propose gets financial managers and executives involved in a proactive way. The approach would ideally involve the use of a dynamic, digital dashboard showing the condition of each facility’s individual components (e.g., roof, walls, boilers, floors, etc.) along with data that compares the cost of repairing or forgoing planned maintenance. Included in the dashboard would be photos of the asset, which could be regularly updated over time.

Digital dashboard for risk valuation approach to facility maintenance
Digital dashboards for improved maintenance decisions (Image credit: Carlos Muza, Unsplash)

For example, a maintenance team would grade the condition of a roof and any equipment or other roofing features. Perhaps the number 3 reflects its ability to protect from weather and other elements. That grade would also include a price for what the team estimates it would cost to move the rooftop from a 3 to a 5 per the company’s assessment scale. With analysis and modeling, a cost could be tabulated for bringing the condition from “needs attention” to “satisfactory” that would satisfy both facility and financial managers.

In addition, it would allow an organization to run what-if scenarios in order to allocate and optimize maintenance budgets by understanding how far those monies will go.

Shifting the model from tactical to analytical

The point of a risk valuation model is to translate something tactical, like the condition of a site roof, to something analytical, in order to focus attention where it's most needed and better direct spending.

“With a single view of assets, an organization’s financial team has an enterprise-wide physical condition of each asset, the gaps, and, most importantly, the cost of inaction.”

In most organizations, the squeakiest, biggest wheel tends to get the grease.

This leaves both facility and financial managers in some tricky situations. A predictive, risk-valuation approach paves the way for them to offer more sound, well-informed recommendations and decisions for maximizing the value and working life of company assets.

Get more details in the entire article at facilitiesnet.com.

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