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The purpose of this paper is to propose and discuss cost of poor maintenance (CoPM), as a concept for managing the improvement of maintenance performance within manufacturing industry.

The paper is based on literature studies and two workshops with representatives from industry and academia.

CoPM is proposed as a new concept for maintenance performance improvement. The concept is derived from established practices in quality costing and hence it should be easily accepted in industry.

By using CoPM as a concept for maintenance performance development, manufacturing companies may identify the potential financial impact of the development work. The CoPM concept should provide a good viewpoint for identification of deficiencies in the maintenance performance within a given manufacturing system.

By adopting a well‐known measure from the research area of quality development, a financial measure for maintenance is proposed in this paper. The measure shows which parts of the maintenance costs are justified and which costs relate to poorly performed maintenance. In this way a more balanced view of the financial contribution of maintenance activities may be achieved, even at board level of the company.

Cost-benefit (C/B) analysis helps to determine the economic feasibility of business software investments. Research literature and published practices do not recognize substantial software maintenance costs in C/B analysis. Current analyses emphasize the benefits of an initial investment but do not consider the recurring benefits of each enhancement during the software lifecycle. Such analyses could lead to incorrect investment decisions and lost business opportunities. This article aims to review current research on software lifecycle costs and develop a theoretically sound C/B analysis.

This article reviews current C/B analyses and discusses their shortcomings in treating the significant recurring maintenance costs. It analyzes the findings of various studies on software maintenance and synthesizes these findings to identify the nature of various maintenance costs and their benefits. Based on the synthesis, it theorizes various cost and benefit elements for inclusion in a revised C/B analysis.

This article identifies each recurring maintenance cost relevant to C/B analysis. It also identifies recurring benefits from each enhancement that hitherto have been omitted. Finally, this article discusses how these costs and benefits should be treated in the revised C/Bs analysis.

This is a conceptual paper proposing a new C/B analysis and requires an empirical validation.

This article provides a revision of the C/B analysis that is long overdue. It will help to justify a software investment correctly, rank software projects that compete for limited funds and help create a sound software project portfolio. Since 20% of software products may incur 80% of software investment, this analysis will help to make correct software investments and avoid lost business opportunities. This article also describes a practical method to use the revised C/B analysis.

This article provides a revision of the C/B analysis that is long overdue. It will help to justify a software investment correctly, rank software projects that compete for limited funds and help create a sound software project portfolio. Since 20% of software products may incur 80% of software investment, this analysis will help to make correct software investments and avoid lost business opportunities. This article also describes a practical method to use the revised C/B analysis.

The purpose of this paper is to emphasize that the choice of the most appropriate maintenance model and policies is the best way to reduce significantly the maintenance costs as well as to optimize the useful Key Performance Indicators – failure rates, reliability, mean time between failures, mean time to repair, and equipment availabilities.

In order to implement the Asset Effectiveness Optimization AEO as well as the Overall Equipment Effectiveness OEE, improving productivity in a complex food‐products plant, the paper presents a theoretical and experimental study related to the maintenance costs directly associated with the equipment used in production tasks.

The developed tool is an efficient method of calculating the maintenance costs and allows one by means of computational simulation to define the most advisable maintenance policy. On the other hand, the proposed relationships are universal and could be used as an economic evaluation indicator for other industries and equipment.

Further research should include the application of the proposed methodology to the similar equipment of other food‐products plants as well as to other different equipment in order to create benchmarking procedures. This generator of technical information is the most appropriate method of optimizing maintenance key performance indicators.

As is well known, equipment availability must be as close to 100 per cent as possible, in order to avoid non‐planned breakdowns with the consequent production losses. Then it is important to adopt the most advisable maintenance policies and practices, the proposed methodology being an efficient tool for evaluating the maintenance performance and, in addition, for optimizing procedures.

The proposed methodology represents an efficient way to evaluate the maintenance performance as well as to choose better maintenance policies and practices in order to reduce costs and increase maintenance key performance indicators.

Maintenance is a key lever for reducing costs in manufacturing companies. Researchers have focused in the past on the importance of integrating maintenance and production planning to obtain total cost savings and have proposed a number of models. Nonetheless, all such contributions take a static perspective and do not consider the dynamics of markets, e.g. when some already committed preventive maintenance (PM) interventions are to be rescheduled. Therefore, the aim of this paper is to suggest a new decision‐making process to manage the rescheduling of PM interventions and to show – through the proposal of an ad hoc planning model – the economical savings from expressly considering rescheduling costs in re‐planning PM interventions.

In this paper the authors used six case studies to infer both the current process of production and maintenance integrated planning and the decision‐making process followed for rescheduling PM interventions. From the current practices the authors derived a new managerial framework for managing rescheduling events and they have built two mathematical models to compare the current and the proposed frameworks by using real data.

Considering rescheduling costs in the joint production and maintenance planning process leads to significant economical savings under all the scenarios tested. In particular, the use of the proposed model allows significant reductions in maintenance costs while keeping constant production costs. This makes the implementation of the authors' proposal in real companies easier.

This research originates from the wish of a real company to better investigate the issue of rescheduling interventions. To the best of the authors' knowledge this is the first study to face the problem of rescheduling PM interventions and to present a mathematical model to support managers in such a decision‐making process.

The purpose of this paper is to present the use of activity-based costing (ABC) approach as an alternative option to the traditional cost accounting system. The contribution of this study is to demonstrate, through a simple example, the application of that costing system in a service (maintenance) industry, i.e. the paper intended to develop a procedure for a cost model that help in calculating any maintenance job cost, to a reasonable degree of accuracy, based on the actual activities performed.

This research uses a simple example whereby hypothetical activities and cost data of maintaining an injector and a pump, of an internal combustion engine, are used, presented and analyzed based on the use of the developed procedure.

ABC system provides more accurate cost estimates rather than the traditional “order costing” methods that uses unit-level costs which are variable in relation to change in service volume. Traditional cost methods distort the costs by applying overhead uniformly over different jobs of varied complexities and activities scope. On the other hand, ABC is a useful means to distribute the overhead costs in proportion (fairly) to the actual activities performed in a specific job and, hence, enhance the rationality of decision making, i.e. will not distort the accounting information used for cost reduction, pricing, and evaluation matters. The results obtained from the analysis showed that allocating costs to the maintained injector decreased from $83.55 to $71.95 and, finally, to $67.57 when using the workshop-wide, two-stage and ABC overhead allocation methods, respectively; while that of the pump increased from $298.90 to $340.34 and, finally, to $359.48 when using the same three methods, in the same order, respectively. The result is quite fair when considering the complexity of the fuel pump, in terms of design and maintenance, when compared with the injector. Notice that using volume to allocate overhead costs results in over costing high-volume products, e.g. injectors (simple in terms of design and operation) and under costing low-volume products, e.g. pumps (more complex in terms of design and operation). The paper recommends to use ABC as a more accurate and fair method when charging maintenance job orders based on the analysis of costing two maintained items in the same premise while consuming different overhead resources.

This study attempts to analyze different methods to calculate a specific corrective maintenance job order. It strives to remedy the drawbacks of the traditional overhead costing of a job order when using principles related to the size of service, such as the direct labor cost/hours, as an allocation base. Consequently, the study proposed a new costing method, i.e. application of ABC. The traditional costing approach is considered by many firms as the best costing method. Nevertheless, it allocates overhead cost over job performed uniformly (equally) not differentiating between the complexity of the job and variety of the activities performed, e.g. using the same allocation base for “oil change” and “fuel pump adjustment” activities. So, ABC prevents cost distortions (unfairness) that could not be prevented by traditional cost accounting system. The author believes that the method presented in this paper will provide a useful management tool for costing maintenance jobs based on the appropriate selected activity drivers in maintenance workshops. The method could be applied for costing maintenance activities in maintenance of all industrial sectors.

The use of traditional costing method has proven to be distorted by applying overhead uniformly over different jobs of varied complexities and activities scope. In this paper the authors strive to present an effective costing alternative that outperforms the traditional ones with regard to overhead allocation. The paper aims to find reliable and fair maintenance costing method, i.e. to find out the relationships between maintenance activities and cost drivers. Although, ABC is widely used in manufacturing industry, no application or current research has presented an applicable thorough worked-out example, with the exception, to the author’s knowledge, of one in the aeronautical industry, to implement ABC method in maintenance industry. The importance of using this method comes from the fact that it provides, relatively, accurate and fair maintenance bills that provide customer satisfaction and firm good image. Hence, the paper is relevant in this respect and intended to contribute to the practice of maintenance management.

The purpose of this paper is to create a cost model at the general equipment level for industrial maintenance services.

The study is divided into two main sections. In the first phase the idea is to create a framework for a cost model with a literature review. The second, empirical part of the study is based on costing information from interviews and information given by network companies: a pulp mill, a maintenance company and an equipment provider. The maintenance of three different equipment processes is examined in the network through a case study, to get more specific information from real world situations to develop the model.

The findings concern the cost items that should be considered in the model, the structure of the model, and how the general cost model is constructed. During the research the model has been extended, and new cost categories included.

The cost model can be used in various performance measurement and decision‐making situations, such as maintenance service pricing, contract negotiations, outsourcing decisions, and life cycle cost management.

The cost model differs from traditional cost models. Earlier models have focused on the perspective of either the service provider or the customer, but not on both perspectives at the same time. However, in order to achieve a win‐win situation in a business network, open books practice is expected from each member of the network.

One of the main problems, when choosing between preventive or corrective maintenance for the production and maintenance departments in the eight firms studied, is to attempt to establish the state of a particular production system or individual production line. In order to carry out a cost analysis it is imperative to be able to measure how preventive maintenance will both reduce the deterioration of the state of the object and improve the state of the object at the point in time that the maintenance is carried out. This can be explained by the fact that the departments lack methods for measuring and estimating the effects. The model presented in this paper determines whether to schedule preventive maintenance and the model trades off the capital costs of preventive maintenance and the sum of corrective maintenance and down‐time costs based on the production line’s state.

The main objective of this study was to analyse the economics of introducing IT in the maintenance department. The economics in this case was determined by conducting a quantitative analysis on the reduction of operational costs, on increase in productivity and on quality improvement. A comparison was made to analyse company performance in the maintenance before and after the introduction of IT in the maintenance department. The analysis shows that there were reductions of operational and inventory holding costs. Likewise, it was shown that there was also improvement in product quality and productivity.

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.