Cost control in maintenance

Almost every company knows how much it spends on maintenance. Very few know on what. The difference between the two is what separates a budget that can be defended from one that merely gets justified.

This article is about how you build the second one, which isn’t an accounting module: it’s a consequence of logging the work properly.

The three questions you should be able to answer

How much does it cost to maintain this equipment? Cumulative, with hours and materials. It’s the one that decides whether you repair it again or replace it.

Is this contract making money? Hours and materials billed to that client against what’s invoiced to them.

How much did this job cost? The smallest unit, and the one the other two are built from.

If any of the three gets answered with an estimate, cost control doesn’t really exist yet.

Where a job’s cost comes from

From two things, and both have to be recorded on the spot.

Hours. Measured with a stopwatch inside the work order itself from the app, not jotted down at the end of the day. Remembered hours always come in low, and a cost calculated on them is systematically optimistic.

Materials. Consumed from the order against the warehouse, not noted down afterward. Every item carries its cost price and its sale price.

Add to that the technician’s hourly cost, which is what turns time into money.

The detail that changes the number: how materials are valued

A decision almost no one asks about, and one that determines what the cost shown in reports actually means.

Each warehouse has its own valuation method, and in GMAO Cloud there are four: weighted average cost (the default), actual cost, FIFO and LIFO.

It matters because the purchase price of the same reference changes between orders. At average cost, the job’s cost gets smoothed out and is easier to compare across periods; at actual cost or FIFO, it reflects what that specific part actually cost.

Neither is better in the abstract. The mistake is not knowing which one you’re using, because then cost per asset doesn’t mean what you think it does.

The cost you don’t see: the second visit

There’s a line item that rarely gets billed and that, in operations with travel involved, is one of the biggest: going back.

A visit that’s left half-done because a part was missing gets paid for twice. To be able to see that, the order needs to be flagged as pending material and needs a return visit, so you can later count how many there were and why.

What reduces them: minimum stock on references that hold up work, and setting up each technician’s van as its own warehouse.

The cost paid without knowing it: warranty

Repairing equipment that was still covered. No one ever finds out, because finding out would require having the date in front of you when opening the order.

The asset record carries its installation date, its cost and its warranty end date, and the order can be flagged as covered work. It’s one of the data points that pays for itself fastest in the inventory.

Purchasing and agreed prices

What gets bought goes through the purchasing workflow, with its supplier, destination warehouse, lines and amounts.

And you can define a price per supplier on each item, with its agreed discount, its reference and which one applies by default, so the agreed percentage gets applied automatically when generating the order. Delivery notes stop needing a line-by-line review.

In the other direction, price lists let you calculate the sale price by percentage increase or decrease, by fixed value or by custom function, with discounts by family and client.

What you can review afterward

The reports that answer the three questions from the start: cost per equipment, equipment costs, materials used in reports, hours per client, hours per technician and time bookings.

And two that usually bring surprises the first time:

Deviation between estimated and actual time. There’s almost always a type of job that gets quoted below what it actually costs, and it’s been that way for years because no one had the hours measured.

References that don’t move. Idle stock no one had counted as a cost.

When to stop repairing

The most expensive decision in cost control.

On an asset you can record its replacement cost and a warning percentage: the system compares accumulated repair spend against that amount and notifies you when it’s exceeded. It doesn’t generate an order —replacing equipment is a business decision, not a task— but it puts the number in front of you right when it’s time to look at it.

If there’s an ERP involved

The boundary gets agreed before connecting anything: the ERP owns clients, items and price lists; the CMMS owns assets, jobs and consumption. Closed orders travel to the ERP with their hours and materials for the invoicing and costing workflow.

Integrations lists the scope of each connector.

Next year’s budget

This is the use case people talk about least and that appreciates the most direction.

A maintenance budget based on last year’s spend is an extrapolation. Based on per-asset history and the configured preventive plan, it’s a calculation: so many scheduled jobs, with their target time and planned materials, plus an estimate of corrective work based on the actual series.

That also lets you defend it line by line. If someone asks to cut it, you can show exactly what gets dropped and on which equipment, instead of applying a blind percentage.

And it enables the reverse conversation, which is the most profitable one: identifying where you’re overspending on over-maintenance. Every facility has equipment that gets inspected four times a year because someone decided that a decade ago and no one ever revisited it. Several cycles in a row without a single anomaly is the signal.

Where to start

Not with cost control: with recording. Measured time and billed materials on the orders for critical assets. As soon as that happens, cost shows up on its own, because it’s a consequence, not a separate module.

If you’d like to see what numbers would come out of your own operation, you can request a demo.