Budget Review & Development
Every maintenance department must develop and review a budget regularly. Often however, budgets are typically pulled together at a high level usually heavily influenced by last year’s numbers. The problem we see with developing budgets this way is, when the requests come through to justify or cut the budget, there is little detailed supporting evidence. This practice often leads to cuts to the budget without a plan or idea as to where the savings are going to come from and what risk it might introduce that needs to be flagged.
The Bluefield approach is to develop a holistic maintenance budget utilising individual asset life cycle costs as the building blocks of the budget. The first step is to define the boundaries of the budget to ensure all the assets to be included are captured and accounted for. Data for the assets and other inputs (e.g. labour) are then collected and collated ready for analysis.
Once the available information has been collected and the boundaries set, a detailed basis of estimate is compiled. This is a critical step in the process to ensure everyone has a clear understanding of the sources of data and the assumptions made during the building of the budget. It provides clarity in the future to see and understand the key inputs into the build when anyone else is reviewing.
We then work with the clients to setup up the budget outputs to match their requirements. As soon as we have the output setup, we run the budget forecast against the current asset strategies with the focus placed on critical assets. This provides a snapshot of the budget as things stand against the current strategies.
Sometimes, business constraints require the budget to be reviewed to reduce costs. This can be tricky when you do not have the details behind what makes up the budget and where you are going to look to reduce it. We work with clients to help them identify areas of opportunity to save and understand the potential risks this may introduce. This can only be effective when you have a clear understanding of not only the cost forecast but also the underlying asset management plans/strategies to understand where the opportunities lie that allow for informed decisions to be made.
In addition to helping clients build their budgets, Bluefield often receives requests to peer review client maintenance budgets that have been developed. This external peer review provides Maintenance Managers with a level of confidence when submitting their final budgets. Bluefield’s approach when conducting peer reviews is to follow similar steps as when we build one. By following the process of building a budget, it allows us to confirm all aspects have been considered, assumptions are documented, and risks are known. While we go through this process we will capture anything that may have been overlooked, question assumptions that appear out of place, and review the risks that have been identified.
If you need a new budget or require a peer review of your existing budget, reach out today to discuss how Bluefield can partner with your team to achieve a well-balanced budget.