Maintenance cost is the sum of everything the company spends to keep its assets in a condition to operate: in-house staff, contracted services, spare parts, materials and the indirect costs generated when the equipment stops. In Brazilian industry, this cost has historically represented something around 4% of the companies gross revenue, according to the ABRAMAN National Maintenance Document series.
Reducing this number is one of the most constant demands on any maintenance manager. The problem is that cutting maintenance cost without method does not reduce the cost: it postpones it, with interest, in the form of breakdowns, overtime and lost production.
This guide shows what makes up the maintenance cost, where Brazilian industry stands according to public data, and a roadmap to reduce the bill without increasing the risk of the operation.
What makes up the maintenance cost
To manage the cost, you first need to see the parts. The classic composition separates direct and indirect costs:
- In-house staff: salaries, charges, training and overtime of the maintenance team.
- Contracted services: outsourced maintenance, technical assistance contracts and specialized services (calibration, inspection, machining).
- Spare parts and materials: spares, consumables, lubricants and the cost of holding idle stock.
- Maintenance own machines and tools: measuring instruments, tooling and support equipment.
- Indirect costs (the ones that do not appear on the maintenance bill): production lost during the stoppage, scrap generated by degraded equipment, penalties for delivery delays and, at the limit, bringing forward the purchase of a new asset.
The classic trap is to look only at the first four parts, which are visible in the budget, and ignore the last one, which is usually the largest. Maintenance that is too lean on direct cost almost always turns out expensive on indirect cost.
To be managed, the cost needs to be classified in at least three cuts at the same time: by nature (staff, material, service), by maintenance type (corrective, preventive, predictive, improvement) and by asset or area. It is the crossing of these cuts that answers the management questions: which equipment consumes the most, how much of the budget goes to emergencies and where one dollar invested in prevention avoids ten in correction. Without a work order appropriating cost, none of these cuts exist reliably.
Maintenance cost over revenue: the Brazilian benchmark
The most used indicator to compare companies and sectors is the total maintenance cost divided by gross revenue, known as the CMF (maintenance cost over revenue). The most consistent public reference in Brazil is the ABRAMAN National Maintenance Document (Brazilian Association of Maintenance and Asset Management), a biennial survey conducted since 1995 with companies from the main sectors of the economy.
The historical series consolidated in the 2011 edition, analyzed in a study published in the GEPROS journal (Unesp), shows the indicator stable around 4%:
| Year | Total maintenance cost / gross revenue |
|---|---|
| 1995 | 4.26% |
| 1997 | 4.39% |
| 1999 | 3.56% |
| 2001 | 4.47% |
| 2003 | 4.27% |
| 2005 | 4.10% |
| 2007 | 3.89% |
| 2009 | 4.14% |
| 2011 | 3.95% |
Source: National Maintenance Document (ABRAMAN, 2011), as analyzed by the GEPROS journal.
Before using the table, a note on method: a benchmark serves as a starting reference, not a blind target. The most useful comparison is the company with itself over time, with the same measurement criterion, because differences in sector, asset age and operating regime change the expected level of the indicator.
Two readings matter more than the number itself. First, the benchmark varies by sector: asset-intensive industries, such as steelmaking and energy, operate above average; automakers and sectors with newer assets, below. Second, the study itself stresses that reducing the CMF at any price is a mistake: cuts that compromise availability and reliability drag down revenue, and the indicator worsens on both sides of the fraction.
Where the cost hides: the weight of emergency corrective work
The same ABRAMAN survey helps locate the money. In the 2011 edition, the distribution of maintenance man-hours in Brazilian industry was 27.4% in corrective maintenance, 37.2% in preventive, 18.5% in predictive and 16.9% in other types.
More than a quarter of the maintenance effort dedicated to correcting failures that have already occurred is relevant because emergency corrective work carries the costs that no budget plans for:
- Material urgency: air freight, spot purchase with no negotiation and a part paid at whatever price the supplier asks.
- Overtime and mobilization: a team called in off-shift, third parties summoned on an emergency basis.
- Lost production: production stopped with no forecast of return, the invisible part and usually the largest of the bill.
- Secondary damage: the failure that breaks the neighboring component too and turns a simple repair into a major intervention.
That is why the cost-reduction rule is not "spend less", but rather shift the effort from emergency to planned work. The biggest wastes in maintenance almost all live in this poorly made transition.
How to reduce the maintenance cost without increasing the risk
The roadmap below orders the levers from lowest to highest execution risk. The sequence matters: skipping steps is the recipe for cutting muscle thinking it was fat. It complements the practical ways to reduce industrial maintenance costs.
- Measure and classify the current cost. Separate the spend by asset, by maintenance type (corrective, preventive, predictive) and by part (staff, material, service). Without this snapshot, any cut is a bet. This is where a well-built maintenance budget stops being bureaucracy and becomes a management instrument.
- Structure planning and control. A standardized work order, reliable history and weekly scheduling are the foundation of any sustainable reduction. The path is detailed in the complete guide to maintenance planning and control.
- Attack the emergency corrective work of critical assets. Identify the equipment that stops the most and costs the most, investigate the recurring causes and build targeted preventive plans. Reducing emergencies is the highest-return lever because it eliminates the entire urgency costs, not just a slice.
- Review the existing preventive plans. Preventive work copied from a manual, without looking at criticality and history, generates cost without generating reliability. It is worth checking whether your maintenance plan is working before adding more tasks to it.
- Measure performance with a few indicators. Follow the MTTR and MTBF of critical assets and the maintenance backlog of the team. These are the numbers that show whether the cost reduction is preserving or eroding the health of the assets.
- Involve those who operate and those who execute. Operators notice deviations before the sensor, and technicians know which plan tasks add value and which only consume hours. Channel this knowledge into the plan review and the routine inspection.
- Digitize the execution record. Reporting on paper, typed in days later, distorts cost, time and failure cause. With a digital record at the moment of execution, the company starts to know where the maintenance money really goes, and the decisions in steps 1 to 6 gain a real basis.
The mistakes that increase the maintenance cost
As important as knowing what to do is recognizing the moves that look like savings and turn out expensive:
- Cutting preventive work in a crisis. It is the easiest cut to approve and the most expensive to pay for. The bill arrives months later, in breakdowns that cost several times the amount saved, and it arrives along with the loss of reliability that drives away revenue itself.
- Postponing the intervention on a degraded asset. Equipment operating out of condition consumes more energy, produces more scrap and wears down neighboring components. The cost grows silently before the failure becomes visible.
- Stocking spares without criteria. Both excess (idle capital and parts expiring on the shelf) and shortage (a machine stopped waiting for air freight) are symptoms of the same problem: stock sized without a reliable consumption history.
- Overtime as a permanent regime. Chronic overtime in maintenance is not a sign of a dedicated team, it is a sign of faulty scheduling or wrong sizing. In both cases, the surcharge is paid every month without solving the cause.
- Deciding on bad data. Incomplete reporting hides where the cost is born. The company cuts where the number appears (material, third parties) and preserves where the waste hides (rework, waiting, travel).
Maintenance budget: turning cost into a plan
Reducing cost sustainably ends in budget discipline. Three practices separate a maintenance budget that works from a decorative spreadsheet:
- Build from the bottom up. The budget comes from the maintenance plans and the asset history: how many preventives, with which materials, how much residual corrective work is expected per equipment family. Repeating the previous year with a percentage on top is not a budget, it is an indexed guess.
- Separate routine from project. Major shutdowns, overhauls and improvements have their own nature and approval. Mixing them with the routine distorts the CMF and hides both overruns and savings.
- Follow monthly, correct quarterly. A budget revisited only in December manages nothing. Monthly monitoring by part and by area shows the deviation while there is still time to act. The step by step is in how to build the maintenance budget and stay within it.
The honest math of the ROI of better maintenance planning
How much is it worth to execute this roadmap? The serious answer depends on your numbers, but the structure of the math is simple. Consider a hypothetical example, just to illustrate the mechanics: a plant with revenue of R$ 200 million per year, operating at the ABRAMAN benchmark of 4%, spends R$ 8 million per year on maintenance.
In this illustrative scenario, each percentage point of cost over revenue is equivalent to R$ 2 million per year. Shifting a fraction of the effort from emergency corrective work to planned work, reducing overtime and urgent purchasing, and cutting preventive tasks that do not add value: each of these fronts moves a real part of this bill, without counting the avoided lost production, which does not appear in the maintenance budget but appears in the company result.
The honesty of the math is in two points. First: the gains come over months, as plans are revised and the history forms, not in the first quarter. Second: none of this happens without reliable execution data, which is exactly what most operations still do not have.
Frequently Asked Questions
What makes up the maintenance cost?
The direct cost gathers in-house staff, contracted services, spare parts, materials and maintenance tools. The indirect cost includes production lost in stoppages, scrap from degraded equipment and bringing forward the replacement of assets. The indirect cost is usually the larger part and is the most ignored in budgets.
What is a normal percentage of maintenance cost over revenue?
The historical series of the ABRAMAN National Maintenance Document shows the total maintenance cost of Brazilian industry stable around 4% of gross revenue, with 3.95% in the 2011 edition. The number varies by sector: asset-intensive industries operate above average, sectors with newer assets operate below.
How do you calculate the maintenance cost?
Add up in-house staff, third-party services, parts and materials appropriated to the work orders in a period. Divide by the gross revenue of the same period to obtain the CMF, the indicator comparable with the ABRAMAN benchmark. For internal management, also detail it by asset and by maintenance type.
How do you reduce the maintenance cost without increasing the risk?
Start by measuring and classifying the current cost, structure planning and control, and attack the emergency corrective work of critical assets with targeted plans. Then review preventive tasks that do not add value and follow MTTR, MTBF and backlog to ensure the cut is not eroding reliability.
Is corrective maintenance more expensive than preventive?
Emergency corrective work carries costs that planned maintenance does not have: urgent purchase of parts, overtime, secondary damage and lost production from a stoppage with no forecast. Planned corrective work, scheduled for the right window, can be a legitimate economic decision on low-criticality assets.
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