Repair and
maintenance (R&M) costs are a part of the cost calculation with the engineering
formula. They consider the estimated costs for repairs and services during
the life span of the machine.
Saving money in
anticipation of breakdowns and regular planned maintenance has two effects:Have money available when maintenance is needed and to
share those costs that occur irregularly with all customers.
From other
machines we can get a feeling of how high the R&M costs would be. As a
general rule of thumb based on experience, a forwarder needs the same sum for
repairs and maintenance over its whole service life span as the initial price
of the machine. A tractor takes a bit less, a harvester a bit more. This
relationship can be expressed as a factor “r” for repairs.
Now it’s easy to
calculate the costs of repair and maintenance:
• Take the price of initial investment
• multiply it with factor r
• and divide it by the number of years
that you expect the machine to run.
However, the
trend is not linear. Normally, a machine will have very low R&M costs in
the first years, then those costs will increase as the effect of wear develops.
Therefore, this calculation accounts for the average costs per year over the
whole machine lifetime.
Old machines that
are written-off and don't cost for depreciation or interest, have a wide space
for R&M costs. This is the reason that there is a market for written-off
machines.
