Reports from EPRI, IEEE, and NERC show:
- Condition-based maintenance (IR, ultrasonic, vibration, dissolved gas analysis, partial discharge) significantly reduces Unplanned outages
- Vegetation management and asset inspection (condition-based monitoring) are the two highest-value investments for reducing preventable outages
Typical downtime cost per hour (industry averages):
| Industry | Downtime Cost |
|---|---|
| Automotive | ~$3M/hour |
| Oil & Gas | ~$220K–$500K/hour |
| Energy / Utilities | $300K–$500K+/hour |
| Telecom | ~$2M/hour |
| Healthcare | ~$636K/hour |
| Retail | ~$1.1M/hour |
| Data Centers / IT | $1M–$5M/hour |
Example #1: Maintenance Justification Calculation
Scenario:
- Facility downtime costs: $12,000 per hour
- Each outage lasts: 3 hours
- Expected outages without maintenance: 1.3 per year
- Proposed maintenance program cost: $8,500 per year
| Downtime Costs/Hr | $12,000 | |
| Downtime Duration | 3 hrs | $36,000.00 |
| Expected Outages/Year | 1.3 | $46,800.00 |
| Costs of Maintenance | $8,500.00 | |
| Savings per Year | $38,300.00 | |
| ROI | 451% |
Calculation Result:
Maintenance yields a 450% return on investment and prevents approximately $46k/year in outage losses. Decision-makers appreciate/respond to formulas like:
- A $8,500 annual maintenance program prevents $46,800 in avoidable outage losses. ROI = 450%.
- Failure to perform this maintenance exposes the facility to a high-probability $47k outage event this year.
Example #2: Maintenance Justification Calculation
| Scenario | Failure Probability | Estimated Cost |
|---|---|---|
| No PM | 40% | $120k |
| Annual PM | 15% | $45k |
| PM + testing | 5% | $15k |
“Preventative Maintenance spending reduces the expected loss by $105,000 annually.”
“Condition-based testing reduces the probability of failure by 70%, avoiding $110k in potential downtime costs.”
Calculation Result:
| Expected Loss (No PM) | $120k |
| Expected Loss (PM) | $45k |
| Expected Loss (PM + Testing) | $15k |
| Savings | ~$105k |
| Risk Reduction | ~70% |
Costs of Unplanned Outages:
Direct Production Loss
- Lost units × profit margin/contribution margin
- Labor costs during downtime
Formula:
Production loss ($/hr) = Throughput/hr × Profit contribution per unit
Quality & Scrap Costs
- Incomplete batches
- Rework
- Contaminated or temperature-sensitive product losses
Delivery Delays / Lost Revenue
- Missed shipments/Delayed Deliveries
- Lost contracts
- Customer penalties
Regulatory or Safety Costs
- OSHA involvement
- Reporting requirements
- Compliance fines (esp. food, pharma, critical manufacturing, hospitals)
Restart & Recovery Costs
- Overtime
- Emergency service calls
- Restart cycles, warm-up time
- Engineering troubleshooting
Unplanned outages dramatically shorten equipment life.
Planned maintenance often extends service life by 20–40% (typical for motors, switchgear, compressors, HVAC, UPS, etc.).
Presentation Tips:
Showing the delta between these scenarios wins budget meetings.
Scenario A: Run-to-Failure
- Higher probability of catastrophic failure
- High outage cost per event
- Emergency callout rates
- Higher damage to equipment
- Lower reliability index
Scenario B: Planned Maintenance
- Controlled downtime
- Lower cost
- Predictable budget
- Improved reliability
- Longer asset life
Executives respond best to:
Bar chart:
Outage cost vs PM cost
Pie chart:
Where outage losses occur
Comparison chart:
Run-to-failure vs PM
ROI table
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