How Do You Evaluate Preventive Maintenance Contracts?
Preventive maintenance is a set plan to extend the life and value of a piece of equipment or facility. Through scheduled inspections, cleanings, and repairs, the productivity of equipment is extended, which then extends the value of the investment in that equipment. A preventive maintenance contract is a service contract between an equipment or facility owner and a service provider that negotiates in advance the costs associated with projected maintenance costs. Estimate the relative value of investment placed into the equipment or facility to be covered under the preventive maintenance contract. This estimate should include upfront costs (purchase price) and quantify the utility of the equipment. For example, if the piece of equipment is a copy machine, quantify the relative impact this equipment has on productivity such as comparing the time saved copying a document 100 times versus printing and collating a document via a standard printer 100 times multiplied by the hourly pay rate o
