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Maintenance-to-Replacement Ratio (MRR)
The aggregated amount spent on preserving an asset, through major maintenance and routine maintenance tasks, over the useful service life of the asset, compared to the eventual cost to replace the asset at the end of its life.



Examples
Listed below are some conceptual examples of the MRR applied to different assets:
  • Over a 30-year period, we spent $18,000 maintaining our boiler and at the end of its life we spent $30,000 to replace that same boiler. Our MRR was therefore a little over 50%.
  • Over a 40 year period, we spent $10,000 maintaining our transformer and at the end of that period we spent $10,000 to replace it. Our MRR was therefore 100%.

Purpose
Listed below are some of the key applications of the MRR to the field of asset management:
  • Establishing maintenance strategies based upon an appropriate maintenance mix.
  • Establishing risk-based maintenance (RbM) strategies.
  • To develop a CCI list for replacement reserve planning.
  • To establish priorities for maintenance with respect to those assets with a high MRR and capital renewal strategies for those with a low MRR.
  • To determine maintenance resource requirements.


Calculation
Listed below are some of the key steps in calculating the MRR for an sample asset:
  • Determine the annual routine maintenance costs that occur on fixed intervals (say $1,000)
  • Multiply the annual costs ($1,000) by the service life of the asset (25 years) = $1,000 x25 = M1:$25,000
  • Determine the major maintenance costs that occur on variable intervals (say $5,000 every 5 years) = M2:$25,000
  • Add M1 + M2
  • Determine the cost to replace the asset (say $100,000) = R:100,000
  • Divide M1+M2 ($50,000) into R ($100,000) = 50%


High, Medium and Low Ratios
Listed below are the attributes and examples of assets with different MRR:

   A.  High MRR
  • Assets that are labour intensive, such as carpets, which are vacuumed every week over a 15 year period. The cost is usually reflected in a caretaker salary.
  • Assets with a frequent maintenance interval.
   B.  Moderate MRR
  • Fences (20%) - painting amounts to about 1/6th of the cost of renewal. For example: 50% of fence area painted every 5 years until replacement at 20 years.
  C.  Low MRR
  • Assets that are capital intensive.
  • Assets that do not require much maintenance, such as the electrical system and the structural system.
  • Assets where maintenance is transferred to individual owners rather than the owner group and therefore the costs do not appear in the operating budget. [Example: balcony membranes]
  • Assets that are being treated on a run to failure cycle. 
  • Very expensive assets, such as glazing systems.
  • Emergency Generator (50%) - $2,000 every year for 35 years = $70,000 or 1/2 of replacement cost.
  • Long life assets, such as concrete walls that do not need to be replaced. (see: structural system)


Management Principles
The MRR is a useful tool for the following asset management applications:

To assist with comparison of the following loads:



Comparing the Maintenance-Repair-Renewal (MRR) trade-offs at different organizations.
Fig. The impact of different levels of maintenance on the total cost of ownership (TCO).


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Fig. Cost correlations of maintenance, repairs and renewals.



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Fig. Carpet flooring has a high MRR since there is a labour intensive cost to frequently clean the carpets (daily or weekly) over their service life (approx. 15 years).


Maintenance-to-replacement ratio represented as a pie chart.
Fig. Maintenance-to-replacement ratio represented as a pie chart.


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Fig. Fence repainting and localized board replacement.


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Fig. Maintenance significance curve indicating the impact of maintenance on the service life of assets.

See also:
Compare with:




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