The Hidden Costs of Equipment Breakdown
Unreliable equipment can be the death knell for a business, with the costs of equipment failure and downtime tricky to accurately predict and calculate. The cost extends well beyond the expense of new parts. You also need to factor in the inconvenience and disruption to your business through:
- Excess maintenance
- Lost production
- Equipment repair and replacement costs
- Sacrificing quality
- Safety risks
- Lost business.
These downsides have negative ripple effects on your staff, customers, the supply chain, and your brand.
For example, landscaping businesses need to seek out good quality gear to do their work efficiently, within the budget, and on time. Low-quality equipment will divert cash flow to repairs, creating downtime while that’s happening. The hassle will gnaw at your workers’ confidence about equipment reliability, safety, and morale as they face unnecessary hurdles to do their work. Customers won’t be happy with an incomplete or delayed job.
What then, are the best practices your business can adopt to calculate the actual cost of equipment failure?
An eye on preventing failures
Keep in mind, these common machinery failures and what you can do to prevent them:
- Abrasion of the mechanical system causing wear debris which the lubricant carries away – ensure contamination control by checking the breather and circulation systems
- Corrosion weakening the metal. Control moisture such as a coolant leak or a defective desiccant breather to control this
- Fatigue, particularly when there are loaded bearings and gears, can be averted through regular maintenance and checking alignment and resonance
- Boundary wear or adhesion due to inadequate lubrication can be minimised by checking lubricant levels and running the equipment to the specifications
- Cavitation, where low pressure creates air bubbles in the liquid, thereby damaging the impellers, pumps, valves, or piping, is thwarted with speed control, surface treatment, and fluid dynamics
- Erosion to baffles, screens, sensor, windows, pipes, etc. is managed with a protective coating
- Electrical discharge from moisture, ground faults, deterioration, or corrosion can be circumvented by controlling for contamination and ensuring the equipment is kept dry
- Deposition to flow controls, valves, filters, screens, or fans from temperature cycles and static charge can be sorted by raising awareness and prevention measures.
Improving your overall strategy
Whichever sector or industry you’re in, you can also keep a step ahead of any issues by:
- Checking, updating, and following maintenance recommendations on your equipment logbook
- Ramping up your record-keeping to track equipment failure, downtime, repair, or replacement costs and duration
- Developing detailed schedules for maintenances such as oil changes, belts, etc. to reduce the chance of failure
- Looking out for news about product safety recalls and other users’ reviews of the equipment to hint at possible issues
- Cutting your losses if your figures show excess maintenance means it’s time to invest in higher quality equipment.
These measures will hand you reliable data to calculate your potential and actual losses through equipment breakdown.
Catering for risks beyond your control
Even if you have great systems and checks in place, then events out of your control – such as a power surge – can still happen for equipment to go awry. As part of your risk minimisation strategy, you might think your commercial property insurance comes to the rescue, but unless you ask for machinery breakdown cover, you won’t be protected.
For peace of mind, equipment breakdown insurance bridges the gap – it’s much like accident, health, and disability cover, but for your gear. We can guide you on customising this insurance. Usually, it includes:
- Equipment breakdown, including the costs to repair or replace the items
- Temporary equipment hire costs to ensure business remains operational
- Deterioration of stock as a result of equipment breakdown
- Professional fees associated with quantifying a loss
- Any costs associated with expediting repairs or replacement
- Business interruption as a result of equipment breakdown
Contact us today, and we can ensure your risk assessment for equipment breakdown is based on solid advice.
This article originally appeared on Tudor Insurance Blog and has been published here with permission.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Tudor Insurance Australia.
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