What an hour of downtime costs: the number missing from the report

The maintenance report shows wages, parts and contracted services. What it almost never shows is what the company failed to earn while the machine was down. That number is usually bigger than everything else, and it's what justifies spare parts stock, preventive work and backup equipment.

What goes into the math

The cost of one hour of downtime has four parts:

1. Lost margin: the profit the production that didn't come out would have made. Use the contribution margin (price minus variable costs), not revenue: raw material that wasn't consumed isn't a loss.
2. Costs that keep running: the crew of the stopped line, energy for equipment that stays on, rented equipment, a crane or truck waiting.
3. Recovery cost: overtime to make up the production, scrap at startup, cleaning and readjustment.
4. Penalties and contracts: late deliveries, penalties for missed response times, discounts given to the customer.

Example: a filling line

A fictional line running at full capacity, with no way to make up what it fails to produce. All amounts are in your local currency:

• It produces 1,200 units per hour, with a contribution margin of 2.50 per unit: 3,000 per hour in lost margin.
• 8 operators stand idle, at 45 per hour each (wages and benefits): 360 per hour.
• Each stop produces about 150 units of scrap at startup, at a cost of 4 each: 600 per stop.

Cost of one hour of downtime: 3,000 + 360 = 3,360 per hour, plus 600 for each stop. A failure that keeps the line down for 3 hours costs 3 × 3,360 + 600 = 10,680, before counting maintenance parts and labor.

The same failure, two costs

Now compare replacing a bearing on this line's conveyor in two scenarios:

Item	Emergency corrective	Planned replacement during a scheduled shutdown
Lost production	10,680 (3 h + startup)	0 (the line was already stopped)
Labor	2 technicians × 3 h on overtime at 70 = 420	2 technicians × 2 h on regular time at 47 = 188
Rush shipping for the part	350	0
Part	900	900
Total	12,350	1,088

The same part, the same job, and a cost more than 11 times higher. Almost all the difference is in things the maintenance report doesn't show: lost production, overtime and shipping. That's why measuring only maintenance spending leads to bad decisions, like cutting preventive work to "save money".

How to use the number

• Spare parts stock: if the part costs 900 and an hour of downtime costs 3,360, keeping that part on the shelf pays for itself the first time it saves you from waiting.
• Priority: calculate the cost of downtime for your criticality A and B equipment. It helps decide who gets attended to first.
• Backup: compare the cost of a backup unit with the downtime hours per year times the cost per hour.
• Replace or rebuild: add up the equipment's maintenance and downtime for the year and compare it with the price of a new one. The maintenance cost vs. replacement calculator helps with that math.

For service providers

For a company that maintains customers' equipment, the customer's downtime becomes its own cost in other ways: penalties for missing the response time, a second visit because the part wasn't in the van, a contract that doesn't get renewed. Calculate the cost of one visit (travel, technician hours, vehicle) and multiply it by the month's return visits. The result almost always justifies a minimum stock in the vehicle.

In taskfield, downtime comes straight from the work orders. With the cost of downtime per hour set for each asset, you can estimate how much each failure cost beyond parts and labor.