Focus on Preventive Maintenance: Analyze Cost to Get the Most Out of Service Contracts

preventive maintenance

Using field service management software to break down preventive maintenance orders and reduce cost where it counts.

All of us in field service know the importance of preventive maintenance work orders. Their sustainability, predictability, and reliable source of revenue make them ideal for companies looking for more than just a one-time deal.

But setting up successful PM programs ain’t easy. Previously, in our Focus on Preventive Maintenance series, we went over how to sell service contracts and schedule the orders on a recurring basis with the right technicians and parts. Today we’ll look beyond the creation of PM work orders and learn how to analyze your preventive maintenance efforts and costs to determine whether your program is successful and how to use the results to make improvements.

The energy it takes to sell, schedule, and analyze PM programs can seem daunting at first, but if you’re able to master each step, the rewards will be well worth the effort.

Analyze Preventive Maintenance Success with Cost and Performance Data

After you’ve sold some contracts and have the automated field service scheduling software you need, you may think your work is done—just sit back, relax, and watch the money roll in.

Unfortunately, (sigh) that’s not the reality. In order to reach the top of your game, you need to collect and analyze empirical data and use it to measure the long-term cost of running the program, ways to cut back, and how to improve efficiency to get the most out of each PM contract.

Think of it like watching highlight films at practice. The hard evidence of watching yourself in action allows you to visualize your strategy and critique your technique to avoid repeating mistakes.

Field Service Can Become a Profit Center if You Understand the Cost

Competitive pressures for today’s field service organizations require that companies place a higher importance on tracking and understanding service costs. Companies must work to find answers to a series of new service management questions, such as:

  • Warranties – What do warranties cost? Do today’s warranty tracking procedures capture enough information? When does the warranty start?
  • Contracts – Are our service contracts profitable? How do I price service and maintenance contracts? How do I track scheduled maintenance?
  • Products – What products hold up best? What changes are needed to our line?
  • Human Resources – Who are our best performing technicians, and why? How can I schedule and dispatch more effectively? How can I increase my technicians’ billable utilization?
  • Depot Repair / RMAs – How should we track cross shipments? Do I repair my customer’s equipment, or replace with a reconditioned unit? When I replace, what happens with the warranty?
  • Time—How much time are my technicians spending traveling? How long does it take them to complete different types of work orders?

Each of these questions correlates with a certain amount of money either taken in or paid out by the company. When you know how much every step of a PM order costs, you can ensure you’re earning enough profit to make it worth your while.

Example: Cost Analysis of a PM Work Order

Let’s make this idea of cost tracking and analysis a little more concrete. You have a contract for a given year and you know how much your customer is paying. It’s your job to make your costs as low as possible while still meeting the terms of the contract in order to gain the largest profit.

If you know how much you make per contract, you know how much leeway you have to deliver services. In order to lower costs, you need to analyze every expense needed to fulfill the contract. This means measuring and calculating every aspect of the process—parts, labor, time, travel, misc. tasks, etc.—and then focusing your efforts on lowering those costs.

Here’s how field service management tools can help:

    • Service Bill of Materials (SBOM)— The SBOM allows you to configure–through predetermined, configurable categories–how many workers are needed, with which parts, for how many hours, and for which tasks. When the tech accepts the order, tracks hours worked and parts used, then takes notes on the job site, the SBOM stores that information so it’s clear how much it cost the company to perform the PM visit.
    • Task management/ Segments—With a segments feature as part of your field service automation system, you’ll receive greater granularity and insight into each work order. By segmenting tasks into granular categories like labor, hours, travel, parts, etc., you’ll be able to see how much each task is costing you, so you can analyze the numbers for better profit next time. Seeing these costs laid out so clearly also allows managers to analyze the success of each task and determine ways to lower costs if needed.
    • Asset ManagementAsset management tools provide details about the equipment you’re maintaining. It’s easy to cut excess costs like travel time, fuel and resources, and tech labor hours when you know exactly who and what’s needed to complete the order and schedule accordingly.
  • Service Portals—Once you collect the information you want to analyze, service portals display it in easy to read and access charts and graphs. This real-time data provides complete visibility into company operations so you know exactly how well your PM contracts are working and where you can start to cut costs or make adjustments.

Making the Most of Valuable PM Contracts

Now that you know how to sell service contracts, schedule them in advance, and analyze their cost to make them as lean and powerful as possible, you’re ready to get out there and make the most of these valuable assets for your service organization. By using the most capable service management for your company, you’ll be able to focus on building up the sort of orders that will keep your organization stable and even growing when times get tough.

Field Guide to Preventive Maintenance for Service Organizations

Get the full guide to complete your preventive maintenance strategy and find out how you can make the most of your organization’s valuable PM program. Download our complementary Field Guide to Preventive Maintenance for Service Organizations.