To repair or replace is an age-old conundrum in many industries. On the one hand, forking out the finances for a brand-new piece of equipment may not seem ideal, and the expense is certainly off-putting. On the other hand, it can feel wasteful to spend money on a piece of equipment that has already failed you once — what if the repair costs rack up a similar (if not more expensive) bill than just buying new in the end?
As a business owner, you’ll know that your business’ productivity and profitability are both at risk if your equipment is faulty or broken. Not only is cost a factor, but so is the time it will take you to get back up and running. Increasing productivity while reducing costs wherever possible is always what you’re aiming for.
One way that many businesses weigh up their options is by following the 50 per cent rule as a guide. This rules states that is the cost of the repairs are set to exceed 50 per cent of the cost of a new piece of equipment, it is probably worth replacing the machine outright. Of course, each case is different, and you should only use this as a general guideline. Let’s take a closer look at the repair vs replace dilemma and consider which factors you must take into account.
Reliability is key
Your first and foremost consideration should be reliability. In terms of safety, productivity, and reducing downtime, reliability is essential. As well as fixing broken equipment, you should practice ongoing preventative maintenance to best avoid any failures or at least, increase the meantime between failures. Having an ongoing strategy in place is the most efficient way to avoid disruptions.
Try to reduce downtime
Downtime plays a big factor in the ongoing question, ‘to repair or to replace’. Before making a decision, you should first consider how important this piece of machinery is to the day-to-day functionality of your business, and how downtime might impact your business. Generator repair, for example, is essential, as backup generators are a complete necessity when the mains power is lost. Regular maintenance will drastically reduce the risk of a double failure, which would likely bring your business to a standstill.
As a general rule, replacing a piece of machinery is normally more time-effective than repairing it. It may be more expensive, but the likelihood is the money you spend on a new piece of equipment will soon be offset by your business getting back up and running with only a short amount of downtime.
Of course, it isn’t always that simple. Some parts might be difficult to source. For example, a dock pump motor at over 100 years old would find a direct replacement impossible to source. If you’re looking to replace parts that are less common and therefore difficult to replace, then repairing you machinery may in fact prove quicker and more cost-effective.
Choose the cost-effective option
Normally, repairing or replacing a specific part of your machine will result in a cheaper fix than replacing the entire asset. In relation to this, the Association of Electro Mechanical Trades, claims that simply replacing a machine’s bearings resolves around 50 per cent of motor failures.
Repairs often feel like the more complicated solution, but if you have the time and resources to get to the bottom of the problem, even complex repairs can result in a more cost-effective solution. One example of this can be found if we consider electric motor rewinding: this process reduces efficiency and industry bodies in including the EASA and the AEMT have demonstrated that it is possible to maintain or even increase efficiency when rewinding a motor.
However, you must also consider the amount of repair work that will be needed after the piece of equipment has been fixed. If you’re looking at ongoing, time-consuming work, it may be more cost-effective to replace the piece machinery after all.
One thing that many larger businesses do is to carry out a lifestyle cost analysis on each asset. This analysis will take various costs into account including:
- Ownership cost— purchase price, insurance, interest, taxes, storage, depreciation, decommissioning, and disposal.
- Operating cost — repairs, maintenance, fuel, operator labour, fluids, and other consumable costs.
The question of repair vs replace certainly isn’t black and white. Depending on your business model, your financial situation, and the severity of the malfunction, the answer to this dilemma will vary from case to case. You must weigh up your individual pros and cons to come to a solution that will allow you to resume business as normal in the most cost-effective and reliable way.