Parts Budget Question

I've spent a majority of my career working in the "real world" where you go on a call, diagnose the problem, explain to the customer the problem, quote the customer an estimate for repairs and, if the customer approves, complete the repairs, collect the check and move on to the next call.

Since last September, I've been employed by a local school district with the specific task of maintaining and repairing kitchen equipment in two elementary schools, one junior high school and one high school. Prior to my hiring, there was no one specific kitchen equipment person and the funds for repairing/replacing equipment was taken out of the general maintenance fund. Since my hiring as the kitchen equipment technician, the budget for kitchen equipment preventative maintenance/repair/replacement falls under the Child Nutrition Department, which is a totally separate department from the Maintenance Department. A vast majority of the monies budgeted for the Child Nutrition Department goes for buying food and paying staff salaries.

Anyway, to make a long story longer, my budget for just equipment maintenance and repair was set at $5,000 for the fiscal year. The day I started, I was handed a stack of work orders. Some of the work orders had gone back almost two years. Needless to say, I had my hands full when I started the job. During the first two months, I blew through the $5,000 to take care of that stack of work orders and to take care of other things that needed attention. Since then, I've had to literally beg my boss for money to take care of other issues that have come up over these past six months. Fortunately, my boss has been able to borrow funds from other budgeted categories so I could order the parts I needed to keep the equipment operating.

Here's the deal. A couple of months ago I audited all the kitchen equipment in the kitchens and came up with close to $1,000,000 in equipment. And, that's just for equipment valued at over $5,000. A majority of the equipment is over ten years old, so issues with the equipment are becoming more frequent.

Based on this information, what would you estimate should be a reasonable repair budget per year for equipment repairs and preventative maintenance?

Well, I guess I'm going to hurt someone's feelings here, but for ten year old equipment a minimum of 10% wouldn't be out of the question. For a school system you usually don't want to be jumping out safeties, and bandaiding equipment, and I tell my customers that they can expect 5% of original cost of equipment to be spent in maintenance after 2 years. You can't just expect to turn it on and ignore it for years with no issues. PM's will go a long way to hold costs down, but commercial equipment receives much more use than residential and therefore needs more upkeep. Good Luck.

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Originally Posted by SandShark

A majority of the equipment is over ten years old, so issues with the equipment are becoming more frequent.

Based on this information, what would you estimate should be a reasonable repair budget per year for equipment repairs and preventative maintenance?

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What has been the expenditures for this equipment the previous years, before your hiring? Talk to your vendors. Track this down and you'll understand why they hired you. Your $5k budget is a "smoke and mirror" game.

Thanks for the feedback. Yeah, if next fiscal year I can get 2% I'll be happy. With all the cutbacks to public school funding by the state, things are extremely tight. I guess I shouldn't complain, though. There is a school that was shut down when one of the newer schools was built several years ago. The old school is still standing. It was built in the 50's and the walk-in-cooler in the kitchen was original to the building and was still running the day the kitchen was moved to the new school. Talk about ancient! At least the walk-ins now are still in decent shape and most of the kitchen equipment at the different schools hasn't been hacked and butchered. So, it's not too bad to work on if I can get money for the parts I need. Since this was the first year my boss had to budget for kitchen maintenance and repairs, she understands that $5,000 isn't going to cut it and, every chance I get, I remind her of that fact.

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Originally Posted by SandShark

Thanks for the feedback. Yeah, if next fiscal year I can get 2% I'll be happy. With all the cutbacks to public school funding by the state, things are extremely tight. I guess I shouldn't complain, though. There is a school that was shut down when one of the newer schools was built several years ago. The old school is still standing. It was built in the 50's and the walk-in-cooler in the kitchen was original to the building and was still running the day the kitchen was moved to the new school. Talk about ancient! At least the walk-ins now are still in decent shape and most of the kitchen equipment at the different schools hasn't been hacked and butchered. So, it's not too bad to work on if I can get money for the parts I need. Since this was the first year my boss had to budget for kitchen maintenance and repairs, she understands that $5,000 isn't going to cut it and, every chance I get, I remind her of that fact.

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I imagine that their previous years expenditures were 2x your annual salary, at least.That is why they hired you. You are sitting on the top of an ice berg. They "have to repair" due to health codes and laws.

dont let the school system use you, you're standing on thin ice, you're a man with a good heart but reallity is once you make that miracle for them get that equiptment up to health code that budget is going to get smaller by the minute. the new budget is going to be used to pay what you're borrowing from the other dept.. I say rruuunnnnn forest while you can..........

The way most schools budget is based on the number of meals per year. This ties in to the number of students they serve. Before you were hired in they may have contracted out all of the maintenance work so the budget was not big enough for in house repair parts. It sounds like you are a hard worker so you may never get enough money in the budget to keep yourself busy.

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Originally Posted by Kenscom

The way most schools budget is based on the number of meals per year. This ties in to the number of students they serve. Before you were hired in they may have contracted out all of the maintenance work so the budget was not big enough for in house repair parts. It sounds like you are a hard worker so you may never get enough money in the budget to keep yourself busy.

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I am close enough to some of my customers to know what there annual sales are.
I am seeing there repair cost run 1%-2% not counting and replacement equipment I sell them.

$1000000 in meal sales = $20000
Most of my customers do not cut corners.

So if you could figure what the meals would sell for in the public market. I think that would get you close to a working budget.
Give it a try I would be curious to see what the figures work out to.

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Originally Posted by SCS

I am close enough to some of my customers to know what there annual sales are.
I am seeing there repair cost run 1%-2% not counting and replacement equipment I sell them.

$1000000 in meal sales = $20000
Most of my customers do not cut corners.

So if you could figure what the meals would sell for in the public market. I think that would get you close to a working budget.
Give it a try I would be curious to see what the figures work out to.

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I have looked at lots of budgets for slow food restaurants. The older the building and equipment is, the closer it gets to 2%. I have some new building and eqiupment at .8%, and some at 5 years old that are at 1.8% including the floor and window cleaning. Some places have have maintenance contracts on computer systems coming from this budget. I do not agree with the computers being included when it is a high number like $500 a month and includes free replacement. So it is like a capital expense coming from the maintenance budget.