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Brings together the issues of maintenance planning, project management, logistics, contracting, and accounting for shutdowns.

Includes hundreds of shutdown ideas gleaned from experts worldwide.

Contains procedures and strategies that will improve yo
Managing Maintenance Shutdowns and Outages
(2 - Accounting - Costs - Budgets)

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   by Joel Levitt
Published By:
Industrial Press Inc.
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Accu rate shutdownaccounting is made more difficult because:


  1. The shutdown event is compressed in time and intensity so that information about proper charging floods in, and if it is not captured correctly, might be forgotten or lost.


  1. Under the best circumstances work orders are difficult to read and interpret. Under shutdown circumstances they might be impossible to understand (without a powerful system that forces the mechanic and supervisor to completely and clearly fill out every field).


  1. Contractors are used and they don’t always submit bills in a timely way or in a format that is easy to relate to your accounting categories.


  1. Bills for rental equipment might not indicate that they were used for a shutdown.


  1. Some maintenance work uses exactly the same resources as shutdown work, making it difficult to separate normal maintenance costs from shutdown costs (particularly if it is a partial shutdown and other maintenance work is still going on).


  1. There is sometimes an incentive or a temptation to transfer costs out of the shutdown to routine maintenance (to make a budget number and look good), or out of routine maintenance into the shutdown (to make a different budget number and different people look good).


  1. The cost to accumulate accurate costs (by work order for example) might be prohibitive.


  1. Shutdowns are on the cutting edge of issues of capitalization and expensing for accounting and tax purposes, which might make some artificial distinctions necessary and complicated to manage. The decisions on these issues are unrelated to the maintenance and engineering of the shutdown and are entirely driven by tax law and accounting goals.


The Budget spreadsheet

One tactic is to prepare a spreadsheet with all the major projects and work orders down the rows and the expense categories across the columns. The rows can be keyed off work order numbers or WBS (Work Breakdown System) codes, or both.


There is some advantage in including the WBS codes (if you are already using them for project management). WBS codes will allow costs to be tracked against individual work orders or activities where that is practical (at a terminal activity level). Where that is not practical, the costs can be charged to higher levels of the WBS. Also, the WBS facilitates totaling of costs to higher levels.


For example, you might rent a crane for a whole project such as ‘Install new stack’ that might have 15 work orders. You could charge the crane against the whole project (very simple), rather than trying to allocate it by hours or another method (very complicated), to the individual jobs making up the project. Charging the crane to the whole shutdown is another possibility, but does not capture the costs for installing the stack (if that was the only work for which the crane was used.)


Constants will be charge rates (the hourly salary + benefits + overheads) for each craft (many places might have only two or three charge rates) such as C1 and C2 below.



The Etc. column represents as many columns as are necessary for all other resources for each job. There might be several versions of this spreadsheet over time with jobs added and others deleted.


After the work orders are listed the spreadsheet would add all the columns and have lines for extra and emergent work. The Extra column might add 5% of the sum of all the work orders. The Emergent column might add 15% of the sum of the work orders. Your historical percentages would be useful (assuming you have tracked emergent and added work from shutdowns of this type in the past).


After Extra and Emergent would be a series of charges for site-wide requirements not charged to individual jobs. These jobs would include everything from spare cranes to eyewash stations, from welding tanks to extra site security, from free access items to extra PPE. This spreadsheet becomes a control document once the shutdown begins. Every shutdown bill would be coded to this spreadsheet.



This spreadsheet accumulates the costs for the shutdown. Intermediate versions should be saved in the project archives.


How to use the budget spreadsheet

It is very useful to take all the estimates from the work list and expand the costs into the budget spreadsheet. Estimate all the site way costs, emergent work, and other unknowns. This first version of the budget spreadsheet is the starting budget. Save this record, and don’t change it once it is approved. Graphs are generated showing the amount of hours and dollars of various categories.


Clear all the numbers from the spreadsheet to make a blank sheet with titles and formulas only. As soon as the shutdown begins, route all information through the person responsible for this spreadsheet. Add in data about actual costs as it becomes available. Estimates, and rounded numbers are okay. Every week at the shutdown update meeting (or at milestones), rerun the spreadsheet graphs for comparison with the budget (called the baseline).


Along with an estimate of work to be completed, this spreadsheet will give you a good leading indicator of budget performance at the end of the shutdown.


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