Optimising the maintenance and repair budget

Situation

Our client, a major phosphate fertiliser producer, was preparing its maintenance and repair budget. The production department submitted an initial draft to the management company showing increases of more than 35% for underground mining equipment and 15% for open-pit mining equipment compared with the previous year’s budget. Although the increase reflected planned production growth, its scale raised concerns. The budget remained relatively high even after internal efforts to reduce it. Our team was brought in to review the budget at the client’s operation and recommend reductions without increasing operational risk.

What we did

• Broke down the maintenance budget to identify the main cost drivers and the reasons for the increase.
• Checked the inputs and assumptions used to calculate the budget and corrected them where necessary.
• Assessed and prioritised budget items based on risk and cost analysis.
• Developed models to make the calculation of budget items transparent.
• Recommended major overhauls instead of purchasing new equipment where appropriate.

Results

• A 14% cost reduction for the underground mine.
• A 9% cost reduction for open-pit mining operations.

Maintenance and repair budget, % of the draft budget for next year