MMM - Maintenance Budgeting and Forecasting v.1 Rev.3

Strength. Performance. Passion.
Maintenance Management Manual

Maintenance Budgeting and Forecasting
Holcim Technology Ltd.

Cement Manufacturing
Performance Analysis and Strategy
© 2014 Holcim Country Company Name 1

Maintenance Management Manual - Maintenance budgeting and forecasting Intenal use only
This page was intentionally left empty
© 2014 Holcim Technology Ltd 2

Content
Content 3
1. Introduction 5
1.1 Objective of the manual 5
1.2 Maintenance budgeting and forecasting in Holcim Management Cycle 5
2. Maintenance budgeting 11
2.1 Introduction 11
2.2 Production planning 12
2.3 Assessment of the equipment to be used 13
2.3.1 Equipment condition 13
2.3.2 Preventive maintenance program 13
2.3.3 Pending maintenance activities 13
2.3.4 Equipment history 14
2.3.5 Tools and maintenance equipment replacements and/or new acquisitions required 14
2.3.6 CAPEX projects 15
2.3.7 Performance improvements required for existing equipment 15
2.3.8 Compliance with safety and environmental requirements and standards 15
2.4 Planning phase 16
2.4.1 Annual Maintenance Plan 17
2.4.1.1 Preventive Maintenance Strategy 17
2.4.1.2 Specific Maintenance activities 19
2.4.1.3 General Maintenance activities 20
2.4.2 CAPEX to Maintain 21
2.4.3 Maintenance department development plan 21
2.5 Maintenance budget consolidation 24
2.6 Budget development completion 27
3. Maintenance forecasting 29
Annexes 31
Annex 1 Maintenance budget activity list template 32
Annex 2 Maintenance own monthly hours distribution template 34
Annex 3 Maintenance subcontracted monthly hours distribution template 35
Annex 4 Third party services maintenance monthly costs distribution template 36
Annex 5 Maintenance materials monthly cost distribution template 37
Annex 6 Wear parts monthly cost distribution template 38
Glossary 39
Document version 41


1. Introduction
1.1 Objective of the manual
Budgeting and forecasting are necessary processes for planning, controlling and
directing for one of the most important and vital resources of an organization, its cash.
Cash management is critical to every organization, and without proper attention can
quickly transform a healthy organization unhealthy.
The objective of this manual is to give to maintenance professionals an overview about

the budgeting and forecasting process in general and in particular for maintenance
related activities as part of the financial Holcim Management cycle.
It intends to provide a step by step guidance on how to develop a documented
maintenance budget and to set up the basis for a fast and accurate rolling forecast, in
alignment with the new Holcim Management Cycle approach of 18 months outlook
implemented through the Aspire project.
In order to reach world class maintenance at sustainable low cost and high reliability as
part of company efforts for a continued improvement of its financial performance, a
rigorous cost control system must be in place for maintenance expense versus
maintenance budget based on reliable usage of the existing maintenance processes and
systems.
1.2 Maintenance budgeting and forecasting in Holcim Management Cycle
Maintenance budgeting and forecasting are components of the general process of

planning for resource allocation and cost monitoring to reach the business goals of the
organization through established strategies.
In the Figure 1 is presented the general Holcim Management Cycle with its containing
elements and their approximated time frame.
Holcim Management Cycle approach replaced the 5 years FINPLAN planning with the 3
years MTP 1 target setting process and introduced an 18 months RoFC 2 process.
The established MTP contains the targets set for the next 3 years and impacts direct or
indirect the maintenance budgeting and forecasting by setting the general operational
plans and the absolute costs value limits. This information is to be used as input for
development of maintenance budget and rolling forecast by establishing the maintenance
activities plan aligned with the established absolute cost frame.
At the start of the financial year, the Board and the EXCO 3 will work closely together to
formulate aspirations and define targets for Holcim Group for the following three years.
These targets will then be translated to targets for the Regions which will enable the
achievement of the Group targets. Consequently, each respective EXCO member will
allocate and cascade the Regional targets to the various operations in their region (Book
of Aspire, Updated 23 October 2013) (Figure 1).
For more details about Holcim Management Cycle setup and requirements please
consult the Aspire project latest updates on Holcim Portal.
1
MTP – Mid Term Plan
2
RoFC – Rolling Forecast
3
EXCO – Executive Committee

rd
Figure 1 Holcim Management Cycle, The Book of Aspire, October 23 , 2013.
Budgets, as part of MTP, are developed at OpCo level starting with middle of August and
completed until the end of October. These are prepared based on the 3 years
established targets at OpCo level.
The OpCo’s MTP and budgets are reviewed and consolidated at Group level during
November and the final version is to be signed-off at mid of December. As soon as these
are completed, OpCo’s budget details are established based on approved targets (Figure
1).
In accordance with the new business process cycle established by Aspire project,
maintenance budgeting must cover 12 months budget and additional 6 months of cost
forecast. By this, maintenance cost estimation will cover the 18 months RoFC
requirements (Figure 2).
A part of the RoFC process, Holcim Group does not expect Group companies to
Forecast at cost center level. Following the level of accuracy required in this process for
maintenance departments it is essential to estimate with the good approximation the time
and the costs related to major repairs part of shutdowns or as separate event and a
stable base load maintenance cost through the rest of the forecasted period.
Maintenance budgeting process is part of this general process of establishing company

targets and starts with the end of the annual shutdown or latest in August as the entire
budgeting process (Figure 3).
In the Figure 4 is explained how the RoFC process is taking place and its link to MTP
adjustments and budgeting process.
The PDP 4 development and approval process is running in parallel with the maintenance
budgeting process at plant level.
4
PDP – Plant Development Plant

PY CY CY+1 CY+2
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Legend
Actuals Budget CY MTP (CY, CY+1, CY+2)
Forecast horizon Budget CY+1 MTP (CY+1, CY+2, CY+3)
PY Previous year CY Current year CY+1 Current year +1 CY+2 Current year +2
Figure 2 Plant level Maintenance budgeting on Holcim Management Cycle
Figure 3 Plant level Maintenance budgeting process and shutdown preparation in relation with
RoFC though the Holcim Management Cycle

Figure 4 The Rolling Forecast process steps, time line and link with MTP and OpCo budget.
The Maintenance budgeting and forecasting process flow runs considering the frame established
by MTP set targets, starting from sales and going until final cost of maintenance.
This process flow is presented in Figure 5.

Figure 5 Maintenance budgeting and forecasting process flow


2. Maintenance budgeting
2.1 Introduction
Maintenance budgeting is a complex process which must consider the combined inputs
from other departments as Sales and Production, general business constrains and as
well the outcomes of the own maintenance analysis on plant equipment condition.
This process will have as output an accurate planning for allocation of maintenance
equipment and tools, financial and human resources through the entire business cycle.
Depending on the setup of the OpCo financial cost structure this allocation planning will
be developed at the level of:
- area,
- functional location,
- cost center, or
- WBS element.
The most common financial cost structure in Holcim is based on cost centers and for this
reason further in the process description the references will be done to cost centers only.
The Figure 5 is showing the elements of the Maintenance budgeting process flow and the
responsibilities related to the various steps of this process.
Figure 6 Maintenance budgeting information sources

In the process to develop the maintenance budget there are two main sources of
information used (Figure 6):
- the outcome of the Production planning, and
- the conclusions of the Assessment of the equipment to be utilized
2.2 Production planning
The general budgeting process for next year starts with the estimation of the foreseen
sales volumes, detailed by distinct products. These are established during the OpCo
targets setting.
Based on this defined product portfolio, production department establishes for each
product the recipe and how to achieve the desired quality and volumes, through the
entire year, for each month.
At this point are established:

- the year start stocks for raw materials, additives, clinker, cement stocks, fuels,
AFR and MIC,
- all required quantities of raw materials, additives, fuels, AFR and MIC to be
handled and used during all year, with delivery schedule,
- the fuel mix to be used and necessary quantities for each fuel type,
- any relevant production process
changes which can influence the
equipment reliability,
- any changes on the raw materials,
correctives, additives and mineral
components, in terms of quantities
and qualities,
- production capacity adjustments –
increase or decrease,
- equipment to be operated,
- equipment operating schedule,
- distribution of the planned production
volumes through the year.
All these will be correlated and a general

production planning will be developed with
details for each month.
The final production planning must consider

all eventual operational constrains as:
- power supply contract restrictions, as
peak times or advance consumption
planning,
- Holcim standards and/or national
legal limitation regarding emission
levels,
- CO2 allowances,
- noise level limitation,
- environmental constrains other than
emissions,
- daily and/or weekly operation span Figure 7 Input process from other departments

restrictions, and
- any other limitations imposed to plant operations which can influence production
capacity and product quality.
2.3 Assessment of the equipment to be used
Based on the detailed production planning and established operating schedule,

maintenance department collects all necessary information about equipment foreseen to
be operated during the budgeting year.
This information is coming from:

- equipment condition,
- preventive maintenance program
- pending maintenance activities (maintenance backlog),
- equipment history,
- tools and maintenance equipment replacements and/or new acquisitions required,
- CAPEX plans for CAPEX to maintain or expansion,
- improvements required for existing equipment,
- compliance with environmental and safety requirements and standards.
2.3.1 Equipment condition
Assessment of plant equipment condition is

essential on determining the future maintenance
activities required and must be the result of:
- walk by inspections,
- PMR’s outcome about equipment status,
- condition monitoring.
2.3.2 Preventive maintenance program
It is necessary to reassess the existing PMR’s

program considering:
- the PMR’s optimization
- changes foreseen to happen during the
budgeted period,
- new equipment to be installed, or
- implementation of new technics
All these must be considered and reflected in the
budget assumptions. Figure 8 Data collection phase
2.3.3 Pending maintenance activities
The maintenance backlog containing all postponed activities accumulated from previous
period must be considered for budgeting purposes.

The necessity to execute each of the tasks from the backlog must be reviewed
considering the following decision triggers:
- equipment current status – when a repair will be required,
- production planning – which equipment and how much will be used
- any plans for relevant process changes – how process changes will influence
maintenance needs in terms of subject and/or frequency, etc.
- available resources – which are the resources required to execute each task,
- priority - work orders priority
- risk evaluation – results of risk evaluation for the case if work is further
postponed.
- execution costs vs. estimated cost generated by not executing the work.
2.3.4 Equipment history
On the budgeting process equipment history data must be used as base for planning
activities and to estimate the necessary resources to perform these activities.
The optimization of maintenance activities must be a constant focus and equipment
history evaluation can help to understand if similar failures will occur again or not , if the
failure can be prevented by performing certain tasks with a certain frequency.
The main historical data to be considered must cover:

- the comparison between activities performed versus budgeted activities for
previous budgets
- failures occurred on past – eventual periodicity
- details about significant failures:
o spare parts required,
o the damage degree,
o human resources involved for each activity,
o downtime.
- wearing rate progression patterns,
- identified trends on equipment condition,
- eventual deviations identified for the current maintenance costs versus budgeted
costs during previous years.
- main activities performed on previous years considering normal replacements and
extraordinary activities due to failures or modifications.
2.3.5 Tools and maintenance equipment replacements and/or new acquisitions

required
The condition of all existing tools and maintenance equipment must be assessed.
Replacement needs must be budgeted accordingly.
Based on the foreseen changes on plant equipment, maintenance department
development, etc. decision must be taken if new or additional tools and maintenance
equipment are necessary to be purchased.
Note:
This cost element will not be considered as direct part of the maintenance budget.
It must be part of the budget of the maintenance department at cost center level.

2.3.6 CAPEX projects
Any kind of CAPEX project will result in a change of the asset base which can be
additional equipment or new technologies as results of major replacements or simply new
equipment in the same specifications.
These projects must be considered during budgeting due to their influence in future
maintenance tasks, tools, spare and wear parts, PMR’s or skills required for maintenance
activities.
The list of project is established and approved though the PDP development and
approval process.
2.3.7 Performance improvements required for existing equipment
Modifications intended to improve the performance of the existing equipment in terms

production capacity, quality, environmental or safety conditions must be considered in
building the maintenance budget.
Considering the capitalization rules, such projects may be considered as CAPEX to

maintain projects and must follow the CAPEX projects approval process if the
capitalization limit value is reached, or simply as maintenance activities and to be
budgeted accordingly. Projects qualified as CAPEX to maintain must be included in the
PDP project list.
The possible impact of such modifications regarding necessary tools, activities to be

performed with them and related training requirements for own personnel must be
considered as well.
These related costs must be foreseen in the Maintenance Department Cost Center
budget for tools and trainings. The maintenance activities list will be considered for Plant
Maintenance Budget.
2.3.8 Compliance with safety and environmental requirements and standards
The assessment of the technical condition and compliance with the safety and
environmental requirements and standards must identify any needs that must be
addressed during the next year period through the maintenance activities.
Existing multiannual plans to reach the required compliance with Fatality Prevention
Elements requirements for example, must be used as reference on building up the
budget proposals.
The involvement of the responsible person for this topic on plant and OpCo level is
important to be able to anticipate incoming maintenance demands.
Summary
The outcome of data collection from:

- equipment condition,
- preventive maintenance program,
- pending maintenance activities,
- equipment history,
- tools and maintenance equipment replacements and/or new acquisitions required,
- CAPEX plans,
- performance improvements required for existing equipment,

- technical assessments and compliance of safety and environmental requirements

and standards,
will create the correct basis for the maintenance team to move to the next step of the
budgeting process.
With these data collected, maintenance team will be able to develop the Annual
Maintenance Activities list, the accurate CAPEX to maintain proposal and to establish
the Maintenance department development plan for personal development of
maintenance team and improvement of their technical capabilities.
2.4 Planning phase
With all collected information budgeting process is moving to the planning phase where
three streams must be considered:
- Development of the Annual Maintenance Plan, list which should cover the day to
day maintenance and the major shutdown activities,
- Development of the CAPEX to Maintain projects which will include all planned
equipment replacements or major upgrades, which reach the capitalization value
level,
- Maintenance department development plan in terms of personnel and
technical capabilities.
Maintenance budget optimization process starts

from the sales budgeting phase, in line with the
plant targets. Market conditions and direct related
to these, the degree of plant equipment utilization
will influence the main focus for the budget
optimization.
A sold out market will require a high utilization

degree of plant equipment and this will highlight the
need of high availability and consequent focus
must be on reducing the time planned for
maintenance activities, without neglecting the cost
side.
A case of low market demand will reduce the group

company financial performance and will move the
focus on cost reduction. Maintenance budget
optimisation in this case must focus on reducing
the maintenance costs more than the time
reduction.
For example this can be achieved by increasing the

utilization of own personnel against third party
services, where suitable, by prolongation of the
maintenance intervals for equipment with lower
utilization degree or for equipment excepting a high
wear limits without compromising personnel safety
and products quality, etc.
Figure 9 Planning phase

2.4.1 Annual Maintenance Plan
The Annual Maintenance plan covers all maintenance tasks which are supposed to be
perform during the budgeting year considering the day to day maintenance of the plant
equipment and all major shutdowns.
Annual maintenance plan must include all maintenance activities performed or
coordinated by other plant departments than maintenance as for example:
- replacement of refractories (brick and castables) for kiln, clinker cooler and
preheater tower cyclones and ducts
- service of heavy mobile equipment from quarries
- service of laboratory equipment.
These activities can be grouped as:

o Preventive Maintenance Strategy,
o Specific Maintenance activities,
o General Maintenance activities.
All these activities can be performed in house by own personnel or by third party services
when specific tools, equipment and/or expertise are missing from our organizations or
there are limitations on the availability of own personnel.
A list with maintenance activities will be developed as result of this phase.

Each activity will be allocated to an area, production line or functional location and further
to a cost center and/or a WBS Element. This allocation must consider and record the
type of the work to be executed – preventive or corrective, the activity type and its
priority.
A work load balance process must be applied in order to assure maximization of the own
personnel usage and its availability for planned activities. Performing the work load
balance will help the maintenance team to correctly allocate their resources.
2.4.1.1 Preventive Maintenance Strategy
Preventive Maintenance Strategy groups in three categories of maintenance activities:
- Conditioning monitoring PMRs’ as follows:

o Walk by inspections,
o Vibration analysis,
o Oil analysis,
o Wear measurements,
o NDT - Non-destructive testing, as magnetic particle testing, ultrasonic
testing, dye penetration testing, visual testing, etc.
o EMD - Electrical Motor Diagnosis,
o Thermography,
o Specific measurements as kiln shell-test, girth gears run out & backlash,
creep deformation, hardness measurement, etc.
For more details regarding consult the Holcim Maintenance Manual, chapters 8,
Preventive Maintenance Foundation and 9, Advance Preventive Maintenance
- Time based maintenance which will cover the replacement of consumable and
spare parts which should be covered by replacement strategy due to financial
reasons or in cases when condition monitoring cannot bring relevant information
for accurate replacement planning based on equipment condition.

In this category are included also time base maintenance activities as service for
heavy mobile equipment from quarries or laboratory equipment which are
triggered by fixed operating time intervals.
Usage of time based replacement should be very limited as number of items

and activities and should be used whenever Condition Monitoring is not
economically feasible.
Replacement of electrical motors brushes or bearings which cannot or it is not
suitable to be subject of condition monitoring (vibration measurements) are
example of time based replacement PMR.
Figure 10 Condition monitoring appliance example
- Service PMRs’ which include:

o Lubrication program,
o Calibration, legal or process required,
o Function testing, legal or process required,
o Alignment,
o Cleaning.
A lubrication chart and the OCR limitations must be used and considered when
developing the Lubrication program as part of the maintenance budgeting
process. Lubrication activities and their related costs with lubricants and other
consumables must be budgeted per corresponding cost center.
Varying from a country to another periodical inspections and checks for usage
authorisation are required in general for under pressure vessels, lifting
equipment referring to cranes, fixed or mobile, elevators for personnel and/or
materials, forklifts and sometimes front end loaders, weight bridges, weight

feeders, electrical installation, vehicles, emission monitoring systems,

measurements devices.
Such activities are considered as PMRs’ for calibration and function testing.
Their related expenses can be budgeted relatively accurate as costs and
occurrence time, and should be grouped per service type, contract or service
target equipment, per corresponding cost center.
Apart of these legal required activities, there are service contracts for
maintenance with established frequency, linked with the running hours and can
vary as scope and level of details based on cumulated running hours and/or if
they are performed in or out from the warranty period.
For these cases based on the established working program, it must be
estimated the time period when and which level of maintenance service will be
foreseen to be provided and budget accordingly.
In most of the group companies such contracts are made for forklifts, front end
loaders, mobile cranes, hoists, elevators for personnel and/or materials,
laboratory equipment and X-ray analysers, process analysers as cross belt
analysers and emission monitoring systems, weight bridges use for inbound and
outbound.
These maintenance services should be budgeted grouped per service type,
contract or service targeted equipment, per corresponding cost center.
As part of the service PMR’s alignment and cleaning activities must be

considered and related expenses budgeted per corresponding cost center, as
separate budget item when these activities have significant impact or significant
value. Otherwise these activities should be considered as lump sum with the
General maintenance activities.
Based on their specifics, in order to provide an accurate view about involved expenses,
these activities must be budgeted accordingly as separate line per each activity type,
allocated to the corresponding cost center.
This list should have as basis the preventive maintenance program and its balancing tool,
updated based on new equipment and operational conditions considered.
2.4.1.2 Specific Maintenance activities
Specific maintenance activities are referring to maintenance works, significant in size,

cost and/or execution time required, which can be predicted as occurrence.
Such activity should be budgeted as a separate line per corresponding cost center.
These activities foreseen here are not part of CAPEX or CAPEX to Maintain projects
and should as such not reach conditions for capitalisation.
The list of such activities may consider for example:

- replacement of the liners set of a gyratory crusher;
- replacement of the clinker grate cooler aeration plates for two of three groups;
- replacement of the chain for a chain bucket elevator
- replacement of a warned belt on a belt conveyor,
- re-welding of the vertical roller raw mill table liners,
- replacement of a ball mill trunnion bearing,
- inspections and technical assessments of equipment

- replacement of refractories (brick and castables) for kiln, clinker cooler and
preheater tower cyclones and ducts
In most of the plants parts of the refractory bricks in the kiln are replaced during
major shutdowns. Significant in cost and duration, such activity must be
considered in the budget as part of the shutdown cost, identified as distinct line.
Due to plant process conditions a partial replacement of the kiln refractory bricks
may be required during the normal operations between two major shutdowns.
If the plant has experienced frequent such refractory failures in the last years in-
between major shutdowns, provisions should be made for this as well for the
budget period.
2.4.1.3 General Maintenance activities
General Maintenance activities should cover all day by day maintenance activities, apart
preventive maintenance routines, performed during the year in order to maintain or
restore the equipment state to perform its required function.
These activities should include for example:

o Conveyor belts idlers replacement,
o Filter bags replacement, besides main shutdown maintenance activities or
foreseen replacements of full set of the filter bags,
o Broken mill liners replacement, beside of main shutdown maintenance
activities or foreseen partial or full set replacements,
o Conveyor belts re-splicing,
o Replacing of V-belts,
o Replacing of air slides fabric,
o Air filters replacement for fans,
o Contact brushes for electrical motors,
o Replacement of electrical fuses,
o Crushers liner replacement, out of main shutdown maintenance activities,
o Cleaning activities other than Cleaning PMR’s,
o Minor repairs that occur in the daily activities
Such activities must be considered like budget items as lump sums, per areas,
production line or functional locations, linked with the respective cost center per activity
or grouped. These must be distributed through the year budget by using an even
allocation for each month or if additional information is available, by following the
historical or presumed pattern of occurrence.
Estimation of the required works and related costs are typically history based and may
represent the average experience from the past years.
For example the calculation can be done by transposing the historical specific costs per
tonne of cement produced for such activities to the budgeted production, considering the
production monthly distribution.
These must be reviewed and optimization potential should be explored and a challenge
by each budgeting cycle.
The final Annual Maintenance Activities list will be the compilation of the individual lists
generated by Maintenance function: Preventive, Mechanical and Electrical.

Each function will have to perform their individual work balance for own personnel in
order to assure the optimum utilization of the personnel availability and to identify tacks
which must be contracted.
2.4.2 CAPEX to Maintain
Part of the maintenance activities can be considered as CAPEX to maintain and should
be budgeted approved through the CAPEX approval process.
CAPEX projects are not part of the Maintenance budget and must be budgeted
separately.
According HARP Manual 14.0 the activities grouped under “CAPEX to maintain
productive capacity and competitiveness” are referring to
o Social and safety
o Environment
o Improvement of product quality
o Rationalization
o Replacement
The rules to distinguish between maintenance expenditure which can be capitalized as

PPE and maintenance expenditure which must be charged in full to the Income
Statement using the appropriate types of cost are set by the HARP standard.
For the latest version of HARP Manual, please consult the Holcim Portal.
Based on the replacement strategy, previous shutdown reports, evaluation of the

equipment status, a CAPEX to maintain plan should be developed including equipment
major repairs or replacements and major upgrades for reliability and maintainability
improvement covered by the threshold defined.
Such projects can be coordinated by Maintenance Department teams but the related
costs will not be part of the Maintenance Budget nor in the Maintenance costs.
For maintenance budgeting reasons the CAPEX to Maintain plan approved through the
MTP process must be considered when the annual maintenance activities are planned as
preventive, general and specific maintenance activities required must be re-evaluated
and accordingly adjusted to the newly created conditions.
2.4.3 Maintenance department development plan
The identified general maintenance needs of the plant, the current level of capabilities of
the maintenance department and as well the eventual plant reorganization must be
considered in the maintenance budget construction.
To cover these a detailed plan must be put in place and accordingly budgeted regarding:
- Tool and equipment, to be replaced or newly purchased

Implementation of new maintenance technics, additional needs identified through
the equipment assessments or induced by the new equipment foreseen to be put
in place through the CAPEX projects, can require new or additional tools and

maintenance equipment. These aspects must be considered during budgeting

phase.
Existing tools and equipment must also be evaluated and rehabilitation or
replacement necessities must be planned.
Works to be performed with these new tools and maintenance equipment, by
using new technics must be considered accordingly in the budgeting process.
Necessary resources should be budgeted separate or as part of the other
maintenance activities which will include them.
New maintenance needs may require new tools and maintenance equipment.
Such needs may occur due to existing equipment condition, due to installation of
new equipment, or as well by implementing new maintenance technics.
Tools and maintenance equipment may come as part of CAPEX expenses due
their value or if are fully assigned to equipment that is subject of the CAPEX
project. These are part of the general equipment supply. These must be
budgeted and approved accordingly as part of CAPEX.
For example hydraulic pumps and cylinders use for vertical roller mills
maintenance purposes must be considered as part of the equipment itself and
their costs to be allocated to the equipment value and implicit to be budgeted on
CAPEX.
If such tools are to be used for more equipment and it does not reach the
capitalization limits, it must be considered as normal expense items and in this
case must be budgeted at the maintenance department cost center level.
Repairs of existing general tools and maintenance equipment must be also

planned and budgeted on the maintenance department cost center level.
For example general hydraulic jack and their operating pumps or oil filtering
units are used for all the plant and their costs do not reach the capitalization
threshold.
Such tools and maintenance equipment purchasing and repairs must be
budgeted on the maintenance department cost center level.
- Personnel development and training.

Development of the maintenance department by implementing new maintenance
technics, introducing additional tasks and as well improving its overall
performance needs to train and develop workers.
Participation to technical and management trainings, inter-companies exchanges,
linked with maintenance skill matrix, IDP and succession planning programs must
be considered and budgeted.
New tools and maintenance equipment as well new maintenance technics may
require new skills to be developed by maintenance personnel.
For example if plant decide to purchase a vibration measurements tools,
workers that will get the task to use this new tool will have to be trained
accordingly to get the expected results.

Reorganization of the maintenance department may bring new tasks to

personnel.
If the new maintenance organization structure will bring additional tasks to
personnel as for example welding for a fitter which is not qualified to perform
such activity, relevant trainings must be planned and budgeted accordingly.
I general all kind of trainings must be budgeted together with HR departments
and booked accordingly at the maintenance department cost center level.
These trainings are to be considered in the individual IDP 5 and to be in link with
the skill matrix for maintenance department personnel.
Note:
This kind of costs will be budgeted as maintenance department cost center expenses
and accordingly allocated to the cost item.
The costs with tools and trainings will not be part of the Plant Maintenance budget but will
influence the budget build up by the works induced.
Summary
Based on collected data the Annual Maintenance Activities list, the CAPEX to Maintain
and the Maintenance Department development plan should be developed.
Annual Maintenance Activities list will contain all Preventive, Specific and General
Maintenance activities, assuring the availability and necessary capabilities from own
personnel and for contractors, considering all maintenance activities including those
direct managed by other plant departments.
CAPEX to Maintain proposals will cover the identified needs and shall be aligned with the
MTP OpCo targets.
In order to match the skills level and technical capabilities required to fulfil budgeted
activities a development plant must be created for Maintenance Department and its
personnel. This should cover all training needs and introduction of new techniques, tools
and equipment for a better maintenance performance. This would be then reflected in the
personnel IDP’s and done according with the skill matrix of the maintenance department.
Annual maintenance activities list will be used to further develop the Maintenance budget
consolidation.
5
IDP – Individual Development Plan

2.5 Maintenance budget consolidation
The costs for each activity included in the Annual Maintenance activities list must be
detailed per cost types as per HARP definition.
Furthermore these costs must be assigned to the month of their estimated occurrence or
distributed through the more months if the related activity covers more than one time
execution.
Distribution of such costs may be done equal for each month for those costs which may
occur during all year more or less at the same level or uneven distributed considering the
historical or presumed pattern of occurrence.
All cost must split as:

- Working hours for:
o own maintenance personnel, and
o subcontracted personnel allocated to
maintenance activities,
- Third party services maintenance,
- Wear parts:
o refractories,
o liners,
o grinding media,
o kiln chains, etc.
- Maintenance materials and spare parts.
Working hours of own maintenance personnel will

be counted in hours only as the hourly fee will be
calculated by SAP system based on the HR payroll
budget input.
Subcontracted personnel costs should be budget
considering the implemented cost allocation
method for the respective OpCo.
Third party services maintenance represents the

cost value of maintenance activities fulfilled by
contractors.
This should be allocated to the related month or
distributed through the related months when the
services is planned to be provided, even or based
Figure 11 Maintenance budget
on historical or foreseen distribution pattern through consolidation
the related period.
Wear parts as refractories, liners, grinding media, kiln chains, represents the cost value
of the planned consumption for these parts and must be allocated even through the
budgeted production period, per month, or based on historical or foreseen distribution
pattern through the related period.
On the Table 1 is presented as example the wear parts classification according with the
HARP Manual.

Table 1 Wear part classification according to HARP Manual 13.0
Grinding
Wear parts Refractories Liners Chains
media
Crusher hammers X
Crusher impact bars X
Crusher grate plates X
Crusher blow bars X
Roller mill table liners X
Roller mill roller liners X
Roller mill wall linings X
Roller mill dam rings X
Roller press liners X
Diaphragm plates X
Burner tips (only nozzle, not
X
including refractory)
Kiln refractories X
Castable – Preheater and
X
cooler areas
Kiln chains X
Ball mill grinding balls X
Ball mill liners X
For latest version of HARP Manual please consult Holcim Portal.
Any other materials, spare parts, lubricants, welding rods, general consumables etc.
used during maintenance activities are considered as being maintenance materials and
must be budgeted accordingly.
The entire budgeting exercise will not be completed if all collected and processed data
are not appropriate kept for an easy access and further processing for rolling forecasting
of the maintenance costs.
As best practice this information should be grouped together considering as minimum the
following level of details:
o ID – identification number of the budget activity,
o Description - of the budget activity,
o Area / Production Line / Functional location - where the works are budgeted to
be performed,
o Cost center - on which the budgeted cost are allocated,
o Order type – the maintenance work order foreseen to be created to execute the
budget item (PM01, PM02, PM06)
o Activity type - related to the budget item based on the MAC-SAP standard
defined types:
o Modification / Improvement - Z09 (PM01; PM06)
o Calibration – ISO - Z10 (PM01; PM02)
o Lubrication - Z12 (PM01; PM02)
o Housekeeping - Z15 (PM01; PM06)
o Environmental - Z22 (PM01; PM02; PM06)
o Condition Monitoring - Z27 (PM02)
o Fabrication Spares and Tools - Z28 (PM01; PM04)
o Occupational Health & Safety - Z29 (PM01; PM02; PM06)
o Repair/Replacement - Z31 (PM01; PM02; PM04; PM06)

o Walk by Inspection - Z32 (PM02)

o Preventive Maintenance routine - Z33 (PM02)
o Work center – the maintenance work center planned to execute the budget item,
o Responsible - assigned responsible for the budget item,
o Priority – set up priority for budget item execution,
o Maintenance own [h] - maintenance own expressed in hours cumulated for the
budgeting year, allocated to the respective budget item,
o Maintenance subcontracted [h] – maintenance works planned to be executed
by subcontracted personnel, expressed in hours cumulated for the budgeting
year, allocated to the respective budget item, for the cases when cost structure
and contracts for subcontracted personnel allow and require the worked hour
counting and processing in SAP,
o Third party services [currency] – third party services maintenance as value
expressed as local Controlling department requires in respective budgeting
currency at level of units or ‘000 or ‘000’000, cumulated for the budgeting year,
o Maintenance materials [currency] – maintenance materials as value expressed
as local Controlling department requires in respective budgeting currency at level
of units or ‘000 or ‘000’000, cumulated for the budgeting year,
o Wear parts [currency] – wear parts as value expressed as local Controlling
department requires in respective budgeting currency at level of units or ‘000 or
‘000’000, cumulated for the budgeting year.
This activity list can also be classified as previous defined groups of activities preventive
maintenance, specific maintenance and general maintenance.
For each budget item the cost elements must be split on monthly bases based on the
cost occurrence, monthly even or uneven split based on foreseen occurrence pattern or
on the certain month for the spot cost for specific activities.
The cost split can be done with the following approach:

• Preventive maintenance activities costs may be split equal for each month,
considering the production scheduling and scheduled downtimes;
• Specific maintenance activities as are very precise defined, their corresponding
costs will be posted on the particular month as planned
• General maintenance activities costs can be allocated based on the previous
year’s pattern.
Once such list of activities has been developed it should be used as basis for the RoFC
and further more for the development of the next budgets as tool for continuous
improvements of planning accuracy.
In the Annex 1 it is presented an example of a budget data collection template.

2.6 Budget development completion
Based on the specific requirements of the Controlling Department in each OpCo,

collected data must be grouped per Cost Centers, summarised per HARP cost elements
and allocated to corresponding month of occurrence.
This final draft of the maintenance budget is handed over to controlling department and
data will be introduced and processed in SAP.
The output results of the SAP budget processing are compared with the Maintenance
cost reference value, MTP targets (Figure 12 ).
Figure 12 Maintenance budget link with MTP and RoFC.
If necessary, adjustments of the Maintenance Budget must be performed in order to

reach the establish business goals.
An accurate complied maintenance budget will allow a priority based reassessment of

the planned activities and their individual impact for the plant reliability in order to select
and address the right budget items for change.

If the budgeting accuracy is good changes are mainly required when the initial budget
assumptions are changed so the sales and implicit the production budget will change.
This may direct influence the level and the scope of maintenance activities required. All
effected maintenance activities must be reassessed and accordingly modified.
If the budgeted maintenance expenses are too high to reach the business targets the
reassessment of the maintenance budget must look to identify activities which can be
postponed to the next year, eliminated or reduced to a lower degree but without
compromising plant operations. A risk assessment must be performed in order to have a
base on taking such decisions. The communication and documentation of risks taken will
help in the next budget period to review and potentially improve the decision and
planning process.
As soon as necessary changes were performed, the updated maintenance budget is

submitted again to controlling department, process and re-assessed against business
targets.
This process will continue until the budget’s final approval.
With the maintenance budget approved, critical spare parts availability and the lead time
for purchase such spare parts must be checked. Planning for purchasing necessary
critical spares must be put in place in due time.
The same should be done for required third party services with significant complexity and
low availability. This will assure that contracting process will be started in time and the
related costs can be kept under control.

3. Maintenance forecasting
The continue changes of the business environment brings necessary adjustment of the
assumptions made during budgeting. Such adjustments may require corrections of the
planned actions, investments or resources.
In order to accurate the estimation about how company will perform in the next period a
prediction is required to be performed for the expected company performance abased on
expected business situation. Such prediction is called Forecast and according with the
new introduced Holcim Management Cycle should cover 18 month rolling.
For example, it may be possible that some of the assumptions done during the budgeting
period about sales volumes to not realize and the current situation to force company to
change its production portfolio, production planning and implicit the equipment utilization.
As presented in the first part about budgeting process, all these aspects have a direct
influence on the required maintenance activities and implicit on the human and financial
resources to be allocated. It may change also the focus of the maintenance budget from
time optimization to cost optimization or the other way around.
Over spending or under spending may have a direct impact regarding maintenance
activities until end of the year. In example a major breakdown will strongly impact the
maintenance cost itself and may require a cut down of planned operational maintenance
activities or investments on the future.
A significant impact on the general financial performance of the company may come from
the currency exchange rate fluctuations. Such changes may trigger the need to adjust
expenses level and with this the maintenance costs during the year.
As the RoFC process is an exercise at OpCo level it will be enough to identify and
accurate estimate the major cost drivers and changes that may occur during forecasted
period compared with the initial budget.
These may impact significant the company results and must be kept under control.
This can be done by performing monthly analysing of the actual and up to date costs, by
estimating the required expenses for 18 month rolling period and the expected business
results for resource allocation adjustments.
A well developed and sufficient detailed maintenance budget, combined with a good
tracking of the performed activities and their generated costs and a constant monitoring
of the plant condition are the necessary premises for forecast development.
In accordance with Aspire project targets (Figure 13) the expected Rolling forecast
accuracy must be very high:
• +/- 2 % deviation for 6 months forecasting horizon, and
• +/-5% deviation for 12 months forecasting horizon.

Figure 13 Rolling forecasting accuracy expectations.

Annexes


Area / Line / Maint. Maint. Maintenance
Cost Order Work Thrid parties Wear parts
No. Description Functional WBS Activity type Responsible Priority own sub materials
center type center
location [h] [h] [CURRENCY] [CURRENCY] [CURRENCY]
Annex 1
© 2014 Holcim Technology Ltd

Maintenance budget activity list template
Maintenance Management Manual - Maintenance budgeting and forecasting
33
Intenal use only
Maintenance own - monthly distribution Monthly split
Area / Line / Work Total hours Jan Feb Mrz Apr Mai Jun Jul Aug Sep Okt Nov Dez
No. Description Cost center WBS Comments
Functional location center [h] [h] [h] [h] [h] [h] [h] [h] [h] [h] [h] [h] [h]
Annex 2

Maintenance own monthly hours distribution template
34
Intenal use only
Maintenance subcontracted - monthly distribution Monthly split
Area / Line / Work Total hours Jan Feb Mrz Apr Mai Jun Jul Aug Sep Okt Nov Dez
No. Description Cost center WBS Comments
Functional location center [h] [h] [h] [h] [h] [h] [h] [h] [h] [h] [h] [h] [h]
Annex 3

Maintenance subcontracted monthly hours distribution template
35
Intenal use only
Thrid party services maintenance Monthly cost split
Area / Line / Cost Work Total cost Jan Feb Mrz Apr Mai Jun Jul Aug Sep Okt Nov Dez
No. Description WBS Comments
Functional location center center [kCHF] [kCHF] [kCHF] [kCHF] [kCHF] [kCHF] [kCHF] [kCHF] [kCHF] [kCHF] [kCHF] [kCHF] [kCHF]
Annex 4

Third party services maintenance monthly costs distribution template
36
Intenal use only
Maintenance materials Monthly cost split
Annex 5

Maintenance materials monthly cost distribution template
37
Intenal use only
Wear parts Monthly cost split
Annex 6

Wear parts monthly cost distribution template
38
Intenal use only
Glossary
AFR – Alternative fuels and raw materials

CAPEX – Capital Expenditures
EXCO – Executive Committee
FINPLAN – Five year Financial Plan
FMEA – Failure Mode Effect Analyse
FPE – Fatality Prevention Elements
HR – Human Resources Department
IDP – Individual Development Plan
MTP – Mid Term Plan
OCR – Oil consumption ration
OEM – Original Equipment Manufacturer
OpCo – Operating Company
PDP – Plant Development Plan
PMR – Preventive Maintenance Routine
PPE – Plant Property and Equipment
RoFC – Rolling Forecast
SRF – Shredded fraction (Alternative Fuel)


Document version
Version: 1.0
Revision: 3
Creation date: 20.01.2014
Last change date: 27.06.2014
Author: Dacian Cătălin Cândea
Department: Cement Manufacturing - Equipment and Process Technology
Company: Holcim Technology Ltd.



Holcim Technology Ltd

Cement Manufacturing
Im Schachen
CH-5113 Holderbank
Switzerland
d.candea@holcim.com
www.holcim.com
Phone +41 58 858 52 01
Fax +41 58 858 62 35

MMM - Maintenance Budgeting and Forecasting v.1 Rev.3

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

MMM - Maintenance Budgeting and Forecasting v.1 Rev.3

Uploaded by

Copyright:

Available Formats

Strength. Performance. Passion.

Maintenance Management Manual

Holcim Technology Ltd.

© 2014 Holcim Country Company Name 1

This page was intentionally left empty

© 2014 Holcim Technology Ltd 2

© 2014 Holcim Technology Ltd 3

This page was intentionally left empty

© 2014 Holcim Technology Ltd 4

The objective of this manual is to give to maintenance professionals an overview about

1.2 Maintenance budgeting and forecasting in Holcim Management Cycle

Maintenance budgeting and forecasting are components of the general process of

© 2014 Holcim Technology Ltd 5

Maintenance budgeting process is part of this general process of establishing company

© 2014 Holcim Technology Ltd 6

Figure 2 Plant level Maintenance budgeting on Holcim Management Cycle

© 2014 Holcim Technology Ltd 7

© 2014 Holcim Technology Ltd 8

Figure 5 Maintenance budgeting and forecasting process flow

© 2014 Holcim Technology Ltd 9

© 2014 Holcim Technology Ltd 10

Figure 6 Maintenance budgeting information sources

© 2014 Holcim Technology Ltd 11

2.2 Production planning

At this point are established:

All these will be correlated and a general

The final production planning must consider

© 2014 Holcim Technology Ltd 12

2.3 Assessment of the equipment to be used

Based on the detailed production planning and established operating schedule,

This information is coming from:

2.3.1 Equipment condition

Assessment of plant equipment condition is

2.3.2 Preventive maintenance program

It is necessary to reassess the existing PMR’s

2.3.3 Pending maintenance activities

© 2014 Holcim Technology Ltd 13

2.3.4 Equipment history

The main historical data to be considered must cover:

2.3.5 Tools and maintenance equipment replacements and/or new acquisitions

© 2014 Holcim Technology Ltd 14

2.3.6 CAPEX projects

2.3.7 Performance improvements required for existing equipment

Modifications intended to improve the performance of the existing equipment in terms

Considering the capitalization rules, such projects may be considered as CAPEX to

The possible impact of such modifications regarding necessary tools, activities to be

2.3.8 Compliance with safety and environmental requirements and standards

The outcome of data collection from:

© 2014 Holcim Technology Ltd 15

- technical assessments and compliance of safety and environmental requirements

2.4 Planning phase

Maintenance budget optimization process starts

A sold out market will require a high utilization

A case of low market demand will reduce the group

For example this can be achieved by increasing the

Figure 9 Planning phase

© 2014 Holcim Technology Ltd 16

2.4.1 Annual Maintenance Plan

These activities can be grouped as:

A list with maintenance activities will be developed as result of this phase.

2.4.1.1 Preventive Maintenance Strategy

Preventive Maintenance Strategy groups in three categories of maintenance activities:

- Conditioning monitoring PMRs’ as follows: