Downtime Cost
Downtime cost is the estimated financial impact created when equipment or production capacity is unavailable.
What this term means in maintenance
Downtime cost is the estimated financial impact created when equipment or production capacity is unavailable.
Possible downtime-cost elements
Downtime cost may include:
- Lost production contribution
- Overtime
- Scrap
- Restart loss
- Expedited freight
- Contractor waiting
- Missed delivery
- Utility waste
- Quality loss
- Customer penalties
Basic estimate
Estimated downtime cost = Downtime hours × Estimated cost per hour
This is a simplified calculation and should state what the hourly value represents.
Practical example
A line is unavailable for three hours and the approved production-loss estimate is 1,500 per hour.
Estimated downtime cost = 4,500
Use of the measure
Downtime cost can support asset criticality, repair-versus-replace decisions, spares, reliability improvement, and business cases.
Common mistake
Using revenue per hour as downtime cost without considering recoverable production, variable cost, and actual lost contribution can exaggerate the result.
How this term differs
Downtime Cost is the estimated financial consequence of unavailable equipment or capacity. It is related to Maintenance Cost, Cost per Work Order, and Maintenance Cost as Percentage of Replacement Asset Value, but these terms describe different records, measures, roles, strategies, or decisions and should not be used interchangeably.
Related concepts
Related maintenance terms
Keep exploring connected CMMS, reliability, and maintenance planning terms.
Equipment Downtime
Equipment downtime is the period when an asset is required or scheduled to operate but is unavailable or unable to perform its intended function.
Unplanned Downtime
Unplanned downtime is the period when equipment is unexpectedly unavailable during time it was required or scheduled to operate.
Asset Criticality
Asset criticality is a structured assessment of how strongly an asset failure could affect safety, environment, quality, production, compliance, cost, and recovery.
Glossary FAQs
- How is downtime cost estimated?
A basic estimate multiplies downtime hours by an approved cost per hour.
- What may downtime cost include?
Lost contribution, overtime, scrap, restart loss, freight, quality loss, and penalties.
- Why can downtime cost be overstated?
Using revenue instead of actual lost contribution may ignore recoverable production and variable costs.