What Is Deferred Maintenance? [New Guide for 2024]

Deferred maintenance is the practice of putting off repairs, upgrades, replacements, or other maintenance work for equipment and infrastructure.

When you defer maintenance, it simply means you’re putting it off, not that it doesn’t need to happen. In fact, deferring maintenance typically leads to greater maintenance costs down the road—industry-wide benchmarks show that deferred maintenance costs compound by 7% per year.

Those who might defer maintenance include:

  • Cities and local governments who work in asset management
  • Private companies who work in inspections or maintenance
  • Real estate companies or individual real estate owners overseeing maintenance for their buildings and properties

Wherever you find it, deferred maintenance creates an ever-growing backlog of work that needs to be completed. Right now, it’s estimated that there is about one trillion dollars of deferred maintenance needs in U.S. infrastructure alone.

deferred-maintenance-pavement-example

That means that one trillion dollars of work to repair our aging roads, bridges, tunnels, and other key infrastructure has been put on the back burner—and all of these assets are getting older as we speak, with maintenance needs only growing more acute.

This practice puts maintenance teams in a mode of constant reactivity, triaging their work to deal with the most urgent issues and pushing back work they see as deferrable.

In this in-depth guide to deferred maintenance we’ll cover what it is and what causes it, risks, examples, and how maintenance teams can climb out of the deferred maintenance hole and take a more proactive approach to asset management.

Here is a table of contents to help you navigate the guide:

What Is Deferred Maintenance?

Deferred maintenance describes the practice of postponing maintenance work, both to infrastructure and to machinery if we’re talking about asset management, and to properties and buildings if we’re talking about real estate.

The practice of deferring maintenance typically happens when budget or staffing shortfalls make it impossible to carry out all the maintenance work that’s needed, leading to a forced prioritization between maintenance tasks that must be done now and those that can be deferred to a future time.

The choice to defer maintenance should not be taken lightly. Deferred maintenance may save money today, but it will probably cost you more than you saved down the line.

deferred-maintenance-water-utility

Delays in performing maintenance can lead assets to wear down and deteriorate, and ultimately to fail prematurely. When these events occur, the costs to mitigate damage or to replace an asset entirely are almost always greater than the up-front cost of performing regular maintenance work.

But sometimes deferred maintenance is unavoidable. If a maintenance manager maxes out their monthly budget without checking everything off the list and can’t secure additional funds, they may be forced to defer some of the work planned for that month.

Sometimes this kind of situation can arise during periods of high growth, when companies purchase assets at a fast pace without growing their maintenance crew and budgets at a corresponding rate. And sometimes they arise in local governments when there simply isn’t enough funding to cover all of the maintenance work that needs to be done.

What Causes Deferred Maintenance?

We’ve already touched on the fact that deferred maintenance isn’t an ideal solution to budget shortfalls, since it can lead to higher costs down the road.

But sometimes putting off maintenance work is unavoidable—here are the seven primary causes of deferred maintenance.

1. Budget Constraints

Sometimes budgets simply don’t allow for all of the maintenance work that’s needed, and extra funds can’t be found to complete it.

In these cases, maintenance may have to be deferred due to a lack of funding.

This cause of deferred maintenance can occur when an organization working with a tight maintenance budget encounters an unexpected expense, either from a low estimate for maintenance work or from an unplanned maintenance situation that suddenly requires extra resources.

2. Aging Infrastructure

In creating maintenance budgets, local governments and organizations don’t always account for the increased costs it may require to maintain aging assets and infrastructure. As assets age, they often require more frequent and thorough inspections, as well as more replacements and repairs.

When building maintenance budgets, it’s important to use realistic models for maintenance needs that account for increased costs in the aging cycle, instead of using flat estimates that don’t incorporate these realities.

deferred-maintenance-roads

[Free download: Preserve Your Pavement: A Data-Driven Approach to Managing Your Most Expensive Asset]

3. Lack of Planning

Sometimes you fail to plan.

Setting a maintenance budget using incomplete or arbitrary data can lead to deferred maintenance, since your planning hasn’t taken into account the real expenses required to keep all of your assets and operations properly maintained.

It’s important to note that a lack of planning can also be attributed to poor or incomplete data. A maintenance manager may know their budget is too small for the following year but not be able to make a strong argument to increase it, because data wasn’t properly captured or stored from past maintenance efforts.

4. Increasing Operational Pressures

New management or changes to focus in management can create increased pressures to cut costs and create more profit.

Despite the importance of maintenance—not to mention that up-front maintenance costs are almost always lower than deferred maintenance costs—the maintenance budget may be one area where cuts are made to drive short term profit, leading to an increase in deferred maintenance in an organization.

On a similar note, a higher demand for funding in other departments within a local government or at a private company can also lead to an increase in deferred maintenance, taking resources from Public Works, for example, to fund other initiatives or departments.

5. Staffing Shortages

Not all resource shortages are financial.

Sometimes, a shortage of skilled labor can lead to deferred maintenance, because a Public Works department or maintenance team just doesn’t have the staff needed to carry out all the inspections, repairs, and other maintenance tasks on its plate.

6. Unforeseen Emergencies

Premature equipment failure, natural disasters, or the sudden onset of a pandemic—these are all unforeseen emergencies that could suddenly divert budget resources away from maintenance, leading to the need to defer some maintenance activities to make up the sudden shortfall in resources.

The Risks of Deferred Maintenance

Delaying maintenance can increase future costs for the same work, in some cases by as much as 600%.

These increased costs primarily come from:

  • Fixing problems that have been allowed to grow severe
  • Buying brand new assets to replace assets that fail prematurely

But higher overall costs are just one of the risks that come with deferred maintenance—here are the top six risks that come along with putting off maintenance work.

deferred-maintenance-aging-infrastructure

 

1. An Increase In Safety Hazards

When assets aren’t properly maintained there are always implications for the health and safety of those working with and near them.

The biggest concern is that large assets might fail, leading to catastrophic accidents such as explosions or collapses, which could result in serious injuries or even death to those nearby.

But there are other health implications that can arise from deferred maintenance, such as poor air quality caused by lack of regular cleaning.

Further, the pressure to meet unrealistic maintenance schedules due to low budgets can lead to rushed work and staff not following safety protocol, which can also result in accidents.

2. Increased Maintenance Costs Over Time

Would you avoid a $10 expense now if you knew it would cost you $60 down the road?

Probably not, if you could afford the $10. But this is the choice that’s often made when maintenance is deferred—putting off expenses for short term savings that will ultimately lead to higher maintenance costs in the future.

Smaller problems can become big ones, and big problems can become total system failures. And the costs to “catch up” with the maintenance work that’s been put off can cost hundreds, thousands, or even hundreds of thousands of dollars.

Not to mention the astronomical costs that come with unplanned outages. For power plants or other large systems, an unplanned outage can cost millions per day in unrecognized profit from having the system offline due to equipment failure.

Another increased cost of deferred maintenance can come in the form of inflation—if you wait to buy a replacement part, it could be more expensive down the road.

3. Reduced Effectiveness

It can be hard to quantify the cost of decreased efficiency—but there is one.

When assets aren’t properly maintained they start to operate less effectively over time, leading to reduced efficiency for those using them. Just like on a car, a machine with a worn-out belt or filthy filter won’t operate as well as when the belts are new and the filter is clean.

Reduced effectiveness can also have hidden costs in the form of slower production and an increase in energy costs for running your systems.

4. Increased Environmental Impact

When assets aren’t properly maintained they can require more resources to run, leading to an increased negative impact on the environment.

In fact, a study from Boiler Room Inspections found a connection between an increase in the frequency of inspections and the reduction of CO2 emissions.

The study specifically looked at ways that using drones for inspections helped increase inspection frequency—but the findings about the environmental benefits were separate from the tool used for the inspection.

Whether using drones or some other inspection method, doing boiler inspections more often helps inspectors detect leaks in boilers and fix them more quickly, which can lead to a reduction of as much as 649 metric tons of CO2 per boiler, per year, according to the study.

5. Poor Regulatory Compliance

Many industrial maintenance practices aren’t just good business—they’re also mandated by law.

In many industries, such as Oil & Gas or Power Generation, inspection schedules are defined by laws that lay out the frequency of inspections and the specific steps you have to take to satisfy inspection requirements.

Safety compliance is also part of maintenance work, since, as we’ve covered, deferred maintenance can lead to poor health and safety conditions in the workplace. In 2019 alone, OSHA gave out over $6 million in fines to companies for failing to comply with maintenance and workplace safety requirements.

6. Lack of Community Trust

If an accident does happen due to deferred maintenance it could cause harm to the people working, to your budget, and to your reputation.

And these accidents can have long-term consequences. After a severe event like a collapse or explosion occurs, companies and local governments have years of work to do to mend their reputation.

Deferred Maintenance Examples

Up to now, our discussion of deferred maintenance has been somewhat abstract.

Here are some examples to make the concept of deferred maintenance more concrete.

1. City and Local Government Deferred Maintenance Examples

  • Roads. Delayed repaving, pothole patching, and bridge repair can result in damage to vehicles and increased safety hazards.
  • Public transportation systems. Lack of investments in public transportation infrastructure could include rail lines, stations, or bus stops, as well as fleet upgrades or replacements.
  • Parks and recreational centers. Lack of overall maintenance for parks and recreational centers can lead to health-related issues, such as unsanitary conditions, insect problems, or attracting rodents, all of which can compromise public health and safety.
  • Storm drains and sewers. Reduced inspection schedules can lead to blockages, which can lead to water backups during flooding seasons.
  • Buildings. Aging government facilities are common victims of deferred maintenance. When essential repairs are avoided in these buildings, the end result is almost always costly repair projects at a later time.
deferred-maintenance-public-transportation

 

2. Deferred Maintenance in Real Estate

  • Paint. Peeling, faded, or water-damaged paint.
  • Siding. Rotten or age- or weather-damaged siding.
  • Roofs. Missing shingles, leaks, or other damage caused by age and wear.
  • Foundations. Cracks, termite damage, or other wear in the foundation and supporting beams and structure of a building.
  • Windows. Cracks, leaks, poor sealing, and other damage.
deferred-maintenance-real-estate

Deferred maintenance in real estate typically refers to the practice of real estate owners putting off the cost of maintaining their buildings and properties.

Sometimes the decision to defer maintenance is made simply because owners want to avoid spending the money on upkeep. But in some cases owners face slow permit approvals, making it so they have to defer maintenance until they can secure the necessary permissions for the work.

3. The National Parks (NPS) Service

This last example shows that deferred maintenance can impact almost any area of life.

Back in 2015, the NPS reported that the cost of its deferred maintenance amounted to $11.9 billion dollars. These costs represented deferred repairs, maintenance, and upkeep for all of the physical infrastructure at NPS parks—things like tunnels, amphitheaters, bridges, and monuments at the hundreds of parks the organization oversees.

nps-deferred-maintenance

When announcing that huge figure for its deferred maintenance costs, the NPS also shared that it was planning to receive funds from the federal government to try and close the maintenance gap, and take care of its maintenance backlog.

Now here’s the key takeaway: the reason the NPS got the funds is because the organization had been diligent about how it identified and reported maintenance work, including maintenance that had been deferred. In total, the NPS had reporting details for over 75,000 assets.

nps-deferred-maintenance-assets

This data helped the NPS make a strong case for getting funds to pay for all of that deferred maintenance, serving as a success story for how organizations can climb out of the hole created by long-term deferred maintenance.

How Do You Handle Deferred Maintenance? Here’s the Answer to Getting Ahead of It.

If you’ve read this far, you know that deferred maintenance can create serious long-term problems for local governments, companies, and other organizations.

The NPS succeeded in getting funding so it could catch up on its deferred maintenance. But not all organizations can count on a big payoff to help them catch up.

Instead, most will have to create a long-term plan and work step-by-step to try and take care of their backlog while still conducting new maintenance issues as they arise.

Here are the steps to follow for handling deferred maintenance, and getting back on track.

Step 1: Log your maintenance activity.

You can’t fix what you don’t track.

By logging maintenance activities, including deferred maintenance, you can start collecting data showing which assets are up-to-date and which aren’t from a maintenance perspective.

Data to consider tracking includes:

  • Assets (list them all)
  • Equipment
  • Warranties
  • Work requests per asset
  • Work orders
  • Wrench time (i.e., the time it takes to complete the work)

Remember, the NPS was able to use data like this to make the case for getting billions to pay for deferred maintenance. You may not get quite as much—but data tracking will certainly help you make the case to get funds to pay for deferred maintenance.

Step 2: Conduct an audit.

After you put data tracking measures in place, conduct an audit to get the full picture of maintenance needs in your government or organization.

In your audit, collect information like:

  • Warranty expirations—is anything set to expire soon
  • Equipment failure—what has failed recently, and what might fail soon?
  • Safety information—are there any safety concerns around assets that haven’t been properly maintained?
  • Effective production information—have any assets slowed or shown poor performance due to suspected maintenance issues?

Step 3: Prioritize the work.

Now that you’ve collected your data and completed your audit, decide what you want to prioritize first with your limited resources.

This step requires you to triage your maintenance work, starting by identifying those assets that need immediate attention and prioritizing them first, then working backward to identify assets that are critical but not urgent, and so on to those that can wait longer.

It may help to just use two categories—immediate and deferred—to start the process of bucketing your work.

Another way to help you prioritize your backlog of deferred maintenance work is to start by considering potential safety hazards. Any maintenance work that could help keep the workplace safe should be done as soon as possible.

Here are some other things to consider when prioritizing deferred maintenance work:

  • Time needed
  • Cost needed—including costs for potential upgrades
  • Location of the workLifecycle of the asset—does it need more maintenance work due to being old?
  • Who will do the work—contractors or in-house specialists?

Step 4: Develop an asset management plan.

Most likely Step 3 and Step 4 will happen simultaneously, with prioritization of work happening as you build out your overall asset management plan.

To create an asset management plan, start by outlining all of the scheduled maintenance activities you expect to perform over the lifetime of every asset you manage (assuming regular usage).

In your plan, you’ll want to include all the data you collected in Steps 1 (Log your maintenance activity) and 2 (Conduct an audit), as well as:

  • Equipment and asset locations (ideally using a GIS system)
  • Equipment documentation, including O&M manuals
    Receipts

Your plan should include a section on deferred maintenance to help you address your backlog of maintenance work, as well as a section on preventive maintenance, to make sure you’re conducting maintenance work as it comes up and not continuing to grow your backlog.

A good preventative maintenance plan will also include a schedule for inspections and maintenance work.

In industrial plants, this work will be coordinated to happen during planned outages to avoid any unnecessary downtimes for the plant. In government work, this work will ideally happen during low traffic periods for public assets, such as roads or water utilities.

Step 5: Implement your plan.

Now that you have a plan it’s time to get to work.

If you continue to record data and make progress on catching up with maintenance that has been deferred, you’ll be in a good position to ask for more funding in the next budgeting cycle to help you continue to tackle your backlog of deferred maintenance work.

Ready to get started with tackling that deferred maintenance backlog in your local government?

Learn how OpenGov’s Cartegraph Asset Management can help.

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