BUSINESS MANAGEMENT

1.1 Ratio of Replacement Asset Value

(RAV) to Craft-Wage Headcount

BUSINESS AND MANAGEMENT METRIC

1.1 Ratio of Replacement Asset Value

(RAV) to Craft-Wage Headcount
A. DEFINITION
The metric is Replacement Asset Value (RAV) of the assets being maintained at the
plant divided by the craft-wage employee headcount. The result is expressed as a ratio
in dollars per craft-wage employee.

B. OBJECTIVES
This metric allows for comparisons of the ratio of craft-wage personnel on a site with
other sites, as well as the benchmarking of data. The RAV is used in the numerator to
normalize the measurement given that different plants vary in size and replacement
value. The metric can be used to determine the standing of a plant relative to best in
class plants which have high asset utilization and equipment reliability, and generally
have lower maintenance craft-wage cost.

C. FORMULA
Ratio of Replacement Asset Value ($) to Craft-Wage Head Count =
RAV ($) Craft-Wage Headcount

D. COMPONENT DEFINITIONS
Craft-Wage Headcount
Number of maintenance personnel responsible for executing work assignments
pertaining to maintenance activities. Include the number of contractors personnel who
are used to supplement routine maintenance. The headcount is measured in full-time
equivalents (FTE).
PAGE 1 of 4

Copyright 2009 SMRP. All rights reserved.

Published: April 16, 2009

Revised: July 10, 2013

Replacement Asset Value (RAV)

Also referred to as Estimated Replacement Value (ERV). This is the dollar value that
would be required to replace the production capability of the present assets in the plant.
Include production/process equipment, as well as utilities, facilities and related assets.
Do not use the insured value or depreciated value of the assets. Include replacement
value of buildings and grounds if these assets are maintained by the maintenance
expenditures. Do not include the value of real estate, only improvements.

E. QUALIFICATIONS
1. Time basis: Annually
2. To be used by maintenance managers to measure the effectiveness of their craftwage workforce.
3. This metric can be calculated and used to compare a process, a department or an
entire facility.
4. Contractors that are employed as part of capital projects or upgrade work should
not be included.
5. Contract employees who support the regular maintenance work force and perform
maintenance on a site should be included.
6. If contract costs for painting, plumbing, carpentry and similar activities are included
as part of the RAV, this contract headcount should be included in the denominator.
7. A full-time equivalent should be normalized at 40 hours per week.
8. For facilities using total productive maintenance (TPM), maintenance performed by
operators should be included.

PAGE 2 of 4

Copyright 2009 SMRP. All rights reserved.

Published: April 16, 2009

Revised: July 10, 2013

F. SAMPLE CALCULATION
For a given facility, the Replacement Asset Value ($) is $624,500,000 and the CraftWage Headcount for maintenance employees is 150.

The Ratio of Replacement Asset Value ($) to Craft-Wage Headcount =

RAV ($) Craft-wage Headcount

The Ratio of Replacement Asset Value ($) to Craft-Wage Headcount =

$624,500,000 150 maintenance employees

The Ratio of Replacement Asset Value ($) to Craft-Wage Headcount =

$4,160,000 per maintenance employee

G. BEST IN CLASS TARGET VALUE

$8,000,000 to $9,000,000 per Craft Worker

H. CAUTIONS (Potential Ramifications if the Target is Misapplied)

Care should be taken when using this best in class target; it may be somewhat
sensitive to industry vertical, and the value is a result of a mature maintenance and
reliability process. If an organization applies this metric in an immature process that is
heavily reactive, it is highly likely that there will be insufficient craft resources to provide
adequate maintenance and repair support and equipment reliability will suffer.

I. HARMONIZATION
This metric has not been harmonized with European standard EN 15341:
Maintenance Indicators.

PAGE 3 of 4

Copyright 2009 SMRP. All rights reserved.

Published: April 16, 2009

Revised: July 10, 2013

J. REFERENCES
Baldwin, R. (2006). Secrets of effective maintenance. Paper presented at Society for
Maintenance and Reliability Professionals Annual Conference, Birmingham, AL.
Retrieved from http://library.smrp.org/1k8egi/4?highlightText=Baldwin
Dunn, R. L. (1999). Basic guide to maintenance enchmarking. Plant Engineering,
reference file 9030/5501, 65.
Humphries, J. B. (1998). Best-in-class maintenance benchmarks. Iron and Steel
Engineer, 1.
Jones, E. K. (n.d.). Basic guide to maintenance benchmarking, Sooryasoftware.
Retrieved from http://sooryasoft.com/papers/papers.asp
Moore, R. (2004). Making common sense common practice Models for manufacturing
excellence (3rd ed.). Burlington, NY: Elsevier Butterworth Heinemann.
Thompson, D. (2011, April). Presented at SMRP Executive Member Meeting, Alcoa M.
Holly plant site, Goose Creek, SC.

PAGE 4 of 4

Copyright 2009 SMRP. All rights reserved.

Published: April 16, 2009

Revised: July 10, 2013