Reactive or Planned Maintenance: A Worked Comparison on One Chiller

An illustrative calculation of what running equipment to failure costs against maintaining it on a schedule, including the costs that never appear on an invoice.

Planned maintenance is usually justified with general statements about prevention being cheaper than cure. The argument is more convincing when it is calculated on a single asset, including the consequences that do not appear on a contractor invoice. The illustrative example below compares the two approaches on one chiller over eight years.

The situation

An owner of a small office building has two air cooled chillers serving the whole building. One is maintained under a planned schedule; the other has historically been run until something goes wrong. The owner wants to compare the two approaches over an eight year period, including the cost of failures, the effect on energy consumption and the consequences for tenants when cooling is lost in summer.

Assumptions (illustrative)

• Illustrative planned maintenance cost: SAR 34,000 per year covering four visits, coil cleaning and condition reporting.
• Illustrative reactive repair history: two minor failures at SAR 18,000 each and one major compressor failure at SAR 210,000 across eight years.
• Emergency premium on reactive repairs: 35 per cent above ordinary rates, already included in the figures above.
• Energy penalty on the unmaintained machine: 9 per cent higher consumption, on a base of SAR 210,000 per year of chiller energy.
• Expected life: twenty years when maintained, assumed fifteen years when run to failure.
• Illustrative tenant compensation and goodwill cost when cooling is lost for three days in summer: SAR 45,000.

Step 1: Total the direct cost of each approach

Planned: 34,000 multiplied by 8 is SAR 272,000. Reactive: 18,000 plus 18,000 plus 210,000 is SAR 246,000, plus minimal basic attention assumed at SAR 6,000 per year, which is 48,000, giving SAR 294,000.

On invoices alone the two approaches are within 8 per cent of each other, which is exactly why reactive maintenance survives. The case is not made by the repair bills; it is made by everything else.

Step 2: Add the energy penalty

The unmaintained machine consumes 9 per cent more. On SAR 210,000 of annual chiller energy that is SAR 18,900 a year, or SAR 151,200 across eight years.

Fouled condenser coils and degraded refrigerant charge raise consumption continuously, invisibly and every single day. This line alone is larger than the entire difference in repair costs.

Step 3: Add the consequence of the summer failure

The compressor failed in July with a lead time for the replacement part. Three days without cooling across the building cost SAR 45,000 in compensation and goodwill, with no corresponding cost under the planned approach.

This is the line owners discount until it happens. Loss of cooling in a Saudi summer is not an inconvenience; in a tenanted building it is a commercial event with lease consequences.

Step 4: Value the shortened asset life

The machine run to failure is assumed to last fifteen years rather than twenty. On an illustrative replacement cost of SAR 450,000, the annual consumption rises from 450,000 divided by 20, which is SAR 22,500, to 450,000 divided by 15, which is SAR 30,000. Across eight years the extra consumption is 8 multiplied by 7,500, which is SAR 60,000.

Running equipment to failure consumes the asset faster. The cost is real even though it never appears on an invoice until the replacement year arrives earlier than expected.

Step 5: Compare the full eight year totals

Planned: SAR 272,000. Reactive: 294,000 plus 151,200 plus 45,000 plus 60,000, which is SAR 550,200.

The reactive approach costs slightly more than twice as much once energy, consequence and asset consumption are counted. The repair invoices, which are the only figures most owners compare, account for under 10 per cent of the difference.

Step 6: Test the result against a cheaper planned contract

If the planned contract covered only two visits at SAR 20,000 a year, the eight year cost falls to SAR 160,000, but coil cleaning frequency halves and the energy penalty is assumed to return at 4 per cent, which is SAR 8,400 a year or SAR 67,200. Total SAR 227,200.

A cheaper planned contract can still outperform reactive maintenance, provided the tasks that drive energy and reliability, principally coil cleaning and condition monitoring, are retained. Cutting the scope is not the same as cutting the frequency.

What changes the answer

• If the major compressor failure does not occur within the period, the direct cost gap closes but the energy and life penalties remain.
• If the building is unoccupied, the tenant consequence cost disappears and the comparison narrows considerably.
• If energy prices for the customer category change, the efficiency penalty scales with them while the repair costs do not.
• If spare parts are held on site, the duration of a failure shortens and the consequence cost falls sharply.
• If the planned contract excludes coil cleaning, most of the energy advantage disappears and the comparison becomes much closer.

What the numbers tell you

• Compare the approaches on total cost including energy, consequence and asset life, not on repair invoices.
• Protect the specific tasks that drive efficiency and reliability when a maintenance budget is reduced.
• Count the commercial consequence of a failure during the cooling season, since it can exceed the repair itself.
• Treat shortened asset life as a real cost that arrives as an earlier replacement year.
• Hold critical spares where the lead time for a part would extend an outage beyond a day or two.

Limits of this example

Every figure above is an illustrative assumption used to show the method, not a quote, valuation or market rate. Costs, rates, fees and regulations change and must be confirmed with the relevant authority, lender or supplier before you commit.

Domira works on buildings that already exist: surveying what is installed, specifying the systems that have to be replaced, and running maintenance and refurbishment work around the people using the property. Tell Domira which asset you are responsible for and we will say what we would inspect first.