A Model for Calculating Cost of Equipment Downtime and Lack of Availability in Directorates of Engineering and Housing

Costs that arise when a vehicle or an item of equipment fails are either tangible costs or consequential costs. Tangible costs (labor and materials) are fairly easy to assess using normal cost accounting. In contrast, consequential costs (those that arise because a vehicle failed, which affects the organization) cannot be assessed with any degree of certainty except under very rigid and well defined circumstances. Installation Directorates of Engineering and Housing (DEHs) need to be able to quantify the consequential costs of equipment failure and include them in equipment decisions. This research developed a model and method for quantifying consequential costs of equipment downtime that is tailored to the DEH on Army installations. This model quantifies lack of availability and downtime costs in four categories: (1) Associated Resource Impact costs, arising when failure in one machine affects the productivity and cost effectiveness of other machines, (2) Lack of Readiness costs, penalty costs assessed against an idle resource, (3) Service Level Impact costs, arising when one machine in the pool of resources fails causing other machines to work extra, and (4) Alternate Method Impact costs, resulting when failure causes a change in the method of operations. Implementation and further development of the model are recommended.