Understanding the Risks of Deferred Maintenance

Proper asset management is vital to keep your business running smoothly. This multifaceted discipline — when done successfully — involves the continuous routine maintenance of physical assets to ensure they function optimally, avoiding increased maintenance costs and safety hazards.

However, the issue of deferred maintenance, which occurs when necessary repairs or upgrades are postponed, is a common challenge that maintenance teams too often face. While this may be a temporary short-term solution, the long-term consequences of a deferred maintenance backlog can be severe and costly.

What Is Deferred Maintenance?

Deferred maintenance is defined as the practice of delaying maintenance activities on both real property (such as infrastructure) and personal property (machinery) largely in an effort to save costs, stay within budget or as a result of budget funding changes.

In general, there are two types of deferred maintenance. The first is strategic deferred maintenance, which involves making a calculated decision to prioritize maintenance tasks that need immediate attention over lower-priority ones in an effort to minimize disruptions and keep safety concerns at bay.

Conversely, involuntary deferred maintenance is often a result of a company’s resource constraints such as budget limitations, emergencies being prioritized or simply a failure to keep up with the maintenance schedule. Many of these factors are often beyond a company’s control, resulting in a snowball effect that often leads to larger problems and increased costs. 

What Are the Causes of Deferred Maintenance?

There are a variety of causes for deferred maintenance, but these are the most common:

• Budget: A lack of funds for maintenance needs is oftentimes the key reason that deferred maintenance occurs.
• Lack of accessibility: The asset or system is physically difficult to reach.
• Company culture: The company might have an “if it’s not broken, don’t fix it” attitude, allowing equipment or assets to run until they break down.
• Not enough time: A smaller maintenance team that’s spread thin may have to prioritize other tasks.
• Missing parts or information: Maintenance gets deferred due to a lack of parts or information.

Rubicon, a contractor based in Centerville, Utah, explains that, from a facilities management perspective, deferred maintenance occurs when necessary repairs or upgrades to a facility are postponed. This can include anything from fixing leaky roofs and repairing HVAC systems to repaving parking lots and updating electrical systems. While deferring maintenance may provide immediate cost savings, it often leads to increased expenses down the line as problems worsen and require more extensive repairs. 

What Are the Risks Involved?

The consequences of deferred maintenance can be far-reaching and affect various aspects of an asset. These risks include:

• More costly breakdown repairs: Parts increase in price with time, so the longer something is put off, the more money it will likely cost. This can also cause asset degradation in that deferred maintenance accelerates the deterioration of assets over time. What could have been a minor repair may escalate into a major renovation if left unaddressed, resulting in higher costs and longer downtime. 
• Decreased equipment efficiency and value: It’s no secret that the longer maintenance is put off, the more likely equipment won’t function as well as it should. Deferred maintenance can reduce the efficiency of building systems such as HVAC, lighting and plumbing. This not only impacts occupant comfort, but it also increases energy consumption and operational expenses. 
• Ultimate failure and downtime: Without proper upkeep, equipment will inevitably fail leading to unwanted downtime and operational costs. For facilities, the property value may diminish in that neglected maintenance can detract from the overall aesthetics and functionality of a facility, diminishing its market value and attractiveness to tenants or buyers. 
• Safety issues: Employee safety is at risk when, for instance, a large piece of equipment isn’t up to standard. Neglected maintenance can also compromise the safety and security of building occupants. For example, failing to repair faulty wiring can increase the risk of electrical fires, while ignoring damaged flooring can lead to slips and falls. 
• Becoming noncompliant: Having no maintenance plan in place can lead to noncompliance with regulatory requirements that could even lead to fines. Not being in compliance can cause a number of issues such as project delays, an increase in insurance premiums, reputation damage and even possible legal action.

When Does Deferred Maintenance Make Sense? 

Keeping equipment and facilities in strong working shape is essential and can be costly. When the costs are too high, companies may delay — or defer — maintenance. 

However, deferred maintenance is sometimes a necessary part of the plan such as when emergency maintenance is required or when there are budget restraints. This is why it’s important for companies to develop an effective maintenance management plan that involves a number of steps such as:

• Assessing the current situation
• Setting clear objectives
• Allocating resources
• Scheduling tasks
• Engaging stakeholders
• Monitoring progress

When deferring maintenance, it is essential that companies have a detailed inventory of the postponed maintenance activities and that they include details of their severity. This inventory can then act as a tool to gauge the extent and severity of deferred maintenance and to then determine whether or not postponing maintenance continues to make sense.

From there, setting clear objectives and allocating resources is vital and begins with a thorough assessment of current assets and a strong plan on how to address a backlog of tasks. This involves incorporating a strong maintenance strategy for resource reallocation that may involve redistributing resources, investing in new equipment and considering budget adjustments such as additional funding. 

An article in “Facilities Management Advisor“ also suggests that facilities management professionals should keep up-to-date on the most important real estate issues, industry trends and maintenance metrics in order to help improve their maintenance strategy.

Real-Life Examples of Deferred Maintenance 

In October 2023, “ConstructionDive“ highlighted billions of dollars in deferred maintenance projects to public buildings and infrastructure across the U.S. that could have potentially been avoided with proper maintenance management in place.

One such project involves a $10 million bond election that was awarded to Watsonville, Calif., city leaders to address deferred maintenance issues for the city’s roads, parks and public library. Other construction initiatives include the development of a new nature center, renovating and maintaining numerous city trails, and upgrading roads and repairing streets to remove potholes. Construction is scheduled to begin in 2024, and the project’s consultants say the final cost projection could be as high as $93 million.

The Minnesota Department of Veterans Affairs’ Hastings campus will also address deferred maintenance issues by demolishing and replacing at least five of its residential buildings with one large housing facility. A planned construction project to replace the administrative facility could cost as much as $221 million, and construction is expected to begin in 2026.

Ways to Avoid Deferred Maintenance

Deferred maintenance can cause companies to waste thousands of dollars annually due to a lack of consistent and proactive repairs. Fortunately, there are a number of ways to avoid this:

• Conduct an audit of current maintenance projects and processes: A maintenance audit is designed to help organizations identify solutions to maintenance-related problems. This will help identify root causes of why work orders may be getting backlogged and what steps can be taken to improve processes and eliminate barriers.
• Log maintenance tasks using CMMS software: Coast has set itself apart from other CMMS software by offering customizable fields throughout the app so users can manage their maintenance operations in accordance with their individual needs.
• Track maintenance tasks and assign them accordingly: This can allow your company to stay on top of emergencies and reactive work while also prioritizing preventive maintenance.
• Set up preventative maintenance tasks: Instead of waiting for something to go wrong and reacting to it, preventive maintenance involves scheduling routine checks and regular maintenance activities — for example, lubrication, adjustments and replacements — to keep assets in optimal working condition.
• Get more funding: In order to manage finances more effectively, your company needs to work with its financial team to secure additional funding. A software’s statistics dashboard can do this by compiling critical data that can convince executive leadership that a budget increase is needed to save money and reduce overall deferred maintenance.