When your AC breaks down, everything from your comfort and productivity to your bottom line is disrupted.
Replacing an AC is the larger investment, so many home or business owners choose to repair the equipment instead of replacing it. But the costs that go along with frequent breakdowns — lower productivity, defective output, rising labor costs, and unmet schedules — can sometimes be greater than the cost of replacing the equipment outright.
In addition to the obvious replacement cost for a new piece of AC equipment, there are several other factors to take into consideration when deciding whether to repair or replace the AC:
- Ongoing maintenance costs over the remaining life of the equipment
- The impact any repair would have on productivity and quality
- Costs incurred from the equipment downtime
- Health, safety, and environmental costs that come with equipment breakdown
- Training costs ( if any) for a new piece of equipment
- Disposal costs
- Installation costs
1. Analyze the Costs
Always think in the long-term when analyzing the costs of repairing or replacing. For a new piece of equipment, consider the cost of purchasing the equipment, its service life, potential salvage value, operating costs, and any revenue increase it may bring.
For an old piece of equipment, consider its remaining service life, operating costs, market value, and future salvage rate. From these figures, you can determine an annual average cost for each option, which will then be easy to compare.
2. Consider the Age of Equipment
Equipment does not age with grace. The older your machinery, the more extensive repairs it will need. This often translates to higher maintenance costs. As you continue to repair, the machine will give you less and less for your investment of repair. You may want to consider replacing an old malfunctioning piece of equipment with a newer, technologically advanced model that will give you better efficiency and longevity. When your equipment is new, it makes more sense, in many cases, to repair it once it malfunctions.
3. Consider the Cost of Repairs
What is the cost of repairs, and more importantly, how often will you be paying those costs for repairs? Documenting asset repair events provides information on the number and frequency of breakdown events and costs for the repairs. Can you tell if you’re going to continue repairing this equipment several times a year, or will it likely just be a one-time fix?
4. Consider Downtime
What’s the impact of downtime while the asset is being repaired? If it takes several days to repair, and if this happens frequently, you’re looking at too many hours of lost productivity. Consider this when deciding if repair or replacement is better in your situation.
Keep in mind, however, that repairing often takes less time than replacing a machine. Replacing involves waiting for the replacement to arrive, installation, new training, and more. If you’re on an extremely tight schedule and if the equipment is crucial to your process, you may lose too much in production if you take the time to replace it.
5. Consider Safety
Remember that older equipment can cause injury to workers if it malfunctions. Even if you stay up to date on maintenance, equipment wears down as it ages. Thoroughly inspect your machinery before making your decision so you can determine if your current equipment will continue to provide a safe environment for your workers. If it won’t, replacement is the obvious choice. If it is still meeting safety standards, it’s worth comparing the costs of a replacement versus repair.
6. Consider Efficiency
Always think of the long run. How efficient is your machine operating now, and will a simple repair keep efficiency at the level you want, or would a new piece of equipment that uses less fuel, offers newer features, and breaks down less frequently be better for your efficiency and your bottom line?
