How Much Is Equipment Downtime Costing Your Workplace?

by Glenn Hicks on June 18, 2019

Equipment downtime isn’t just frustrating; it’s downright expensive.

Just think about what happens when the internet goes down in your office. Even if it’s only for 15 minutes, that’s 15 minutes when no one is able to work or respond to important customer issues.

And large-scale equipment downtime and outages can bring production to a screeching halt. But what’s the total price you’ll pay for unexpected equipment downtime? These startling statistics show just how costly equipment downtime can be — and how to avoid it.

5 startling statistics about unplanned equipment downtime

  1. Over 80 percent of companies have experienced an unexpected outage within the past three years.
  2. The average cost of unplanned equipment downtime is $260,000 per hour, according to research conducted by Aberdeen.
  3. The average equipment outage lasts four hours, costing a company $1,040,000 each time, according to Machine Metrics.
  4. The five industries most impacted by equipment downtime in terms of revenue lost per hour are pharmaceuticals ($2.1 million); insurance ($2.5 million); information technology ($3.3 million); telecommunications ($4.6 million); and financial services ($8.2 million).
  5. Nearly three-fourths of organizations say zero unplanned equipment downtime is now a top priority or the number one priority for their company.

The true cost of equipment downtime

The true cost of equipment downtime is even more expensive than you might initially guess. There are many different costs associated with equipment downtime, and they add up quickly.

Equipment downtime causes a ripple effect, hindering other critical functions and often limiting profitability. As part of a recent report, Information Technology research firm Ponemon Institute identified the ten primary categories of expenses associated with unplanned equipment downtime.

The list below accounts for all the direct, indirect, and opportunity costs that are associated with equipment downtime and illustrates just how catastrophic any unexpected asset failure can be.

1. Detection costs

The detection cost factors in expenses related to the initial discovery and investigation of the equipment downtime incident. This includes the time, resources, and personnel required to identify and diagnose the issue as well as the time, resources, and personnel required to correct it.

2. Containment costs

Expenses associated with the activities that enable the company to reduce the impact of the unexpected failure and prevent the malfunctioning equipment from affecting other assets are considered containment costs. This category of equipment downtime costs also includes the cost of implementing temporary fixes until a permanent solution can be found.

3. Recovery costs

Recovery costs are the costs associated with restoring business operations to their baseline. For example, in a situation where a company needs to recover data lost as a result of the failure that led to equipment downtime, the costs would include the time employees needed to dedicate to locating and installing backups.

4. Ex-post response costs

“Ex-post” is Latin for “after the fact.” These costs include all incidental expenses related to the disruption itself and to the subsequent recovery — or, the recovery costs that occur after the fact. Some examples of ex-post response costs are legal expenditures and regulatory fines.

5. Equipment costs

Equipment costs are costs related to repairs and replacements, including parts and delivery. This also includes the cost to fix damages to other assets that occurred as a result of an asset’s malfunction or failure leading to unexpected equipment downtime.

6. IT productivity loss

In the event of an issue related to technology, IT productivity loss includes the financial impact of the IT team’s inability to complete their regularly performed duties, as well as any overtime that was required in order to resolve the issue.

7. User productivity loss

Similar to IT productivity loss, user productivity loss includes the cost of lost time from employees who are unable to perform their job as a result of equipment downtime. It also includes the cost of any overtime needed to compensate for the lost output related to the issue.

8. Third-party costs

Third-party costs are any expenses associated with the use of contractors, consultants, and other specialists that the company must bring in to resolve the issue from equipment downtime. If the problem is serious enough, third-party costs would not only include the expenses of outside parties who assisted with the equipment, but also the costs of hiring a mediator or Public Relations firm to manage the subsequent fallout.

9. Lost revenue

This cost is the total revenue that was lost as a direct result of the equipment downtime. Depending on the industry and the type of asset failure, this could include any purchases customers could not complete, the products that could not be manufactured, or sales contracts that could not be closed.

10. Business disruption

This number is the total cost of the equipment downtime, including the lost revenue, lost productivity, the cost of recovery, any damage to the company’s reputation, missed deadlines, customer churn, in addition to any long-term damage to business systems and processes.

How to avoid unexpected equipment downtime

The most effective way to prevent having unplanned equipment downtime, asset malfunction, or failure is to develop an effective preventive maintenance strategy. Preventive maintenance enables you to proactively optimize the operation of all assets, from HVAC and lighting systems to printers and breakroom appliances.

As with most areas of the business, staying ahead of issues goes a long way in preventing problems of all sizes. Plus, it also elongates the life of your equipment and improves the experience for your team, end-users, and your customers.

There are five steps to executing a preventative maintenance strategy that reduces equipment downtime:

  1. Define the problem
  2. Measure current asset performance to establish a baseline
  3. Identify and explore possible causes of the problem
  4. Analyze the best approach
  5. Calculate how well your current approach has been working and adjust as needed

To make the process even easier, consider investing in facility maintenance software. With robust facility maintenance software, you can:

  • Manage preventive maintenance in a centralized queue
  • Track the performance of various assets and identify those nearing the end of their useful life
  • Run reports of service requests by asset type or location to identify patterns
  • Set up automated alerts when it’s time to schedule maintenance

You can’t afford to let unplanned equipment downtime cost your company money, time, and resources — especially if you can prevent it altogether. And in this case, an ounce of prevention is worth a pound of cure.

At the end of the day, unexpected equipment downtime comes at much too high a cost — and since it’s avoidable, steps should be taken proactively versus reactively.

See how investing in our facility maintenance software can help you avoid expensive equipment downtime problems later. Request a free demo today.


Glenn Hicks

A member of the Business Development team, Glenn has years of experience with business process improvement on the Commercial Real Estate and Facilities Management sides.

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