Creating, managing, and getting approval for the lab’s budget is one of the most important and difficult responsibilities for a lab manager. An important part of the budgeting process is taking proper care of the equipment, instruments, and tools in the lab. Repair and maintenance are often one of the top five costs for labs. For most labs there isn’t enough budget to cover all the complex equipment with service contracts. Lab managers need to make effective, data-driven decisions on how to best use the available budget and serve the lab’s key stakeholders.
Labs have three options to take care of their equipment—do it themselves, pay for service at the time of need, or secure a service contract to cover repairs and maintenance at a pre-determined price. Most labs use a combination of all three approaches based on the complexity of the equipment, the knowledge of the staff, and the size of the budget. It is important to remember that all three will have a cost. Doing repair and maintenance internally will take staff time, which is the most expensive budget item for a lab and still requires the purchase of parts and standards.
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Lab managers can use the data available to make good hypotheses about the best places to spend time and money on repairs and maintenance. The better they can support decisions with data, the more likely their hypotheses will stand true, and the more likely they’ll get approval for these repair and maintenance investments from line management.
Historical service records
It is important to document repair and maintenance events around the lab. Most quality management systems require documenting and tracking all changes to the instruments and equipment in the lab. These records should document each event, the duration of downtime, the cost of the work, and the time invested by the lab to do the work. The historical record will enable the lab to understand the frequency, duration, and cost of each service event.
If the equipment is already covered under a service contract, document any costs in addition to the contract, and obtain from the vendor what the costs would have been without the contract.
Equipment usage
Equipment usage data helps the lab understand the intensity and need for each piece of equipment. Instruments with high usage often suffer greater wear and tear and are likely to require service more frequently. Instruments with low demand are likely to be lower priority for getting service when they breakdown.
Equipment usage data will also illuminate what instruments are most critical to delivering the lab’s mission and purpose. Equipment that is highly important to deliver for stakeholders will have high priority for service when they encounter performance problems.
Age and condition data
Older instruments are more likely to break down and fail than newer instruments. Keeping an up-to-date asset inventory will allow the lab to track and trend failures across similar instruments and ensure that equipment receives the preventive maintenance they require to keep working properly and extend their useful life.
Outcome assessments
Lab managers can improve their decision-making by adding an outcome assessment to each service event. It is important to be candid about the assessments. Document the assumptions, decisions made, and the quality of the outcomes. These assessments will add depth and color to the historical service records. Tracking the assessments will help to improve decisions regarding how to support the existing assets.
Cost versus benefit analysis
Once all these data have been investigated, the lab manager can conduct a cost-benefit analysis. This involves comparing different scenarios for a specific item across the different service options. It is important to compare specifics like the cost, the duration of the downtime, the response time for service, the time invested by lab staff, and the expected quality of the outcome. All the benefits can be monetized, so that a return on the cost invested can be directly compared.
Putting tips into practice
Here is a short case study that demonstrates the effectiveness of following the strategy outlined above.
A lab runs more liquid chromatography (LC) analyses than any other technique. A key stakeholder who supports the lab financially expects to receive LC data with a three-day turnaround time. The lab has a fleet of eight LC instruments, which range in age from five to 15 years old. Last year, the lab did most of the service themselves. They spent over $20,000 on parts and had to bring in a service provider three times for issues beyond their repair skills for another $35,000. In addition, a key analyst who did much of the repair work is planning to retire near the end of the year. Also, the lab fell behind on work due to spending their time servicing the instruments. This caused friction with their existing stakeholder and prevented them from taking on new work worth at least $50,000 from a potential new stakeholder.
This year the lab is exploring service contract options. One option includes full coverage of repairs with a response time of two days or less and annual preventive maintenance for each instrument. The cost is $75,000. Another option is to purchase service on demand when issues arise. When comparing their service records for the last year to service on-demand costs, they would likely have to pay more than $90,000.
Although the service contract represents additional cost for the lab, the loss of significant internal knowledge, the ability to reduce the risk of angering their key stakeholder, and the ability to use the lab staff more effectively to address stakeholder needs pushes the lab manager to propose the service contract to line management. The careful cost and risk analysis demonstrates the benefits, and it is approved.
