Estimate your annual maintenance budget from replacement asset value (RAV) using the 2–5% rule of thumb. Enter what your equipment would cost to replace today, pick a condition, and get a budget figure plus a suggested split across labor, parts, contractors, and capital repairs.
Newer, well-maintained plants typically run near 2% of RAV; average operations around 3.5%; older or mostly reactive plants closer to 5%. It's a starting point — your work-order history is the real answer.
Estimated annual maintenance budget (3.5% of RAV)
$70,000 / year
Typical split — adjust to your history.
The % of RAV rule gets you in the right range. A year of real work-order history — labor hours and parts per asset — tells you exactly where the money goes and where next year's budget should move.
RunTight tracks labor and parts per work order, so next year's budget comes from data — free for teams up to 25.
When a maintenance team has no cost history to build a budget from, the most common starting point is a percentage of replacement asset value (RAV). The convention, used across manufacturing and facilities for decades, is that annual maintenance spend typically lands somewhere between 2% and 5% of RAV. Plants with newer equipment and a strong preventive program tend to sit near the bottom of that range; plants running older machines mostly reactively tend to sit near the top, because emergency work is consistently more expensive than planned work — overtime, expedited parts, and collateral damage all add up.
There is no single authoritative source for the number — it's an industry convention that has held up because it keeps first-year budgets from being wildly wrong in either direction. Treat it as a sanity check and a starting range, not a benchmark to hit.
RAV is what it would cost to replace everything your team maintains at today's prices — not what you paid for it, and not the depreciated value on the balance sheet. A ten-year-old CNC machine might carry a near-zero book value while costing $400,000 to replace, and it's the $400,000 that predicts what maintaining it costs. To estimate RAV: list your significant assets, price each at current replacement cost including freight and installation, then add 10–20% to cover the long tail of small equipment nobody lists individually. A rough RAV is fine — the rule of thumb is a range, not a precision instrument.
The % of RAV rule knows nothing about your duty cycle, your operating environment, your crew, or how much deferred maintenance you're carrying. Two plants with identical RAV can reasonably have budgets 2× apart. The way out is data: once you track labor hours and parts costs against each work order, next year's budget comes from what your equipment actually consumed, asset by asset — and you can defend every line of it. That's the same shift covered in the maintenance KPIs worth tracking on a small team, and it's a big part of why tracking maintenance in a spreadsheet quietly costs more than software — the spreadsheet never tells you where the money went.
However you arrive at the total, it helps to plan it in four buckets. Internal labor (~40%) — wages, benefits, and overtime for your own techs. Parts & consumables (~30%) — spares, lubricants, filters, belts, and everything else the storeroom issues. Contractors (~20%) — specialty trades and work you outsource, from crane inspections to controls. Capital repairs reserve (~10%) — a set-aside for the one big rebuild or replacement each year that would otherwise blow the budget. These proportions are typical, not universal — adjust them to your own history as soon as you have one.
Say a mid-sized shop tallies its equipment at a replacement value of $2,000,000 and the fleet is in average condition, so it picks 3.5% of RAV. That gives an annual maintenance budget of $70,000. Split into the four buckets, that's roughly $28,000 for internal labor, $21,000 for parts and consumables, $14,000 for contractors, and $7,000 held in reserve for capital repairs. If the shop's actuals come in at $95,000 the following year, that's not a failed budget — it's a signal, and the work-order history will show whether the gap was one bad asset, too much reactive work, or an RAV estimate that was simply low.
A widely used rule of thumb puts annual maintenance spend at 2–5% of replacement asset value (RAV). Newer, well-maintained plants tend to sit near 2%, average operations around 3–4%, and older or mostly reactive plants closer to 5% or above. It's a planning range, not a target — your own work-order history is a far better guide once you have it.
RAV is what it would cost to replace all the equipment you maintain at today's prices — machines, HVAC, utilities, material handling, and installed infrastructure. It is not book value or depreciated value, and it excludes the building shell and land unless your team maintains them. A quick estimate: list your major assets, price each at current replacement cost including installation, and add 10–20% for the small stuff.
Track actual labor hours and parts costs per work order for 6–12 months, then rebuild the budget bottom-up from that history. You'll see which assets consume the budget, how much goes to reactive versus preventive work, and where the rule of thumb was off for your plant. Each year of data makes the next budget more defensible.
RunTight is free for up to 25 users — the full CMMS, no credit card. Pro adds cost reports and advanced analytics for $49/month.
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