How To Make Good Proactive Maintenance Decisions

money diceI got a reminder notice in the mail last week from a company whose business is the proactive maintenance of domestic hot water heaters.

Now, you might be thinking: “How could anyone make a business out of that?” Well, the hot water heater in my house, like thousands of others, is a storage type – basically a tank of water heated by gas. But the steel tank has a sacrificial anode installed to protect it from corrosion and therefore extend its life.

I had the anode replaced three years ago. And the letter is to remind me it is now due for inspection. But from past experience, I know the anode will be spent. The cost of a new anode is $150. What to do?

If you’re responsible for keeping hydraulic equipment running, this is the sort of decision you have to make on a regular basis: do I spend a modest amount of money now to avoid an expensive disaster down the track?

In the case of my hot water heater, $150 is not a life-changing amount of money. Still, it would be very easy to sit on my hands and do nothing. After all, replacing the anode will do nothing to enhance its performance; I won’t get a better shower in the morning.

But that’s why it’s called proactive maintenance. Proactive maintenance requires accurate thinking, followed by appropriate action – or in some cases, intentional inaction.

Since ignoring the reminder notice is neither of the above, some accurate analysis is required. My brother-in-law is a plumber, and he reckons if the anode is replaced every 3 to 4 years, the water heater should last at least 12. But it could rust out in as little as 6 without anode replacement. A new unit is around $1200 excluding installation. And Murphy’s Law suggests it will rust out during the Christmas holidays when my Mother-in-law wants to wash her hair. Plus, assuming I can get hold of a plumber at that time of the year, he’ll want a king’s ransom just to show up.

Without factoring in the consequences of my Mother-in-law having to choose between a cold shower or a bad hair day, the numbers are not hard to crunch: without any anode replacements, assuming a service life of 6 years, then after 12 years I will have replaced two water heaters at a cost of $2400 (2 x $1200). If I replace the anode at years 3, 6 and 9 – and the complete hot-water unit at 12 years, the total cost over 12 years is $1650 ($1200 + 3 x $150).  So I am in front by $750 ($2400 – $1650) worth having.

The return on investment (ROI) is even more impressive: I have invested $450 to save $750, and ROI of 67% (750/450 -1 x 100). I won’t get that sort of return by leaving the money in the bank.

But what if my water heater doesn’t make it to the 12-year mark? Say it rusts out in 8 years. Well, based on a 6 year life without anode replacement, and a unit replacement value of $1200, each year of service life extension is worth $200 ($1200/6 = $200).

So say I replaced the anode twice at years 3 and 6 for a total cost of $300 (2 x $150) but only got 8 years out of the unit. Those 2 years of life extension are worth $400. In this case I am only $100 in front after deducting the cost of two anode replacements ($400 – $300 = $100). But even in this worst case scenario I’m still better off.

So based on this analysis I feel confident that getting the anode replaced now (year 6) is a sensible proactive maintenance decision.

“That’s great Brendan, but what’s it got to do with me?” I can hear you thinking. Well, if you’re a hydraulic equipment owner, or work for one, consider this your reminder notice. What proactive maintenance decisions are you putting off or procrastinating about?

Of course, as the above example illustrates, to make informed decisions in these matters you need accurate information about your hydraulic equipment. And that’s another reason to get plugged-in to the resources available at: www.HydraulicSupermarket.com




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