Justifying Your Rebuilds – How to talk to Accountants

Rebuild

Equipment rebuilds can be expensive.  However, that is a cost of doing business.  Sometimes they can be capitalized and other times they can’t, it depends on your accounting rules and whether or not you are increasing the life of the machine beyond its original design.  If the rebuilds are routine maintenance, you generally have to expense those items, and that can be hard to put in the budget.  If the rebuild will increase the machine life and you can capitalize it, it always helps to show a savings or increase in performance to help get the capital approved.  Either way, it is valuable to show people what you save when you complete a rebuild.

The other consideration is to determine if the rebuild is worth the money.  If you don’t see any significant improvement in the machine after the rebuild and the machine cost isn’t considerably high, why rebuild it?  Just replace it.  That can be the solution sometimes.

I have attached a worksheet that takes into account some of the simple things that can be used to calculate the value of a rebuild.  Often times we forget to include the labor portion of downtime or even the additional income that can be generated on the machine if it is capacity constrained.  Those are some of the things considered in this worksheet.

Rebuild Justification

I haven’t locked it, so feel free to modify the worksheet for your own use.  I would be interested in the feedback of anyone that tries this out.  I am always open for suggestions and improvements.  If anyone has created something similar or has a different resource, please feel free to comment with those as well.

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