5 STEPS TO CALCULATING THE ANNUAL COST OF MANUAL LUBRICATION
To calculate the manual lubrication costs, we will split the identified parameters related to manual lubrication using the example of a Caterpillar 320 excavator. This machine is used throughout the year at a construction site and is lubricated daily by an onsite technician.
Step 1: How to calculate costs of downtime
To calculate the cost of machine downtime during manual lubrication, we will estimate the value of profits lost using the rental price of a machine. That is the income that would have been accrued if the machine had been in operation. Cost of machine downtime = (rental) cost of machine per hour
Step 2: How to calculate labour costs
Next, we calculate the labour cost per hours of the employee who does the lubrication. Cost of labour for manual lubrication = Labour cost per hour. To make this part of the calculation at a later stage easier, we can combine the first two hourly costs into one:
cost of machine downtime + cost of labor for manual lubrication = (cost of machine + labour cost) per hour
For this scenario, we will estimate that the rental cost per hour for a 22-ton excavator is R840 and the labour cost per hour is R375. If we use these figures in the equation, we get: R840 + R375 per hour.
Step 3: How to calculate the duration of manual lubrication?
The time needed to do the manual lubrication is based on the number of lubrication points and the time needed to lubricate each point. Duration of manual lubrication = Lubrication points * Time to lubricate one point
The Caterpillar 320 excavator has 20 lubrication points. Assuming it takes 1 minute to lubricate one point (i.e. allocate the grease fitting, clean it, connect the manual grease gun, dispense grease, disconnect the gun, and clean grease fitting again), the total time to lubricate the machine will be 20 minutes. Using the conversion that 1min = 1/60, means the duration of manual lubrication = 20 points * (1/60).
However, a study done by a major oil company estimates that 3 minutes is the average time needed to manually lubricate one grease point.
Step 4: How to calculate the frequency
The frequency describes how often per day, week, etc, manual lubrication is done. It usually varies depending on the manufacturer’s recommended service intervals and environmental conditions. In reality, the frequency of manual lubrication depends on technicians’ maintenance activities.
Frequency = 1 “once” / Days between manual lubrication
Step 5: How to calculate the yearly machine usage in days
For total operation days per year, we assume that the machine is used for 220 standard working days (minus weekends and holidays).
In our example with the Caterpillar 320, we consider that the machine is lubricated once each day throughout the year (220 operation days). Thus, going back to our equations, we can calculate as follows: Frequency = 1/1 and Days per year = 220.
Yearly cost of manual lubrication
Having determined the annual cost for the downtime of a 22-ton excavator like the Caterpillar 320 with an hourly rental fee of R840, R375 labour cost, 20 lubrication points, 1 minute to lubricate each point, daily lubrication and a yearly machine usage of 220 days, we can use this to calculate the return on investment.
Cost of manual lubrication per year = (cost of machine + labour cost) * Duration of manual lubrication * Frequency * Days per year
Cost of manual lubrication = (R840 per hour + R375 per hour) * 20 points * (1/60) * (1/1) * 220 = R89, 100.