[Themaintainers] Re proper accounting and budgeting for maintenance costs

[Stewart Brand]

The note below from David Albrecht is dead on.

There must be good articles, papers, and BOOKS on the subject of sensible budgeting and funding for maintenance—ideally of all sorts, as well as infrastructure.

What sources do people here recommend?

		—Stewart Brand

> 
> Message: 1
> Date: Sun, 4 Apr 2021 21:03:06 -0700
> From: David Albrecht <albrecht.dr at gmail.com>
> To: Melinda Hodkiewicz <melinda.hodkiewicz at uwa.edu.au>
> Cc: "themaintainers at lists.stevens.edu"
> 	<themaintainers at lists.stevens.edu>
> Subject: Re: [Themaintainers] Maintenance engineering coursework?
> Message-ID:
> 	<CACFrA1PDgF7GCw_RT=6fLmQxwSy1N714WdYwSBuZXyoNt11u7A at mail.gmail.com>
> Content-Type: text/plain; charset="utf-8"
> 
> Rental property operator and software engineer here.
> 
> I don't think a course like this is complete without some discussion of
> accounting. At the risk of stating the obvious, accounting is the
> accumulated body of knowledge on how to quantify economic activity.
> Probably half if not more maintenance problems are ultimately rooted in
> poor accounting, specifically focusing too much on cashflow and not enough
> on the balance sheet.
> 
> Simple but obvious example to illustrate the point. A municipality spends
> $1 million on a new road with an estimated lifetime of 20 years. Next year,
> they collect $500k in tax revenue and spend $475k. Yay, a surplus! Cut
> taxes! Except the simple math of $1 million/20 years for our road shows you
> need to be tracking the $50k annual wear and tear...somewhere. Most
> organizations -- many municipalities and unsophisticated rental property
> operators -- don't do this well, and are caught short when a major capital
> item hits end-of-life, causing them to scramble to get a loan and fall
> farther and farther into debt they have no way to service.
> 
> I think the solution is to emphasize a culture of continuous, incremental
> capital replacement in an organization. I haven't seen too many
> organizations (especially in the public sector) with the discipline to
> accumulate huge piles of cash for lumpy capital spending, without
> shenanigans taking place that cause the money to get redirected for other
> short-term uses. I'd love to know if I'm wrong about this.
> 
> On Sat, Apr 3, 2021 at 5:02 PM Melinda Hodkiewicz <
> melinda.hodkiewicz at uwa.edu.au> wrote: