Deferred maintenance

Deferred maintenance is the practice of postponing maintenance activities such as repairs on both real property (i.e. infrastructure) and personal property (i.e. machinery) in order to save costs, meet budget funding levels, or realign available budget monies. The failure to perform needed repairs could lead to asset deterioration and ultimately asset impairment. Generally, a policy of continued deferred maintenance may result in higher costs, asset failure, and in some cases, health and safety implications.

The accounting standard-setter for the U.S. Government (www.FASAB.gov) in its Statement of Federal Financial Accounting Standard 6, defines deferred maintenance in this way, “Deferred maintenance” is maintenance that was not performed when it should have been or was scheduled to be and which, therefore, is put off or delayed for a future period. For purposes of this standard, maintenance is described as the act of keeping fixed assets in acceptable condition. It includes preventive maintenance, normal repairs, replacement of parts and structural components, and other activities needed to preserve the asset so that it continues to provide acceptable services and achieves its expected life. Maintenance excludes activities aimed at expanding the capacity of an asset or otherwise upgrading it to serve needs different from, or significantly greater than, those originally intended.

An example of deferred maintenance for a household would be putting off the recommended 1-year checkup on one's car, or putting off the repairs recommended at that checkup: the car will not run as smoothly or efficiently and will be more likely to break down or crash. The term is usually used in the context of large organizations or governments, however.

Maintenance competes for funding with other programs and is often deferred because appropriations are not available or were redirected to other priorities or projects.

Deferred maintenance is often not immediately reported -- and sometimes, not at all. Maintenance which is deferred because of insufficient funding may result in increased safety hazards, poor service to the public, higher costs in the future, and inefficient operations.

References

• Federal Financial Accounting Standard 6, U.S. Federal Accounting Standards Advisory Board.

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