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KPI for Measuring of Ratio corrective versus preventive maintenance costs per real estate rental property posted in category Real Estate

WinningKPI - Real Estate - KPI for Measuring of Ratio corrective versus preventive maintenance costs per real estate rental property posted in category Real Estate Oana Boteanu This KPI is for measuring the ratio between the corrective and the preventive maintenance costs spent on the real estate rented property. This is calculated by measuring the two percentages. The real estate agent or company should aim to achieve a healthy ratio between these two figures, as corrective costs are likely to be much higher than maintenance costs. For instance, it will cost more to repair or buy a new shower rather than to maintain the shower.
A ratio where the corrective is much higher than the maintenance may resemble the reason why the profit lowered in a time period.
Hence this KPI can be joined with other cost and performance related KPIs, to give a clearer picture of the real estate agent’s performance. It may also be used in comparing with competition and in advertising campaigns.

Formula:
% corrective costs: % costs

For example, a letting agency may find that the ratios of their maintenance costs was between 75% corrective costs and 25% preventive costs
75%: 25% = 3:1, where for every $1 spent on corrective costs, $1 dollar is spent on preventive.
In this case, the agency may want to level this costs to a 2:1 or 1:1 ratio, until the corrective costs are minimised and the preventive are enough (and lower enough) to maintain the property and maximise profit.

KPI Units: ratio

KPI Time Frame: update annually

Posted by Oana Boteanu | Help to protect community: Flag for moderation

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KPI Expert Example:

A student accommodation agency (for a University) wants to measure the ratio between corrective vs. preventive maintenance costs, for the student houses, over the past year.

Formula is calculated as below:
% corrective costs: % costs

Or can also be measured by comparing:
Total corrective costs: Total preventive Maintenance costs


So,

The total costs that the accommodation office spent on maintenance costs was of $8000.
Total corrective costs: 5000
Total maintenance costs: $3000

Corrective costs %:
5000/8000 x 100 = 62.5 %

Preventive costs:
3000/8000 x 100 = 37.5 %

Hence the formula for the ratio is:
62.5 %: 37.5 % (divide them both by 12.5) = 5:3
For every $5 spent on corrective maintenance costs, $3 dollars are spent on preventive costs.

This can also calculated as:
5000: 3000 (all divided by 100) = 5:3

Oana Boteanu | + | September 13, 2012 at 10:30 am

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