# Repair vs Replace Equipment Calculator for SAP PM Asset Decisions

> Source: https://netray.co/tools/sap-pm-repair-vs-replace-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Compare yearly maintenance plus downtime cost of an old asset to the equivalent annual cost of a replacement, with a sweep of rising repair cost.

## Category

sap

## Erp

SAP PM

## Industry

Manufacturing

## Audience

- Maintenance manager
- Asset manager
- Plant controller

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Current asset maintenance cost per year

**Key:** old_maint

**Type:** number

**Default:** 42000

**Min:** 0

**Step:** 1000

**Unit:** per year

**Help:** Labor, parts and contractor cost from order settlement history for the equipment.

#### Current asset downtime per year

**Key:** old_down_hours

**Type:** number

**Default:** 110

**Min:** 0

**Step:** 5

**Unit:** hours

#### Cost of downtime

**Key:** down_cost

**Type:** number

**Default:** 650

**Min:** 0

**Step:** 25

**Unit:** per hour

**Help:** Lost contribution margin plus idle labor for each hour the process is stopped.

#### Replacement installed cost

**Key:** new_price

**Type:** number

**Default:** 260000

**Min:** 1

**Step:** 5000

**Unit:** cost

#### Resale value at end of life

**Key:** salvage

**Type:** number

**Default:** 30000

**Min:** 0

**Step:** 1000

**Unit:** cost

#### Economic life of new asset

**Key:** life

**Type:** slider

**Default:** 12

**Min:** 3

**Max:** 30

**Step:** 1

**Unit:** years

#### Discount rate (cost of capital)

**Key:** rate

**Type:** slider

**Default:** 9

**Min:** 1

**Max:** 20

**Step:** 0.5

**Unit:** %

#### New asset maintenance per year

**Key:** new_maint

**Type:** number

**Default:** 9000

**Min:** 0

**Step:** 500

**Unit:** per year

#### New asset downtime per year

**Key:** new_down_hours

**Type:** number

**Default:** 20

**Min:** 0

**Step:** 5

**Unit:** hours

**Outputs:**

#### Annual cost of keeping the old asset

**Key:** old_total

**Expr:** old_maint + old_down_hours * down_cost

**Format:** currency

**Primary:** true

#### Capital recovery factor

**Key:** crf

**Expr:** (rate / 100) / (1 - pow(1 + rate / 100, 0 - life))

**Format:** decimal

#### Annualised capital cost of the new asset

**Key:** capital_eac

**Expr:** (new_price - salvage / pow(1 + rate / 100, life)) * crf

**Format:** currency

#### Equivalent annual cost of the new asset

**Key:** new_total

**Expr:** capital_eac + new_maint + new_down_hours * down_cost

**Format:** currency

**Primary:** true

#### Annual advantage of replacing (negative = repair)

**Key:** saving

**Expr:** old_total - new_total

**Format:** currency

**Chart:**

#### Old vs new annual cost as repair spend rises

**Type:** line

**X:** old_maint

**From:** 0

**To:** 120000

**Steps:** 25

**Series:**

- old_total
- new_total

**Disclaimer:** Simplified equivalent annual cost model before tax. It ignores tax depreciation, inflation, capacity changes and project risk.

## Content

**Intro:** At some point an old machine costs more each year than a new one would. This calculator puts both on the same annual basis so you can see where repair stops being the cheaper choice, using cost data you already have in SAP PM.

**Sections:**

#### How to use it

**Body:** Pull the last two to three years of maintenance cost for the equipment from order settlement (settled to the equipment, cost center or asset) and total the breakdown hours from notifications. Enter your cost of downtime, the replacement quote, expected resale value, economic life and cost of capital. The tool returns the annual cost of keeping the asset, the equivalent annual cost of the new one and the difference.

**Bullets:**

- Use the trend, not the best year, for old asset cost.
- Include contractor and emergency premiums in repair cost.
- Use a realistic downtime cost, not only labor idle time.

#### The equivalent annual cost method

**Body:** The new asset's capital cost is spread across its life with the capital recovery factor, r divided by one minus (1 plus r) to the minus n. The resale value is discounted back and netted off the price. Add yearly maintenance and downtime to get the equivalent annual cost. Because both sides are annual figures, assets with different lives are comparable. The chart shows the break-even repair spend where the lines cross.

#### Limits and common mistakes

**Body:** The most common error is comparing the old asset's maintenance only with the new asset's price. That ignores downtime and the time value of money. Another is projecting last year's repair cost forward when age-driven cost usually accelerates. Also test the answer with a sensitivity run: change downtime cost and the discount rate and see whether the recommendation holds.

**Bullets:**

- Include spare parts obsolescence for old controls.
- Add safety or compliance gaps that the new asset closes.
- Treat the result as one input to a capital request, not the decision itself.

**Cta:** If you want a per-equipment cost and downtime history pulled from SAP PM to feed this analysis, Netray can build a read-only report on your own infrastructure.

**Faq:**

#### What is equivalent annual cost?

**Answer:** Equivalent annual cost converts the purchase price, resale value and running costs of an asset into a single yearly figure using a discount rate. It lets you compare assets with different lives on an equal basis.

#### Where do I find maintenance cost per equipment in SAP?

**Answer:** Settle maintenance orders to the equipment or functional location and use order reports such as the cost analysis in the maintenance information system. Hours and breakdowns come from notifications.

#### How do I estimate the cost of downtime?

**Answer:** Use lost contribution margin per hour of the constrained process plus idle labor and any penalties. If the machine is not a bottleneck, downtime cost may be lower because other equipment can absorb the load.

#### Does this include tax?

**Answer:** No. The model is pre-tax and keeps inputs simple. Your finance team should rerun the final case with depreciation, tax and inflation assumptions.

## Search terms

repair or replace calculator, equipment replacement analysis, equivalent annual cost calculator, maintenance cost vs replacement, sap pm cost history equipment, asset replacement decision, lifecycle cost of equipment, replace vs repair break even

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