O&M (Operation and Maintenance)

Definition

Operation and Maintenance (O&M) refers to the costs associated with operating an item or system (such as electricity) and the costs to maintain it in working order (such as replacing worn belts).

Purpose

O&M costs are crucial for budgeting and financial planning, ensuring that systems and equipment remain functional and efficient over their operational life. This includes routine maintenance, repairs, and operational expenses required to keep assets running smoothly.

Examples of Use

• Building Systems: O&M costs for HVAC systems include electricity for operation and periodic maintenance like filter replacements and belt adjustments.
• Manufacturing Equipment: Operational costs for machinery and regular maintenance to prevent breakdowns and extend equipment life.
• Infrastructure: Costs related to operating public infrastructure, such as roads and bridges, and maintaining them to ensure safety and functionality.

Related Terms

• Life Cycle Costing: The total cost of ownership over the life of an asset, including O&M costs.
• Preventive Maintenance: Routine maintenance activities aimed at preventing equipment failures.
• Operational Costs: Expenses related to the day-to-day functioning of a system or organization.

Notes

• Budgeting: Accurate estimation of O&M costs is essential for effective budgeting and resource allocation.
• Efficiency: Regular maintenance can improve operational efficiency and reduce long-term costs by preventing major repairs.