How to Know When the Foundation Should Be Repaired as Opposed To Replaced
Whether as an aim of asset management and decision support processes the differentiation between repair and replace is central across in industries.repairreplacement (ad)
Definition & Key Differences
Much like we have to repair an item. Repair is the act of mending something, such as a piece or arrangement’s fractures and faults in order that it give better outcome after words. Can consist of repair, mending or it is removing damage so that the item can be used. This refers, for example, to repairing a car by hammering out the dent or replacing only an unserviceable part rather than scrapping it all12.
On the other hand, replacement is getting rid of an old item and making a new one. This is usually done when the costs to repair are greater than an assigned limit making repairs economically unfeasible for that article34.
Economic Considerations
The Million Dollar Question – Repair or Replace? There are several economic considerations that weigh on this all-important question.
Cost analysis: A good rule of thumb is the “50% Rule.” If it will cost more than 50% to repair or replace, it may be time to consider replacing. This latter version of the remedy is commonly employed in commercial real estate or asset management135.
Depreciation-analysis: Calculating the depreciation of a certain asset, also have good knowledge about present value. Once the remaining value of an asset is less than its cost to service, refurbish or repair then in comparison replacement becomes a more attractive proposition46
Practical Applications
In the real world, for example when performing maintenance on vehicles or managing commercial property… a decision to repair things vs replace them may be driven by:
Functionality and Safety- If repairing an item would incomplete the way that it functions or is no longer safe to use, higher short-term costs associated with a new one are preferred5.
Long-term Value: Often, a new investment in an asset can deliver better long-term benefits including efficiency gains and reduced maintenance costs over the longer term26.
In summary though both repairing and replacing are the important components of asset management opting one depends on economic efficiencies, safety requirement along with long terms benefits.