Every company's footprint is unique in their business for labor cost and revenue stream. Naturally, actual downtime cost and downtime history will be different for every company. However, for all companies there are three (3) steps needed to calculate downtime cost.
After considering all factors, the true cost of downtime will be known and it may be a shock the first time you calculate it.
Unless a company has actually tracked and calculated the real losses from downtime in the past, they have no monetary value to consider return on investment (ROI) if they invested in reducing the frequency of downtime and outages each year.
Here is a simple equation to calculate the average labor cost of an outage:
Labor Cost = (N x A x C x T) Where:
Total Labor, Equipment, and Miscellaneous Cost of Outage
Number of Personnel Affected by Outage
Percentage of Time Personnel Were Affected by Outage
Loaded Labor Rate Per Hour
Total Hours of the Outage
Total Labor Cost
Use the following equation to calculate the average loss revenue loss from an outage:
Lost Revenue = (G / H x P x T) +M Where:
Total Loss of Revenue for Outage
Gross Yearly Revenue
Total Yearly Business Hours
Average Revenue Per Hour
Total Manhours for the Outage
Total loss Revenue
The miscellaneous category covers all intangible costs from outage.
Some types of electrical outages:
How do electrical companies report outages to state PUCOs’?
Each state has a different set of rules on just what an electrical outage from the utility company means and when it is required to report an outage. Many different references for the electrical utility on line averages are available. It seems that if you average state across the board a ten (10) year uptime average is around 99.5%. However, that number is only for the reported outages that the electrical utility is required to report. Below are the electrical utility outage requirements for the state of Ohio.
Please note short durations and individual outages are not required to be reported to the Ohio PUCO for electrical service continuity rating.
Ohio PUCO administration Code
Chapter 4901:1-10 Electric Companies
(1) Two thousand five hundred or more customers in an area for a projected or actual period of four hours or more.
(2) One hundred or more customers in an area for a projected or actual period of twenty-four hours or more.
(3) A facility of any telephone company, electric light company, natural gas company, water-works company, or a sewage disposal system company, as defined in section 4905.03 of the Revised Code and including a company that is operated not-for-profit, or owned or operated by a municipal corporation, when an interruption to that facility for a projected period of four hours or more, affects or will affect public safety.
(4) Any police department, fire department, hospital, or countywide 9-1-1 system, for a projected period of four hours or more.
As used in this paragraph, "area" means the electric utility's certified territory within a county or all adjoining municipalities and townships in an electric utility's certified territory.
Five Year Review (FYR) Dates: 09/30/2014 and 09/30/2019
Promulgated Under: 111.15
Statutory Authority: 4905.22, 4905.04, 4928.06, 4928.11
Rule Amplifies: 4905.06, 4905.22, 4905.28, 4928.11
Prior Effective Dates: 7/1/99, 9/18/00, 1/1/04, 6/29/09
Using data that the electrical utilities report to each state Public Utility Commission Office we get a ten (10) year average uptime of around 99.5%. However, because of the reporting requirements this could very well be a bogus number for individual facilities and might not represent a true outage percentage for your facility.
Even if we take, the outage percentage at 100% face value depending the timing of the outage a company could start every year in the red 0.05% just from electrical utility failures. Remember that the electrical utility company is the cause of only 20% of electrical power disturbances that cause electrical problems and the facility itself is responsible for 80% of electrical power disturbances that cause electrical problems. This could mean that your company has the potential over ten (10) years to start each year a MINIMUM of 2.5% in the red.