Do maintenance costs only involve annual checks and repairs or does it also include any replacement costs (in the case of batteries for example)
I am not sure if you can find a definite answer to this. Ideally, this is somehow specified in the problem or you can clarify with someone (if it seems material to the case - actually a big part of the consultant's job is to decide what is and what is not to avoid spending too much time on less relevant details).
That being said, I would probably treat battery replacement like any other part replacement (you can separate out the cost of the batteries/parts/other materials from labor costs if relevant) if it happens only once in a while. On the other hand, if a device is powered by batteries that have to be replaced daily etc. I would probably treat them as other consumables (think disposable gloves, welding electrodes…).
They both are maintenance costs - however, checks & repair are more of an opex item and replacement costs are more of a maintenance capex item.
However, depending on the case you can draw the line anywhere. Make sure to confirm with the interviewer.
Hi there,
Yes, replacement costs (parts, batteries, etc.) are included in maintenance costs.
Remember, maintenance costs are difference to capex, in that capex costs have to permanently increases the value of an asset.
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