Correlation of Maintenance Expense With Age of Plant and the Maintenance Penalty in Value Determination

Abstract

A statistical method is proposed for correlating maintenance expense with age of plant. The raw data are in dollars, taken from accounting record of yearly plant installations and maintenance expense. The age distribution of existing plant need not be known. By the use of the derived correlation equation, the maintenance penalty (value decrement caused by rising maintenance expense) is derived. The effect of inflation is also developed.