Internal maintenance employee cost: how much of the budget is your own people

A contractor-heavy maintenance strategy can look cost-effective on the surface, until someone adds up all the internal salaries, benefits and overheads running alongside it. A heavily insourced operation can look expensive, until you work out what contractors doing the same work would actually charge.

Knowing how much of your maintenance spend is your own people, as opposed to materials, contractors or services, is the first step to managing that balance on purpose rather than by accident.

What it actually measures

Internal maintenance employee cost is the total burdened cost of all your own maintenance employees, direct craft workers and indirect support staff alike, expressed as a percentage of total maintenance cost. "All your own employees" is meant literally, and is easy to clip too short: it spans the blue-collar crafts, yes, but also the salaried supervisors, planners, engineers and clerks, and leaving the salaried supervision out is one of the commonest ways this number comes out wrong. It includes base pay, overtime and benefits such as employer taxes and insurance, and it includes labour for outages, shutdowns and end-of-life asset replacements. It excludes contractor costs, janitorial costs, and any labour for plant expansions.

How to work it out

Internal maintenance employee cost (%) = (Internal employee cost ($) × 100) / Total maintenance cost ($)

A plant with $7,920,000 of internal craft labour and $2,260,000 of maintenance staff overhead, against a total maintenance cost of $21,500,000:

Internal maintenance employee cost = ($10,180,000 × 100) / $21,500,000 = 47.3%

Nearly half the budget goes on internal employees. Whether that is appropriate depends entirely on how the site compares with its peers and on what the contractor proportion looks like beside it.

What the number is really for

On its own, the figure is just an accounting split. Its value appears the moment you set it beside the contractor share, because together they frame one of the biggest strategic choices a maintenance organisation makes: how much of the work to keep in-house and how much to buy in. That choice deserves a clear-eyed look, because the savings promised by wholesale outsourcing are often more apparent than real. A contractor frequently looks cheaper not because contract labour is inherently cheaper, but because the contractor plans the work, schedules it and strips out the waste, the very disciplines an in-house team could adopt itself. Knowing precisely what your own people cost, and what they deliver for it, is what lets you judge whether a contractor is genuinely cheaper or merely better organised, and whether the right answer is to outsource the work or to fix the planning that would make your own team just as efficient.

What good looks like

No industry benchmark has been established, and this is one metric where that absence comes with an explicit warning. Because cost structures, wage rates and outsourcing strategies vary so wildly between companies, comparing your figure to another firm's is genuinely treacherous, and the sensible guidance is to be deliberately cautious about it. Use it instead for internal trending and for comparing sites within your own organisation, where the definitions can be held steady. A rising share over time may simply reflect wage growth or the deliberate repatriation of previously contracted work, which is not a problem at all, merely a change worth understanding.

Where it can mislead you

• Include all internal maintenance employees, direct and indirect, and do not forget the salaried supervisors and support staff; their omission is the classic mistake.
• Exclude janitorial, contractor and capital-expansion labour. Inconsistent treatment of those items is the single most common source of error when comparing sites.
• Be especially cautious using it for cross-facility benchmarking against other companies, since no formal target exists and cost structures vary enormously.
• A rising percentage is not automatically bad news; read it next to the contractor share to understand what actually shifted.

Internal maintenance employee cost gives you the baseline for every labour-strategy decision: how large your own people-cost is relative to everything else you spend. Get that number clearly, with nothing quietly left out, and the conversation about the right mix of internal and contract resource can finally be had with facts instead of impressions.