How to Calculate the Cost of Downtime in South African Operations

Unplanned downtime is one of the largest hidden costs in South African mining, manufacturing, and facilities. When a critical asset stops, you lose more than the repair bill: you lose production, pay overtime, rush parts, and sometimes face penalties or compliance risk. To justify investment in maintenance — whether a CMMS, preventive programs, or better spares — you need a clear number. This guide shows you how to calculate the cost of downtime using a simple formula, South African industry benchmarks, and a worked example in rand. You can use the result to build a CMMS business case, justify preventive maintenance spend, and prioritise which assets matter most.

Why the Cost of Downtime Matters

Putting a number on unplanned downtime turns a vague pain into a decision-making input. Two uses matter most.

For the CMMS Business Case

Management and finance want to see return on investment. A CMMS costs licence fees, implementation time, and possibly training. The payoff is fewer unplanned failures, faster repairs when they happen, and better compliance. To show that the payoff exceeds the cost, you need an estimate of how much each hour of downtime costs today. Multiply that by the number of hours you expect to save (through better PM, faster work orders, and smarter spares), and you have the benefit side of the ROI equation. Without a downtime cost figure, the business case stays qualitative and easy to dismiss.

For Budget Justification

Maintenance competes with production, projects, and cost-cutting. When you ask for more preventive maintenance, better spares, or additional technicians, the question is: what do we get back? The cost of downtime is the denominator: if one critical failure costs R500,000 and you can avoid two such failures per year with a structured PM program, the benefit is R1 million. That makes it easier to justify the budget for PM labour, parts, and the systems that schedule and track the work. Our guide on what is CMMS in South Africa explains how a CMMS supports that scheduling and tracking so the investment in maintenance is visible and measurable.

The Downtime Cost Formula

The true cost of unplanned downtime is the sum of several components. Miss any of them and you understate the number.

Total cost of downtime (per incident or per hour) = Lost production + Labour + Parts and emergency costs + Penalties and compliance + Reputation (where applicable)

Each component is defined below, with how to calculate it and what to watch for in South African conditions.

Lost Production

When the asset is down, you are not making saleable output. Lost production cost is the margin you would have earned on the units you did not produce (or the cost of buying replacement product if you have contractual commitments). Formula:

Lost production = (Output per hour when running) × (Downtime hours) × (Contribution margin per unit)

Use contribution margin (revenue minus variable cost), not full cost, so you reflect the actual economic loss. Example: a packaging line produces 5,000 units per hour; contribution margin is R12 per unit; downtime is 4 hours. Lost production = 5,000 × 4 × R12 = R240,000.

For process plants or mining, output might be tonnes per hour or ounces per shift. Use the same logic: throughput rate × downtime × margin per unit of output.

Labour

During the stoppage, you pay people who would otherwise be productive, plus any overtime or call-out premiums. Include:

Wages for idle production staff (if they cannot be redeployed).
Maintenance labour: technicians, planners, and supervisors engaged in the repair.
Overtime or standby pay if the repair happens outside normal hours.

Labour cost = (Hours of downtime or repair time) × (Fully loaded labour rate) × (Number of people involved)

Fully loaded means wages plus benefits, leave, and overhead. If two technicians work 4 hours each at R350/hour fully loaded, labour = 8 × R350 = R2,800. For overtime, use the actual premium (e.g. 1.5× or 2×) so the number reflects real cost.

Parts and Emergency Costs

Repairs often need parts. In a breakdown, you may pay more than planned:

List price or standard cost of parts used.
Expedited shipping (airfreight, courier) to get parts faster.
Contractor or specialist labour at premium rates when internal capacity is insufficient.

Parts and emergency cost = Cost of parts + Expedited shipping + Contractor premiums

Track these separately so you can see how much unplanned downtime is inflated by urgency. Many South African operations face long lead times for imported spares; expedited shipping can double or triple the part cost.

Penalties and Compliance

Some downtime triggers contractual or regulatory cost:

Customer or tenant SLAs — Late delivery or service credits. Commercial property managers often face lease clauses that grant tenants rent rebates or credits when HVAC, lifts, or power fail for more than a defined period.
Regulatory penalties — Under the OHS Act or, in mining, the MHSA, failure to maintain equipment can lead to improvement notices, fines, or prohibition. The direct cost is the fine or remediation; the indirect cost is lost production or reputation while you fix the issue.
Penalties in supply contracts — If you supply a customer under a just-in-time or penalty clause, late delivery can incur per-day or per-unit penalties.

Penalties and compliance = SLA credits + Regulatory fines or remediation + Contract penalties

Estimate from your contracts and from known cases in your sector. Even if you have not been fined yet, include a reasonable probability-weighted amount for compliance risk when the failure is linked to poor maintenance.

Reputation

Hard to quantify but real: repeated failures or high-profile incidents can damage relationships with customers, tenants, or regulators. For the downtime cost calculator, you can leave reputation as a qualitative note unless you have a way to estimate lost future revenue or tender disqualification. For critical assets in safety-sensitive industries, the reputational cost of a single serious incident can exceed years of maintenance investment.

How to Calculate Each Component: Practical Steps

Choose an asset or line — Start with one critical asset or production line where you have data or can make reasonable assumptions.
Get throughput and margin — From production or finance: output per hour (or per shift) and contribution margin per unit. If margin is not available, use revenue per unit minus variable cost.
Estimate typical downtime duration — Use history if you have it (e.g. from work orders or shift logs). If not, use industry benchmarks or ask maintenance and production for a range. Our MTBF and MTTR guide for South Africa explains how to calculate mean time to repair so you can use MTTR as the expected repair duration.
Labour — Count who is involved (production idle, maintenance, contractors) and for how long. Apply fully loaded rates and overtime factors.
Parts and urgency — For recent breakdowns, use actual parts cost and any expedited or contractor cost. For a generic estimate, use average repair cost per failure from history, or assume a percentage of lost production (e.g. 5–15% for parts and labour on top of production loss).
Penalties — Check SLAs and contracts; add a line for regulatory risk if the asset is safety or compliance-critical.
Sum and express per hour — Total cost ÷ downtime hours = cost per hour of downtime. Use this for business cases and prioritisation.

South African Industry Benchmarks

Benchmarks help you sense-check your number and compare across sites. Ranges below are indicative and depend on asset criticality, margin, and labour rates.

Sector	Typical cost of downtime (ZAR per hour)	Notes
Mining (gold shaft, critical hoist or mill)	R500,000 – R2,000,000+	High throughput value; entire shaft or plant can stop.
Manufacturing (automated line)	R50,000 – R500,000	Depends on line speed, margin, and whether other lines can compensate.
Manufacturing (single machine or cell)	R5,000 – R50,000	Lower throughput; labour and parts dominate.
Commercial property (HVAC, lifts, power)	Tenant SLA penalties + reputational	Often expressed as rent rebates or credits per hour of failure.

Use these as a sanity check: if your calculation is far outside the range for your sector, revisit throughput, margin, or labour assumptions.

Hidden Costs of Unplanned Downtime

Beyond the formula, several costs are easy to miss.

Overtime and fatigue — Repeated emergency call-outs increase overtime and can lead to fatigue, errors, and higher turnover. Factor in overtime premium and, where relevant, the cost of mistakes or follow-up repairs.
Expedited shipping — Airfreight and express couriers for spares can add 50–200% to parts cost. Track this separately so you can justify holding critical spares on site.
Contractor premiums — External specialists often charge more for emergency call-outs. Include these in “parts and emergency costs.”
Cascading failures — One failure can cause another (e.g. a pump failure leads to overheating and bearing damage elsewhere). Where you have seen this pattern, add a factor or document it as a risk in the business case.
Compliance penalties — Under the OHS Act and MHSA, inadequate maintenance can result in improvement notices, fines, or prohibition. Even one notice can cost more than a year of CMMS licence fees. Include a probability-weighted estimate for high-consequence assets.

Worked Example: Packaging Line in Gauteng

A food manufacturer runs a packaging line that produces 4,000 units per hour. Contribution margin is R18 per unit. The line has an unplanned stoppage when a drive motor fails. Repair takes 6 hours.

Lost production: 4,000 × 6 × R18 = R432,000

Labour: Two maintenance technicians, 6 hours each at R320/hour fully loaded; one hour overtime each at 1.5×. (5 × R320 × 2) + (1 × R480 × 2) = R3,200 + R960 = R4,160

Parts: New motor R28,000; expedited delivery R6,000. R34,000

Contractor: None; internal repair. R0

Penalties: No SLA for this product. R0

Total cost of this downtime incident: R432,000 + R4,160 + R34,000 = R470,160

Cost per hour of downtime: R470,160 ÷ 6 ≈ R78,360/hour

If this line has three similar unplanned stoppages per year, the annual cost of downtime for this asset alone is about R1.4 million. Reducing that by even one incident per year through better preventive maintenance or faster diagnosis (e.g. with procedures and spares from a CMMS) can justify a substantial maintenance and systems investment. For more on shifting from reactive to planned work, see preventive vs reactive maintenance in South Africa.

How to Use the Number

Once you have a cost of downtime (per incident or per hour), use it in three ways.

Build the CMMS business case — Estimate how many hours of unplanned downtime a CMMS could avoid (e.g. through on-time PM and fewer repeat failures) and how much faster repairs could be (through work order clarity, procedures, and spares visibility). Multiply by your cost per hour to get annual benefit. Compare to CMMS cost over the same period.
Justify PM investment — Compare the cost of additional preventive maintenance (labour, parts, scheduling) to the cost of one or two avoided breakdowns. If one breakdown costs R400,000 and your PM program costs R150,000 per year and prevents two such failures, the ROI is clear.
Prioritise critical assets — Rank assets by downtime cost (frequency × cost per incident). Focus PM, spares, and procedure improvements on the top of the list. Assets with high cost of downtime deserve the most disciplined scheduling and the best data in the CMMS.

How a CMMS Reduces the Cost of Downtime

A computerised maintenance management system does not eliminate failures, but it reduces their frequency and shortens their duration.

PM scheduling — Work orders are generated from time- or usage-based schedules so preventive tasks are not forgotten. More PM completed on time means fewer unplanned failures. This is the main lever for reducing the number of downtime incidents.
Faster work orders — Requests are logged, assigned, and tracked in one place. Technicians see priority, procedure, and required parts. Less time is lost searching for information or parts, so MTTR falls. Our MTBF and MTTR guide shows how to track and improve these metrics using CMMS data.
Spare parts availability — When parts are linked to assets and work orders, and reorder points are set, critical spares are more likely to be on site when needed. That cuts expedited shipping and shortens repair time.
Analytics — Failure and repair history in the CMMS reveals patterns: which assets fail most, which failure types recur, and where PM is slipping. That supports better prioritisation and continuous improvement.

Calculating the cost of downtime gives you the number you need to justify investing in the processes and systems that reduce it. Start with one critical asset or line, apply the formula, and use the result to build your CMMS business case, justify PM spend, and focus improvement where it pays most. For a clear overview of what a CMMS is and how it fits into maintenance management in South Africa, see what is CMMS in South Africa. If you would like to see how Lungisa can support your maintenance and compliance, explore Lungisa or contact the Skynode team to discuss your requirements.