Quiz Test

The cost of the skills gap is hard to calculate, partly because each company is different. To gain visibility on what costs you might be paying each year, select the most important issues that your company is facing, below. Once selected, you will see details on how to calculate what each may be costing you.

You've selected
Overtime in maintenance department
- Perhaps the most visible cost
- While some is unavoidable, eg preventative maintenance that cannot be scheduled during standard production hours, mechanical breakdowns are a common cause.
- For the latter, overtime is affected by both number of employees available to solve a problem, and abilities of employees to solve a problem quickly.
- Your calculation:
  - Avg wage of Maintenance team: $/hr ____
  - Hours of overtime in maintenance dept last year: ______ x Overtime premium (the “half” of “time and a half” $/hr ____ = $____________
  - Avg wage $26/hr. 1000 hours last year x $13.00 = $ 13,000
- Consider related problems, eg Turnover in maintenance department for employees who don’t want so much overtime.
Excessive unplanned downtime
- If this is a problem, it typically dwarfs all the rest, and reducing this can pay for the apprenticeship many times over.
- Some sources say that plants under-calculate unplanned downtime by up to 300%. It is our experience that most companies are indeed unpleasantly surprised when they add up the actual number of hours.
- Calculation option 1: Some companies know the cost of an hour of downtime. It may range from a few hundred to tens of thousands of dollars per hour.
  - Hours of unplanned downtime last year for production Line 1: ____ hours
  - Cost per hour: $_____ / hour
  - Total cost Line 1: ____ hours x $ ____ cost/hr = $________
  - Repeat for additional production lines if applicable
- Calculation option 2: According to recent American Productivity and Quality Center (APQC) estimates, unplanned downtime accounts for a loss of anywhere from 40¢ to $1.20 on every $20 in revenue.
  - Revenue last year $__________
  - Multiplier between $0.40 and $1.20. If unplanned downtime is an issue, we expect that a company would be on the high end of the range. Your multiplier: ______
  - Calculation: Revenue $________ / $20 x your multiplier= __________
  - Revenue $15,000,000 / $20 x $1.10 = $825,000
- Consider related problems:
- Overtime in production to catch up
- Late delivery
- Expedited shipping

You've selected

Overtime in maintenance department

Excessive unplanned downtime