How do you know when replacing rather than repairing an asset makes more financial sense? Total cost of ownership (TCO) is a crucial figure for asset management and budget control that many FMs simply don’t have access to. Here’s why and how facilities managers need to take control of their assets at TCO.
TCO is the record of all the money you have spent on an asset over its lifetime, including its acquisition, operation, maintenance, and eventual disposal. The total of ownership can be hard to uncover, as the 'hidden costs' in downtime and inefficient servicing remain stubbornly unseen.
As this diagram points out, the older an asset becomes, the more maintenance it requires and the more it costs to own and operate.
It also shows that if your business has no means of managing your assets, depending only on reactive maintenance to keep them operational, the cost of ownership will dramatically increase.
However, if your business is capable of managing your assets (tracking and optimising their efficiency through preventive and predictive maintenance), you can:
By tracking the TCO of your assets over time - it will also become clear when the cost of servicing and repair will begin to outweigh the overall value the asset generates for you.
Most experts agree that when an annual or one-off repair cost reaches more than 65% of the replacement cost, you should assess whether investment in new equipment is required.
But this decision-making process to replace or repair is always a delicate balancing act.
As the global asset management standard ISO 55000 highlights, the goal of smart asset management is to juggle cost, risk, and performance over an asset’s entire lifespan to get the most value from it. If you over-maintain an asset, you’re wasting money; if you under-maintain it, you’re setting yourself up for breakdowns, downtime, and expensive emergency repairs.
Being able to track and project the total cost of ownership, therefore, is vital to be able to weigh the pros and cons of replacement.
But ISO 55000 also emphasises the bigger picture—you shouldn’t just assess an asset in isolation but in the context of your entire organisation’s operational and financial strategy. That means understanding how asset performance impacts efficiency, compliance, and long-term budget planning of your business as whole.
To do this, you need data that most facilities managers simply don’t have.
Without a digital asset management system, keeping track of your TCO can feel like guesswork. If you’ve been relying on shared servers and Excel sheets, chances are you don’t have a full picture of how much you’ve actually spent on each asset over its lifecycle - or be able to correctly project the future cost of the asset or its replacement..
With a mix of internal engineers and contractors handling maintenance over the years, some costs will inevitably slip through the cracks.
Routine servicing, component replacements, and emergency call-outs may not have been consistently recorded, especially when things were rushed or paperwork was overlooked.
Over time, key details get lost—lines on spreadsheets go missing, incomplete records pile up, and crucial information like warranty coverage gets forgotten. This could mean paying for repairs that should’ve been free, missing warning signs of asset failure and struggling to justify replacement decisions when it matters most.
To get things sorted out, you need to take control of your assets - digitally.
We were running FM in our business using spreadsheets and email. A lot of data and knowledge was stored in the heads of our teams, and being lost to the business. We needed to change it into usable data. A CAFM is doing that for us.
Shakeel Jivraj, Head of Operations for Queensway Coffee Houses
The first step toward managing TCO effectively is getting your assets listed in a digital register (such as a CAFM).
The right CAFM system should give you the tools to start recording the details of existing assets in a single place, giving you end-to-end visibility of their condition and, ultimately, their TCO.
Your chosen CAFM system should be capable of dynamically tracking and calculating ownership costs using the following data:
By combining these, you should be able to see each asset’s current value in real-time and figure out whether it’s generating more costs than they are worth.
But it’s not enough just to track your TCO through a CAFM’s digital asset register.
Choosing the right CAFM should help you actively manage your TCO. It should help you optimise engineer and contractor performance to keep assets in the required condition, while preventing costly operational and compliance failures.
What’s more, the digital platform you chose should be able to give you all the asset analytics you need to make key life-cycle decisions. And it should give you this information in the form of configurable dashboards; with all the charts and graphs that can help you win the internal arguments for CAPEX investment.
A CAFM system enables more effective contractor oversight. They can ensure you are getting maximum co-operation from your supplier relationships; with external engineers dedicated to reduce the cost of asset management and improve their performance.
Key benefits include:
But, don’t forget - adoption of a new CAFM systems by engineers and third parties can be hard to achieve. Persuading contractors to migrate to your way of doing things - and use your software to log their time and activity can be an uphill battle
Make sure your CAFM partners bring a seamless experience for engineers on the ground to maximise uptake. Provide an easy-to-use mobile portal with QR code access, allowing quick job logging, instant invoicing, and performance tracking. Incentivizing contractor use through quicker payments and transparent performance reviews can further boost engagement.
Without your contracrtors logging every detail of their asset management activity on your CAFM you will never get a handle on your TCO
The big goal for us was getting contractors on board, so we could monitor their activities and control our spending with them. Contractors are now using the system to record their time and manage their site visits. We have got excellent feedback from them, and we continue to listen and speak to them every day.
A preventive maintenance strategy is crucial for reducing unplanned downtime and extending asset life, directly impacting TCO.
With a CAFM system, you can:
Preventive maintenance ensures long-term cost savings by reducing repair expenses, minimising disruptions, and improving asset reliability.
Total cost of ownership can be inflated by failing compliance and efficiency levels within your assets.
A CAFM system can help FMs avoid costly compliance failures by:
A digital asset management system will also help you automatically track downtime, service frequency, and repair costs that contribute to your TCO.
High-level analytics will then make it simple to spot:
This visibility into historical performance helps you project future costs and strategically manage the total cost of ownership over time.
A centralised asset management tool in a CAFM should provide a clear picture of asset conditions, usage, and replacement needs.
It should bring the lifecycle data together in user-friendly ways, so you can clearly see the decisions that need to be taken around CapEx:
The right asset management software can help you analyse groups of assets to see if bulk purchasing will present opportunities to negotiate with suppliers over costs e.g. 10 fridges at a better price than buying them individually when required.
Josh Greibach, CEO and Co-Founder, Expansive Solutions
Many FMs struggle with outdated or fragmented asset data, making lifecycle planning difficult. A CAFM system eliminates reliance on siloed data sources and ensures asset information remains visible and accessible.
Managing TCO across an enterprise with many locations is certainly a challenge, but it doesn’t have to be a shot in the dark. With the right data, tools, and processes in place, businesses and facilities teams can make the best data-driven decisions to calculate and manage their TCO and use their budget strategically.
For more insight into strategic asset management and how you can solve your repair or replace dilemmas, download our expert guide to digital transformation.