Decision Making for Repair Versus Replacement of Highway Operations Equipment (2023)

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1   Decision Making for Repair Versus Replacement of Highway Operations Equipment Motivation Fleet managers regularly face the question: what should be done with a downed piece of equipment? Answers to this question fall into the following four categories: • Repair: Restoring the unit to its pre-repair condition. • Rebuild: Adding useful life to equipment (“rewinding the clock”) through the process of replacing potentially worn-out components prior to failure. • Replace: Substituting a damaged or malfunctioning piece of equipment with a similar piece of equipment (which may be new or just a different unit). • Retire: Removing the unit from service without replacement. A simple approach to this decision is to use quantitative data—such as equipment age, usage, and estimated repair cost—to calculate metrics such as minimum lifetime cost or maximum lifetime profit. In reality, fleet managers must weigh various competing factors in these decisions, not all of which are easily quantified. These factors include the procurement schedule for the equipment, promised highway levels of service, availability of replacement parts or substitute equipment, mission criticality of the equipment, budget constraints, and environmental regulations. Furthermore, fleet managers in state DOTs regularly face fiscal scrutiny and must justify and document these decisions. The resources developed as part of NCHRP Project 13-08 are intended to fill this gap. Project Objective The objective of this project was to assist state DOT fleet managers in evaluating and doc- umenting the decision to repair, rebuild, replace, or retire a piece of equipment. The Excel- based tool presented here—the 4R Tool—provides a rigorous, peer-reviewed approach to making this decision. The written resources in this report accompany the 4R Tool. 4R Tool Description The Repair, Replace, Rebuild, Retire Tool (the 4R Tool) is the centerpiece of this project. The tool includes two modules with independent purposes. The Decision Module uses quantita- tive and qualitative user input to determine the best decision for addressing a downed piece of equipment. The Economic Analysis Module uses historical usage data and cost data from the equipment to illustrate the age in the future for which one outcome (e.g., repair) has an economic advantage over the others. S U M M A R Y

2 Decision Making for Repair Versus Replacement of Highway Operations Equipment Video explanations of the 4R Tool can be found on the National Academies Press website (nap.nationalacademies.org) by searching for NCHRP Research Report 1046: Decision Making for Repair Versus Replacement of Highway Operations Equipment. Decision Module e Decision Module structure is shown in Figure 1. e user answers 11 questions in the Initiation tab (shown in the top center of Figure 1) about topics such as equipment age, its condition, and the expected time needed to repair it. Depending on the responses, the user is directed downward toward the Rebuild vs. Repair tab or to the right toward the Replace vs. Retire tab. e user answers an additional ve to seven questions and arrives at one of four recommended outcomes: Repair, Rebuild, Replace, or Retire. e tool is exible in that users can adjust the relative importance of each question in the module using the Weights tab. For example, if resale value has a low importance level for a given state DOT eet, the user can decrease the importance of that question. An Output tab aggregates all user inputs and outputs into a single, printable location for documentation purposes. Economic Analysis Module is module estimates the cost rate ($/h) of the repair, rebuild, or replace decision into the future. e retire decision does not have a cost rate since the equipment will no longer be used. e graphics at the bottom of the Economic Analysis Module show the cost rate ($/h) by age going forward. is allows the user to gauge the benet (or cost) of delaying a given decision into the future. For example, in Figure 2, the lowest-cost decision is to rebuild— until the 8,000-hour mark is reached. At that point, replace becomes the lower cost-per-hour Figure 1. Structure of 4R Tool decision module.

Summary 3   option. The vertical delta between two given lines at a specific equipment age is the “cost of the wrong decision.” In Figure 2, the vertical distance between the options to rebuild or to repair at 4,000 hours is the cost to the user if they choose the option to repair instead of the lower-cost option, which would be to rebuild. Organization of this Report This written report includes the following three parts: • Part I: Research Report: Documents the investigations made by the research team. • Part II: Guide: Provides the concepts and theory behind the repair, rebuild, replace, or retire decisions. • Part III: User Manual for the 4R Tool: Provides step-by-step instructions for using the 4R Tool. Figure 2. Cost rates ($/h) in the future.