Maximizing Proceeds from the Fleet Asset Disposal Sales Process (2023)

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2023 N A T I O N A L C O O P E R A T I V E H I G H W A Y R E S E A R C H P R O G R A M NCHRP RESEARCH REPORT 1074 Maximizing Proceeds from the Fleet Asset Disposal Sales Process Henry Canipe Steve Varnedoe Mott MacDonald Raleigh, NC Geo Morrison Daniel Harrison The Cadmus Group LLC Arlington, VA John Hildreth Western Carolina University Cullowhee, NC Lisa Kunzman Fair Oaks, CA Dennis Halacho Pine, AZ Lew Brown Chapel Hill, NC Subscriber Categories Administration and Management • Vehicles and Equipment Research sponsored by the American Association of State Highway and Transportation Ofcials in cooperation with the Federal Highway Administration

NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM Systematic, well-designed, and implementable research is the most effective way to solve many problems facing state departments of transportation (DOTs) administrators and engineers. Often, highway problems are of local or regional interest and can best be studied by state DOTs individually or in cooperation with their state universities and others. However, the accelerating growth of highway transporta- tion results in increasingly complex problems of wide interest to high- way authorities. These problems are best studied through a coordinated program of cooperative research. Recognizing this need, the leadership of the American Association of State Highway and Transportation Officials (AASHTO) in 1962 ini- tiated an objective national highway research program using modern scientific techniques—the National Cooperative Highway Research Program (NCHRP). NCHRP is supported on a continuing basis by funds from participating member states of AASHTO and receives the full cooperation and support of the Federal Highway Administration (FHWA), United States Department of Transportation, under Agree- ment No. 693JJ31950003. The Transportation Research Board (TRB) of the National Academies of Sciences, Engineering, and Medicine was requested by AASHTO to administer the research program because of TRB’s recognized objectivity and understanding of modern research practices. TRB is uniquely suited for this purpose for many reasons: TRB maintains an extensive com- mittee structure from which authorities on any highway transportation subject may be drawn; TRB possesses avenues of communications and cooperation with federal, state, and local governmental agencies, univer- sities, and industry; TRB’s relationship to the National Academies is an insurance of objectivity; and TRB maintains a full-time staff of special- ists in highway transportation matters to bring the findings of research directly to those in a position to use them. The program is developed on the basis of research needs iden- tified by chief administrators and other staff of the highway and transportation departments, by committees of AASHTO, and by the FHWA. Topics of the highest merit are selected by the AASHTO Special Committee on Research and Innovation (R&I), and each year R&I’s recommendations are proposed to the AASHTO Board of Direc- tors and the National Academies. Research projects to address these topics are defined by NCHRP, and qualified research agencies are selected from submitted proposals. Administration and surveillance of research contracts are the responsibilities of the National Academies and TRB. The needs for highway research are many, and NCHRP can make significant contributions to solving highway transportation problems of mutual concern to many responsible groups. The program, however, is intended to complement, rather than to substitute for or duplicate, other highway research programs. Published research reports of the NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM are available from Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet by going to https://www.mytrb.org/MyTRB/Store/default.aspx Printed in the United States of America NCHRP RESEARCH REPORT 1074 Project 13-09 ISSN 2572-3766 (Print) ISSN 2572-3774 (Online) ISBN 978-0-309-70916-3 Library of Congress Control Number 2023946808 © 2023 by the National Academy of Sciences. National Academies of Sciences, Engineering, and Medicine and the graphical logo are trade- marks of the National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, APTA, FAA, FHWA, FTA, GHSA, or NHTSA endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. Cover photo: Patching machine awaiting auction, provided by Richard Rogers of Rogers Auction Group. NOTICE The research report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the National Academies of Sciences, Engineering, and Medicine. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; the FHWA; or the program sponsors. The Transportation Research Board does not develop, issue, or publish standards or spec- ifications. The Transportation Research Board manages applied research projects which provide the scientific foundation that may be used by Transportation Research Board sponsors, industry associations, or other organizations as the basis for revised practices, procedures, or specifications. The Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; and the sponsors of the National Cooperative Highway Research Program do not endorse products or manufacturers. Trade or manufacturers’ names or logos appear herein solely because they are considered essential to the object of the report.

e National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, non- governmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Marcia McNutt is president. e National Academy of Engineering was established in 1964 under the charter of the National Academy of Sciences to bring the practices of engineering to advising the nation. Members are elected by their peers for extraordinary contributions to engineering. Dr. John L. Anderson is president. e National Academy of Medicine (formerly the Institute of Medicine) was established in 1970 under the charter of the National Academy of Sciences to advise the nation on medical and health issues. Members are elected by their peers for distinguished contributions to medicine and health. Dr. Victor J. Dzau is president. e three Academies work together as the National Academies of Sciences, Engineering, and Medicine to provide independent, objective analysis and advice to the nation and conduct other activities to solve complex problems and inform public policy decisions. e National Academies also encourage education and research, recognize outstanding contributions to knowledge, and increase public understanding in matters of science, engineering, and medicine. Learn more about the National Academies of Sciences, Engineering, and Medicine at www.nationalacademies.org. e Transportation Research Board is one of seven major programs of the National Academies of Sciences, Engineering, and Medicine. e mission of the Transportation Research Board is to provide leadership in transportation improvements and innovation through trusted, timely, impartial, and evidence-based information exchange, research, and advice regarding all modes of transportation. e Board’s varied activities annually engage about 8,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. e program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individuals interested in the development of transportation. Learn more about the Transportation Research Board at www.TRB.org.

C O O P E R A T I V E R E S E A R C H P R O G R A M S CRP STAFF FOR NCHRP RESEARCH REPORT 1074 Waseem Dekelbab, Deputy Director, Cooperative Research Programs, and Manager, National Cooperative Highway Research Program Ann M. Hartell, Senior Program Officer Dajaih Bias-Johnson, Senior Program Assistant Natalie Barnes, Director of Publications Heather DiAngelis, Associate Director of Publications Doug English, Senior Editor NCHRP PROJECT 13-09 PANEL Field of Maintenance—Area of Equipment Rod Bliss, Texas Department of Transportation (retired), Austin, TX (Chair) Laura Carey, Ohio Department of Transportation, Columbus, OH Michelle Doane, Idaho Transportation Department, Boise, ID Rick Durham, Kentucky Transportation Cabinet, Frankfort, KY Greg A. Hansen, Washington State Department of Transportation (retired), Tumwater, WA Courtney Lattimore, Office of Contracting and Procurement, Washington, DC Pooja Thakkar, New Jersey Department of Transportation, Trenton, NJ Morgan Kessler, FHWA Liaison Jonathan Sirianni, AASHTO Liaison

NCHRP Research Report 1074: Maximizing Proceeds from the Fleet Asset Disposal Sales Process describes approaches to selling surplus vehicles and equipment that can increase real- ized prices and net returns to a state department of transportation (DOT). Accompanying the report is a spreadsheet-based tool for comparing potential returns from various sales channels. The report and accompanying resources will be of interest to fleet managers and others responsible for decisions about the disposal of fleet assets. State DOTs own and manage fleets of vehicles and equipment. An important part of fleet management is the process of disposing of fleet assets once vehicles and equipment reach an age, level of use, or condition that limits usefulness for state DOT operations. Once the decision is made to dispose of these assets, a key objective is to maximize net proceeds from the sale. Fleet assets can be sold using various sales channels, including live auctions of a wide range of equipment at a centralized location, specialized offerings at regional or local venues, and online auctions operating on a continuous basis. The process used for bids and pricing can also vary: bids can be sealed or open and public, or the selling agency can establish a reserve or minimum bid. Time of year for a sale is a further consideration because the seasonal nature of construction activities and macroeconomic cycles can affect the number of buyers and the prices they will pay. Some state DOTs use purchase-based methods to manage fleet disposal, such as guaranteed buy-back and trade-in programs. An important consideration for agencies is how best to market and present fleet assets. For example, reconditioning, repairing, or repainting equipment to prepare it for sale can increase sales prices, but that increase must be balanced with the costs for preparation. Some buyers may be attracted to sales where equipment is bundled into larger lots. Other types of buyers may be interested in certain categories of vehicles or equipment, such as only light- duty vehicles or non-self-propelled equipment. Understanding the interests, preferences, and needs of buyers is important to ensure that a state DOT is effectively marketing and conducting disposal sales so as to maximize proceeds. Under NCHRP Project 13-09, “Maximizing Proceeds from the Fleet Asset Disposal Sales Process,” Mott MacDonald was tasked with developing a manual for state DOT fleet managers on strategies for preparing, marketing, and selling surplus equipment and vehicles to maxi- mize proceeds. The research team reviewed the research literature on buyer behavior, sales practices, and factors that determine sales prices. The research team also conducted a national survey to collect information on current fleet asset disposal practices among state DOTs. A Delphi panel of industry experts was convened to gain additional perspectives. NCHRP Research Report 1074 documents the results of these activities and provides insights on buyer behavior and effective marketing strategies. To support implementation of the research, F O R E W O R D By Ann M. Hartell Staff Officer Transportation Research Board

a spreadsheet-based tool is available for separate download. The tool provides information on advantages and disadvantages of various sales channels depending on the asset type, con- dition, and remaining life of the asset. The tool also allows a fleet manager to compare the potential returns from various sales channels and estimate the benefits and costs of developing an alternative sale channel. The report is accompanied by a set of presentation slides sum- marizing the project, a fact sheet about the project, and a memorandum describing activities to promote the adoption and implementation of the research. The tool, presentation slides, fact sheet, and implementation memorandum are available on the National Academies Press website (nap.nationalacademies.org) by searching for NCHRP Research Report 1074: Maxi- mizing Proceeds from the Fleet Asset Disposal Sales Process.

1 Summary P A R T I Conduct of Research Report 9 Chapter 1 Introduction 11 Chapter 2 Research Approach 16 Chapter 3 Research Findings 42 Chapter 4 Marketing Basics P A R T I I User Guide for the Asset Sales Decision Support Tool 53 Chapter 1 Asset Sales Decision Support Tool 54 Chapter 2 Limitations of Asset Sales Decision Support Tool 55 Chapter 3 Using the Asset Sales Decision Support Tool P A R T I I I Conclusions and Recommendations 67 Chapter 1 Conclusions 69 Chapter 2 Best Sales Practice Recommendations 72 Chapter 3 Opportunities for Future Research 73 Chapter 4 Final Reflections 74 References 75 Bibliography 76 Appendix A NCHRP Project 13-09 Internet Survey 88 Appendix B NCHRP Project 13-09 State Department of Transportation/Public-Sector Interview Questions 90 Appendix C Glossary C O N T E N T S