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From page 1...
... P A R T I Research Overview
From page 2...
... C O N T E N T S I-3 Summary I-6 Chapter 1 Introduction I-6 1.1 Background I-7 1.2 Project Objective I-7 1.3 Research Approach I-7 1.4 Organization of the Report I-8 Chapter 2 Research Approach I-8 2.1 Literature Review I-8 2.2 Agency Survey I-8 2.3 Data Collection I-8 2.4 Developing a Methodology for Long-Range Replacement Plans I-11 2.5 Development of the Long-Range Replacement Management Software I-11 2.6 Validating the LRM Software I-12 Chapter 3 Research Findings I-12 3.1 Literature Review I-16 3.2 Agency Survey I-16 3.3 Assessing the Identified Factors and Processes I-17 3.4 Methodology for Long-Range Replacement Plans I-20 3.5 Validating the LRM Tool I-21 Chapter 4 Summary and Suggested Research I-21 4.1 Summary and Conclusion I-22 4.2 Suggested Research I-23 Appendix A Survey I-29 Appendix B Detailed Survey Results I-38 Acronyms I-39 References
From page 3...
... I-3   Background Operations equipment assets are critical components for the delivery of state highway agency programs, projects, and services and contribute to a significant portion of capital investments. Operations equipment assets generally deteriorate as they age, resulting in rising operations and maintenance costs and decreasing salvage values.
From page 4...
... I-4 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets • Replacement budget, • Purchase cost, • Expected useful life, • Age of equipment when acquired, • Repair cost, • Annual utilization, • Maintenance cost, • Criticality, • Physical equipment condition, • Fleet size, • Downtime hours, and • Obsolescence. Required Funding Level for Annual Replacement Plans over a Long-Range Period Defined criteria for equipment replacement were used to determine which equipment units were candidates for replacement in each year over a long-term period (e.g., 25 years)
From page 5...
... Summary I-5   units that are candidates for replacement. Alternatively, the model can identify equipment units that can be replaced within the available budget.
From page 6...
... I-6 1.1 Background State highway agencies own and maintain a substantial number of operations equipment assets that are diverse in type and condition. These assets are critical components for delivering state highway agency programs, projects, and services and contribute to a significant portion of capital investments.
From page 7...
... Introduction I-7   1.2 Project Objective The overall objective of this research was to develop a guide for the formulation of long-range plans and budgets for replacement of highway operations equipment. The goal was to include processes and tools for consideration in making investment decisions.
From page 8...
... I-8 Operations equipment assets typically deteriorate as they age. This leads to increasing operations and maintenance costs and decreasing salvage values.
From page 9...
... Research Approach I-9   (such as mileage) were used, and some optimal replacement criteria were incorporated into the analyses.
From page 10...
... I-10 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets – Accumulated engine hours: The accumulated engine hours of an equipment unit in the next year were found by using the accumulated engine hours of the equipment unit in the current year and the user-input annual utilization reduction rate. This analysis is similar to the accumulated mileage.
From page 11...
... Research Approach I-11   equipment for replacement. The replacement score is calculated on the basis of the summation of the assigned scores for criticality, physical condition, and utilization over the summation of the user-input replacement decision weights.
From page 12...
... I-12 C H A P T E R   3 This chapter details the findings of the literature review, agency survey, computational models for formulating long-range plans for replacement of and budgeting for highway operations equipment, and validation of the tool. 3.1 Literature Review This section presents the findings of the literature review and focuses on the contributing factors and relevant processes.
From page 13...
... Research Findings I-13   costs, replacement costs, obsolescence, and time value of money. The guide includes tools and processes to facilitate decision-making on optimal replacement cycles of on- and off-road highway operations equipment (1)
From page 14...
... Study Factor H am ilton (1) G hadam et al.
From page 15...
... Safety X X X Insurance cost X X X Emission X X X Operator cost X X X X X Operator style X X Physical condition X X Parking cost X X Parts availability X Lead time X X License cost X X X X X Obsolescence X X X X X X X Disposing cost X Criticality X Spare parts inventory X Equipment technology X Researching hours for finding a replacement X Installation cost of new equipment X Training costs for new equipment X Frequency of repairs X Lease cost X Study Factor H am ilton (1) G hadam et al.
From page 16...
... I-16 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets 3.2 Agency Survey Different transportation agencies were surveyed on their practices and research studies on long-range plans for replacing fleet equipment and developing budgets to address knowledge gaps identified in the literature. The survey was designed with the following objectives: 1.
From page 17...
... Research Findings I-17   further investigation or improvement were also identified, and the advantages and deficiencies of the existing solutions were discussed. The relevance of factors was evaluated, and factors with more significant effects for use in the formulation of long-range plans for replacement needs and budgets for highway operations equipment were identified and recommended.
From page 18...
... I-18 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets Frequencya No. Factor Impactb Data Availabilityc Importance 1 Equipment age 86.4 100 Equipment age has a significant impact on all replacement strategies and could be recorded in all agencies.
From page 19...
... Research Findings I-19   Frequencya No. Factor Impactb Data Availabilityc Importance 12 Fleet size 36.4 90.9 The number of equipment units of a certain type in a fleet influences the service they provide as well as the associated costs.
From page 20...
... I-20 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets 3.5 Validating the LRM Tool The LRM tool offers general solutions for all state DOTs, enabling them to calculate the required funding levels for replacement of operations equipment on the basis of the identified replacement criteria. The tool can be used to evaluate the impact of any replacement-related decisions annually over a long range of analysis.
From page 21...
... I-21   4.1 Summary and Conclusion The operations and maintenance costs of aging operations equipment increase significantly over time, and their salvage value decreases. Deterioration and technological changes motivate agencies to replace a portion of their equipment fleet continually.
From page 22...
... I-22 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets operations equipment, given different types of operations equipment, and are embedded in the LRM tool. The tool was designed to call the developed computational models for long-range replacement planning on the basis of the available data.
From page 23...
... I-23   A P P E N D I X A Survey The survey questions were developed in Qualtrics (41)
From page 24...
... I-24 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets
From page 25...
... Survey I-25  
From page 26...
... I-26 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets
From page 27...
... Survey I-27  
From page 28...
... I-28 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets
From page 29...
... I-29   A P P E N D I X B Figure B-1 shows the annual budget of participating state DOTs for equipment repair, maintenance, and purchase. Annual equipment repair and maintenance budgets varied between 1.5 and 40 million dollars, and the purchase budget was between 3.8 and 40 million dollars per year for all respondents.
From page 30...
... I-30 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets 43 Frequency of repairs Frequency of repairs within a period 44 Lease cost Total or installment payments for leasing equipment No. Factor Definition 1 Equipment type Equipment type, such as truck, loader 2 Equipment age Time in service 3 Initial age Age of equipment when newly acquired 4 Utilization Life-to-date usage based on different criteria, such as mileage, hour 5 Annual usage Total yearly usage in terms of mileage, hour, engine hours 6 Pace of work Working hours per day of equipment 7 Repair cost Life-to-date repair costs, including new parts and labor 8 Maintenance cost Preventive and regular services, including labor and parts 9 Downtime hours Idle hours 10 Reliability Frequency of repairs 11 Budget Budget limitation for replacement 12 Purchase cost Initial paid cost for acquiring equipment 13 Advance deposit Leasing or advance deposit cost 14 Discount rate Minimum interest rate 15 Depreciation rate Market value reduction of equipment due to age, obsolescence 16 Fuel consumption Average daily, monthly, or annual fuel consumption 17 Fuel cost Unit price of fuel 18 Fleet size Size of the fleet for each type of equipment 19 Remaining asset value Current market value of equipment 20 Salvage value Scrap value 21 Tire cost Cost of buying new tires or repairing them 22 Rental income Value of equipment as rental 23 Working condition Working area condition in terms of temperature, terrain 24 Useful life period Life expectancy based on historical data or experience 25 Safety Safety features of a vehicle in terms of brake types, airbags 26 Insurance cost Cost of insurance cost for liability, fire, theft 27 Emission Official policies on the emissions of equipment 28 Operator cost Labor expenses 29 Operator style Operator moral 30 Physical condition Body condition of equipment in terms of damage, rust 31 Parking cost Rental costs of parking 32 Parts availability Availability of repair parts 33 Lead time Time between replacement of an order and delivery of new equipment 34 License cost Cost of renewing license tabs 35 Obsolescence Process of becoming obsolete, outdated, or no longer needed 36 Disposing cost Costs and fees associated with disposing of equipment units 37 Criticality Extent to which equipment is deemed essential to the performance of core agency functions 38 Spare parts inventory Inventory costs for spare parts 39 Equipment technology Improved functionality and efficiency of new equipment 40 Researching hours for finding a replacement Time spent in finding replacement equipment 41 Installation cost of new equipment Labor cost of setting up new equipment for use 42 Training cost for new equipment Cost of training operators to use new equipment Table B-1.
From page 31...
... Detailed Survey Results I-31   policies used the repair frequency and costs of equipment to find a cost limit beyond which vehicles should be replaced (25, 42)
From page 32...
... I-32 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets No. Factor Importance 1 Equipment type Different types of equipment have different functionality, purpose, and costs.
From page 33...
... Detailed Survey Results I-33   Figure B-2. Impact of each factor on long-range equipment replacement.
From page 34...
... I-34 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets Figure B-3. Data availability for each factor.
From page 35...
... Detailed Survey Results I-35   ND MN SD CO MO TN KY NH IN OH LA ID WV SC CA UT MT KS MI FL AR Figure B-4. Use of state-of-practice processes in long-range replacement decisions in the United States.
From page 36...
... I-36 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets Process State DOTs Target threshold Kentucky, Maryland, Colorado, Missouri, Minnesota, North Dakota Experience-based judgment Tennessee, Colorado, Missouri, Louisiana, New Hampshire Life-cycle cost analysis Kentucky, Colorado, Minnesota Mathematical modeling method Colorado, Missouri, North Dakota, Kansas Commercial software Kentucky, Colorado, New Hampshire, North Dakota Table B-5. Key processes used by state DOTs in long-range replacement planning.
From page 37...
... Detailed Survey Results I-37   Figure B-6. Importance of long-range replacement planning for each equipment type.
From page 38...
... I-38 DOT department of transportation EOS equipment operations system FHWA Federal Highway Administration LCCA life-cycle cost analysis LRM long-range replacement management NAFA National Association of Fleet Administrators NCSU North Carolina State University TERM Texas Equipment Replacement Model UNCC University of North Carolina at Charlotte Acronyms
From page 40...
... I-40 Replacement of Highway Operations Equipment: Formulation of Long-Range Plans and Budgets 22.

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