Decision Making for Repair Versus Replacement of Highway Operations Equipment (2023) / Chapter Skim
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P A R T I I Guide
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21 1.1 Purpose of the Guide This guide (Part II) provides readers with the concepts and intuition behind how to deal with a downed piece of equipment.
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22 This chapter provides fundamental concepts pertaining to fleet management and decisions around a downed piece of equipment. 2.1 Background Nearly all organizations use equipment to perform work or provide services, even if such tools are just routine office equipment.
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Fundamentals of Managing a Downed Piece of Equipment 23 2.2 Drivers of Decision Making The desire to return equipment units to service as quickly as possible tends to drive the initial repair versus no repair decision-making process, with a bias toward the option that results in the shortest period of downtime (typically, this is the repair option)
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24 This chapter describes three approaches to deciding what to do about a downed piece of equipment: • Economic lifetime approach. Identifies the optimal age at which an asset should be retired.
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Decision-Making Approaches to Downed Equipment 25 Past research explores a variety of topics related to improving LCCA and the estimation of target economic lifetime. Mitchell (1998)
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26 Decision Making for Repair Versus Replacement of Highway Operations Equipment Cumulative Repair Limits A cumulative repair limits approach considers the minimum repair cost rate, cumulative total cost of repairs, or maximum number of repairs in the repair versus replace decision. As with individual repair limits, cumulative repair limits are relatively easy to track and implement, although decisions can be complicated by having multiple criteria to consider.
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27 This chapter describes a conceptual decision tree that fleet managers can follow when faced with a downed piece of equipment. The decision tree is based on data collected in the surveys and interviews in NCHRP Project 13-08 and aligns with the structure of the Decision Module in the 4R Tool described in the Research Report and User Manual.
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28 This chapter discusses the future costs faced by fleet managers once they decide what to do about a downed piece of equipment. Importantly, these costs change over time depending on the decision made.
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Future Cost and Availability Impacts on Equipment 29 Figure 6. Hypothetical impact on operating costs for repair, rebuild, and replace options.
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30 This chapter describes how to calculate the A and B coefficients needed as inputs to forecast the cost rate of repair, rebuild, and replace decisions in the future. As the option to retire will not require assessment of future life cycle costs, it is not applicable for this analysis.
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Calculation of A and B Coefficients for Economic Analysis Forecasting 31 Year Equipment ID LTD Operating Hours LTD Operating Cost 1 MG2001 460 $ 5,562 2 MG2001 1,576 $ 22,008 3 MG2001 2,465 $ 40,743 4 MG2001 3,489 $ 65,675 5 MG2001 4,404 $ 85,470 6 MG2001 5,107 $ 105,595 7 MG2001 5,868 $ 127,820 8 MG2001 6,734 $ 154,065 9 MG2001 7,303 $ 180,453 10 MG2001 7,653 $ 208,404 1 MG2002 326 $ 3,178 2 MG2003 1,416 $ 11,680 3 MG2004 2,404 $ 26,015 4 MG2005 3,537 $ 39,160 5 MG2006 4,437 $ 50,057 6 MG2007 5,471 $ 76,899 7 MG2008 6,036 $ 95,225 8 MG2009 6,396 $ 119,820 9 MG2010 6,969 $ 151,952 10 MG2011 7,310 $ 163,480 1 MG2003 416 $ 4,202 2 MG2003 1,600 $ 14,638 3 MG2003 2,491 $ 30,258 4 MG2003 3,493 $ 46,497 5 MG2003 4,174 $ 60,337 6 MG2003 5,244 $ 76,870 7 MG2003 5,531 $ 98,740 8 MG2003 6,045 $ 112,500 9 MG2003 6,560 $ 135,675 10 MG2003 6,864 $ 150,426 1 MG2004 454 $ 2,794 2 MG2004 1,072 $ 7,535 3 MG2004 1,778 $ 21,438 4 MG2004 2,702 $ 41,100 5 MG2004 3,711 $ 62,622 6 MG2004 5,025 $ 99,113 7 MG2004 5,422 $ 108,896 8 MG2004 6,039 $ 120,423 9 MG2004 6,086 $ 133,830 10 MG2004 6,426 $ 146,607 1 MG2005 340 $ 2,372 2 MG2005 1,516 $ 16,952 3 MG2005 2,304 $ 30,215 4 MG2005 3,028 $ 44,431 5 MG2005 4,044 $ 61,347 6 MG2005 5,031 $ 81,624 7 MG2005 5,457 $ 92,803 8 MG2005 5,746 $ 109,557 9 MG2005 5,940 $ 121,572 10 MG2005 6,164 $ 133,568 Table 3. Example LTD operational and cost data for seven representative pieces of equipment.
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32 Decision Making for Repair Versus Replacement of Highway Operations Equipment Once these data have been input into Excel, they can be plotted in a line graph that shows the relative age (x-axis) and LTD operating costs (y-axis)
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Calculation of A and B Coefficients for Economic Analysis Forecasting 33 collected for 260 items of equipment operating in 17 different fleets that were managed by four construction companies. Regression analysis was used to evaluate 19 different equation forms, and a second order polynomial was found to provide the best fit to the data as follows: LTDOperating Cost A Age B Age2= × + × LTDOperating Cost cumulative cost of repair parts and labor from 0 hours to age hours= Age LTD hours worked by the equipment= This has come to be known within the realm of equipment management as the Mitchell Curve.
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34 Decision Making for Repair Versus Replacement of Highway Operations Equipment The principal limitation to the methodology is the availability of quality LTD data needed to drive the analysis. LTD data are not available for equipment purchased on the resale market or where reliable cost data have not been maintained since the purchase of a new piece of equipment.
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