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98 Performing Life Cycle Cost Analysis The optimization tool performs LCCA at two levels: class level and unit level, each with a specific purpose. Use a class-level LCCA to determine optimal life cycles when complete annual data are not available for LCCA of indi- vidual units. It looks at all units in a specific class and bases the cost analysis on average LTD cost for each unit within that class. Use a unit-level LCCA to analyze the life cycle costs of individual units, using annual cost data for each year of the unitâs life. 5.1 Class-Level LCCA The class-level LCCA uses LTD data uploaded in the for- mat shown in Figure 13. The tool performs the LCCA in the following manner: â¢ All equipment units are grouped by age. The tool is preset for 25 years of analysis. Vehicles older than 25 years are not shown. â¢ The LTD cost per mile or hour is calculated for each of the cost components. Maintenance includes labor, parts, and commercial costs. Depreciation cost is calculated from the replacement cost and depreciation schedule in the configu- ration file for the particular class. â¢ The total cost per mile is obtained by totaling maintenance, fuel, downtime, operating, and depreciation costs. Use the following process to perform class-level LCCA. 1. Open the tool folder, C:/Equipment Replacement Opti- mization Tool, and click on the spreadsheet for the desired class. The folder contains a separate spreadsheet for each of the 40 equipment classes. The following exam- ple uses the â1521_Half_Ton_Pickup_Analysis.xlsxâ file as shown in Figure 14. To complete the cost calculations and view the results of other equipment classes, open each class spreadsheet separately. When opening a class spreadsheet, the tool automati- cally performs the cost calculations for that equipment class, using data that was loaded to the tool by the process detailed in Chapter 4. Although it is not always necessary, it is recommended that the data in each spreadsheet be refreshed by clicking on âDataâ on the Excel toolbar and then clicking on âRefresh All,â as shown in Figure 15. Note: In some versions of Microsoft Windows and Excel, an error message will appear when opening the tool directly from Windows without already having the Excel program open. Therefore, it is recommended to open Excel before opening the toolâs spreadsheets. 2. Once selected, each class analysis spreadsheet displays five tabs as shown in Figure 16. Click on the LCCA tab at the bottom of the sheet to display the results of the class- level LCCA. 3. View the results in both table and graph form. Figure 17 shows the results for the example using the class of Â½-ton pickup. 4. The following text explains the results shown in Figure 17. â Cell E6 displays the calculated optimal replacement year, which is 7 for this example. Cell J6 displays the cal- culated optimal replacement mileage, which is 95,377 for this example. â Column A displays the age of all equipment units for that row. â Column B shows the number of equipment units in that age category. For example, 16 Â½-ton pickups are 1 year old. â Column C shows the year in which the units were placed in service. â Columns D through H show the calculated average LTD cost per mile for each of the cost components. â Column I is the average total cost per mile for all units of that age. â Column J displays the calculated values on the trend curve for each year. Use the trend values to determine the optimal replacement year shown in Cell E6. C H A P T E R 5
99 Figure 14. File selection for class-level LCCA. Figure 15. Data refresh. #N/A designates no data available. Figure 16. Equipment analysis file tabs.
100 Figure 18 shows a close-up of the graph that displayed the results in Figure 17. The graph depicts the LCCA components for ownership cost (depreciation), operating cost, and total cost. For the purpose of the analysis, the tool projects a smooth trend line for the total cost curve. 5.2 Unit-Level LCCA The tool also provides the ability to perform LCCA of indi- vidual equipment units. Unit-level LCCA is especially helpful if there are not enough equipment units in a particular class to perform the class-level LCCA or to examine the details of an individual unitâs life cycle cost. For performing unit-level LCCA, note the following: 1. Unit-level LCCA can only be performed on equipment classes listed in the configuration file, because links to the replacement factors in the configuration file are used in the LCCA calculations. 2. Annual cost and utilization data for each year of the unitâs life are required. There are two separate spreadsheets used for unit-level LCCA: one for equipment utilization measured by miles and one for equipment utilization measured by hours. Use the following process to perform unit-level LCCA. 1. Open the tool folder, C:/Equipment Replacement Opti- mization Tool, and click on the unit-level analysis file with #N/A designates no data available. Figure 17. Sample class-level LCCA results. the correct utilization type: â03Unit_Level_Analysis_ Miles.xlsxâ for equipment tracked by mileage or â04Unit_ Level_Analysis_Hours.xlsxâ for equipment tracked by hours (see Figure 19). 2. When selected, the unit-level analysis displays the form shown in Figure 20 in the green DataEntry tab. All white cells on this sheet will be empty when first opened. The top section of the sheet is used to enter general information about the unit being analyzed, as shown in the example in Figure 21 for a tandem dump truck. Enter the information for the specific unit being analyzed. 3. Download the unitâs annual cost data from the agencyâs system(s) and enter it into the spreadsheet. Enter the annual cost data for each year of the unitâs life. This process happens external to the tool. Enter the required utiliza- tion, cost, and downtime data in the exact cells beginning on Row 12, as shown in Figure 22. 4. Once the data entry is complete, click on the LCCA tab at the bottom of the spreadsheet, as shown in Figure 23, to view the analysis. Figure 24 shows the results for Unit 123, a tandem dump truck. Results of the analysis will show the equipment num- ber, description of the unit, and the results in both table and graph form. The output from the unit-level LCCA is similar to the out- put of the class-level LCCA but describes the results somewhat
101 Figure 18. LCCA graph. Figure 19. File selection for unit-level LCCA. Figure 20. DataEntry tab selection.
102 Figure 21. General equipment data. Figure 22. Data entry for unit-level LCCA. Figure 23. LCCA tab selection.
103 differently. Whether a unit has reached its optimal life cycle cannot be known until after the fact. Looking at the graph in Figure 24, the total cost curve levels out in years 12 through 15. However, future maintenance costs cannot be easily pre- dicted, and it is uncertain whether the total cost curve will continue at a level trajectory or begin to rise sharply. A con- dition assessment of the unit may indicate future needed repairs and give an indication of anticipated costs. Because it is not known if the unit has reached its optimal life, the unit-level LCCA depicts the âLowest Cost Year, To-Dateâ in Cell F6 based on the total costs calculated in Column G. The corresponding mileage is shown in Cell P6. A trend line is provided on the graph to help visualize the pos- sible future cost trend. The tool is set to analyze up to 25 years of data. The trend line on the graph extends the full 25 years, even if only 15 years of data are available, as in the example. #N/A designates no data available. Figure 24. Sample unit-level LCCA results.