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Optimal Replacement Cycles of Highway Operations Equipment (2018)

Chapter: Chapter 4 - Summary and Suggested Research

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Page 38
Suggested Citation:"Chapter 4 - Summary and Suggested Research." National Academies of Sciences, Engineering, and Medicine. 2018. Optimal Replacement Cycles of Highway Operations Equipment. Washington, DC: The National Academies Press. doi: 10.17226/25036.
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Page 38
Page 39
Suggested Citation:"Chapter 4 - Summary and Suggested Research." National Academies of Sciences, Engineering, and Medicine. 2018. Optimal Replacement Cycles of Highway Operations Equipment. Washington, DC: The National Academies Press. doi: 10.17226/25036.
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Page 39

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38 Summary and Suggested Research NCHRP 13-04 was accomplished in two phases. In Phase I, a large volume of literature pertaining to equipment replace- ment practices and tools was reviewed and examined to assess how commonly used replacement factors, practices, and tools could be adapted and applied in the highway operations envi- ronment. In Phase II, the project developed the • Optimal Replacement Cycles of Highway Operations Equipment guide • Excel-based Optimization Analysis Tool • Tool User Manual The guide was developed to incorporate promising prac- tices identified in the literature search with adaptations to fit real-world operating conditions within a state DOT fleet agency. Actual equipment cost and history data were gath- ered from a number of state DOTs to use in developing the replacement factors and testing the optimization tool. The optimization tool was built using Microsoft Excel because of its ready availability and general ease of use. The tool is designed to perform LCCA using replacement factors specific to highway operations equipment and to support a systematic equipment replacement process. The guide and tool user manual are included in this report as Parts II and III, respectively. The optimization tool is avail- able for download from TRB’s website at www.trb.org by searching on NCHRP Research Report 879. 4.1 Summary of Findings The literature search revealed that various approaches, methodologies, and factors are used for determining optimal life cycles and making replacement decisions. • LCCA is considered the best approach for determining equipment life cycles because it is data driven and based on sound economic theory. • LCCA is time consuming, requires good data, and demands continuous commitment of staff to obtain reliable results. The most time-consuming task may lie in the effort to download and clean up the data before the data are entered into the tool. • There is a need to improve equipment information and data in the highway operations industry to ensure that LCCA results in reliable outputs for determining optimal life cycles. • Making replacement decisions is a process that requires a systematic, methodical approach to attain optimal results. • Although a detailed evaluation could not be made of pro- prietary software and tools, it appears that while most of them provide equipment cost analysis capabilities, few pro- vide LCCA features and outputs for determining optimal life cycles. • The factors used in the various cost analysis approaches were generally the same, but not always, and the methods for measuring and quantifying the factors varied. • Equipment condition, a fundamentally important factor in asset management, was not found to be used systematically in any of the approaches. • Mission criticality is not considered in most current prac- tices but was mentioned in some literature as a soft cost to be considered indirectly. 4.2 Suggested Research Four areas were identified for possible future research to augment and enhance the work completed in this project: • Data quality and consistency. Data quality was identified in the project research as a major concern. An effort should be made to develop standards or guidelines for reporting and tracking equipment maintenance and repair cost. The guidelines should incorporate recommended data quality control procedures. C H A P T E R 4

39 • A more robust software application for the optimiza- tion tool. Excel was chosen for the development of the optimization tool because of its ready availability. The Excel-based tool accomplishes the project objectives by providing the appropriate features to support equipment replacement. However, the tool’s functionality could be enhanced with more robust software. • Equipment maintenance cost reporting and tracking. Guidelines should be developed for determining the true cost of mechanic labor rates. Prevailing practices fail to account fully for direct and indirect overhead expenses, and equipment operating costs are being understated. • Downtime reporting and tracking. Guidelines should be developed for measuring, reporting, and tracking equip- ment downtime. It appears that most agencies do not currently track downtime, resulting in the true cost of equipment operations being understated. The developed guide addresses all of these concerns and provides guidelines and recommended procedures for clean- ing up data, reporting maintenance costs, accounting for overhead expenses, and tracking downtime. The guidelines contained in the guide should be considered as starting points for future refinement, with the goal of achieving more standardized practices. 4.3 Need for System Training and Ongoing Support User training is necessary when any new software system is implemented in an agency. Such is the case with the equip- ment replacement processes and optimization tool contained in Parts II and III. Agencies that wish to implement the tool will require training to understand the recommended pro- cesses supported by the tool and how to apply the tool in per- forming LCCA and making effective replacement decisions. System training is a normal and important step for successful system implementation. Also, ongoing system support will be required. This too is a natural step in the implementation and ongoing use of the tool. An industry organization such as AASHTO is most likely the best organization to provide the ongoing support. 4.4 Need for Trained Dedicated Staff Implementing an effective equipment replacement pro- gram can be time consuming and requires dedicated staff who can commit the time to ensure quality data, perform analysis, interpret results, and consider other factors in replacement decision making. The benefit in reduced overall cost of equip- ment ownership outweighs the cost of resources. Fleet agencies need to exert the level of effort required to effectively manage their replacement programs. The literature noted that LCCA is time consuming and difficult for many fleet management agencies and that establishing replacement cycles is both an art and a science, involving data analysis on one hand and judgment, prediction, forecasts, and assumptions on the other (14). The art of performing LCCA and making replacement decisions can only be learned through performing the tasks over time. There is nuance in the analysis and the process is intricate. A dedicated and sufficiently trained staff is needed to fully realize the benefits of the products developed in this project.

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TRB's National Cooperative Highway Research Program (NCHRP) Research Report 879: Optimal Replacement Cycles of Highway Operations Equipment acts as a handbook on equipment replacement concepts and an instruction manual for making cost-effective replacement decisions. The research report presents a process for determining replacement needs for highway operations equipment, identifying candidate equipment units for replacement, and preparing an annual equipment replacement program. The products include a guidance document and an Excel-based replacement optimization tool to support the equipment replacement process and facilitate its implementation.

Disclaimer - This software is offered as is, without warranty or promise of support of any kind either expressed or implied. Under no circumstance will the National Academy of Sciences, Engineering, and Medicine or the Transportation Research Board (collectively "TRB") be liable for any loss or damage caused by the installation or operation of this product. TRB makes no representation or warranty of any kind, expressed or implied, in fact or in law, including without limitation, the warranty of merchantability or the warranty of fitness for a particular purpose, and shall not in any case be liable for any consequential or special damages.

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