22 TR News, July–August 1990

RESEARCH PAYS OFF

Vehicle Replacement StrategiesNCTRP Data Provide Basis for Guidelines onReducing Cost Impacts

Suggestions for "Research Pays Off"articles are welcome.

Contact Crawford F. Jencks, Trans-portation Research Board, 2101 Con-stitution Avenue, N.W., Washington,D.C. 20418 (telephone 202-334-2379).

Public transit agencies, like everyoneelse, must try to balance their expensesand incomes. Faced with an anticipatedvehicle replacement shortfall of morethan $200 million in the next 10 years,the Los Angeles County TransportationCommission (LACTC), in conjunctionwith 13 Los Angeles County transitoperators, conducted a study to developcost-effective vehicle replacementguidelines. The study built on the re-sults of research recently completedunder an Urban Mass TransportationAdministration-sponsored programdirected by TRB under the NationalCooperative Transit Research and De-velopment Program (NCTRP). Theresult was a simple, efficient methodfor evaluating cost impacts of alterna-tive vehicle replacement schedules.

ProblemAlthough transit capital investmentscan have a significant impact on oper-ating costs and, therefore, on deficits,decisions on capital investments areseldom based on optimization. Capitalinvestment decisions are more oftendriven by federal funding availabilityand are based on federal vehicle re-placement guidelines. Simply replacingvehicles at 12 years of age or 500,000miles, or when local matching funds areavailable, does not ensure cost-effectiveinvestment, nor do such investmentpolicies properly evaluate the choicebetween vehicle replacement and reha-bilitation.

SolutionIn July 1988, the LACTC estimated a$220 million shortfall in fundingneeded to meet the capital replacementrequirements of 13 Los Angeles Countybus operators between the years 1990and 2000. These organizations initiateda study to develop vehicle replacementguidelines that would better use theiravailable transit-operating and capital-financial resources and engaged FleetMaintenance Consultants, Inc. (FMC,Inc.) of Houston, Texas, to help de-velop the guidelines. The consultantshad previously prepared NCTRP Re-port No. 10, Public Transit Bus Main-tenance Manpower Planning, and No.15, Transit Capital Investment To Re-duce Operating Deficits—AlternativeBus Replacement Strategies. FMC, Inc.,provided an extensive data base thatthey had developed for the NCTRPreports that encompassed vehicle oper-ating and maintenance costs for 170transit coach fleets containing morethan 10,000 buses and 18,000 cars,trucks, and vans.

This national data base was used toprovide specific cost relationships, suchas operating cost as a function of ageand mileage; cost versus miles betweenvehicle subsystem rebuilds; and salvagevalue related to mileage, age, and pur-chase price, to supplement availablelocal information. Los Angeles Countytransit operators carefully examined theapplicability of national cost relation-ships to their vehicle fleets and de-ployment practices and critically

TR News, July–August 1990 23

reviewed the results. In all cases, thetransit operators found the results to bereasonably consistent with their experi-ence and understanding and agreed touse local information supplementedwith the national data base to developlocal vehicle replacement guidelines.

ApplicationThe study group developed a coachreplacement methodology considering

1. Capital costs, which were amor-tized across the useful life of the vehi-cle and decreased as the vehicle ageincreased;

2. Base maintenance costs, which in-crease with vehicle age and cumulativemiles, reflecting the higher cost of op-eration and repair associated with oldervehicles; and

3. Major vehicle subsystem rebuildcosts (for engines, transmissions, bod-ies, and frames), which can either in-

crease or decrease with age becausethey generally occur at fixed mileageintervals. These costs were totaled todetermine the annual equivalent cost(AEC) for the existing bus replacementpractice. They were then applied for arange of potential vehicle replacementages and the relative AEC was com-pared for each age. This indicated thatthe minimum AEC for the buses understudy occurred at 15.5 years.

A similar technique was applied tothe Dial-a-Ride and support fleet op-erations. Major subsystem rebuilds arenot common with these fleets; whenthey occur, they are included in thebase maintenance costs. Unlike transitcoaches, vans and support fleet vehi-cles (trucks and automobiles) mayhave significant residual or salvagevalue at retirement. The research indi-cated that a three-and-a-half- to four-year retirement period yielded thelowest total cost for support vehicles.In mileage terms, this reflects about55,000 to 65,000 miles per vehicle inLos Angeles.

BenefitWhen the guidelines were applied toeach bus fleet owned by the 13 LosAngeles County transit operators, thealternative replacement schedules pro-duced an estimated cost saving of $117million (in 1989 dollars) over 10 years.When the guidelines were applied tothe van and support vehicle fleets, thealternative replacement schedule, whichrequired replacing the vehicles earlierthan planned, produced an estimatedcost saving of about $8 million.

For further information, contactRichard Drake, Fleet MaintenanceConsultants, Inc., 1880 South DairyAshford, Suite 109, Houston, Texas77077 (telephone 713-469-7177), orDouglas Carter, Booz-Allen & Hamil-ton, Inc., 5933 West Century Boule-vard, Suite 310, Los Angeles, Califor-nia 90045 (telephone 213-216-2838).