How to Evaluate Life-Cycle Costs


Foreword


Introduction


Chapter 1
Defining vehicle life

A power unit has three overlapping lives — service life, technological life and economic life. You need to consider all three to determine whether it’s time to replace a vehicle.

Chapter 2
Prioritizing replacement

To ensure a cost-effective replacement of your vehicles, identify — and record — the operating and maintenance costs of each vehicle.

Chapter 3
Types of vehicle specifications

You can spec a vehicle two ways — by quantifying items to exacting detail and by defining the function. With a technical specification, the company that sets the specs is liable for problems. With a functional specification, the manufacturer assumes the liability.

Chapter 4
Developing vehicle specifications

Distribution of gross vehicle weight is a key consideration in determining whether a vehicle can carry a load. Consider several factors — maximum gear reduction, geared road speed, gradability, speedability and gear steps — to ensure sufficient performance.

Chapter 5
Component and system considerations

Vehicle components and systems are changing rapidly to meet increased and sometimes conflicting demands from trucking companies. Staying abreast of changes to engines, suspensions, transmissions, fuels and lubricants is critical to running a safe and efficient fleet.

Chapter 6
Soliciting and awarding bids
Make sure your specifications address all of your expectations: performance, operating costs, projected maintenance costs for the life of the vehicle and warranties (both expressed and implied). Seek bids from as many companies as possible, and from several dealers if you have selected a specific brand.

Chapter 7
Assembly, acceptance and warranty administration

When soliciting a bid, define warranty terms, expectations about handling of any defects and the process for liquidating damages. Evaluate bids based on conformance with specifications, the manufacturer’s/dealer’s support capabilities and price.

Chapter 8
Maintenance: The critical component

Service failures are unacceptable, so maintenance is more important than ever. Many fleets are outsourcing some or all of their maintenance, but remember, outsourcing does not relieve you of all service and maintenance responsibilities.

Chapter 9
Disposal: The end of the road

Your choice among vehicle disposal options should depend on market conditions. Patience, promotion and presentation are keys to a successful disposal.

Chapter 10
Vehicle replacement strategy

Your strategic vehicle replacement plan should compare operating and maintenance costs, excluding driver costs, for current and new equipment.