Computerized Equipment Replacement Methodology

The Texas Department of Transportation (DOT) owns and maintains an active fleet inventory of approximately 17,000 units and replaces about 10% of them annually. Any methodology that can improve Texas DOT’s replacement procedures could potentially save millions of dollars. Private and public agencies do not routinely use life-cycle cost as a replacement criterion because the only way to automate inspection of thousands of life-cycle cost histories has been to define an acceptability threshold for annualized costs. Most fleet managers consider this practice too inaccurate. The most relevant information provided by a lifecycle cost graph is its trend. Units whose life-cycle costs have been increasing longer or at a faster rate should have higher replacement priority. The trend score concept allows a computer to mimic replacement decisions made by a person visually inspecting a series of life-cycle cost histories. A new economically sound methodology for assisting with equipment replacement at Texas DOT is presented. This new method takes full advantage of Texas DOT’s comprehensive equipment operating system database, can prioritize the units on the basis of comparisons among all units within any desired class of equipment, and uses life-cycle cost trends as a replacement criterion. This methodology was implemented through the Texas Equipment Replacement Model, a menudriven software that allows the fleet manager to efficiently apply the methodology.