estimating owning & operating costs
TRANSCRIPT
Estimating Owning & Operating Costs
John C. Hildreth [email protected]
2015 AASHTO SCOM/TRB Maintenance Conference
Estimating Equipment Costs
1. Equipment Costs 2. Annual Cost Model 3. Cumulative Cost Model 4. NCDOT Models The take home…
1. Equipment Costs
$0
$20
$40
$60
$80
$100
$120
$140
$160
0 5 10 15 20 25 30 35 40
Rat
e ($
/hr)
Machine Age (hrs x 1000)
Owning
Operating
Total
1. Equipment Costs
Operating Costs • Rate ($/hr) increases with age
due to increasing frequency & magnitude of repairs
• Also a “fixed” rate component for fuel, PMs, and wear parts
• Timing and size of repairs are the real unknowns
$0
$40
$80
$120
$160
0 10 20 30 40
Rat
e ($
/hr)
Machine Age (hrs x 1000)
2. Annual Cost Model Owning Costs • Sum of Years Digits to estimate machine value • Depreciation term and ultimate value from:
– Current NCDOT depreciation schedule – Construction Equipment Ownership and Operating
Expense Schedule by US Corps of Engineers
Class 0201 – Truck, Pickup 5000 GVW Term: 5 years Salvage Value: 20% of purchase price
2. Annual Cost Model
Operating Costs • Estimated cost and use in each year of life • Snapshot of the fleet in a year (2011)
y = 0.2462e0.0373x
R² = 0.1228
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
0 2 4 6 8 10 12 14
Ope
ratin
g R
ate
($/m
i)
Age (yrs)
y = -697.07x + 17653R² = 0.064
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
0 2 4 6 8 10 12 14
Ann
ual U
se (m
i)
Age (yrs)
2. Annual Cost Model
Observations 1. Operating cost ($/mi) highly variable
• Snapshot of a trend longer than 1 year • Investment periods – high cost and low use • Honeymoon periods – reaping benefits of previous
investments
2. Data included all possible variations • All makes/models, applications, and operator skills • Some older machines no longer produced/purchased • May not accurately reflect expected future
3. Cumulative Cost Model • Track machine age in
miles or hours, rather than years
• Tangent point defines economic life (lowest rate)
• Cost growth largely comes from increasing operating costs
T*Tt
L*Machine Age
Cum
ulat
ive
Cos
t
Pp
t
3. Cumulative Cost Model
Mitchell Curve LTD Repair Cost = A*Age2 + B*Age
• For similar machines – type, size, and application • Must have LTD cost and use (age) data
y = 0.0011x2 + 0.9613xR² = 0.9382
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
0 2,000 4,000 6,000 8,000 10,000 12,000
Life
-to-
Date
RPL
Cos
t
Age (hours)
1001
1002
1003
1004
1005
• Best to have: – Machines of varying ages – Some machines at or beyond
economic life
4. NCDOT Models
Equipment classes, model years 2003-08: – 0201 Pickup trucks – 0205 Dump trucks, 35k GVW – 0314 Backhoes – 0900 Motor graders
y = 1.23E-10x2 + 5.34E-06xR² = 0.9906
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1.75
0 20,000 40,000 60,000 80,000 100,000
Cum
ulat
ive
Cos
t Ind
ex
Machine Age (miles)
Cumulative Cost Index – Operating cost as a percentage of purchase price
CCI = LTD Oper Cost [2012$]Purchase Price [2012$]
4. NCDOT Models
9,200 data points for 1,300 pickups (class 0201)
y = -9.61E-12x2 + 1.18E-05xR² = 0.875
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
0 50,000 100,000 150,000 200,000 250,000 300,000
Cum
ulat
ive
Cos
t Ind
ex
Equipment Age (miles)
4. NCDOT Models
2003 Model Pickups
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0 50,000 100,000 150,000 200,000 250,000
Cum
ulat
ive
Cos
t Ind
ex
Machine Age (mi)
Low miles High A values
4. NCDOT Models
Average A value of top quartile machines by age
-3.0E-10
-2.0E-10
-1.0E-10
0.0E+00
1.0E-10
2.0E-10
3.0E-10
0 50,000 100,000 150,000 200,000 250,000 300,000
Mitc
hell
Cur
ve A
Coe
ffic
ient
Machine Age (mi)
4. NCDOT Models
y = 2.03E-11x2 + 8.34E-06x
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0 50,000 100,000 150,000 200,000 250,000 300,000
Cum
ulat
ive
Cos
t Ind
ex
Equipment Age (miles)
4. NCDOT Models
Class 0201 Pickup Trucks
4. NCDOT Models
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
0 50,000 100,000 150,000 200,000 250,000 300,000
Aver
age
LTD
Tot
al R
ate
($/m
ile)
Machine Age (miles)
4. NCDOT Models
Comparison of Results
Equipment Class Annual Cost Models Cumulative Cost Models
Econ. Life Total Rate Econ. Life Total Rate
0201 Pickups 186,379 mi $ 0.42 197,800 mi $ 0.38
0205 35k GVW Dumps 113,525 mi $ 1.60 105,000 mi $ 1.32
0314 Backhoes 5,197 hrs $ 34.33 5,865 hrs $ 29.43
0900 Motor graders 6,568 hrs $ 52.20 6,020 hrs $ 52.27
Estimating Equipment Costs
1. Equipment Costs 2. Annual Cost Model 3. Cumulative Cost Model 4. NCDOT Models The take home…
1. Equipment Costs
Owning Costs Rate ($/hr) decreases with age as hours are accumulated over which to spread the loss in value
$0
$40
$80
$120
$160
0 10 20 30 40
Rat
e ($
/hr)
Machine Age (hrs x 1000)
Operating Costs Rate ($/hr) increases with age due to increasing frequency & magnitude of repairs
$0
$40
$80
$120
$160
0 10 20 30 40
Rat
e ($
/hr)
Machine Age (hrs x 1000)
2. Annual Cost Model
• Estimated cost and use in each year of life • Snapshot of the fleet in a year (2011)
y = 0.2462e0.0373x
R² = 0.1228
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
0 2 4 6 8 10 12 14
Ope
ratin
g R
ate
($/m
i)
Age (yrs)
y = -697.07x + 17653R² = 0.064
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
0 2 4 6 8 10 12 14
Ann
ual U
se (m
i)
Age (yrs)
4. NCDOT Models
2003 Model Pickups
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0 50,000 100,000 150,000 200,000 250,000
Cum
ulat
ive
Cos
t Ind
ex
Machine Age (mi)
Low miles High A values
4. NCDOT Models
Average A value of top quartile machines by age
-3.0E-10
-2.0E-10
-1.0E-10
0.0E+00
1.0E-10
2.0E-10
3.0E-10
0 50,000 100,000 150,000 200,000 250,000 300,000
Mitc
hell
Cur
ve A
Coe
ffic
ient
Machine Age (mi)
4. NCDOT Models
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
0 50,000 100,000 150,000 200,000 250,000 300,000
Aver
age
LTD
Tot
al R
ate
($/m
ile)
Machine Age (miles)
Estimating Owning & Operating Costs
John C. Hildreth [email protected]
2015 AASHTO SCOM/TRB Maintenance Conference