Commercial Carrier University

How to Evaluate life cycle costs

The following is an exerpt from How to Evaluate Life Cycle Costs, a manual produced by Commercial Carrier University and sponsored by Castrol. CCU is an educational program produced by Commercial Carrier Journal that includes business management manuals, seminars aimed at improving management skills and a website. For more information, visit www.commercialcarrieruniversity.com.

Although some fleet managers might operate with few budget constraints, most live with financial limitations that may prevent them from replacing vehicles at the most economical time. At least twice a year, assess your fleet in light of any changes in the business, resale values, manufacturer incentives, and principal and interest costs.

When you make this assessment, establish a priority ranking that will guide you through the replacement cycle. Any vehicle targeted for replacement should receive a physical inspection by operating, maintenance and specification professionals to determine whether it is feasible to extend the vehicle’s life with some added investment in maintenance and repair. A vehicle assessment report will help you develop a ranking system to determine which vehicles should be replaced first.

Set priorities to determine which vehicles to replace with the available funds. The following method is one possible approach.