Fleet Challenge specializes in, and has completed lifecycle analysis for dozens of fleets in the U.S., Canada and abroad. Our highly-evolved and proprietary Life Cycle Analysis (LCA) process and software tool is used by our team to illustrate the total life cycle cost of owning and operating each fleet vehicle type and/or category for fleet clients.
LCA uses historical cost data for each vehicle category in our client’s fleet to determine at what age units should be considered for replacement.
As shown in the illustration below, ideally, optimal replacement occurs before the rollup of costs rise and reliability/safety is reduced, and before major capital expenditure or refurbishment is necessary.
Why is Lifecycle Cost Analysis so Important?
Fleet Challenge believes that fleet management’s prime responsibility is vehicle availability – “uptime”. This means ensuring that safe and reliable fleet vehicles, of the right type, size and capacity are ready each day when needed, whether that is for drivers to conduct their daily routines.
For a fleet manager, this can be a delicate balancing act – preventing budget overruns despite inflation, rising costs for vehicles, parts and fuel and unseen factors while ensuring that the fleet is modern, safe and reliable, and that vehicles are suited to user’s needs.
LCA assists fleet managers in analyzing their operations and prioritizing those strategies that optimize vehicle life and return on investment. Some vehicles in poor or unsafe condition may require replacement before the criteria is met. Conversely, some vehicles may be in good condition and exceed the criteria and not warrant replacement, therefore recommended replacement criteria should be used as a guide.
Optimizing vehicle retention rates is a data intensive practice and a proper vehicle LCA will return significantly higher end-of-life return on investment. This can then be cycled back into fleet purchasing budgets, or utilized to offset other capital expenses.
In LCA, for each vehicle class, we will generate the following data fields: average capital cost, value, maintenance and repair cost as the vehicle ages (parts and labor), downtime — as assessed by (if available) total work order numbers (i.e. shop visits for reactive repairs) as the vehicle ages, mile or km/yr., and fuel consumption as well as engine hours, and/or power take off hours, among other fields where additional data is available.
For our LCA clients, Fleet Challenge will develop vehicle retention recommendations based on discounted cash flow analysis and determine an overarching retention strategy that describes the optimal replacement cycles for all types of vehicles in the client’s fleet.
Software tools, including the LCA tool, which we use in our consulting projects are incuded in the overall price and we license the tools we use in perpetuity at no charge to our clients for their own use post-project. Optionally, the software tools can be purchased for clients own use.