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City of Raleigh Climate/Energy Action Plan
Comprehensive Fleet Transformation Strategy – Initial Step
One of the top CEAP strategies is Strategy FLT-1-10: Increase City Fleet Alternative Fuel Vehicles. Under this
strategy, the City’s fleet would continue to be replaced with alternative fuels and/or hybrid vehicles when it is
deemed that the optimal life cycle of the existing vehicle has been reached. Enhancements to this strategy will
require some additional information. The purpose of this Volume is to provide background information and a list
of data that will be needed to develop a decision support system that would facilitate the execution of this
strategy.
Working to lower emissions and operating costs, a comprehensive fleet management program will examine the
full lifecycle of vehicles to determine when it is best to retire, repair, or replace vehicles in favor of cleaner, more
efficient options. This strategy will provide a decision support system to measure the existing performance and
operating cost of individual vehicles to determine at which point in time, either now or in the future, it would be
best to replace the vehicle, maintaining the optimal lifecycle of the existing asset while minimizing overall
emissions. The strategy involves understanding many things including the average life, emission factors, cost of a
vehicle over its lifecycle, and time replacement relative to the maintenance and repair cost versus that of new
technology. Using both statistical modeling and decision analysis, individual vehicles in a fleet can be evaluated as
part of the entire fleet, in order to minimize the actuarial present value of all future costs associated with the
fleet, and thus the long-term consumption of scarce resources.
Implementation of this decision support system will provide a scientific analysis to aid in the establishment of
fleet management policies including defined guidelines for what equipment is best for what use, as well as the
lifecycle costs and emissions threshold that trigger retire, repair, or replace decisions for the existing fleet. It will
be necessary to generate defined data and apply the tool to analyze how to minimize the future costs and
emissions associated with the fleet, and thus the long-term impacts of operating suboptimal equipment.
The result will ultimately be a vehicle decision support system that manages the obsolescence, retirement, and
replacement of vehicles as they age, while maximizing the useful life of each vehicle.
Methodology
This decision support system (DSS) will monitor key economic costs associated with not owning a new, more
efficient, replacement vehicle. Data will be used to support decisions which minimize the actuarial present value
of all such future costs for each individual vehicle, and its successors, using the method described in
Obsolescence Risk and the Systematic Destruction of Wealth” (T.E.Wendling, Society of Actuaries, 2012). This
method minimizes the future costs of vehicle assets when aggregated across an entire fleet. The primary purpose
of this data collection is to enable quantification of the following economic costs:
Opportunity costs of newer vehicles
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Lower energy consumption, lower fuel costs, lower routine maintenance requirements, lost tax shelter
from expired depreciation, and any opportunity costs associated with not having a newer replacement
vehicle
Unscheduled repair costs
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These become greater in frequency and severity as the vehicle ages
Expected loss costs
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Any estimated costs associated with potential down time due to the vehicle becoming less reliable as it
ages