Key Variables Affecting Decisions of Bus Replacement Age and Total Costs

Abstract

Recent budget and fiscal constraints make optimal fleet management more imperative than ever for transit agencies. Fleet data have consistently shown that bus operations and maintenance (O&M) costs per mile increase as buses age. From a purely economic perspective, there is a cost trade-off between the lower O&M costs of newer fleets and their higher initial capital costs. This trade-off has a significant impact on the optimal timing of purchase and replacement decisions. Realistic cost data and an optimization modeling framework were used to analyze the impact of purchase timing decisions on fleet costs per mile. The results indicate that (a) increases in diesel prices do not affect total bus fleet costs as much as increases in maintenance costs, (b) increases in maintenance costs and utilization per year reduce the optimal replacement age, (c) increases in utilization and fuel economy have a similar impact in terms of total fleet costs, and (d) bus purchase-price changes have a significant impact on the optimal replacement age. Given uncertain and hard-to-forecast market variables, a thorough sensitivity analysis is presented to ascertain the key variables that affect bus transit replacement timing.