What
Data
Do You Need?
Snapshot
To work with AGE/CON you
need three sets of numbers:
- Operating & Maintenance Costs
- Trade-In Estimates
- Inflation Rates
Even if your database is not great, AGE/CON
will give you better replacement indications than your previous estimates. |
The Details
AGE/CON requires some numbers
to work with. These numbers are from your own records, or, in some cases they’re
estimates based on your own knowledge and experience.
Essentially, you need three sets of figures —
- The year-by-year actual costs of operating and maintenance for each unit
- Inflation-rate percentages for each year of the unit’s life
- Your estimates of trade-in values for each unit at the end of each year of its life.
Pin-point accuracy is not essential. Even when exact figures are available they need
only be expressed, as you enter them into the program, as rounded numbers.
A scarcity of real data should not necessarily be an
impediment concerning the use of AGE/CON. Why do we say this?
- For one thing, even with estimates, you’ll likely get replacement recommendations
from the software that are better than you previously arrived at.
For another, you can easily determine the sensitivity of the AGE/CON
results by playing what-if games with your input.
Thirdly, by beginning to use AGE/CON, even without the most accurate
numbers, you’ll be developing a feel for the kind of data you need to collect for
future analyses.
Let’s look at each of these data-requirements in turn —
Operating & Maintenance Costs
You’ll need one O&M Costs figure for each year of the unit’s life.
O&M Costs should include all of the costs of running the vehicle — mostly fuel,
but not drivers’ wages — plus the costs of maintaining the unit…essentially
parts and labor. Getting at these figures is not usually a problem. You have records for
each vehicle that include these costs, and your records are often computerized in a
spreadsheet format or in a CVMMS (Computerized Vehicle Maintenance Management
System).
As remarked above, AGE/CON will need only one O&M total figure for
each year, unless — and this is not typical — you wish to carry out quarterly
analyses in which case you’d need one total O&M number for each quarter.
These costs are usually in current dollars, that is, the dollars that were
actually spent in a given year on these expenses.
AGE/CON, however, works in constant dollars. It needs to work
out the trend of O&M Costs that exclude the effects of inflation. Which brings us to
—
AGE/CON’s Inflation-Adjustment Feature
The software will easily be able to convert your current dollar figures to constant
dollars if you tell it what the inflation rate was for each year of the data. How do you
arrive at this? Quite easily. Since maintenance labor is a major component of the O&M
Cost total, you have only to look at your labor wage-rates over the years and work out the
yearly increase…that’s the inflation rate you can apply to the overall O&M
Costs input.
Remember, AGE/CON does the applying. All you have to do is input these
inflation rates once, for each unit, and you’ve got it!
The third input component is…
Trade-In Estimates
AGE/CON will also ask you for the acquisition cost, today, of a brand
new vehicle of this type. Based upon this figure, you must estimate what that vehicle, at
that acquisition cost, would bring today as a trade-in if it were one year old, two
years old, three years old, and so on. AGE/CON allows you to enter these
estimates as dollar-amounts, or as percentages-of-acquisition costs, whichever you prefer.
That’s the story on data input. Any questions? Contact us. Also, get AGE/CON
to come to life by asking us for our free demo program
to try out for yourself on your own computer.
Here’s a look, right now, at AGE/CON’s Main Screen where
most of the input and output are displayed. Nice and clean…and simple! (Who needs
complications there days!).
Notice the input, as described in the text earlier. The
Acquisition Cost of $150,000; The O&M Costs (Operating & Maintenance), that
increase each year; The Resale Values that decrease each year — and they can be
entered as dollar-estimates or as percentages of the acquisition cost.
The output in the right-most column will be described in the next section.
This screen allows you to select the scenario that most
closely resembles your policy of utilization. It’s an important component of the
model Dr. Jardine uses to ensure that the optimal replacement year that AGE/CON arrives at
is indeed…optimal.
Here’s how you select which inflation calculation
you’ll require. AGE/CON must work in "today’s dollars". That makes it
necessary to adjust "yesterday’s dollars" to represent what the costs would
have been had they been incurred this year…i.e., "today".
The Output
You’ll Get
Snapshot
This snapshot is an easy one! You get
one critical piece of information — the time to replace the vehicle that is
absolutely the most economical solution to your replacement question.
There’s not a fleet manager in
the world that doesn’t have to justify his or her proposal to a higher-up, or to a
committee. What better way to sell your recommendations than to show them Age/Con's
output and explain that it’s been calculated from the proven mathematics applied by
one of the world’s most respected maintenance authorities, Dr. Andrew Jardine. |
The Details
The answer is in the right-hand column of AGE/CON’s
main screen — the EACs, the Equivalent Annual Costs. If you scroll
back up to the screen-display, you'll see we have circled them in red. The year
where you see the lowest cost EAC is the recommended trade-in year, and it’s also
displayed in the Best Year box, above.
Your Savings
What this screen shows is…if you replace the vehicle at the end of it’s 6th
year, the total cost of everything…ownership, labor, maintenance, fuel, and so
on…will have amounted to $52,833 in each and every year. If you had traded it in
after only 4 years, it would have cost your vompmpant $55,500 per year. Thus in
those four years you would have spent $2,667 x 4 = about $10,000 more than you should
have!
Multiply these kind of savings by the number of vehicles you operate, and you’ll
see what an impressive total the possible savings amount to. AGE/CON can
easily pay for itself the first time you use it.
There’s an added wrinkle, by the way. If, as sometimes happens, your EACs are
decreasing throughout the time-span of the analyses — that is, the final year is the
lowest year — that may mean that next year’s EAC may be lower still.
Communicating the Results
If you like pictures better than numbers, just click VIEW GRAPH and you get a curve. The
low point on the curve corresponds to the BEST YEAR number.
What about showing all this to management? One way is to tell the program to
"Print Report". The report will detail in hard copy all the input and output for
a given analysis. Still another way is to capture some of the screen-displays and build
them into your Microsoft WORD or PowerPoint presentation. Your management will not only be
impressed with the "look", but they’ll also be impressed with your
recommendations — seeing that Dr. Jardine helped you with them!
AGE/CON’s Delivers Even More!
Yes, AGE/CON can do even more for you. Take the Repair-or-Replace
question for example. Along with the procedures in our User’s Manual you can work out
whether it’s better to repair your unit or replace it. Of course, making the right
choice can save tons of money! Same with the Lease-or-Buy quandary, as well as the
question of establishing how much equipment is required to do a given amount of work.
It’s true that the basic reason for acquiring AGE/CON is
to find out exactly when to replace your equipment, but AGE/CON will
deliver these added features, when you need them.
The Bottom Line
AGE/CON can — and will — save you money. Our guarantee is in
writing! |
