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FLEET MANAGEMENT www.landscapeirrigation.com Landscape and Irrigation March 2015 35 The first step in vehicle acquisition should involve evaluating exactly what you need the vehicle to do, and then ensuring that the design and specifications for the vehicle in question match your requirements. Adding extra or more complex components to a vehicle may increase its productivity, but there are tradeoffs. Not only will these add-ons increase the upfront cost of the unit, but they may also increase its overall weight, which could lead to less payload and more maintenance costs. The extra weight and potentially increased engine idle time necessary to operate the equipment could also negatively affect fuel economy. This doesn't mean that you should never consider add-ons. Before you add components, simply be sure to calculate their long-term benefits using a net present value (NPV) life-cycle cost analysis. An NPV analysis can be used to evaluate both up- graded truck chassis components and productivity add-ons. To make such an analysis, first identify your internal cost of money (more on that later) and then determine how soon the upgrades and/or additions need to return their costs (payback period). If you are a for-profit, tax-paying entity, you should also factor in your total effective income tax rate so that you can determine the impact of depreciation on the proposed upgrades. A vehicle investment will have a zero NPV at the end of the payback period if the payback equals your cost of money. If the return is less, the NPV will be negative; if it is earning more, the NPV will be positive. One of the factors impacting an NPV analysis is the cost of money. Money can be obtained from mul- tiple sources, including internal capital, direct borrowing (debt) and leasing. The question you must answer is "Which is best for me?" Your answer will be impacted by the proposed life of the asset in question, your internal cost of money, alternative op- portunity costs and the market cost of debt. Just because you have always financed your new vehicles using one particular op- tion does not mean that you should continue to do so. Another factor for tax-paying entities is how the government treats capi- tal investments for depreciation purposes. This is a constantly changing wildcard and should be reevaluated every year. Before buying, another question you should ask yourself is "Do I really need that truck?" Just because a truck is currently in your fleet does not mean that it needs to be replaced. It may have been acquired initially to meet a requirement that no lon- ger exists. Likewise, you may have multiple trucks that are per- forming the same basic task. Changes in demand for that task or increased productivity of the fleet through upgrades may have eliminated the need for some of the units. The process of evaluating the need for all of your vehicles, commonly referred to as fleet "right-sizing," should be a part of every vehicle re- placement cycle's evaluation process. Do you have a specialty unit that is only used occasionally? If so, determine if that work can be subbed out to a rented unit for these occasional require- ments at a lower cost. The elimination of non-productive ve- hicles in you fleet will reduce your investment costs, routine maintenance and licensing costs, and potentially even allow you to reduce your maintenance labor force. VehIcLe fueL effIcIency Fuel efficiency is dependent largely on how a vehicle was initially designed. That's why you should start your new vehicle search by selecting a truck that is close in size and type to your desired end result. It is usually more cost-effective to pay for the right base, rather than to try to make an insufficient vehicle work by continually adding components. Once you have selected the proper base vehicle, it is time to consider engine options. Just because you have always used a gas engine or a diesel engine in the past does not necessarily mean it is the correct choice going forward. Changes in technologies, job requirements and fuel costs can all impact your choice. This is especially true for trucks in the Class 3–5 range, where gaso- line engines have improved and diesel engines have become more expensive as a result of post-2010 emissions requirements. Once you have settled on an engine type, then you can take the time to optimize the total powertrain (engine, transmission, axle gear- ing) to perform at maximum fuel efficiency. There are numerous other factors you should consider that can impact the fuel efficiency of a vehicle. In many cases, your selections will be guided by the drive and duty cycles for the ve- hicle in question. For example, aerodynamic add-ons are highly beneficial when you have a drive cycle that includes extended driving at highway speeds and a duty cycle that includes frequent implementation of that drive cycle. The proper selection of options can also reduce the weight of a vehicle. This weight reduction can be leveraged to allow you to improve fuel economy, increase payload (which can improve productivity), or even downsize the selected vehicle. In all cases, the net effect is a reduction in fuel consumption for each unit of work performed. Other design/specification factors that can impact fuel econo- my include the use of low rolling resistance tires, high-efficiency transmissions, synthetic lubricants (especially in gear boxes), low-drag brake systems, and high-efficiency accessories such as air conditioning units, air compressors and alternators. Regard- less of how you approach fuel efficiency, it is critical that you know your options. The better educated you are in terms of what the chassis OEMs are offering, the easier it will be for you to spec' an optimum truck for your application. Long-term maIntenance costs The way you spec' your next truck can have a huge impact on long-term maintenance costs. If a truck is not properly designed for the intended application and is overloaded in any way, your The process of evaluating the need for all of your vehicles, commonly referred to as fleet "right-sizing," should be a part of every vehicle replacement cycle's evaluation process.