As fleet managers are asked to cut costs in every direction, expenditures are under heavy scrutiny — particularly with large acquisitions such as sweepers. Nevertheless, keeping an aging unit requiring major maintenance and expensive to operate can weigh heavily on a fleet's budget as well. To make the best budgetary choices, fleet managers must know the annual costs associated with operating their sweepers — and those units they may purchase.
A lifecycle cost analysis helps fleet managers know exactly how much a fleet unit costs to operate over its service lifetime. This analysis can lead to other important conclusions, including whether to keep an aging vehicle or which new models are the best purchase. To help, sweeper experts weigh-in on the best approach to performing a lifecycle cost analysis of these important fleet units.
1. Devise the Right System
Performing an accurate analysis is based on simple organization. Before you begin, create a system — a database, spreadsheet, or other electronic resource - that will accurately collect all data and store it in one organized place.
Rick Longobart, fleet services superintendent for the City of Inglewood, Calif., says fleet managers may consider purchasing a software program that performs the work for them, depending on their budgets and organizational acumen.
"In terms of software, there are many different ways to perform a lifecycle analysis, and no one way is right or wrong. One approach is to use fleet management software that does everything behind the scenes: You input the data, and it accumulates it. You can also use a simple Excel document by collecting all the costs and creating a formula to show what you're spending each year. Other software programs are designed specifically for lifecycling," he said.
"Many tools tare available to choose, but the choice depends on what works best for the fleet and what you're willing to spend. Whichever tool you choose, the most important thing is what you take away from it and how you interpret the results," Longobart added.
While purchasing a lifecycle-specific software program might not seem practical, Jeffrey Haase, senior VP of Environmental Products of Florida, an Elgin Sweeper dealer, says investing in a program can do more than simply calculate costs.
"A software package will also help you in scheduling preventive maintenance. Your costs over the long run will be lower if you maintain your sweeper in a timely fashion," he said.
2. Gather the Data
In analyzing the cost of an existing or new sweeper, fleet managers should look carefully at the unit's operating costs, including acquisition price, fuel, tires, maintenance, main broom life, gutter broom life, replacement parts, and importantly, labor costs. This data generally is found in fleet records or the operator's manual, or from the manufacturer or distributor. Additional factors to consider include accident history, depreciation, and inflation.
Elgin's Haase offers his formula. "Capture all your repair, maintenance, and broom usage costs, assign a value for each day the sweeper is out of service, add the acquisition cost, and subtract the residual value," he said. "Gather all repair orders to the repairs from outside vendors. Accounting departments can supply the acquisition cost. The sweeper dealer is the best one to set the residual value. Depending on their systems, all the costs are right under fleet managers' fingertips."
When purchasing new units, buyers should compare models carefully, keeping in mind the application. "One should first estimate the number of hours the machine will be used per year and its application," Chad Bormann, national sales manager for Allianz Sweeper Company, said.
"This will help to determine the type of sweeper to purchase and limit the risk of premature wear on the machine and components due to placing the wrong machine in the wrong application. It is very important for all customers to research the available equipment and purchase what best suits the application and not buy just because 'it is what we have always operated,' " said Bormann.
Equally important as finding the right sweeper for the right function is accurately assessing maintenance-related labor costs. According to Sebastian Mentelski, regional sales manager for Allianz Sweeper Company, different models can make a difference.
"Allianz Sweeper Company designs products that focus on ease of serviceability, hence reduced costs of labor," he said. "Quick oil changes, broom replacement, and standard repairs take time, and time costs money. Being able to replace a faulty part or change a main broom can save the customer money, especially if it can be accomplished in half the time compared to the competition. Furthermore, repairing something quicker means that the street sweeper can go back to its regular route, hence minimizing downtime."
3. Talk to the Experts
Unfortunately, there isn't one magic solution for performing a lifecycle cost analysis. However, many industry experts can offer practical advice and valuable knowledge about how sweepers run and their true operating costs. For instance, the shop foreman would have first-hand knowledge of labor rates, the price of parts, and the frequency of repairs and maintenance.
Longobart suggests talking with the person who truly knows the unit best: its operator. "It's important to get the operator's perspective and ask, 'If we keep this vehicle, how does it affect you? Can you still perform your job?' " he advised. "Even though you justify keeping a unit numerically or financially, it's important to consider the operator's perspective. In some cases, the numbers would justify the fleet hang onto the vehicle, but there is no reason to keep it around if it isn't serving its purpose."
Bormann and Mentelski say individuals outside the fleet can help as well.
"Approach the local dealer or manufacturer," Bormann said. "As a manufacturer that produces a complete line of sweepers, it is our job to recommend the right machine for the application and the machine that would serve as most efficient and cost effective. A reputable manufacturer will also be able to provide references the fleet manager could contact for results of their collected data."
"All fleet managers should work directly with the distributors in the area," Mentelski said. "Allianz Sweeper Company encourages all customers to work with the distributor and with Allianz as well."
4. Continue Gathering the Data
Today, most fleet services departments keep excellent records of equipment utilization and maintenance. Thorough records of all maintenance, fuel consumption, consumables, and unexpected costs related to the equipment is valuable information in guiding budget estimates and future purchases. Consistently and continually tracking this data helps managers in their purchasing decisions.
"The key to determining total cost of operation is to be diligent and update the database continually," Mentelski said. "Every hour of labor should be accounted for and properly assessed. Every replacement part should be tracked, along with tires, oil changes, filter changes, coolant changes, etc."
In addition to routinely gathering data, Longobart suggests fleets consistently perform lifecycle cost analysis. "Most people say they shouldn't look at it each year because they already anticipate that at the end of five or 10 years, the sweeper will have reached its lifecycle. But you need to see what each year brings and make the assessment annually to maintain accuracy."
5. Remember Sweeper Operations Differ
While all equipment runs on fuel and needs regular maintenance, new tires, and an occasional repair, sweepers require special considerations. In particular, the environment in which they operate can significantly affect their longevity.
"The major difference between a street sweeper and a car, truck, or off-road vehicle is a street sweeper works in a very corrosive environment," Mentelski said. "It works in dust and water, and that combination can quickly destroy hydraulic systems, bearings, and electronics. A street sweeper is a high maintenance-type of heavy equipment, and it is crucial that it receives daily maintenance as well as manufacturer recommend service."
Longobart added that the way a sweeper works matters, too. "The stop and start conditions under which a sweeper operates will ultimately shorten its lifecycle. Unlike a car that can get out on the freeway, a sweeper operates at slow speeds within the city." Longobart said for this reason, fleet managers shouldn't assume a car or truck's lifecycle would be similar to that of a sweeper.
Likewise, Bormann suggested that because sweepers are tasked with many functions, they are taxed more than a typical fleet unit. "Today, a street sweeper is used for more than cleaning the street," he said. "They can be used as a water truck. They clean catch basins and help to comply with Clean Water laws. Typically, a car or truck would serve a single purpose. It is obvious a multipurpose tool like a sweeper would carry higher lifecycle costs in serving such necessary duties. More moving parts, consumables, and maintenance will far exceed that of the standard automobile, but for logical reasons."
6. Justify the Purchase
Performing a lifecycle cost analysis isn't simply a routine effort of putting an X in the "run the numbers" box. Fleet managers must justify purchases with hard numbers. That's when a lifecycle analysis becomes truly valuable.
When purchasing new sweepers, Bormann noted the numbers can help reveal the true value of a purchase over its lifetime — a consideration that can reduce sticker shock and help fleets get equipment that yields the most value.
"In many cases, the buyers and councils do not look beyond the initial purchase price of the equipment," Bormann said. "If a fleet manager can provide them with this type of information and educate them on the overall cost factors over the life span of the machine, they will more than likely see that saving money up-front is not directly proportional to savings over the lifecycle. It can help a fleet manager justify purchasing the 'right' piece of equipment and not always the 'less expensive' piece of equipment."
Haase agreed. "If you just purchase the lowest bid, you may be surprised when you find repair costs to be high, utilization is low, and your broom life is short," he said. "Your up-front acquisition cost may be higher, but after you factor in all your costs, you may find that the more expensive sweeper really is the lowest overall price."
The decision to purchase a sweeper — or to delay that purchase — is important. Longobart suggested why: "A critical factor in determining when to replace a sweeper is determining its impact on operations, should it break down. If it fails, you can't go out and simply rent a replacement, so a sweeper breakdown ultimately has a greater impact than would a vehicle breakdown."
When fleet managers can present a solid case for equipment purchases, they use taxpayer dollars wisely and garner the best fleet equipment. A lifecycle cost analysis helps accomplish this important and often difficult task.