HomeMy WebLinkAbout7B - 2008 Equipment Replacement Report
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4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
CITY COUNCIL AGENDA REPORT
FEBRUARY 4, 2008
7B
AL FRIEDGES, PARKS & FLEET MAINTENANCE SUPERVISOR
PRESENTATION OF THE 2008 EQUIPMENT REPLACEMENT REPORT
Introduction
The purpose of this agenda is to seek City Council approval of a report relating to:
1. City Council authorization of equipment acquisition strategies, and
2. Review of equipment to be acquired in 2008.
History
On August 20, 2007 City Staff presented a report detailing the City's Equipment
Matrix program. As part of that presentation staff was directed to provide an
annual report that previewed and justified the proposed purchases for the coming
year. Additionally the report would summarize Staff's research of the following
potential alternatives to possibly extend the life of our fleet and to help reduce
purchase costs:
1. Equipment Refurbishing Program;
2. Lease and Rental options;
3. Equipment Zero Value Operation;
4. Alternative Fuels Analysis;
5. Vehicle and Equipment Scheduling and Operations Procedures;
6. Equipment Partnerships; and
7. Used Equipment.
Current Circumstances
As directed by the City Council Staff has prepared a 2008 Equipment
Replacement Report. Staff has investigated the following options and will
consider them as part of 2008 purchases and the preparation of the 2009-2013
Equipment Matrix.
1. Refurbishing Program:
Currently, the fleet division performs numerous refurbishing and body repair
functions to the vehicles and equipment. The repair and refurbishing conducted
helps to keep our equipment looking good displaying a positive public image and
it also adds longevity.
Staff has researched other options to see if a more aggressive refurbishing
program by changing out and replacing drive train and engine components could
save money and extend the projected life expectancies.
The equipment used in this exercise was the five ton (5T) dump trucks and the
one ton (1T) dump trucks. The following are examples of the cost associated for
both:
www.cityofpriorlake.com
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5T d t k
ump ruc s
Replacement Component Staff labor Labor cost Sub-total
component cost hours
Enoine $13,099 40 $1,200 $14,299
Transmission $5,623 10 $300 $5,923
Brakes, tires, $9,000 30 $900 $9,900
suspension
Plow $12,500 40 $1,200 $13,700
upgrades,
electronics
Box & prewet $21 ,426 0 0 $21 ,426
Plow and $12,040 ,27 $810 $12,850
wing
Sand/paint $3,150 48 $1,440 $4,590
195
Total $82.688.00
1 T truck with dumo box and olow
Replacement Component Staff labor Labor cost Sub-total
component cost hours
Enoine $6,000 34 $1,020.00 $7,020
Transmission $2,363 16 $480.00 $2,843
Dump box $8,000 18 $540.00 $8,540
Brakes, tires, $4,000 20 $600.00 $4,600
suspension
Plow $3,714 4 $120.00 $3,834
Sand/paint $2,400 38 $1,140.00 $3,540
130
Total $30,377.90
The purchase cost for a new 5T dump with a plow, wing and all the electronic
updates to control all of the accessories for snow and ice removal functions is
$150,000.
Likewise, to purchase a new 1T truck with a dump box and plow is $40,000.
Analvsis:
Extending the life of vehicles which are already at least 12 years old in both of
these examples can result in hidden issues. After spending thousands of dollars
to replace engines, transmissions and drive trains, the vehicle itself continues to
age. This can result in uncertainties to the condition of the frames, hydraulics,
electronic components and rear ends. Additionally, the resale value continues to
decrease. The equipment also would not include new technology for winter
applications or fuel tracking.
The City does not currently have the in house facilities necessary to complete the
above refurbishing. A significant capital investment would be necessary to
pursue this option.
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Recommendation:
Staff recommends continuing to perform body repairs and small refurbishing
projects such as trailers and basic body work but not take on the major equipment
overhaul contemplated above.
2. Lease and Rental Options:
lease
Currently the Public Works maintenance divisions do not lease equipment. long
term leasing eventually costs more than an outright purchase. Like wise, lease
with the option to buy costs more than a purchase.
The semi-annual payments with interest for 5 years would be $19,265.58.
Additionally, unlike the private sector, the City receives no deduction on a lease or
lease to own option
Analvsis:
There are two options that would make a lease more effective:
1. Leasing can be an asset if a piece of equipment were needed on a short term
basis only and potentially never needed again.
2. Another option from a short term lease to be a benefit would be if a piece of
equipment were to become obsolete because of rapidly changing technology.
Rental
Typically, the equipment that the Public Works maintenance divisions rent are
pieces of equipment that are not utilized enough, or the cost of the machine is too
high to justify purchasing. Examples of the rented equipment are mini-
excavators, track hoe's and occasionally skid loaders when all of the City owned
skid loaders are being utilized.
Followino are equipment rental costs from 2004 - 2007:
Year Streets Water Sewer Storm Total
Water
2004 $4,872.75 $6,582.13 $161.14 $11,616.02
2005 $4,804.77 $2,869.12 $917.00 $8,591.44
2006 $2,643.64 $9,027.27 $3,503.13 $15,174.04
2007 $1,657.40 $2,874.68 $1,005.91 $5,184.09 $10,722.08
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Recommendations:
Staff recommends continuation of rental options when appropriate and to utilize
short term leases, and as addressed in the section entitled "Equipment
Partnerships" we will consider joint purchase or borrowing as appropriate.
3. Equipment Zero Value Operation
There are several specialized pieces of equipment that the City needs to
purchase to maintain the utilities, streets and parks. This type of equipment is
usually expensive and the purchase value of the equipment decreases rapidly.
Examples of specialized equipment are:
~ Extend a jetter
~ Pavement router
~ Slide-in-sanders
~ Jet vac
~ Crack sealing equipment
~ Anti-icing equipment
~ Top dressers
~ Valve exercisers
~ Large turf mowers
Analvsis:
Operating equipment to zero value has pros and cons:
Pros:
By operating select pieces of equipment to zero value the City can utilize it to its
maximum life, therefore receiving 100% use of the purchase price.
Cons:
1. When this type of equipment is identified in an estimated life cycle for
replacement, it is usually in fair condition, but has no trade-in value.
2. By retaining this type of equipment longer periods of time, major cost break-
downs can and will occur. Funding for this in the correct budget cycle
becomes impossible.
Recommendations:
Staff believes that certain pieces of equipment should be operated to zero value
to maximize life and return to City. However this should be limited to equipment
which the City can operate without for a short period as in a given year funding
may not be available to replace the equipment or delays in ordering may result.
4. Alternative Fuels and Upgrading Fuel Site
Analvsis:
Currently we utilize gasoline with a blend of 10% ethanol and diesel fuel with a
blend of 2% bio (B2). Starting in 2008 all of our diesel fuel will be B5.
Additionally, all of our new vehicle purchases will be analyzed for alternative fuel
and environmentally sensitive options. These options will include E85, electric and
diesel.
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Recommendations:
At this time staff believes purchasing diesel vehicles when options allow and
utilizing more efficient gas vehicles are the best options for the City both
economically and environmentally. Hybrid electric technology will continue to be
evaluated by staff.
5. Vehicle and Equipment Scheduling and Operations Procedures
Schedulino:
Currently the supervisors in all the respective Public Works maintenance divisions
meet each morning before delegating job tasks to employees. The purpose of
these short meetings is to discuss equipment needs for the day. This process
assures that all available equipment in the fleet is being utilized to its maximum
potential.
Analvsis:
During the summer month's when many seasonal employees are retained, a
shortage of equipment and vehicles becomes problematic. In order to help
remedy some of the vehicle shortage issues, the Parks Maintenance Division is
investigating the idea of having some of the seasonal employees report directly to
the park that they are assigned to. By having select employees report directly to
the work site will help alleviate vehicle shortages since they will not need to use
city equipment.
An example of the City's scheduling effectiveness is the Skid loaders. Presently
the City owns three skid loaders that range in hourly use from 500 to more than
700 hours per year. Current industry guidelines recommend having a skid loader
for every 400 hours of needed use. By effectively scheduling and maintaining
these loaders and using rental loaders to meet peak demand the City is able to
exceed existing guidelines and maximize value.
Operation:
The City is currently working on an idle reduction program to reduce the amount
of idle time for equipment. The anticipated benefits of minimizing idling are
expected to be a reduction in fuel consumption, reduction of emissions and
extended equipment life.
Recommendations:
Staff recommends working closely with all Public Works maintenance divisions to
create other alternatives to reduce vehicle shortages without necessarily
purchasing additional vehicles and equipment. Staff will report the results of the
idle reduction program later this year.
6. Equipment Partnerships
The City has actively been promoting partnerships with the SMSC, and cities of
Savage and Burnsville to share the cost of purchasing certain vehicles, as well as
sharing the cost to maintain and repair the vehicles and equipment. The
"Purchase and Utilization Agreements" are consistent with the goal of building
partnerships as provided in the 2030 Long Range and Strategic Plan.
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The equipment utilized by these governmental entities include:
~ A crack seal asphalt heater and applicator
~ A pavement router
~ A heated mobile asphalt unit
~ A infra-red asphalt patch unit
Analvsis:
Additional avenues of partnerships are available through the Scott County
Association for Leadership and Efficiency (SCALE) where numerous pieces of
maintenance equipment are available from other Scott County cities, townships,
school districts and the County at cost effective rates for both normal and
emergency situations. Occasionally, new equipment purchases are discussed for
joint purchasing venture through the SCALE group members.
Recommendations:
Staff recommends continued utilization of joint purchasing and increased
partnerships with other outside agencies for specialized repair or maintenance
equipment.
7. Investigation of Used vs. New
Analvsis:
Streets and Utilities supervisor, Craig Eldred has completed a comprehensive
review of the purchase of new vs. used equipment. The study compared the
costs for buying a used vs. new Tandem Dump Truck. The study highlighted
several issues related to buying used Dump Trucks.
A. Unless the truck was originally set up for plowing the frame and
springs do not meet the City standards and the vehicle will wear
out quicker.
B. Technology wise, a substantial amount of money is needed to
upgrade these vehicles and equipment.
C. The available vehicles that meet the City's needs typically have
substantial mileage in this case 90,000.
The total cost of the used vehicle is $115,000 compared to $178,000 for a new
vehicle. There also are bidding issues because these vehicles require
competitive bids.
There are opportunities when purchasing slightly used equipment that could be a
cost savings to the City. For instance, purchasing used pickups, demo mowers
with low hours, enclosed trailers and backhoes could, if available at the time of
need, be good alternatives to buying new.
Staff has purchased used vehicles in the past; the most recent is the purchase of
a used enclosed trailer. Staff will continue to work with the City Attorney to
develop a specification that would allow competitive bidding of used vehicles.
Recommendation:
The City will continue to develop specifications that allow bidding of used
equipment when appropriate and will continue to evaluate the most cost effective
options for the City.
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ISSUES:
As Council is aware, the Vehicle and Equipment Replacement Matrix, the vehicle
and equipment history, analysis and statistics and the Jet Fleet and Gas Boy
monitoring system are the tools that staff utilizes to justify vehicle and equipment
purchases.
By incorporating the alternatives to extend the life of our Fleet to help reduce
purchase costs as discussed in this report, all purchases will have gone through a
very diligent evaluation process. This process will guarantee that all existing and
new equipment purchases will meet a strict set of criteria.
The Equipment Matrix in the Capital Improvement Program identifies the following
equipment to be replaced in 2008. Each vehicle or piece of equipment purchased
is subject to Council approval and will be presented at a later date.
Department/Division Equipment New Equipment Year Estimated
Description Replacement Number Cost
Fire Rescue New addition n/a n/a $350,000
truck
Public Works Ford 4x4 Replacement #453 1997 $36,601
w/plow
Parks Maintenance Skid steer Replacement #532 1996 $7,745
trailer
Parks Maintenance 22 ft. trailer Replacement #531 1996 $7,745
Department/Division Equipment New Equipment Year Estimated
Description Replacement Number Cost
Parks Maintenance Melroe Replacement #502 2001 $41,853
Bobcat 773
Parks Maintenance Holder Replacement #506 1998 $82,538
sidewalk
plow
Parks Maintenance Toro 580D Replacement #503 1995 $81,901
Parks Maintenance Toro 72" Replacement #524 1998 $34,904
325D
Parks Maintenance Cushman Replacement #536 1998 $31,933
herbicide
sprayer
Parks Maintenance Seed-a-vator Replacement #665 $2,00 $11,246
0
Public Works Slide-in- New addition n/a n/a $6,896
sander
Public Works Ford L8000 Replacement #519 1996 $205,815
dump
Total $899.177 .
The 2009 Equipment Matrix identifies the replacement of a 1994 Ford one ton
dump truck. This vehicle was put on "light duty" status this fall because of
transmission, bell housing and drive train problems. Staff is requesting that this
vehicle be moved up for replacement in 2008 and that Unit Number 453, a 1997
Ford pickup which is up for replacement this year be pushed back to 2009.
Staff recommends moving Unit #453 back one year for two reasons:
~ Unit #453 from a maintenance stand point can be effectively utilized for
one additional year and
~ Moving Unit #453 back for one additional year will help balance the
proposed Equipment Matrix budget.
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FINANCIAL
IMPACT:
There is $899,177.00 identified to replace existing vehicles or equipment or to
purchase additional vehicles and equipment in the Equipment Matrix. The
vehicles and equipment being replaced have met or exceeded their life
expectancies and will soon begin to cost excessive dollars in repairs.
Staff cannot calculate the exact potential cost savings that this report discusses.
If all the staff recommendations on each issue are exercised and over time
additional research is conducted, the savings could be substantial. Additionally,
as we conduct and track the potential alternatives in this report, all purchasing will
have gone through strict criteria.
ALTERNATIVES:
The alternatives are as follows:
1. Approve the report and provide staff with direction regarding included
equipment and facilities and method of funding so a draft matrix can be
provided to the City Council for the 2009-2013 CIP.
2. Table this agenda item for a specific reason.
3. Deny this agenda item for a specific reason and provide staff with direction.
RECOMMENDED
MOTION:
Alternative #1.
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