Model for Retiring, Replacing, or Reassigning construction equipment

Abstract

Retirement and replacement models for construction equipment have been based on the notion that there is an optimum time to sell a piece of equipment to the competition. One problem with these models is that they do not explain why one's competition may have a need for the equipment when one does not. The model presented here looks at the consequential costs of downtime for each piece of equipment when assigned to specific applications. Old and unreliable equipment therefore carries a significant consequential downtime cost when used in a key production application. Likewise, new and reliable equipment carries a significant capital recovery cost, which makes it less desirable in applications where consequential costs of downtime are low. This model provides a methodology to assign equipment optimally and to identify equipment for which its owner typically has no good applications.