Procedure to Evaluate Alternatives to Transit Bus Replacement

Abstract

The addition of new buses to a transit agency’s fleet is a capital-intensive project. In an average year, more than 3,500 buses are purchased by FTA grantees. The annual cost of bus replacement easily exceeds $1 billion. A procedure to evaluate alternatives to bus replacement is presented. Two generic alternatives are identified—rehabilitation and remanufacturing. The former approach focuses on the repair of engines and machine components. The latter approach is to restore a vehicle’s structural integrity. The evaluation procedure is based on economic principles and quantifies the benefits and costs associated with postponing a bus replacement, either by rehabilitation or remanufacturing. A modified benefit-to-cost ratio (B/C) technique is proposed that incorporates intangible benefits and disbenefits, as well as a risk penalty associated with the extended use of an older bus. As an alternative to computing the B/C, the recommended approach is to estimate the maximum investment that can be justified in a rehabilitation or remanufacturing project using the derived benefits. An affordability index is developed that is sensitive to the risk penalty used. Numerous examples are presented to demonstrate the application of the proposed procedure. Finally, a set of guidelines is presented to assist transit agencies in determining the economic viability of postponing a new-bus purchase by rehabilitating or remanufacturing an older bus.