Case study of an equivalent annual cost model for economic lifetime for construction vehicles under cost uncertainty. Issue 1 (2nd January 2022)

• Record Type: Journal Article
• Authors: Zarean, Mohamad; Sayadi, Ahmad Reza; Mousavi, Amin Alah
• Is Part Of: Engineering economist. Volume 67:Issue 1(2022)
• Page Start: 75
• Page End: 93
• Publication Date: 2022-01-02
• Subjects: Engineering -- Estimates -- Periodicals; Industrial management -- Periodicals; 338.4762005
• DOI: 10.1080/0013791X.2022.2028048
• Languages: English
• ISSNs: 0013-791X

Abstract

Abstract: Whereas the practical importance of the Economic Lifetime (EL) is well-known, selecting the proper process has always been a dilemma. In this respect, classical methods dating back to one century ago are generally favored, but using them in a data-driven approach still has particular shortcomings. This paper aims to present a Life Cycle Cost (LCC) model determining the EL of a truck while fluctuation in historical data deepens through its lifespan. The equivalent annual cost of LCC is developed based on Operating and Maintenance (O&M) costs along with the resale value. The O&M cost was estimated deterministically and stochastically using regression analysis and Brownian-Motion-based simulation. The resale value was modeled by employing a genetic algorithm. The model capability was evaluated using real data of a seven cubic-meters truck hauling rock-fill materials in a dam construction project. The optimal EL was estimated on average 105 months in deterministic condition, while it was 88-145 months at the 70% confidence level using non-deterministic approach.