Item 14 - Purchase Order for Utility Serivce Body Truck

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EXHIBIT 1 E=t, City of Santa Ana Administrative ^+ i Policies and Procedures Subject EQUIPMENT REPLACEMENT POLICY PURPOSE �,..... City Manager's Authorization Date July 17, 2013 The purpose of this document is to articulate the decision -making process for replacing City equipment that can no longer be economically operated and maintained. Specifically, this document defines the various stages of the review process and describes the interaction between Fleet Management Division and City departments in the implementation of an Equipment Replacement Program. DISCUSSION Given the fiscal magnitude and operational importance of City equipment, the decision to timely replace such assets will be duly reviewed in three (3) stages as follows: Fleet Management Division will prepare an annual preliminary equipment replacement list that contains assets that have reached thresholds suggested in Attachment A: "Equipment Lifecycle Guidelines." Since this list is preliminary, the assets listed are not automatically replaced but are subjected to further review. 2. Fleet Management Division will then evaluate each listed asset for condition, cost, usage, safety history, and operating performance. The evaluation will be based on fleet data from mechanical appraisals, utilization, and Life -Cycle Costing (LCC) as these factors are considered fleet industry key components for assessing safety and the cost of repair and maintenance. (!Vote: LCC is a replacement analysis model which considers the total cost of owning and operating an asset by integrating economic factors such as depreciation and resale value with standard factors such as age and mileage.) LCC analysis can be used to identify and retain assets that are cost-effective to operate beyond the thresholds suggested in Attachment A. LCC values can be calculated using Attachment B: "Life -Cycle Costing Worksheet," 3. In this review stage, Fleet Management Division will collaborate with City departments to further refine the replacement list by considering factors other than lifecycle. Some assets that have not reached their lifecycle threshold may be replaced earlier than scheduled due to safety concerns, unusual wear and tear, or recurring mechanical problems. Conversely, some assets that have exceeded their lifecycle threshold may be retained if they are classified as mission -critical and no replacement unit will be available. These qualitative and other such factors can be captured and evaluated using a points system, an approach several jurisdictions have adopted, as exemplified in Attachment C: "Equipment Replacement Points System."