"1^0- IS FILE COPi NBSIR 75-961 The Police Patrol Car: Economic Efficiency in Acquisition, Operation, and Disposition Rosalie T. Ruegg Institute for Applied Technology National Bureau of Standards Washington, D. C. 20234 Prepared by Law Enforcement Standards Laboratory National Bureau of Standards Washington, D. C. 20234 June 1976 Final Prepared for National Institute of Law Enforcement and Criminal Justice Law Enforcement Assistance Administration U.S. Department of Justice Washington, D. C. 20531 1 NBSIR 75-961 THE POLICE PATROL CAR: ECONOMIC EFFICIENCY IN ACQUISITION, OPERATION, AND DISPOSITION Rosalie T. Ruegg Institute for Applied Technology National Bureau of Standards Washington, D. C. 20234 Prepared by Law Enforcement Standards Laboratory National Bureau of Standards Washington, D. C. 20234 June 1976 Final Prepared for National Institute of Law Enforcement and Criminal Justice Law Enforcement Assistance Administration U.S. Department of Justice Washington, D. C. 20531 •"•t.u Of U.S. DEPARTMENT OF COMMERCE. Elliot L. Richardson, Secretary Dr. Betsy Ancfcer^Johnm. Auiatant SBcrHafv for Sehnee mid T^chnohgy NATIONAL BUREAU OF STANDARDS. Emett Ambler. Acting Director ACKNOWLEDGMENTS This report was prepared by the Law Enforcement Standards Laboratory (LESL) of the National Bureau of Standards, under the direction of Jared J. Collard, Acting Manager, Vehicles Program, and Jacob J. Diamond, Chief of LESL. Appreciation is extended to the many police departments and commercial enterprises that cooperated in this study. ii . PREFACE Expenditures for police patrol vehicles exceed those for any other item of equipment purchased by law enforcement agencies. With growing sizes of fleets, increasing diversity of vehicles for specialist jobs, and an increasing number of options available for acquiring, maintaining, and disposing of vehicles, the management of police fleets is becoming increasingly complex. The police fleet manager, in his efforts to provide suitable transportation to meet department requirements , has a multiplicity of objectives: to provide a fleet of the composition and size necessary to perform department duties; to provide vehicles which have adequate performance capabilities, meet safety requirements , satisfy officer morale and comfort criteria, and contribute to the desired public image; and to provide the vehicles at lowest possible cost. In turn, the manager is confronted with a number of decisions regarding provision of the fleet. He must, for example, decide what types of vehicles and how many to buy; what optional equipment is required; what utilization practices to follow; how to secure the vehicles; what type of maintenance and repair facilities to have; how much preventive maintenance to schedule; when to replace a vehicle; and how to dispose of used vehicles The alternative courses of action are likely to have unequal efficiencies in terms of resulting costs, but the "best" decision is not always apparent. Information and techniques are needed which will help the police fleet manager secure an effective fleet in the most economical way. In the words of one such administrator, "the need for information in this field is great. A study of existing practices and the success of the various types of operation should be documented so that the police administrator may make intelligent decisions." Elimination of inefficiencies in police fleet management can significantly reduce the cost of police services and result in substantial savings of public funds A brief summary of this report, entitled Life Cycle Costing of Police Patrol Cars : Summary Report , was published as National Bureau of Standards Interagency Report NBSIR 74-471, in March 197 4. iii I. (.!•• (..' THE POLICE PATROL CAR: ECONOMIC EFFICIENCY IN VEHICLE ACQUISITION, OPERATION AND DISPOSITION CONTENTS Page Preface iii List of Tables vii List of Exhibits xi Executive Summary 1 1. Introduction 15 2. Methodology of Life Cycle Costing 21 2.1 Life Cycle Costing 22 2.2 Break -Even Models 32 3. Cost Analysis of Police Patrol Vehicles 33 3.1 Critical Cost Elements 33 3.2 Cost of Vehicle Acquisition ......... 35 3.2.1 Purchase Price, Resale Value and Depreciation Cost 35 3.2.2 Cost Saving Practices in Buying and Selling 47 3.2.3 Lease vs. Buy 71 3.3 Operating and Maintenance Costs 100 3.3.1 Operating and Maintenance Costs for Patrol Cars of Different Sizes .... 100 3.3.2 Operating and Maintenance Costs by Type of Expenditure, and as a Function of Driving Environment, Usage Rate, and Mileage 103 3.3.3 Selection of Maintenance Facility: Centralized or Decentralized Organi- zation and Location —Police Shop, Municipal Garage, or Private Vendor . 108 3.4 Cost Effects of Alternative Vehicle-Driver Assignment Plans: The Personal Car Program . Ill 3.4.1 Description of the Personal Car Program 112 3.4.2 Vehicle Costs Under the Personal Car Program: Empirical Evidence 113 3.4.3 A Cost Comparison of a Personal Car Program with a Minimum Fleet/Multi- shift Car Plan: A Hypothetical Example 120 V 3.5 Patrol Car Replacement Decisions 128 3.5.1 Replacement Methodology 130 3.5.2 Replacement of Police Cars: Illustra- tive Cases 142. 3.6 Life Cycle Costs of a Typical Patrol Car . 159 4. Summary 161 Appendix A—Police Fleet Practices 165 Appendix B — Sample Leasing and Maintenance Agreements. 191 Appendix C — References » • • 1/ vi LIST OF TABLES Table Number Page 1 Discounting Formulas 27 2 Discount Factors, 2% Interest Rate 29 3 Discount Factors, 10% Interest Rate 30 4 Discount Factors, 15% Interest Rate 31 5 Typical 1972-1973 Price Quotation for a 4-Door Standard Size, Popular Model Patrol Car . 36 6 Average Base Prices of Ford, Chevrolet, Plymouth, Dodge, and American Motor's Cars, By Model 38 7 Estimated 1972-1973 Prices of Different Models of Police-Accessorized Patrol Cars 39 8 Estimated Resale Values and Depreciation Rates for Two Year Old Patrol Cars Recently Sold by a Few Police Departments 4 0 9 Derivation of Annual Depreciation Rates for Patrol Cars Owned by Different Types of Police Departments 42 10 Estimated Resale Values for Patrol Cars, by Model and Type of Department, Over a Four Year Period . „ 4 3 11 Typical 1973 Prices of a Representative Selection of Add-on Equipment for Patrol Cars 4 5 12 Annual Cost of Patrol Car Equipment 4 6 13 Comparative Annual Ownership Costs of Standard and Intermediate Size Patrol Cars, by Model- line, Age, and Department Type 4 8 14 "Holding Costs" for Selected Items of Car Accessories 54 15 Comparison of Annual Depreciation Costs Associated with Two Approaches to Ownership of a More Expensive Patrol Car 57 16 Cost Comparison of Visi-Bar Light System with a Bubble Light 59 17 Acquisition Cost of Purchasing Compared v/ith Finance Leasing 80 18 Estimation of Garage Staff Requirements and Annual Labor Cost 84 19 Estimation of Equipment Cost 8 6 20 Estimation of the Cost of Parts 90 vii 21 Estimation of Garage Building Cost 91 22 Estimated Annual Cost of Performing Maintenance In-House 94 23 Estimated Annual Cost of Contracting Maintenance Work 95 2 4 Operating and Maintenance Costs by Size of Police Patrol Car 101 25 Operating and Maintenance Costs of Private and Fleet Cars, by Size of Car 102 26 Operating and Maintenance Costs by Type of Expenditure, Over the Life of a Sample of State Highway Patrol Cars 104 27 Maintenance Cost for a Sample of City Patrol Cars by Type of Expenditure and Mileage Interval of Occurrance 106 2 8 The Effect of Different Driving Environments and Vehicle Usage Rates on Operating and Maintenance Costs of the Patrol Car .... 109 29 Comparative Maintenance Cost per Mile for Vehicles Maintained in a Sample of Police Shops, Municipal Garages and a Commercial Garage 110 30 Experience of a Large City Police Department with a Personal Car Program 116 31 Expenditures and Receipts for a Personal Car Program (PCP) and a Multi-Shift Plan (MSP) . 122 32 Annual Ownership and Operating Costs of a Personal Car Program (PCP) and a Multi-Shift Plan (MSP) Under Alternative Conditions . 125 33 Illustration of Simple Approach to Calculation of Optimal Replacement Point: Minimizing the Average Cost Per Period 132 34 Illustration of the Use of an Annualized Cost Model to Determine Optimal Replacement Point 134 35 Illustration of the Use of a Present Value Model to Determine Optimal Replacement Point 136 36 Maintenance and Repair Cost as a Function of Mileage for Samples of Patrol Cars, by Type of Department 14 9 37 Optimal Patrol Car Replacement, Based on Maintenance and Repair Cost for a Sample of 29 Cities, Assuming Average Annual Mileage of 40,000 and a Six Percent Quarterly Depre- ciation Rate 150 viii 38 Optimal Patrol Car Replacement, Based on Maintenance and Repair Cost for a Sample of 29 Cities, Assuming Average Annual Mileage of 40,000 and a Depreciation Rate of 10 Percent Per Quarter 39 Optimal Patrol Car Replacement, Based on Maintenance and Repair Cost for a Sample of 29 Cities, Assuming Average Annual Mileage of 40,000 and a Depreciation Rate of 20 Percent Per Quarter 153 40 Optimal Patrol Car Replacement, Based on Maintenance and Repair Cost for a Sample of 29 Cities, Assuming Average Annual Mileage of 80,000 and a Depreciation Rate of 20 Percent Per Quarter 154 41 Optimal Patrol Car Replacement, Based on Maintenance and Repair Cost for a Sample of 29 Cities, Assuming Annual Mileage of 20,000 and a Depreciation Rate of Six Percent Per Quarter 155 42 Optimal Patrol Car Replacement, Based on Sample Data for Maintenance and Repair Cost from a Medium Sized City Police Department, Assuming Annual Mileage of 30,000 and Rapid 156 Depreciation . 43 Optimal Patrol Car Replacement, Based on Sample Maintenance and Repair Cost from a Large City Police Department, Assuming Annual Mileage of 30,000 and Rapid Depre- ciation 157 44 Optimal Patrol Car Replacement, Based on Sample Maintenance and Repair Cost from a State Highway Patrol, Assuming Annual Mileage of 30,000 and Moderate Depreciation.