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Scenario Information

Scenario Simulation - Council Truck Fleet
Scenario Background - Introduction
In this part of the course, students take on the role of Asset Manager in a “gaming” environment that is a microcosm of the asset management practice.
This provides a “test bed” for students to make decisions in an asset management environment based on the knowledge framework and provides the opportunity to obtain feedback on the results of decisions that are consistent with what may occur in practice.
The scenario is structured as a simplified cost model typical of that encountered in a local government environment. The key elements of the context setting include:
1. The Council SAMP has a requirement that tip truck capability be provided as part of the Council asset spread;
2. A major re-investment decision is pending and needs to be made based on available information in week 1 (representing 2017);
3. The cost model (asset performance) will be reviewed on an annual basis (2018, 2019 etc., representing week 2, 3 etc.);
4. External and internal inputs will be revised each week, and asset management decisions revised and adjusted;
5. Decision making “performance” will be recorded progressively, with the summary figures available to the class;
6. Students will be asked to reflect on their own performance, and that of some of their peers in the final assessment.
Grading for assessment will primarily be based on the ability to relate the knowledge framework to the scenario, and to critically review asset management performance. In the context of the scenario, the ability to make good “experience” based decisions is commendable, but the ability to relate the scenario to knowledge framework and learning from the decision process is most important.
Student Requirements
Each week, students will be required to:
1. Make decisions and make appropriate adjustments to the cost model;
2. Check their own key parameters on their cost model, and post them, along with their decisions on the discussion board;
3. Engage with their peers on the discussion board, including issues identified, and methodologies to resolve them;
4. Document their own learning by week in a simple reflective diary; and
5. Submit their Decision and Reflection Log.

Scenario Context
Your local authority currently has a fleet of 6 Hino 10 m3 tip trucks that have reached the end of their service life. There are 4 shortlisted options for replacement are summarised in Table 1 – see also Capital Cost Base tab on spread sheet that have been prepared for consideration by the fleet manager.
The SAMP has an agreed action that the Council will maintain base load capability for tip trucks as a minimum to service emergency and miscellaneous council requirements as well as maintenance requirements. In the past, six tip trucks (10 m3 capacity) have been able to service this requirement with some additional capability for capital works. The bulk of capital works resources have been provided by external providers, of which there are a number in the local area. Funding has been sourced for some more significant capital works over the life of the new fleet, and some councilors have suggested that this be used as an opportunity to provide increased base load tip truck capability.
The scenario places each student in the role of asset manager for a local government authority, responsible for a small fleet of tip trucks. Key elements of the current local government position are:
• The trucks are used in three main roles; 1. Emergency response and clean-up operations; 2. Routine maintenance; 3. Capital works;
• Availability where and when required for (a) and (b) is a key driver for retention of the truck fleet (as opposed to outsourcing);
• Various private vehicle owners provide “for hire” vehicles to supplement the council vehicles; and
• The existing fleet of 6 trucks has reached the end of its economic life in 2016, and either needs to be substantially upgraded or replaced.
The fleet manager has proposed the following alternatives:
1. New Kenworth fleet;
2. New Freightliner fleet;
3. New Sinotruk fleet; or
4. Overhaul existing fleet;
A cost and performance model has been provided in the form of an Excel spreadsheet.
Options 1, 2, and 3 are based on the premise of disposing of the existing fleet for a $ 50,000 per truck – serving as a deposit on new vehicles. Clearly Option 4 requires that the existing fleet be retained, and re-investment occur.
Scenario Changes
Most importantly, at the start of each week, new information affecting your choices for the scenario will be released via the announcements, so check your notifications for the updates - you'll need them to undertake the scenario.

Scenario Option Summary
# Option Sub options Advantages Disadvantages/Risks
1 KW T409 Base case Most technically advanced reliable option Excessive capability?
1a Future purchase of dog trailers Specification suitable for dogs
1b Consider # trucks Possible increase in the number of trucks
2 FL CST 112 Base case Advanced option with good reliability but a reduced capital cost compared with (1)
2a Future purchase of dog trailers requires upgrade of drive train Retains advantage of using dogs in the future, albeit at an increased upgrade cost.
2b Consider # trucks Possible increase in the number of trucks
3 SinoTruk Base case Fully imported from China, this option represents a significant reduction in the base capital cost, even after post arrival modifications and certification Some concerns around reliability exist, and the certification requirements are an estimate only. It is not possible to obtain certification for upgrading these units to tow dog trailers.
3a Consider # trucks Possible increase in the number of trucks Possibly consider purchase of additional truck to address above risk, with the upside being additional capability.
4a Existing Hino fleet Motor re-build Lowest cost extension of service. Fleet upgrade options can be revisited in 2 years Financing not available, so will need to be funded from existing revenues (unplanned) Reliability already becoming an issue. Less availability during rebuilds
4b Existing Hino fleet Drive train rebuild in 2019

Scenario – Key Tips
Some key tips for engagement with the scenario are:
1. Do not treat the scenario as a spreadsheet optimization exercise, as this will draw you into detail that will obscure the broader issues being explored.
2. Week 1 – identify selection criteria/basis for key decisions, then reflect on this basis (with particular reference to the framework documents) in your response in week 7. Stick with the strategy you adopt in week 1. If you identify significant issues with your strategy in the end, address that in the week 7 reflections.
3. How will your decisions affect your team, and how will you go about “selling” your decisions to other stakeholders.
4. Refer to the framework documents for guidance as you make your decisions.
5. Consider how solution adjustments affect financial results.
6. Does the framing of the scenario represent reality? How could different framing of the same situation change your answers.
7. At the end of the scenario, consider your recommendations for the next truck asset renewal programme.
Finance Calculator
You can use any calculator you find online.
https://www.finlease.com.au/equipment-finance-calculator.html
https://www.finlease.com.au/equipment-finance-calculator.html

Editable Microsoft Excel Document
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