Item F2
,
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: 8-21-02
Division:
Public Works
1;
Bulk Item: Yes No ..K-
Department: Fleet Management
AGENDA ITEM WORDING: Submission of Fleet Management Consultant's final report and
presentation of staff recommendations.
ITEM BACKGROUND: At previous Board meetings, staffwas directed to solicit a professional
Fleet Management consultant to provide a written analysis of the County's existing Fleet Management
Department, operations, policies, procedures and associated costs.
PREVIOUS REVELANT BOCC ACTION: In September 2001, the Fleet Management
consulting group MAXIMUS, INC. was retained by Monroe County to conduct a review of the
County's existing Fleet Management Department's operations, policies, procedures and associated
costs.
CONTRACT/AGREEMENT CHANGES: N/A
STAFF RECOMMENDATIONS: Approval for staff to implement recommendation Items
one through twelve (see attached), over a period of time as funding can be allocated.
TOTAL COST:
Unknown
BUDGETED: Yes
No x..
COST TO COUNTY:
Estimate Attached
REVENUE PRODUCING: Yes_ No_ AMOUNTPERMONTH_ Year
APPROVED BY: County Atty _ OMBlPurchasing _ Risk Management _
DEPARTMENT HEAD APPROVAL:
DMSION DIRECTOR APPROVAL:
ROY s~ <
(~~
DENT PIERCE
DOCUMENTATION:
Included X
To Follow
Not Required_
DISPOSITION:
----=
AGENDA ITEM # ~o?
~
STAFF RECOMMENDATIONS
All Fleet Management employees welcomed the recent Monroe County Fleet Management
Operations review. The review was done in a professional manner, and it was a pleasure
communicating and working together with the consultants enabling them to prepare the Final
Report, attached. This report gives the County detailed information regarding the County's
existing Fleet Program along with suggestions where improvement is needed to become more
efficient, cost effective and most importantly safety sensitive.
In order to meet these objectives, the following items/recommendations must first be addressed in
order to map out long range plans for the County's Fleet Management programs.
J 1. Implement proposed 15-year fleet replacement plan utilizing appropriate department
funding sources, Roads/Bridges, Card Sound, Solid Waste, Airports, General Fund, Social
Services Grants, Fleet Reserves, etc.
Background: Implementation of a systematic vehicle replacement program provides an
organization with more stable and predictable operation costs, SAFER FLEET, increased user
satisfaction, improved vehicle reliability, potential reduction in fleet size and increased
accountability for total fleet related costs.
Estimated cost: $1,000,000 (Annually). NOTE: Portions of replacement program is already
established, therefore, increase would actually be around 50% of the listed impact or
approximately $500,000.
):. - Outsource, through private contractors, all maintenance and repairs of the County's
ambulances. .
Background: The small number of units in the County's fleet does not justify a dedicated
emergency vehicle mechanic; repairs could most likely be performed more cost effectively
through private vendors that have Emergency Vehicle Technician Training and Certification.
J 3. Solicit and hire temporary, part-time professional assistance to develop initial, service
based charge-back rates, along with formal policies & procedures for all user departments, to
include review and separation of avoidable verses non-avoidable, fleet cost allocation.
Background: The annual Fleet Management Internal Service Fund should not make money nor
lose money. Rates should be set in such a manner that all costs are recovered through department
. charges for only those goods and services received. Should the fund has excess funds in one
year, the excess should be used to offset rates for the next year. Additionally, previous year's
Fleet Management budgets reveal a significantly higher indirect charge (cost allocation) to the
Fleet Management Department and users than would be expected.
Estimated cost: $20,000.
4. Solicit long term and formal Interlocal Commitment from the Sheriff's Department
before moving forward with recommendations to upgrade Fleet Maintenance Facilities.
Background: At this time, the Sheriff's Department is the second largest departmental user of
the Fleet Management programs with approximately 350 units presently utilizing approximately
25% of existing mechanics wrench turning hours, and approximately 50% of all fuel pumped
from Fleet Management fueling stations.
1
5. Add one full-time Supervisor position to the Fleet Department to supervise the three
maintenance shops on a full time basis.
Background: A similar type position was eliminated from Fleet Management's budget several
years past when the County was downsizing due to potential County wide incorporation.
However from that time to present, Fleet's responsibilities have escalated from approximately
650 total units to nearly 750 at this time. The roving Supervisor will allow the Fleet Director to
concentrate efforts on managing the department, implementing and maintaining the
recommendations contained within. Additionally, it would ensure consistency among the
garages, fill in for the lead mechanics when absent, act as primary customer service representative
for Fleet Services, verify and complete all workorders assuring accurate data in Fleet's computer,
and make sure County wide priorities and safety issues are handled accordingly.
Estimated cost: Full-time Supervisor w/benefits approximately $65,000 (Annually).
6. Add one full time Heavy Equipment Paint/Body Mechanic position to Fleet Management
to maintain the Road Department's heavy equipment and large trucks.
Background: A similar type position was eliminated from Fleet Management's budget several
years past when the County was downsizing due to potential County wide incorporation,
anticipation of fewer vehicles and less responsibilities. However, from that time to present
Fleet's responsibilities have escalated from approximately 650 total units to nearly 750 at this
time. The Heavy Equipment Paint/Body Mechanic position will enable the Road Department to
fight the natural elements (salt water, corrosion, etc.) thus keeping their equipment in good
condition, and allow them to keep their Fleet for up to 15 years, as planned in proposed vehicle
replacement schedule. For an extended period of time, Fleet has unsuccessfully attempted to
. contract out for this service.
Estimated cost: Full-time Paint Mechanic w/benefits approximately $45,000 (Annually).
~
7. Provide centrally located, full-size EPA approved, paint-spray booth and work area.
Background: An EPA approved paint booth, large enough to paint the County's largest
equipment and trucks, will enable the County to protect their investment for most costly
equipment, replacing on a 15 year cycle as planned in proposed vehicle replacement schedule.
Due to a lack of local private sector alternatives, being able to perform this work in-house is
essential, more practical and more cost effective than sending to mainland for services.
Estimated cost: $100,000.
8. Add three (3) full-time Service Technician positions, one for each County garage, if long
term commitment to remain in Fleet Maintenance is acknowledged and received from Sheriff
Department.
Background: Three similar positions were eliminated from Fleet Management's budget several
years past when the County was downsizing due to potential County wide incorporation,
anticipation of fewer vehicles and less responsibilities. However, from that time to present,
Fleet's responsibilities have escalated from approximately 650 total units to nearly 750 at this
time. The primary responsibilities of these positions will be to act as service writers/parts
workers in the shops and perform maintenance and repairs as time permits. It is anticipated that
three Service Technicians would allow the Mechanics to spend nearly all of their time on
maintenance and repairs; they would allow the Lead Mechanics to spend more time on the shop
floor trouble shooting problems, performing training, and performing quality control inspections;
and these positions would compliment the maintenance function by performing some wrench
2
turning activities as well. Each of these positions would be billed a predetermined percentage of
their time to direct labor.
Estimated cost: Three (3) Full-time Service Technicians wlbenefits approximately $115,000
(Annually).
9. Reorganize/Reclassify existing personnel to accommodate shifting priorities and
additional services.
Background: For example, over the last ten years, the County has added approximately 50 new
emergency power generators to Fleet Management's responsibilities for maintenance and repairs.
Due to liability and risk (electrical hazards involved), it is highly recommended that the County
create one new centrally located mobile generator mechanic position, with the latitude to
reclassify existing personnel and make pay adjustments to accommodate these priorities and
others that may become necessary.
Estimated cost: Reorganize/reclassify existing personnel, approximately $15,000 (Annually).
10. Establish a systematic program of vehicle utilization monitoring in order to help control
the size and composition of the County's Fleets.
Background: The program should establish a set of utilization targets for specific classes of
yehicles and notify the divisions when specific units are not meeting those utilization targets.
Units that fall below utilization threshold should then be investigated with the appropriate
division or department to determine whether the asset should be retained, or if alternatives such as
renting or the use of pool equipment would be more cost effective.
11. Develop and implement a master facility plan that incorporates current and future space
needs for fleet operations in all three areas, upper, middle and lower Keys.
Background: t1aintenance facilities should comply with OSHA, EP A and other federal and
state requirements. They should be operationally and environmentally safe and efficient. Of the
three County garages, Marathon could be described as barely adequate, while Plantation Key and
Key West are too small, over crowded and lack storage space, parking, staging areas and
adequate restroom facilities.
Estimated cost: Approximately $4 to $5 million.
~ 12. Implement annual mechanics certification and training program with predetermined
hourly wage increase incentives.
Background: There are presently no formal training programs or incentives for mechanics to
obtain Automotive Service Excellence (ASE) or other recognized Fleet certifications.
Knowledge gained through training and certification will improve employee productivity and
quality of work. Due to continual and accelerating changes in automotive technology, a rigorous,
proactive training program is essential for maintaining the viability of any/all fleet maintenance
programs. Training investments yield dividends in mechanic effectiveness and efficiency, which
translates into better, cheaper and safer maintenance and repair services.
Estimated cost: Approximately $20,000 (Annually). NOTE: Portions of Fleet Training
Program is already established, therefore, increase would actually be around 75% of the listed
impact or approximately $15,000 annually.
Note: Other items of importance such as parts inventory, preventative maintenance inspection
compliance, policy manual update and other performance measures can easily be remedied and
documented, however proposed additional staffing must be considered and/or provided before
taking action regarding these issues.
3
ADDITIONAL NOTES:
Fleet Management has 16 employees that are located in three separate garage/fueling facilities in
Key West, Marathon and PK [One Director, one Fleet Coordinator, one Administrative Asst.,
three (3) mechanic/supervisors and ten (10) mechanics).
Fleet provides maintenance and repairs on over 750 vehicles and equipment (consisting of225
vehicles and small trucks, 350 sheriff vehicles, 75 pieces of off-road construction equipment, 75
medium & heavy duty trucks, 16 small buses and 11 ambulances), as well as 51 emergency
generators; Fleet also provides over 450,000 gallons offuel each year.
Currently the hourly rate is determined by dividing overhead by number of billable hours (total
available wrench-turning hours, less vacation, sick leave, holidays, and administrative time).
Each Department's vehicle maintenance charge is based on the number of hours of labor provided
from the previous year (determined by reviewing work order history) multiplied by the new
hourly rate.
Overall, Fleet Management is doing an excellent job given the aging fleet equipment, space
constraints, and the ratio of maintenance staff to fleet equipment. Some areas of concern are
currently being addressed, and some items will take time and funding to update and revise;
however, this report provides an opportunity to clearly review the vast areas of responsibility and
consider implementation of action plans.
4
M
IMUS~
HELPING GOVERNMENT SERVE THE PEOPLE $
r,d-
"
FLEET MANAGEMENT
OPERATIONS REVIEW
FOR
MONROE COUNTY, FL
June 2002
FINAL REPORT
MAXIMUS, INC.
1350 PICCARD DRIVE, SUITE 100
ROCKVILLE, MARYLAND 20850
301.869.2002
MONROE COUNTY
FLEET OPERATIONS REVIEW
TABLE OF CONTENTS
I NTRO DUCTI ON.................................................................................................. 1
Project Approach................................. .......................................................... 1
Key Concepts................................................................................................ 2
Unique Factors............ .................................................................................. 3
ROLE OF FLEET SERVICES .............................................................................. 4
Background.......... ....... ...... ........................................ ....... ............................. 5
COMPETITIVENESS DEFINED ... ................. .... ........... ... ...... ........ ... .............. ..... 8
FINDINGS AND RECOMMENDA TIONS ............................................................. 9
General Management Practices................................... ................................. 9
Organization and Staffing...... ...................................... ... ..... ........ ................ 10
Maintenance Management and Service Levels .......................................... 14
Preventive Maintenance Program................ .......... ..................................... 18
Parts Procurement and Supply..... ......................... .......... ................ ........... 20
Vehicle Acquisition ......................... ................ ........ ..................................... 23
Vehicle and Equipment Disposal..... ................ ............................... ............. 24
Maintenance Certification and Training............................. ............... ........... 27
Customer Communication and Feedback................................................... 28
Internal Service Fund Management ............................................................29
Charge-Back Rate Methodology... ......... ........ ............. ........ ....... ................. 30
Fleet Replacement Planning and Funding .................................................. 32
Vehicle Assignment and Utilization .............................................................41
Maintenance Facilities..... .... ................ ..... ................... .............. .................. 44
Fleet Management I nformation System ...................................................... 46
APPENDiX......................................................................................................... 48
Example Performance Measures............ ................... ...... ........... .................... 49
Parts Inventory Performance Measures ......................................................... 51
Light Vehicle Replacement Guidelines ........................................................... 52
MONROE COUNTY
FLEET OPERA TlONS REVIEW
INTRODUCTION
In September 2001, the Fleet Management Consulting Group of MAXIMUS was
retained by Monroe County to conduct a fleet management operations review of
the Fleet Management Department of the Public Works Division. The scope of
our review included a review of the administrative, managerial, and operational
practices of the fleet organization and an evaluation of the cost competitiveness
of the fleet maintenance program.
The following report presents the findings and recommendations of the project
team. Although most of its contents relate to opportunities for improvement, it
should be noted that the fleet organization was found to have generally sound
operational practices, has made continued improvement in service quality since
the inception of the department, has staff knowledgeable in current fleet
management practices, and has provided the County with a valuable service
while facing many obstacles such as staffing shortages and inadequate facilities.
We recognize the difficulty for any organization of opening itself to the scrutiny
and judgment of outsiders. We wish to express our appreciation and admiration
for the forthright manner in which so many County officials and employees have
done so. MAXIMUS wishes to thank all County personnel for their cooperation
during our review.
Proiect ADDroach
We employed a highly interactive approach in conducting this study, consulting
regularly with County fleet representatives and, where appropriate, other officials
and department/division representatives on information gathering efforts,
evaluation methods, and preliminary findings. We encouraged frequent and
open communication with County staff during interviews and site visits. We
conducted a formal user group meeting to allow the primary users of the services
provided by the Fleet Management Department to communicate their concerns,
comments, ideas, and other relevant information regarding their experience with
the fleet organization. The dialog was beneficial to us in helping to better
understand the dynamics of the current operation.
We initiated the project by submitting an information request to obtain necessary
organizational, operational, and fiscal information and followed that with on-site
meetings and operational reviews. Copies of policies, practices, procedures,
vehicle and equipment inventories, and fleet measurement data and service
results were provided by the County to the extent that the information was
available.
We evaluated fleet practices and performance using a variety of methods
including: 1) review of documentary material on fleet-related policies and
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MONROE COUNTY
FLEET OPERATIONS REVIEW
procedures; 2) interviews of fleet management personnel and other County
officials; 3) development and analysis of quantitative information on fleet
conditions and performance; and 4) direct observation of maintenance and shop
operations.
We used the information assembled through these methods to evaluate the
performance of the Fleet Management Department and formulate findings and
recommendations for improvement and/or additional investigation primarily in
three ways:
· By evaluating the inherent soundness of fleet management and
operating policies and processes and, where appropriate, their
comparability to best practices in the industry;
· By developing quantitative measures of performance, calculating
corresponding performance statistics, and comparing these statistics
with applicable industry benchmarks; and
· By directly analyzing and assessing the appropriateness of f1eet-
related conditions such as fleet age and utilization levels.
All of the data was then analyzed and benchmarked against current performance
from other public and private sector organizations. Preliminary conclusions and
concepts for improvement were developed.
s Kev ConceDts
Vehicle Equivalents - In order to make some high-level judgments of the
amount of maintenance effort required to keep a fleet in good condition, each
piece of equipment is measured according to the amount of maintenance effort
that is generally required to keep an average sedan in a fleet in good repair. The
amount of this maintenance effort is expressed as one vehicle equivalent (VE)
unit. Each general class of vehicle is assigned a vehicle equivalency that
expresses the service effort required to maintain that vehicle as a multiple of fleet
sedans. This provides a method of equating level of effort and costs for
dissimilar vehicles. For example, the typical law enforcement patrol car equates
to 2.5 vehicle equivalents. This means that it takes about two and one-half times
as much maintenance effort to maintain the average patrol car as it does to
maintain the average fleet sedan. A backhoe is typically 4.0 VE's, which means
it takes approximately four times as much effort to maintain a backhoe as it does
a sedan.
The Monroe County fleet and other units maintained by the fleet organization
equate to 1,509 vehicle equivalent units.
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FLEET OPERA TIONS REVIEW
Uniaue Factors
In evaluating the fleet operations of Monroe County, it is imperative that the
unique geographic and climatic factors be considered. By their very nature, the
Florida Keys provides obstacles to the fleet organization.
_ There are very few private alternatives for fleet maintenance and repair,
especially for unique or specialty equipment. There are limited local resources
for repair and replacement parts so most non-routine items have to be obtained
from other areas many miles away. The closest major source of non-routine
items is Miami, FL. The ever-present salt water can cause significant rusting on
vehicles and equipment and can lead to premature deterioration of the vehicle
and equipment bodies and components. And, the threat of hurricanes requires a
significant effort on the part of the fleet organization to acquire, maintain, and test
emergency backup generators.
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FLEET OPERATIONS REVIEW
'-
ROLE OF FLEET SERVICES
Motor vehicles and equipment are vital to the day-to-day operations and service-
delivery activities of the County. In fact, the County could not function without
them. In some cases the equipment is an integral part of service delivery and the
need is self-evident. But in many cases, the critical nature of vehicles and
equipment is less apparent, but no less important. The Roads and Bridges
maintenance supervisor who needs to inspect the progress of a work crew; the
parks and beaches employee who needs a large riding mower or tractor to
effectively maintain the grounds of a large park or beach area; or the department
manager who needs transportation to the County Courthouse for an important
meeting. Each of these represents a vehicle or equipment need that must be
satisfied. The accumulation of these requirements results in a relatively large
fleet of vehicles and equipment in even the smallest of cities or counties.
In the perception of the average citizen, the appearance, and manner in which
the fleet is deployed and operated provides one of the most visible determinants
of the value and quality of County services. In other words, the fleet is a key to
successful service delivery, a primary element in the County's infrastructure, as
well as a key ingredient of its public relations program. Therefore, the suitability,
reliability, safety, cost effectiveness, and operability of the fleet must be actively
managed. This requirement defines the role of fleet services in local government.
The primary mission of the Fleet Management Department is to provide a fleet of
vehicles and equipment that is safe to operate. In the unfortunate event that a
County vehicle is involved in an accident, it is paramount that the fleet
organization can provide documented proof that the unit was in a state of good
repair, was safe to operate, and the technicians that maintained or repaired the
unit have had the proper training. Therefore, a fleet organization also provides a
measure of risk management to the County.
Notwithstanding their importance, our experience is that fleet management
activities usually do not receive a lot of attention from high-level decision makers
in government jurisdictions (or many private companies, for that matter).
Inattention to fleet-related issues results from, to a large degree, the fact that few
individuals appreciate the diversity and complexity of activities encompassed by
the expression ''fleet management." We refer to this, only partially tongue in
cheek, as the "everyone-is-a-fleet manager syndrome". Since most individuals
are experienced in the acquisition, operation, maintenance, and replacement of
motor vehicles - i.e., their personal cars - the idea that acquiring, operating,
maintaining, and replacing several motor vehicles and pieces of equipment is a
particularly intricate or demanding undertaking is often difficult to grasp. In the
minds of many people, in other words, fleet management is just not that
complicated an endeavor.
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FLEET OPERATIONS REVIEW
In reality, however, few functions involve as many business disciplines as does
fleet management. Activities included in this function range from managing the
depreciation of millions of dollars worth of assets to diagnosing an electrical
problem in a diesel engine control module. The following chart illustrates the
wide range of activities that a fleet management organization must address:
KEY FLEET MANAGEMENT ACTIVITIES
Routing & Mission &
--:::--.-. ,- \TI/A~o~tY Vehlc~ ::~:~n:::nagement
Reimbursement ~ ~ ~
Vehicle ~ ~
Disposal ---...... EFFECTIVE ...-- VehleleReplacement
Registration III FLEET .. OperatorID~ver
Renewal Training
~ MANAGEMENT...-......
Facility Management Vehicle Maintenance
~ ........... & Repair
Fuel ~ /; \"'~ Parts
Procurement & Supply t Procurement & Supply
Vehicle VehIcle
utilization Operation
Outsourcing Motor Pool Machanlc
Management Supervision
Thus, this study is important not only because it constitutes an opportunity to
develop strategic plans designed to optimize the performance of the County's
fleet operation, but also because it will serve to illuminate a subject to which most
decision makers usually do not devote much thought: the contributions of fleet
management to the delivery of public services, and the challenges associated
with performing these activities well.
Backaroun~
The Fleet Management Department is an organizational unit of the Public Works
Division and is responsible for a variety of line and support functions. These
functions include the following:
>> Fleet Management - The activities associated with the acquisition,
specification, inventory and disposal of fleet vehicles.
>> Vehicle Maintenance and Repair - The provision of maintenance and
repair activities by the fleet organization for vehicles in the County's fleet.
>> Parts Procurement and Supply - The procurement and supply of ad-
hoc and contract parts purchases for County vehicles and equipment.
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".
> Commercial Repair Management - The administration of commercial
repairs of fleet vehicles.
> Fuel Procurement and Supply - The procurement, supply and
distribution of fuel from the County's fuel sites.
> Emergency Generator Coordination - The activities associated with
procuring backup emergency generators and coordinating regular
maintenance and testing on the units.
The Fleet Management Department provides maintenance and repair services at
three locations throughout the Keys; Key West, Marathon, and Plantation Key.
The Department has a total budget of $2.4 million this fiscal year and has sixteen
personnel, which are organized into the following units at the three garages:
Function Number Location
of Staff
Administration 3 Key. West
Fleet Maintenance & Repair 5 Key West
Fleet Maintenance & Repair 5 Marathon
Fleet Maintenance & Repair 3 Plantation
Key
Total 16
The Fleet Department provides services to all of the County's internal
departments and specific services such as speedometer calibrations for the
Florida Highway Patrol and Florida Marine Patrol. The Department is
responsible for managing and replacing approximately 420 vehicles and pieces
of equipment (the department maintains an additional 250-300 vehicles in
addition to these including the Sheriff's vehicles). A breakdown of the fleet
managed by the fleet Department by type of unit is illustrated in the following
chart.
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Fleet Summary
Tractor
6%
Mower
3%
Compressor
1%
Construction Equip
8%
The original purchase cost of the Monroe County fleet managed by the Fleet
Management Department was approximately $8.6 million. The current
replacement cost of the fleet (Le., the amount the County would have to pay in
today's dollars to replace every vehicle and piece of equipment that is managed
and replaced by the fleet organization) is approximately $12.8 million.
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COMPETITIVENESS DEFINED
While clearly an indispensable part of local government operations, fleet services
are, by nature, support services. That is, fleet services are not provided directly
to the citizens. Rather, they are provided to other operating departments and
divisions within County government who in turn use their vehicles and equipment
to provide services to the citizens. Unlike some direct County government
services (e.g., law enforcement services) that must be provided by the
government entity, most support services have viable private sector alternatives.
Particularly in the case of fleet, there are many private sector providers of similar
or identical services.
But what defines competitiveness? A complete view holds that competitiveness
must be defined on two continuums, cost effectiveness and service quality, as
illustrated by the following competitive matrix.
If the government service provider can LOW HIGH
demonstrate that it is providing a high level of QUALITY QUALITY
service quality at a low cost relative to other
providers of the same products or services LOW COST
(i.e., it is in the green quadrant of the
competitiveness matrix), then there is no
justification for considering outsourcing. In HIGH COST
fact, it will often be counterproductive to do so
since the government will be releasing a
measure of control over service delivery to an
entity that is beholden not only to its citizen customers, but to the need for
achieving profitability. Alternatively, if it can be demonstrated that the government
entity is providing poor service at a high cost (i.e., it is in the red quadrant of the
matrix), and there is no demonstrable trend toward improvement, then the
opposite holds true and that government service is a clear candidate for
outsourcing since the benefit to the citizens will far outweigh the negatives
associated with a potential loss of control. If the government-provided service
falls in either of the other two quadrants, the decision is less clear cut, and would
depend heavily on the trend of performance (i.e. is the trend toward the high
servicellow cost quadrant?).
The MAXIMUS assessment of the Monroe County Fleet Management
Department was conducted with this philosophy in mind. Comparisons between
the cost effectiveness and service quality of Monroe County's fleet services were
conducted on both a macro and micro level. That is, an assessment of
competitiveness was conducted for individual aspects of the Department's
performance as well as overall competitiveness. The following sections
summarize our findings in many of the functional areas of fleet management.
Related to, and described along with these findings are the associated
recommendations and quantitative performance measures.
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FINDINGS AND RECOMMENDATIONS
General Manaaement Practices
Fleet management is a varied and complicated field of endeavor that requires a
comprehensive set of well designed and executed management practices in
order for optimal results to be produced. Fleet organizations must excel at a host
of business management practices such as strategy development and planning,
financial management, human resource management, and policy and procedure
development.
An important tool for a fleet management organization is a well-designed and
comprehensive set of policies and procedures.
Findings:
./ The Fleet Management Department has a well defined mission and
specific and reasonable goals and objectives for the operations of the
Department.
./ The Fleet Management Department has drafted a Policies and
Procedures Manual for the purpose of establishing standards governing
the management, operation, maintenance, and repair of all County
vehicles. The manual is extensive and covers all major areas of fleet
management. As of this time, the manual remains in draft form awaiting
the results of this Fleet Operations Review.
./ The Fleet Management Department currently tracks a limited number of
performance measures on a regular basis. The primary measure
reviewed by the Fleet Director is direct hours charged by employee to
maintenance and repair. This statistic is used to evaluate the productivity
of each mechanic and lead mechanic and is subsequently used as a
major factor in the employee's performance evaluation. The number of
direct billable hours became a major issue as a result of an internal audit
conducted by the Clerk of the Circuit Court in 1996. The audit found that
mechanic's time was not being accurately captured and therefore
appropriate performance analysis could not be performed.
Other measures of performance such as vehicle utilization, fleet
availability, preventive maintenance compliance, and elapsed time to
complete various maintenance and repairs are not being routinely
measured. A more expansive performance measurement system would
enable the County to:
Reduce reliance on subjective judgment and speculation;
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Track performance against industry standards and benchmarks;
Home in on areas of the organization that require improvement;
and
Track trends over time.
RECOMMENDA TION
The Fleet Management Department should update the draft Policies and
Procedures Manual with applicable changes and recommendations adopted
relative to this study. The manual should be formally adopted by the County
and provided to all vehicle and equipment users.
The Department should develop an expanded set of performance measures
that are more in line with common industry practices. A list of recommended
performance measures is included in the Appendix of this report. We do not
necessarily recommend that all of the listed measures be tracked. The Fleet
Department should consider the effort required to track and report on measures
when selecting which ones to include in its performance measurement system.
Organization and Staffing
In this section of the report we examine the current organizational structure of the
fleet management program focusing on issues such as the appropriateness of
functional responsibilities; staffing levels; job definitions and classifications; and
supervisory span of control.
Fleet management functions should be organized so as to meet the needs of
fleet users, in recognition of the fact that, without fleet users, there would be no
need for fleet management organizations. Thus, the key objective in examining
the organization of fleet management functions is to determine what type of
organizational structure will yield net improvements in service effectiveness
and/or cost control, always keeping in mind that customer service considerations
should take precedence over cost reduction considerations because it is
customer needs that dictate the need for fleet management endeavors in the first
place.
The performance of any fleet maintenance program is largely affected by the
number of personnel who are employed to deliver services and the manner in
which they are organized and deployed to accomplish their mission.
Organization structures should reflect reasonable spans of control and channels
of communication that are consistent with formally defined authority and
responsibilities. Staffing levels should be consistent with the amount of effort
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required to produce desired services in a productive, efficient, and effective
manner.
Effective mechanic supervision requires the management of many tasks at the
same time. Beyond the obvious requirement for a supervisor to ensure that
mechanics are working productively, safely, and efficiently, shop supervisors
must also serve as troubleshooters and trainers, mentors and motivators,
disciplinarians and performance appraisers. Supervisory responsibilities and
authority should be clearly defined in the position descriptions of supervisory
personnel, and sufficient support personnel must be available so that these most
experienced and skilled of maintenance technicians are not required to spend
undue amounts of time on routine administrative and parts procurement and
supply tasks.
For a fleet of reasonable age and condition each maintenance and repair
technician should be able to support between 100 and 125 vehicle equivalent
units (VE's). However, the Monroe County fleet is relatively old - 8.8 years - and
in fair condition which translates into additional maintenance effort.
Findings:
./ The basic centralized structure of the fleet management program is sound.
Economies of scale are available when a support function, such as fleet
services, is centralized. The operation of a central in-house maintenance
operation provides the ability to better control this important function than
having each division or department responsible for maintaining and
repairing their own vehicles and equipment.
./ The three shops are managed by a Lead Mechanic or Senior Lead
Mechanic. These positions are responsible for supervising the
mechanics, managing the day to day operations of the shops, assigning
work to mechanics, assisting mechanics in diagnosing problems,
performing actual maintenance and repairs on vehicles and equipment,
and all other administrative, supervisory, and operational tasks associated
with ensuring the timely and accurate maintenance and repairs of the
fleet. A breakdown of the staffing at each location is provided in the
following table.
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Position Type Key West Marathon Plantation
Key
Administration 3 0 0
Supervisory 1 1 1
Maintenance & Repair 4 4 2
Parts 0 0 0
Service Writer 0 0 0
Other 0 0 0
Total 8 5 3
It should be noted that this organizational staffing represents a reduction
of 5 employees, or 24 percent over the last three years. The deleted
positions include an accounting specialist that was originally added to
comply with the 1996 internal audit, mechanics, and a fleet administrator
position.
Due to the absence of a service writer and parts staff at each shop, the
mechanics are required to perform those functions in addition to their
regular maintenance and repair functions. Based on discussions with the
mechanics at each location, it is estimated that as much as 15-20 percent
of a mechanic's time is spent writing repair order requests and/or
researching, sourcing, and obtaining parts. Assuming 1,500 billable hours
in a year per mechanic, this equates to 225-300 hours per year (28-38
days) that a mechanic is unavailable to perform wrench-turning activities.
./ The ratio of maintenance staff to fleet equipment is high, indicating an
understaffing problem in the County's shop. Our experience is that one
VE is equal to 12 to 15 labor hours per year and that mechanics generally
can be expected to produce 1,500 hours of wrench turning time each year.
Consequently, each technician can be assigned from 100 to 125 VEs
(1,500 divided by 12 equals 125). We have calculated the total number of
VEs that the County's maintains at 1,509. Our analysis of the County's
fleet staffing is shown in the following tables.
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Mechanic Staffing Analysis
Total Available
Labor Component FTE M&R
Positions
Mechanics 10
Total Actual FTE
M&R Positions
10
Lead Mechanics
3
0.75
Total Maintenance & Repair (M&R)
Available
10.75
Total VE's
Total VE's per Technician
Optimal Mechanic Staffing (100-
125 VE's per technician)
1,509
140
15.1 -12.1
These tables assume that each lead mechanic will be able to commit 25
percent of their time to wrench turning activities and that all of the
mechanic's available time is spent maintaining and repairing vehicles.
However, instead of 10.75 FTE positions performing repairs, the reality is
closer to 8.0 - 9.0 FTE's performing this work. Reasons being the
ancillary duties that the mechanics are required to perform such as parts
procurement, service writing, and maintaining the fuel sites.
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RECOMMENDA TION
The County should add one full-time roving supervisor position to the Fleet
Department to supervise the three maintenance shops on a full-time basis.
This will allow the Fleet Director to concentrate his efforts on managing the
department and implementing the recommendations contained within this
report. The roving supervisor would ensure consistency among the shops, fill in
for the lead mechanics in their absence (sick leave, vacation, training, etc.), and
act as the primary customer service representative for customers of the Fleet
Management Department. This position should be rated a pay grade above the
Senior Lead Mechanic.
The County should also add three Service Technician positions. The primary
responsibilities of these positions will be to act as service writers/parts workers
in the shops and perform maintenance and repair activities as time permits. It is
anticipated that the three Service Technicians would free up the mechanics to
spend nearly all of their time on maintenance and repair functions, allow the
lead mechanics to spend more time on the shop floor trouble shooting
problems, training, and performing quality control inspections, and compliment
the maintenance function by performing wrench turning activities. Each of these
positions should be expected to bill approximately 1/3 of their time to direct
labor. This will also allow the department to more adequately address the
maintenance and testing of the emergency generators. The Service Technician
positions should be rated at the same pay grade as a Mechanic.
This staffing recommendation increases the total mechanic FTE statistic to
11.75 (10 mechanics; ~ of each lead mechanic; and 1/3 of each service
technician). This is still slightly below the industry standard staffing but we feel
by renewing the fleet more regularly, making process improvements detailed
within this report, and optimizing shop space more appropriately this would be
adequate staffing for the fleet organization.
The Fleet organization should have the latitude to reclassify existing personnel
to accommodate shifting priorities and additional services. For example,
reclassifying an existing position to a mobile generator mechanic and other
subsequent position and pay adjustments that will become necessary.
Maintenance Manaaement anti Service ~
All vehicles and other pieces of motorized equipment require maintenance and
repair during their life. Since a fleet service organization's primary mission is to
maximize the availability of vehicles so that its customers can productively do
their jobs, the focus of maintenance management for such organizations needs
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to be in developing practices that minimize unscheduled incidents of repair and
that return vehicles requiring repair to service in as little time as possible.
Work orders should be used to document all maintenance and repair services
provided to a vehicle. Procedures also are needed to monitor the progress and,
where necessary, to expedite the completion of work. These include protocols
for passing work from one technician or shop to another, and from an in-house
garage to a vendor. Procedures also are needed for following up on repairs
whose completion by a mechanic or vendor is excessively slow and on parts
whose delivery is overdue. Best in class fleet operations have the service writer
or other individual opening a work order estimate the time and services required
to complete a work order, by reference to appropriate flat-rate manuals or in-
house time and task standards to estimate the cost of the repair.
Work authorization procedures should ensure that appropriate controls are in
place over the service and costs provided by a vendor. Such controls are
particularly important as vehicles approach their planned replacement dates. In
order to ensure the cost-effective utilization of in-house maintenance resources
and to minimize maintenance and repair turn-around time and downtime,
processes should be in place for scheduling work into a shop in advance and for
performing minor repairs while the driver/operator waits. Service hours and
scheduling processes should be flexible enough to accommodate vehicle users'
work schedules, but also should seek to maintain a steady flow of work to
mechanics and avoid peaks and valleys associated with unplanned service
demands.
Procedures should be in place to distribute work to mechanics so as to promote
high levels of mechanic productivity, efficiency, and effectiveness and to
minimize repair turn-around time; and assign the work to a specific mechanic
based on an assessment of mechanics' availability and skills. Additionally,
priority systems are often used to identify vehicles that are to be moved ahead in
the repair queue based on their importance to the organization.
Vendors may be relied upon to perform fleet maintenance and repair services for
a variety of reasons, including managing in-house work backlogs; avoiding costly
investments in facility construction, tooling, training, and staffing to meet low
volumes of service demand in remote areas or for specialty repairs; and to
achieve a degree of flexibility (e.g., in terms of locations, hours of service, etc.) in
the provision of services that is not possible with civil service system constraints
and sizable investments in fixed fleet maintenance infrastructure. The cost-
effective use of vendors requires, however, that procedures be followed for 1)
determining the comparative cost effectiveness of performing a service in house
or using a vendor; 2) managing and controlling vendor performance relative to
individual service orders and ongoing service levels (in the case of contract
providers of services); and 3) capturing all relevant information on vendor-
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performed services so as to maintain a complete record of vehicle maintenance
history and costs and provide for timely user billing via a charge-back system.
Repair quality assurance procedures are used to ensure that requested services
are performed properly. When repairs are not completed correctly, the vehicles
are often returned resulting in "comeback" repairs. When they occur, comebacks
are costly and annoying, so they need to be tracked and followed up on. It is
important that comebacks be identified and handled properly. In all likelihood,
the vehicle user is not pleased that the vehicle has had to be returned to the
shop.
The comeback may have occurred because the initial defect report failed to
clearly describe the problem. If this is the situation, a review of the original
service request with the service writer and/or operator may be in order. The
mechanic may have improperly diagnosed and/or performed the repair.
Therefore, some retraining may be needed. The parts used may have been
defective and some follow-up with the supplier may be called for.
One of the best strategies in managing comebacks is avoiding them all together.
This usually involves some form of post-repair review process. Quality checks
can range from simple road-tests, to quality checklists, and to complete
observation of the repair. No matter what procedure is used, good quality
programs are integral to insuring customer satisfaction. It is impossible for
maintenance managers to be all places at all times and, therefore, to assess the
appropriateness of maintenance activity and performance solely on the basis of
subjective judgment, first-hand observation, and second-hand information. The
development and analysis of management information enables managers,
supervisors, and trades workers to develop insights into aspects of their
performance and opportunities for improvement therein that might otherwise not
even be detected. Accurate, complete, detailed, and timely collection of
maintenance activity and cost data through work orders is the foundation on
which maintenance performance measurement and improvement processes rest.
Findings:
./ The Fleet Management Department maintains all internal County
Department vehicles and equipment including ambulances. Although
ambulances represent only approximately 1.5 percent of the entire fleet
that the Department maintains, it requires a significant investment in time
and effort. The small number of ambulances does not warrant a full-time
dedicated mechanic for the maintenance and repair of just the emergency
units. None of the mechanics in the County fleet organization have
obtained Emergency Vehicle Technician certifications or substantial
training in the maintenance and repair of ambulances. The ambulances
are complex units and continued specialized training is required for any
mechanic performing maintenance or repairs on these units.
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I--';'~...-,
~ .,
~
./ The County performs a limited amount of auto body repair and paint work
in-house in the small paint booth at the Key West facility.
./ The Fleet Management Department makes use of a computerized work
order system to collect and manage maintenance and repair data.
./ The customer is not provided an estimate of cost or time for the
maintenance or repair activity when bringing a vehicle or piece of
equipment to the shop unless requested.
./ There are no formal priorities established for completing repairs. Priorities
are set by the lead mechanic on a case-by-case basis.
I
i
..
./ The County makes use of commercial vendors for some specialty repairs.
However, due to its location, competitive private sector alternatives are not
always available as a viable option for the County. It was reported that
this was the case for painting vehicles and equipment.
I
f^"'"
I
L
./ The cost of maintenance and repair services is at the low end of the
benchmark level. Earlier in this report we introduced the concept of
Vehicle Equivalent Unit Analysis, which is a technique used to provide a
consistent methodology for comparing fleet costs and staffing levels. We
have calculated the total maintenance and repair cost per VE as $815.
This is at the low end of our benchmark range of $800 - $1,000 per VE.
..
I
./ In the absence of many of the typical fleet management performance
measures such as fleet availability, repair turnaround time, comeback
rates, etc. it is difficult to quantify service levels. However, based on the
comments provided during the customer focus group, it is apparent that all
of the departments and divisions represented were satisfied with the
services being provided by the fleet organization, with the exception of
one department that represented a very small percentage of the fleet.
Many of the users of the fleet organization stated that vehicle and
equipment maintenance and repair is much better since the County had
centralized it under the Fleet Management Department.
I
I
~~~
.
I
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RECOMMENDA TION
Consider outsourcing all maintenance and repairs of the County's ambulances.
The small number of units in the County's fleet does not justify a dedicated
emergency vehicle mechanic and repairs could most likely be performed through
private vendors that have the suggested Emergency Vehicle Technician training
more cost effectively.
Document formal policies and procedures for establishing priorities for
maintenance and repairs, and performing quick-fix services.
Begin monitoring and reporting on "comebacks" - vehicles that are returned to
the shop because the original problem was not satisfactorily addressed, and other
measures of performance included in the Appendix.
All repairs performed by commercial shops for any County vehicle, including
ambulances, should be coordinated through the Fleet Management Department
and the appropriate information collected and entered into the fleet management
information system. This information is necessary to maintain accurate fleet costs
for the County. The associated markups to cover the Fleet Department's
overhead should be passed on to the user departments.
Typically we would not recommend that auto body or painting be performed as an
in-house function. However, due to limited private sector alternatives, performing
the work in-house is likely the most cost effective way to do so, provided that
appropriate painting areas are available and the mechanic is properly trained in
this function. If this function is performed in-house, then an additional Auto-body
mechanic may be required and a full size EPA approved paint booth would be
required.
Preventive ""iintenance Proaram
A comprehensive preventive maintenance (PM) program is paramount to the
success of any fleet operation. Preventive maintenance is the regular,
scheduled inspection, adjustment, and refurbishment/replenishment/replacement
of vehicle components, systems, and fluids aimed at identifying and correcting
conditions that may result in future mechanical failures and expensive repairs.
PM programs enable minor problems to be detected and corrected before they
result in service-disrupting breakdowns and costly repairs. A good PM program
consists of thorough documentation of activities to be performed at specific time
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~I'''
I::;f{'-
or usage intervals, scheduling, and follow-up mechanisms that ensure that
vehicles are serviced at these intervals.
I
It is the responsibility of the fleet organization to ensure that PM intervals are
based on original equipment manufacturer's recommendations or on actual
historical experience and that users are notified when their units are due for
service. Policies should also be in place that dictates consequences to users
that consistently fail to meet their scheduled maintenance.
The industry benchmark for PM compliance for a state, county, or city fleet is 95
percent. That is, 95 percent of all units receive their appropriate level of service
by the established PM interval.
\
J
-
Findings:
./ PM's are a stated priority for the County's fleet and listed in the
Department's mission and goals. However, the emphasis of the Fleet
Management Department has been to perform emergency repairs to allow
operating departments to keep their vehicles and equipment on the road.
This has resulted in a backlog of PM's that are due or overdue.
I
r
l._
./ Our analysis, based on vehicle maintenance records maintained in the
fleet management information system, revealed that 93 percent of the fleet
was either due or overdue for a PM service. The following chart provides
a graphical representation of the number of days since each unit's last
PM.
~
I
200
180
80
160
140
120
I
I
!
=>
'; 100
'i!
i!
u 80
40
20
o
~30 31-60 61-90 91-120 121-150 151-180 181-360 381-540 541-720 721-900 901-1,200
Days 8ince Last PM
.
I
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The fleet organization has comprehensive PM checklists specific to
vehicle and equipment classes. It is the user department's responsibility
to monitor the PM window sticker that is placed in the vehicle each time a
unit is serviced and schedule a PM. Users typically do not put forth the
necessary effort to get their units into the shops for PM's because they do
not fully understand the purpose of a PM, they do not like to be
inconvenienced, and they do not see any consequences for missing PM's,
even if the missed service results in catastrophic and costly repairs.
RECOMMENDA TION
The Fleet Management Department should develop fonnal PM policies and
procedures that include processes for notifying user departments when their
units are due for service; scheduling services to provide the least disruption to
the departments operations; notifying users of follow-up work that may be
required; generating regular monthly PM compliance reports; and
consequences for missing regularly scheduled PM's. The Fleet Department
should also make a specific effort to educate its customers as to the importance
of regular preventive maintenance services, and to distinguish PM services
provided in-house by the fleet organization and the quick oil change and lubes
that are available by commercial vendors.
The Department should take the appropriate actions to catch up on the overdue
preventive maintenance services. This could be done by working overtime, or
shifting the repair work to local commercial vendors until all PM's are up to date.
We acknowledge that this may not be a viable solution due to the limited
availability of private vendors in the areas.
Parts Procurement and SUDDIX
The cost effective and timely provision of high quality repair parts to maintenance
staff is a key element in the overall provision of fleet maintenance services. The
organization and staffing of the parts supply function, the procurement of parts,
parts inventory management, warehousing, and inventory control each have a
large effect on the overall success of the parts supply function, and have a
corresponding effect on the efficiency and effectiveness_ of fleet maintenance
services.
The accumulation and storage of a spare parts inventory is a necessary evil for
all fleet operations that maintain their own vehicles. The goal is to minimize
capital investments in the parts inventory while maintaining a suitable level of
product availability. This is accomplished through an ongoing and routine
performance analysis by establishing, maintaining and regularly reporting on
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parts stock levels, parts consumption activity, inventory turnover rate, and parts
availability. Therefore, a prerequisite to a successful inventory management
system is the management of parts data with a quality fleet management
information system (FMIS).
The long term goal of a fleet parts operation is to achieve an inventory of rational
size and composition that will provide a suitable level of product availability to
fleet maintenance personnel with a minimum of capital investment in inventories.
A further goal is to maintain a high level of inventory performance through
ongoing and routine performance analysis. A final goal is to provide a database
of information on trends in product usage that will be of benefit to the fleet
maintenance operation in diagnosing trends in overall fleet and parts
performance.
The trends that develop over time, and direct comparisons between measures of
performance will provide managers with information they can use to make
informed decisions. For example, inventory value is not a particularly useful
measure unless it is tracked consistently and/or used as a comparison basis. If
the value of inventory is recorded at set intervals, say monthly, then a trend line
can be developed. This trend becomes useful to managers by indicating whether
the overall size of the inventory is increasing or decreasing. Now, if we compare
this trend with another measure, say the total value of inventory issued,
managers can gauge whether the trend is explainable and appropriate.
Inventory value decreasing while the value of issues increases and the size of
the fleet grows, may be a cause for concern.
When inventory performance is measured and reported consistently,
management will have the information readily available to make informed
decisions about inventory policy. This includes establishing stocking criteria, re-
order points, inventory reconciliation, and disposal of obsolete or slow moving
parts.
Well-designed contracts and blanket purchase agreements enable an
organization to reduce administrative effort and time delays associated with
procuring parts; to monitor and control parts purchases; to simplify payment for
such purchases; and to secure discounts associated with buying from particular
suppliers in volume. In short, they can reduce both the direct and indirect costs
of buying parts and other fleet maintenance-related commodities. Procedures for
establishing, monitoring, renewing, and circumventing contracts should be
designed to maximize vendor performance, minimize administrative effort, and
maintain a maintenance organization's flexibility to procure a part by other means
when contract suppliers cannot satisfactorily meet its needs.
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Findings:
./ The Fleet Management Department does not have any dedicated parts
personnel. The lead mechanics - working supervisors - and the
mechanics are responsible for obtaining all of the parts they need
including maintaining a parts room at each maintenance garage.
./ The Department does not monitor parts inventory fill rates, inventory
turnover statistics, or stock movement. Parts are ordered when the
mechanics or lead mechanics deem they are needed and not based on
minimum/maximum parts inventory levels maintained in the FMIS.
./ The Department has just obtained approval to pay parts invoices based on
a monthly statement instead of a per transaction basis. This practice will
provide a more streamlined process for processing payments for parts.
./ Other than possibly an annual physical parts inventory, routine physical
inventories are not performed.
./ The parts room (shed) at the Key West facility is not restricted and anyone
in the area could walk away with parts and supplies if they were so
inclined.
./ Parts can only be added to work orders by the lead mechanic at each
shop. This is typically performed when the work orders are closed.
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RECOMMENDA TlON
The three new proposed Service Technician positions would be responsible for
parts procurement, issuing parts to mechanics, and inventory management in
addition to service writing. This will greatly reduce the time mechanics spend
obtaining their own parts and allow them to spend more time on vehicle and
equipment maintenance and repair. Repair parts should be entered onto the
work order when the part is issued from the parts room, not at the end of the
workweek when the open work orders are closed by the supervisor. This will
ensure a more accurate accounting of parts costs.
Regular, at least quarterly, physical inventory cycle counts should be performed
to reconcile parts purchases with parts issued.
Open purchase orders and/or parts contracts with regular parts suppliers should
be utilized whenever possible that permit monthly payments to be made by the
County. This reduces the time and effort to acquire the part and to process
payments.
Since the parts supply and procurement function accounts for nearly 35-40
percent of maintenance and operation costs for a fleet operation, it is imperative
that accurate and up to date records are maintained. These records are the
dataset from which a number of important fleet performance statistics are
generated. To that end, we have included a number of performance measures
in the Appendix that have been designed to measure performance in this area.
Used together, they will provide a better overall sense of inventory performance
than anyone used in isolation.
Vehicle Acouisition
The manner in which specifications are developed and used not only affects the
ultimate cost effectiveness and suitability of the vehicles that are purchased, but
the level of effort and amount of time required to acquire vehicles as well.
Effective specification processes incorporate information on user needs and
maintenance organization experience with particular types of vehicles and
components, and seek to balance custom design requirements with standard
features. The more custom the design, the longer it takes to develop the
specification and the more expensive the vehicle is to procure.
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The methods used to acquire vehicles can have an impact on the price of a unit,
the amount of time required to deliver it to a user, and the responsiveness of the
vendor to customer needs. Acquisition policies should consider how to leverage
the County's buying power to obtain the best possible price and insure the timely
delivery of properly constructed and outfitted equipment. Additionally,
procedures should exist to review vehicles upon delivery to ensure their
compliance with purchase specifications. Critical parts lists, service manuals,
and user and/or mechanic training services should be included in purchase
specifications for units that are new to the fleet or specialized equipment whose
operating and maintenance requirements are not self evident.
Findings:
./ The Fleet Director works with user organizations and attempts to ensure
that the new units meet the needs of the department while attempting to
standardize the fleet when at all possible.
./ The County makes good use of the State of Florida's master contract for
the purchase of vehicles and equipment and other cooperative purchasing
agreements that are available.
./ The County generally obtains manuals when new units are purchased.
RECOMMENDA TION
The Fleet Management Department should continue to utilize the State of
Florida contract and other cooperative purchasing agreements whenever
possible. In the event that the County is required to solicit bids for vehicles and
equipment, consideration should be given to awarding multiple year awards to
vendors with an annual cost escalation clause. Bids should also include three
sets of manuals - one for each shop - and mechanic training whenever
possible.
Vehicle and EauiDment pisDosal
Once vehicles and equipment have reached the end of their useful life or
completed their duty tour, the procedures used to remove the vehicle
permanently from the fleet should aim to maximize residual value and avoid
unauthorized retention of assets that have been replaced. At the time a decision
is made that a vehicle is to be disposed of, almost all vehicles have a salvage or
residual value. Even a vehicle that has been "totaled" usually has value for its
parts that were not damaged in the accident. Therefore, once vehicles have
been replaced and/or removed from service, it is desirable to dispose of the
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vehicles (turn the vehicles into cash) as quickly as reasonably possible. Vehicles
lose value each day they sit idle pending sale. Commercial fleet leasing
companies have a performance standard that they monitor closely called "days to
sale". They know that each day a surplussed vehicle remains on its books
represents an asset that is not earning money for them and that is losing value.
Government fleets are no different.
Net proceeds from the sale or disposal of vehicles should be returned to the fleet
sinking/replacement fund (and the using department's account credited) or to the
owning department. The value derived at the time of vehicle resale is an
incentive to the using organization to keep the vehicle clean and properly
maintained - but only if the using organization is the beneficiary of the proceeds
from the sale. Further, the using organization should be entitled to use the credit
from the timely disposal of a well-maintained vehicle to offset the full cost of the
replacement vehicle.
There are several methods of disposing of vehicles arid equiprnent. They
include:
· Auctions;
· Trade-Ins;
· On-line Sales;
· Direct Sales to Outside Individuals;
· Manufacture Sell-Back Programs; and
· Employee Sales.
Auctions have been one of the most common methods for disposing of fleet
assets for public entities over the past several years. By the very nature of the
process, auctions attempt to solicit the highest price for an asset. Auctions
provide a quick solution to disposing of assets and it is relatively simple for an
organization to conduct an auction or hire an auction service to conduct the sale.
The drawbacks to the auction approach include the lag time between the time the
asset is taken out of service and the time it is finally sold; auction fees typically
are based on a percent (5-10%) of the auction proceeds and can reduce the total
revenues significantly if a large number of vehicles are sold; auctions do not
guarantee the sale of an asset; and you must settle for the auctioneer's
wholesale price rather than a higher price that could be obtained by selling the
vehicles as individual units or as small groups.
Another popular method of disposing of old units is to offer them as a trade-in on
the new unit being purchased. Vendors are required to view the unit and submit
a quote as a trade-in that offsets the new vehicle's purchase price. The benefits
of this approach include the simplicity involved in disposing of the used asset.
When using this method, an organization should always use language in the bid
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document that allows it to accept or reject the trade-in offer if the fleet
organization believes that it can obtain a better price elsewhere in the market.
One of the newest and fastest growing methods of disposing of obsolete units is
through the World Wide Web (Internet). The County could either develop its own
on-line auction service and present items for sale via the Internet or contract with
an existing e-solution auction provider such as E-Bay. This method generally
provides for the greatest exposure of an asset, which in turn generally results in a
higher salvage value.
Another method is to sell the asset directly to individuals or private organizations
through direct sales methods. This approach is similar to the procurement
process where a notice of sale is provided to the public, usually through print
media outlets, and bids for the specific unit are solicited. This method can be
successful in obtaining high salvage proceeds but the costs and efforts
associated with this method are also high.
A seldom used approach is to come to an agreement with an original equipment
manufacturer to "buy back" a vehicle or piece of equipment after a certain
amount of time in service. This approach works well with construction type of
equipment such as loaders and backhoes. Vendors receive such a substantial
discount for selling a unit to a governmental or other not-for-profit entity that the
vendor can re-purchase the same unit a year or two later and re-sale it to the
general public for a higher price than it was originally sold to the non-profit
agency. The problem with this method is that it is only available occasionally
and by a limited number of vendors.
The final method is to offer the out-going units to employees of the County at
reasonable market value. This method has two distinct advantages; it can create
a positive attitude among employees that is seen as fringe benefit, and it tends to
ensure the quick disposal of vehicles and equipment. The disadvantage of this
approach is that vehicles are sometimes over-maintained and too much time,
effort, and money is spent making sure the unit is in favorable condition at time of
disposal. Also, it may generate negative reaction from taxpayers if they perceive
this to be an undue benefit for County employees.
Findings:
./ The County does not have an effective or efficient method to dispose of
vehicles once they have been removed from service. The current process
is bid based. Once a unit is identified for disposal, the County solicits
competitive bids with a minimum selling price. If the minimum price is not
achieved, the unit is bid a second time without a minimum price. If the
County is successful in obtaining a bid for the out of service unit, then the
bid price must be approved by the County Board before award can be
made.
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./ Vehicles and equipment that are awaiting disposal are stored at all three
maintenance locations. All of these locations have inadequate space for
maintenance and repair operations and storing additional units at the sites
further exacerbates the space problems at the three maintenance
garages.
RECOMMENDA TION
The County should reengineer the fleet asset disposal process using one or
more of the methods described above. We have found on-line and auctions to
be the most cost effective ways to dispose of salvaged fleet assets for local
governments. The current process is time consuming, does not maximize
salvage value, and storing units awaiting disposal hinders operations at the
maintenance and repair facilities.
Maintenance Certification and Jrainina
Emphasis on professional certifications shows a commitment by an organization
to excellence and the importance the organization places on training for its
employees. The knowledge required to become certified improves the
productivity and quality of work of employees.
The training process involves the identification of the need for training,
appropriate funding, and the selection of and attendance at appropriate courses.
Due to continual and accelerating changes in automotive technology, a rigorous,
proactive training program is essential for maintaining the viability of in-house
fleet maintenance programs. Training investments yield dividends in mechanic
effectiveness and efficiency, which translate into better, cheaper maintenance
and repair services.
Findings:
./ There is no formal training program or incentives for mechanics to obtain
Automotive Service Excellence (AS E) or other recognized fleet
maintenance certifications. Training is done on an ad-hoc basis and
limited due to budgetary constraints. The total expenditures for training for
FY 2001 was approximately $1,600 (account 530400 - Travel and per
diem). If limited to just the mechanics, this would only be $160 per
employee per year for training and continuing education.
./ The mechanics that we interviewed were very much in favor of additional
training.
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RECOMMENDA TlON
The Fleet Management Department should develop a formal training program
that ensures that each mechanic will have the opportunity to attend
maintenance and repair related training at least once per year. Consideration
should also be given to establishing a pay incentive program for obtaining ASE
or equivalent certifications. This could include a lump sum award when a
certification level is reached or an increase in the hourly wage based upon the
certification level. This would provide the mechanics an incentive to obtain
additional training and provide a form of career advancement.
Customer Communication and Feedbac~
Customer service management is central to the effective performance of any
fleet management organization. Good customer service management stems
from an acute sensitivity to the needs and concerns of fleet users, and manifests
itself in a set of communication, decision-making, reporting, and feedback
processes which encourage fleet users to actively participate in the management
and maintenance, and not simply the utilization, of a fleet.
Findings:
./ There are no formal open lines of communication between the fleet and
user organizations.
./ The Department does not ask users to complete vehicle satisfaction
surveys or have any other method for users to communicate formally with
the organization.
./ Based on the comments provided at the users meeting, we would
conclude that the customers of the Fleet Management Department would
give the fleet organization an overall positive rating for the services they
provide.
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RECOMMENDA TION
The Department should coordinate regular meetings of the major users of fleet
services at least quarterly. These meetings are an excellent way to improve
communication with customers and provide an avenue to educate users on
fleet initiatives and policies and procedures. The Department should also
consider using customer surveys at least on an annual basis. It is sometimes
beneficial to have an unbiased third party familiar in fleet operations perform
the annual customer survey. The benefits include ensured accuracy in the
survey results, properly designed survey to identify potential problem areas,
familiarity with professional fleet operations, and complete anonymity of the
survey respondents.
Records of the level of satisfaction can be tracked over time and areas where
improvement is needed can be easily identified.
Internal Service Fun~ Manaaement
The Fleet Management Department operates as an Internal Service Fund (ISF)
within the County. ISFs are used by state and local governments to account for
the financing of goods and services provided by one department or agency to
other departments or agencies, and to other governments, on a cost-
reimbursement basis. The use of ISFs provides a number of distinct advantages,
including the following:
· The ability to recover the total cost of an activity;
· Provides for ease in costing and pricing services;
· Allows for the accumulation of resources for equipment replacement;
· Transfers some governmental fund type overhead costs to the ISF for
redistribution to the benefiting programs; and
· Enables more effective claiming of overhead cost reimbursement from
grant programs, where permitted, by providing a clear audit trail.
From a General Fund point-of-view, ISFs should be zero budgeted. In other
words, General Fund (and Enterprise Fund) appropriations are provided to ISF
customers to permit the customers to purchase goods and services from the ISF
organization. An ISF should neither make money nor lose money. They should
set their rates in such a manner that their costs are recovered through their
charges for goods and services. To the extent that an ISF "makes" money in one
year, it is required to set its rates to lose that same amount of money the next
year. Financial reporting practices should provide a clear view of cash flows and
the source of any deficits or surpluses.
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Findings:
./ The Fleet Management ISF recorded a net operating gain of $212,000 for
the fiscal year ending September 30, 2001.
./ The Fleet Management ISF had a ending fund equity balance of $2.5
million at the end of fiscal year 2001.
g.arae-Back Rate Methodoloay
The purpose of establishing a charge-back system is to provide a mechanism for
the Fleet Management Department to recover the full costs of providing services,
while enabling using agencies to easily identify the costs of the specific services
they consume. With a well-designed rate structure, cross subsidization of
service delivery costs and associated inequities of user charges are eliminated.
To be effective, charge-back rates should be designed to promote cost
recognition and control by consumer departments (customers). In general, this
means that rates should be tied to the costs of providing discrete goods and
services that are recognizable to the average fleet user. Rates should also
differentiate among the goods and services provided insofar as the costs of their
provision are significantly different. The rates should be developed empirically
based on the fleet organization's actual costs of providing the various services
such as maintenance and repair, fuel, parts, and sublet services.
The importance of developing charge-back rates that reflect the actual costs
incurred in providing the specific goods and services cannot be over
emphasized. Using charge-back rates that do not accurately reflect these costs
largely defeats the purpose for charging users for the resources they consume.
Inaccurate rates do not enable - let alone encourage - fleet users to consume
goods and services in the most efficient and effective manner because the true
costs of their consumption remain hidden. By inhibiting such recognition,
inaccurate rates also reduce fleet user scrutiny of the fleet organization's
performance, thereby weakening incentives for it to provide services in the most
cost-effective manner possible.
Findings:
./ The fleet organization has developed fully-burdened charge-back rates for
the services they provide. However, the charge-back rates currently used
by the Fleet Department are developed based on the previous years
actual expenditures and then billed in equal installments quarterly to each
user department that has vehicles "In the Program" (County owned
vehicles under jurisdiction of the County Administrator).
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An additional fundamental problem with the current rate structure is that
customers have no basis for comparing costs charged by the Fleet
Department with those of an alternative service provider.
For vehicles "Not in the Program" (other government agencies or
departments not under the jurisdiction of the County Administrator), they
are direct billed on a monthly basis for actual work performed at the
established charge-back rates.
The 2001/2002 charge-back rates are compared below with industry
standards. We would expect Monroe County charge-back rates to be at
the high end of the benchmark range due to the lack of viable competition,
geographic challenges, and other factors discussed within this report.
Service Area
Monroe County
Rate
$56.97
71%
10%
$0.24
NA
Industry
Benchmark
Local Market
25-40%
8-15%
$0.08 - $0.15
$5.00 - $15.00
Labor
Parts
Commercial Repairs
Fuel Markup/gallon
Fleet Administration Fee Per
vehicle/month
Although we were not engaged to develop new service-based charge-
back rates for the County's fleet operation, a cursory review of the budget
and expenditures included in the current calculations revealed a
significantly higher indirect charge (cost allocation) to the Fleet
Management Department than we would expect to find. The Department
is charged $326,000 annually for cost allocation. This represents 14
percent of the total Department's annual budget. This has a significant
impact on the charge-back rates as shown in the following table.
Department's Indirect Indirect Cost
Rate Cost Allocation - Total
Cost Allocation % of Total
Labor Rate $40.13 $16.84 29.6% $56.97
Parts MarkuD 27% 44% 62% 71%
Fuel MarkuD $0.20* $0.04 16.7% $0.24
*includes capital depreciation
./ Service based rates, which charge customers for the actual costs of the
products and services that they consume, are more equitable and provide
a better awareness of the costs associated with owning and operating
individual units. Moreover, costs charged by the Fleet Department (such
as for an hour's worth of labor or a brake job on a pick-up truck) are
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instantly comparable to alternative service providers and, consequently,
provide incentives to both the Fleet Department and its customers to take
actions to reduce fleet operating costs.
RECOMMENDA TION
The County should implement a service based direct charge-back system for
all customers ("In Program" and "Not in Program" customers) of the fleet
organization. The rates should be fully burdened and designed to recover all
of the costs of the Fleet Department. This system should be complimented
with a monthly charge for fixed costs such as replacement charges and fleet
administration costs. For the purpose of establishing the true costs of the
services provided, the contributing cost factors contained within the rates
should be identified and made known to the fleet maintenance customers.
The development of charge-back rates is a complicated and time consuming
endeavor. Most local governments engage the services of a professional
consulting firm that has significant experience in rate development to
establish the initial rates and to review and update the rates annually.
Another option is to add staff that has specific experience working with
intemal service funds and developing charge-back rates and have this
person responsible for the development and maintenance of the charge-
back system.
Fleet ReDlacement PJannina and Fundina
Many fleet professionals and government decision makers confuse fleet
replacement planning with procedures used to select which vehicles should
actually be replaced. The former is a strategic activity designed to predict
replacement funding needs so that fleet assets can be replaced in a planned and
rational manner before undesirable operating impacts occur, such as high repair
costs and disruptions in service delivery activities caused by vehicle breakdowns.
The latter is a tactical activity with the aim of spending allocated funds in the
most beneficial manner by selecting the vehicles that are most deserving of
replacement.
A replacement planning process has two major components: development of
replacement planning parameters that determine when each vehicle and piece of
equipment should be replaced; and a financing and funding process that ensures
that money is available to purchase a replacement asset when the desired
replacement date is reached. A clear distinction needs to be drawn between the
replacement planning and funding process and the process for selecting specific
units to be replaced. Replacement cycles are planning parameters, and as such
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are predictive criteria used to establish funding requirements. While they are
also often used to identify potential candidates for replacement, additional factors
need to be considered when developing the list of units that are most deserving
of being replaced. These additional factors should include items such as
maintenance and repair costs, reliability, type of use, and vehicle condition,
among others.
The development of a systematic vehicle replacement program provides an
organization with more stable and predictable operation costs, a safer fleet,
increased user satisfaction, improved vehicle reliability, a potential reduction in
fleet size, and increased accountability for total fleet related costs.
The primary objective of a formal replacement plan is to project aggregate, long-
term fleet replacement costs to ensure that sufficient funds are recovered to
defray these costs. Securing adequate funds to ensure the timely replacement of
vehicles and equipment has been, and will continue to be, one of the biggest
challenges facing fleet management organizations. Deferring fleet replacement
purchases increases pressures on the fleet maintenance infrastructure
(additional maintenance space, additional technical staff, and additional
maintenance dollars), increases vehicle downtime, and reduces worker
productivity.
Where the deferral of vehicle replacement purchases has become chronic, it is
not unusual to find a significantly inflated fleet size. This is because operating
departments, charged with providing services to taxpayers, realize that having a
vehicle down for maintenance does not obviate the need to deliver promised
services in a timely manner. As vehicles become less dependable, incur more
unscheduled maintenance, and spend longer periods in the maintenance shop,
operations' supervisors look for solutions to keep their employees productive.
The usual solution is to retain vehicles as they are replaced rather than
permitting them to be retired. This provides the needed backup or spare vehicle.
However, it increases the size of the fleet as the older, higher mileage, and
maintenance prone vehicles are retained.
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The economic theory of vehicle
replacement holds that vehicles should be ECONOMIC THEORY OF VEHICLE
replaced when the sum of ownership and REPLACEMENT
operating costs is at a minimum. The
chart at the right illustrates this concept.
The chart shows three cost curves. The
"capital (ownership) cost" curve shows the
decreasing cost over time of a fleet asset
as it ages and depreciates. The
"operation cost" curve illustrates the
increasing maintenance and repair costs
for the same asset over time. The "total
cost" curve combines the two. The optimal point at which to replace this asset
from an economic perspective is when the "total cost" curve is at its lowest. That
is, when the combined cost of owning and operating the unit is at a minimum, just
before it begins to increase. As illustrated, the bottom of the "total cost" curve is
relatively flat. This means in practical terms that there is not a single best time to
replace a unit. Rather, a period of time exists during which the combination of
capital and operating costs are at their lowest, and delaying the replacement of
the unit will not have a material impact on the total annual costs for that unit. For
example, for the typical sedan and other light-duty vehicles in a fleet, this flat
section usually represents from five to seven years or from 60,000 to 90,000
miles.
Iii
o
u
~~
OPERATING
CAPITAl.
nME/USAGE
The "total cost" curve is different for every unit. This variability is caused by
differences in the design and engineering of different types of units, the effects of
differences in operating environments, the quality of care the unit receives, and
other factors. As a result, it becomes impractical to apply this model without
utilizing class average replacement criteria or estimates, which will accurately
reflect the best replacement time for most of the units in that particular class of
vehicle or equipment.
Even the best replacement planning efforts will not succeed jf the appropriate
funding to renew the fleet is not available. It is important to recognize that a
dollar of fleet replacement funding deferred is not a dollar saved. Fleet assets do
wear out. Over time they not only become more unreliable, but more costly and
unsafe to operate. Decisions to defer replacement for a particular unit or type of
unit beyond its planned service life will impact the average maintenance and
repair costs for those units. It will also affect the manner in which the unit is
utilized due to its actual or perceived drop in reliability. Significant deferment, in
our experience, also leads to an overall increase in the size of the fleet due to the
need, real or not, to have spare vehicles available. The ultimate need to replace
the unit in question is not eliminated; it is only pushed to another year.
The basis then, for a successful replacement program, is the development and
adherence to a reasonable set of replacement parameters. Replacement
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parameters are a set of criteria that initiate the replacement of an asset. Fleet
replacement parameters are set as time and usage - that is - months in service
and mileage or engine hours for a particular classification of vehicle or piece of
equipment.
We recently were
engaged to
examine the
relationship
between vehicle
d 0.4
age an
maintenance 0.3
costs in a large 0.2
Florida county 0.1
fleet of about 0 ,
3,700 units and 1 2 3 4 5 6 7 8 9 10 11 12
the results can be Age
seen in the above chart. It shows the impact of increases in vehicle age on
direct maintenance and repair (Le., labor and parts) costs per mile for four
groupings of vehicles. In this particular setting, cross-sectional maintenance cost
data suggested that costs per mile increased by as little as 186 percent and as
much as 800 percent over 12 years. These figures do not include increases in
indirect costs associated with the aging of a fleet, such as more frequent,
unpredictable breakdowns and repair-related downtime; greater difficulty in
securing replacement parts; reduced vehicle safety; and lost worker productivity.
They also do not reflect the drop in usage that accompanies the aging process.
0.6
Impact of Vehicle Age on Maintenance and Repair Costs
$/Mile
0.5
-+- Heavy
___ Medium
Light
---)<'-- Sedans
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L TO Repair Costs vs. L TO Mileage
6000
1000
20000
40000
60000
Mileage
80000
100000
120000
5000
~
~4000
o
...
'ji
Q,
&!3000
2000
The above chart is a scatter diagram we developed for a state's department of
administrative services' short-term rental fleet showing the relationship between
life-to-date (L TO) mileage and life-to-date repair costs for sedans. As can be
seen, repair costs not only rise at an increasing rate as vehicles age, they also
become more volatile and, hence, unpredictable.
These two studies, and numerous others that we have done, validate the
relationship between vehicle age/usage and increasing maintenance costs. We
have a number of clients who have implemented the replacement programs we
have recommended and have observed that overall maintenance costs have
decreased, vehicle availability has increased, customer satisfaction has
increased, and fleet size has decreased. Meanwhile, they find that their total
fleet budget (including the purchase cost of the vehicles) has decreased when
adjusted for the time-value of money.
Findings:
./ The fleet organization is responsible for managing the replacement of all
County vehicles and equipment except for Sheriff's vehicles, fire trucks,
ambulances, and elected officials' vehicles. The responsibility for
replacing these units lies with the user departments and therefore are
excluded from the replacement analysis.
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./ The County has just recently (FY 1999) established a fleet replacement
fund for the purpose of accumulating funds to replace vehicles and
equipment. Charges are only being recovered for new vehicles that have
been purchased since this replacement fund has been established. The
Vehicle Replacement fund is projected to have a balance of $326,000 at
the end of FY 2002.
./ The County has established an informal replacement plan that consists of
three categories of replacement parameters; five years, ten years, and
fifteen years. Our work with hundreds of clients has shown that the
average replacement cycle for government fleets is between seven and
nine years, depending on the mix of vehicles in a fleet. A fleet with more
light vehicles, such as cars and pickups, will fall on the lower end of the
range. Conversely, a fleet with a higher percentage of heavy vehicles,
such as refuse trucks and construction equipment, will fall on the higher
end of the scale.
The average of the County's class based replacement criteria is 8.8 years,
making it a typical government fleet. We have reviewed stated
replacement age for each class and believe that they are, for the most
part, reasonable. The five-year replacement cycle for standard sedans,
however, is slightly more aggressive than most fleets we work with.
./ The County has not appropriated sufficient funding in recent years to
replace its fleet in a reasonable manner. In terms of analyzing the
adequacy of historical replacement funding we calculate the replacement
value of the assets and divide this figure by the average stated
replacement criteria. This establishes an annual replacement funding
requirement, which when adjusted for inflation and fleet size growth, can
be used to compare actual funding to requirements over time.
The current replacement cost of the County's fleet is $12.8 million
(excluding Sheriffs vehicles, fire apparatus, and ambulances). With an
average replacement cycle of 8.8 years, the County should spend
approximately $1.5 million on capital equipment renewal this year.
For the three years prior to 2001, the County replaced only a handful of
vehicles on a case-by-case basis.
Another way to assess the adequacy of vehicle replacement funding is to
compare the average age of the fleet to the average stated replacement
criteria. The average replacement cycle for the County's fleet is 106
months (8.8 years). Assuming that vehicles are normally distributed on
the basis of age throughout the fleet, which has been our experience with
most governments, then we would expect the average age of the units in
the fleet to be half of the average replacement cycle - or 4.4 years for the
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County's fleet. However, the actual age of the units in the County's fleet is
6.8 years, or nearly sixty-five percent higher than we would expect.
We have prepared a preliminary, high-level replacement analysis for the
County's fleet. The results are presented graphically in the following
chart. The chart illustrates year-to-year replacement expenditure
requirements for the next twenty years.
$8.0
$7.0
ii'
~ $6.0
!.
! $5.0
.a
:g
~ $4.0
a.
lC
w
C
G $3.0
E
3
..
i $2.0
a::
$1.0
$-
2003 2004 2005 2006 20CfT 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Fiscal Year
Several points are apparent from this analysis:
· The backlog or replacement needs exceeds $5 million in 2003,
illustrating the impact of historical under funding of fleet
replacement;
· The average annual expenditure requirement for the next five years
is $1.96 million. Spreading out of the funding backlog over five
years would be a more rational approach than spending $5 million
next year;
· There is an inherent lumpiness, or volatility in the long-range
replacement plan. Adopting a multiple-year approach to vehicle
replacement planning provides the opportunity to manage this
volatility; and
· The need to renew the fleet is ongoing and deferring replacements
only makes matters worse.
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As indicated in the introduction to this section of the report, the principles
of life-cycle cost analysis hold that there comes a point in time that
deferring replacement of a vehicle in order to save capital funds actually
increases overall fleet costs. This is especially true if non-pecuniary costs
such as lost employee productivity caused by unreliable and unavailable
vehicles are added to the equation.
While a fleet renewal program would unquestionably provide the County
with a more cost-effective fleet over the long term, the real significance of
our findings regarding current fleet replacement practices lies in the fact
that the County's fleet can be permitted to age only for so long. One might
argue that all of the figures in this report somehow are distorting the real
situation on the ground. We certainly would concede that an organization
could limp along with a fleet of 10-year old vehicles. We submit, however,
that it cannot do so with a fleet of 20-year old vehicles.
It appears to us that the County has few options in this area, none of
which may seem to be particularly pleasant. It can spend a lot more
money on fleet replacement; it can limp along with an older, less safe, less
reliable, and less economical fleet; it can reduce the size of the fleet; or it
can pursue some combination of these strategies.
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RECOMMENDA TION
We recommend that the County update replacement parameters specific to
each class of vehicle and equipment. The parameters should include both
age and usage (miles or hours).
We recommend that the County develop a formal long-range (at least 15
years) fleet replacement plan that precisely quantifies the costs of the future
replacement of the fleet.
The development of a comprehensive vehicle and equipment replacement
plan is an arduous task that requires considerable time and effort. The
County should consider either hiring additional staff to develop and maintain
the plan or solicit outside professional assistance to develop the initial plan.
The plan should be updated annually.
The County should continue to develop a sinking fund within the Fleet ISF to
finance the future replacement of fleet assets. Monthly capital charge-back
rates should be based on the expected life of each asset, expected future
replacement costs net of expected salvage proceeds, and also include a
factor for investment income that accrues to the fund.
The County should also develop a formal process for selecting units that are
actually replaced. Many fleet organizations have developed a weighted
point system that mixes factors such as age, mileage, life-to-date operating
costs, type of use, and condition into a formal review process. This has the
advantage of taking most of the politics out of the replacement process
because all stakeholders (including budget staff and fleet users) understand
the factors being considered and have bought into the process. A sample
point system is provided in the Appendix.
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Vehicle Assianment and Utilization
Since a fleet user's need for a vehicle or piece of equipment can diminish over
time, justifying the initial acquisition and assignment of a vehicle does not ensure
that a fleet of vehicles will remain properly sized, composed, and utilized. Fleet
management organizations should be responsible for developing and reporting to
fleet users information on the utilization of fleet assets and on opportunities to
share such assets. They usually are uniquely positioned to do so by their need
to maintain up-to-date records on fleet size and composition, their responsibilities
to acquire, fuel, maintain, and dispose of vehicles, and their operation of central
fleet management information systems.
Defining a fleet management organization's responsibilities in this area is a
delicate task, however, since it is difficult to maintain good customer relations
when acting both as a provider of fleet assets and services and a controller or
regulator of the use of such resources. One way to address this issue is to have
the fleet organization function in a consultive role to customers and to a higher-
level decision maker, such as the County Administrator, to whom user agencies
are responsible for justifying retention of underutilized vehicles.
Fleet utilization levels, expressed in terms of average annual miles driven or
hours used for particular classes of vehicles, can provide an indication as to
whether or not assignment justification and utilization monitoring processes are
effective in controlling fleet utilization. It is important to realize, however, that
such measures do not always provide a complete and accurate picture of the
need for a vehicle or piece of equipment. Other considerations such as
frequency of use (Le. time away from base), cargo carrying requirements,
emergency responsibilities, and special equipment needs must be added to the
analysis.
Findings:
~ The County does not have a formal vehicle utilization monitoring program.
Procedures should be in place to develop and analyze information on the
utilization of fleet assets so as to identify opportunities to optimize fleet
size, composition, and deployment. The absence of a formal review
process has enabled user departments to avoid the need to justify
retention of low use vehicles.
~ We conducted a very high level analysis on the utilization of the fleet. In
order to provide a graphic representation of the utilization of classes of
vehicles - mileage by vehicle type - we developed a box and whisker plot
chart. A box and whisker plot chart is used to help identify several
statistical representations for a group of data. In this case, the box and
whisker plot chart is used to compare total mileage by vehicle type. For
example, the top group is pickup trucks. The box shows the middle 50
percent of pickup trucks based on total accumulated life to date mileage,
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and the horizontal black lines represent the remaining vehicles. For each
group, the vertical line in the middle of the box marks the median of the
data sample. The median means that half of the values - vehicles - in the
sample are larger and half are smaller. The red box represents the middle
50 percent of the data elements - pickup trucks by mileage.
The whiskers are the horizontal lines that extend from the box in either
direction. They show the range of values - mileage - that fall within a
predetermined variance. The graphic also displays those units that fall
statistically outside of the normal distributed range. The units identified
with an "0" are called outliers or "outside values". These units are called
extremes or "far outside values" and are most likely the result of corrupt
data - inaccurate mileage readings.
The following box and whisker plot chart shows the average life to date
utilization by vehicle class. Mileages for the units were obtained from the
County's fuel system.
Sedan
()
72
SUV
Q)
c..
>-
~
Q) Trk - HD
.Q
.c
Q)
>
Trk - LD
152
o
Trk-MD
~
Van
B9
o
50,000
100,000
150,000
200,000
Life To Date Mileage
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I
~
In examining the above graph, it reveals that, for example, the median mileage
for all pickup trucks in the fleet is approximately 67,000 miles. It also shows that
a significant number of pickup trucks have mileage exceeding this number up to
and beyond 150,000 miles (far right hand end of the horizontal "whisker"). By
comparing this to other County fleets, it is apparent that the pickup trucks owned
by the County have considerable mileage and a significant number are well
above the industry standard replacement criteria of 80,000 - 100,000 miles for
pickup trucks. It also shows that there may be considerable disparity in usage
among pickup trucks since the whiskers range from near 5,000 miles to over
150,000 miles. Although some of the vehicles at the left end of the pickup
whisker may be new vehicles, there is probably still opportunity to rotate vehicles
to ensure more consistent usage.
-
We also looked at the vehicle utilization information in the context of average
annual utilization, or average annual miles driven for the major classes of
vehicles. The following table provides the results of this analysis.
I
#of Average
Vehicle Type Units Annual
Mileage
Pickup Truck 66 10,904
Sedan 44 11,838
Sport Utility 6 16,002
Truck, HD 25 9,073
Truck, LD 24 9,115
Truck, MD 9 8,184
Van 40 9,557
....,
.
I
RECOMMENDA TION
I
I
The County should establish a systematic program of vehicle utilization
monitoring in order to help control the size and composition of the fleet. The
program should establish a set of utilization targets for specific classes of vehicles
and notify the divisions when specific units are not meeting those utilization
targets. This program should be conducted on at least an annual basis to identify
units that are being utilized at a rate 50 percent lower than the average usage 01
each class for the entire fleet. Units that fall below this utilization threshold should
then be investigated with the appropriate division or department to determine
whether the asset should be retained, or if alternatives such as renting or the use
of pool equipment would be more cost effective.
.
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w
Maintenance Facilities
~
r
~
The essential ingredients of a safe and productive maintenance facility are
adequate staging, work, and storage space and appropriate shop tools and
equipment. Maintenance facilities should comply with OSHA, EPA and other
federal and state requirements. They should be operationally safe and efficient,
environmentally sound, and effectively utilized to minimize fleet costs.
Poorly designed and constructed facilities will result in lower mechanic
productivity, increased maintenance and repair backlogs, reduced fleet
availability, and increased maintenance costs. On the other hand, facilities that
are too large for the size and composition of the fleet will be under utilized and
expensive to maintain.
r
The industry standard for repair bays to technicians is 1 to 1.5. That is, each
mechanic should have one and a half maintenance bays at their dispose. This
allows continuity when working on multiple jobs simultaneously.
Findings:
v' The County operates three maintenance shops - Key West, Marathon,
and Plantation Key.
v' Key West is the main garage and is located on property leased from the
airport. The site is shared with other County operational departments.
This has led to problems at times since the maintenance garage is open
and the work is performed outdoors. Other County employees and
anyone in the vicinity can walk into and through the area causing work
interruptions and potential safety concerns. Staff has since purchased
and installed a chain barrier system in an attempt to restrict access to the
maintenance areas.
· The administrative offices for three administrative positions are
barely adequate. The area is crowded and has reached its
maximum capacity. Additional staff will require additional
space.
· Parts are stored in a detached portable shed that has been
installed next to the shop building. This presents a potential for
inventory shrinkage since the shed remains unlocked during the
course of the day and could be accessible to anyone in the
yard. The small parts area inhibits proper organization of parts
and supplies.
· All maintenance is performed outside under canopies with the
only exception being the small paint booth that occupies a
single bay within the garage area. The remaining indoor bays
are used to store mechanic tools, diagnostic equipment, and
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other maintenance and repair tools and supplies. There are 4/5
outdoor bays for vehicle and equipment repair. At best, this is
one bay per technician (5 bays to 5 technicians), well below the
1.5 bays per technician that is the industry standard. Due to the
space limitations, many quick fixes are performed wherever the
operator or mechanic has a place to park the unit, including the
primary driving lane through the lot. Units that are awaiting
parts are often either left in the bays or pushed to some other
area of the lot.
· The site lacks adequate staging areas for vehicles waiting for
repairs and those that are ready and waiting to be returned to
the operating departments.
· The facilities offer minimal employee amenities comprised of a
small conferencellunch room and locker/restroom.
· There is inadequate employee and visitor parking and
insufficient space for the County vehicles and equipment stored
at the site.
· The facility is in poor physical condition and is much too small
for the services provided.
./ The Marathon maintenance garage is the newest facility and is fairly
adequate. The facility has four indoor bays in addition to the outdoor work
areas. The garage has an overhead fluid distribution system and exhaust
removal system. A separate parts room is located off of the shop floor.
The maintenance operation shares the site with other operating
departments of the County and also has inadequate staging and storage
areas and parking for County vehicles, employees, and visitors outside of
the immediate garage area.
./ The Plantation Key maintenance garage is a converted gas station. There
are no indoor maintenance bays. The inside area that was formerly work
bays are used to store mechanic tools, supplies, and diagnostic
equipment. The outdoor area has been designed to accommodate
generally five bays. All are canopied. There are small administrative
offices and an adequate parts room. Employees are required to park their
personal vehicles outside of the fenced site due to limited parking, staging,
and storage space.
./ None of the maintenance facilities are equipped with a vehicle/equipment
wash bay or cleaning apparatus.
./ None of the facilities have space to store vehicles and equipment waiting
for disposal.
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RECOMMENDA TION
Clearly, the Key West and Plantation Key maintenance shops are not
adequate for the current maintenance operations. The Marathon shop is only
fairly adequate at best when considering the exterior adjacencies of the
facility. The County should develop a master facility plan that incorporates
current and future space needs for not only the fleet operation but all other
operating departments as well. A formal facility program and plan should be
completed prior to authorizing any formal designs of buildings. Facility
programming and planning is the process of determining an organization's
actual facility needs from an operational viewpoint and documenting these
needs in a form that is useful to the County and eventually to the architectural
and design firms. The programming of these facilities will ensure that the
buildings are designed to meet the operational goals of the County and the
specific needs of the operational units.
Install vehicle wash areas at each maintenance facility. The wash areas
should be designed to be environmentally friendly, provide all of the
necessary accessories such as hand washes, pre-wash areas, and catwalks
for cleaning vehicles and equipment of all sizes.
If finding private sector alternatives for painting continues to be difficult, the
County may want to consider the installation of a multi-purpose paint booth at
the Marathon facility (centrally located) or programmed into the new facility in
Key West.
Consideration should be given to constructing a combined maintenance
facility that could be shared by other government and utility organizations in
Key West.
-fleet Manaaement Information System
In recent years, the fleet management profession has begun to undergo a
fundamental change in its approach to management decision-making.
Traditional methods of managing fleet operations based on hands-on experience
and "gut instinct" are being augmented by decision-making based on the
development and analysis of objective, quantitative information and the
application of management science principles and techniques. This shift stems,
in part, from growing pressure on fleet managers - from elected officials, upper
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management, customers, labor organizations, and competitors - to maintain or
improve service levels and quality while holding the line on, or reducing, costs.
Recent advances in information technology clearly are the most important
enablers of this shift towards scientific management of fleet operations. Many
fleet management organizations have responded to these developments by
implementing, with varying degrees of success, new management information
systems, e-mail, office automation software, and lntranets. In the future, the
effective integration and application of such tools will constitute one of the major
pillars of progressive, professionally managed fleet operations, regardless of size
or financial resources.
Findings:
./ The County has implemented the FASTER CS computerized fleet
management information system. This is a robust system that is widely
accepted and used by fleet organizations throughout the country. The
system is generally capable of collecting and reporting on a number of
fleet related performance statistics. Mechanic productivity reports are
routinely generated by staff to review labor hours charged to work orders.
Other reports are generated on an as needed basis from canned reports
on the FASTER system or have to be developed using report writing
software.
./ Staff uses the system as a real-time management tool and collects all
maintenance and repair data using this system.
./ The system runs on a file server located in the Fleet administrative offices
and is networked to all of the maintenance shops. There is only one
terminal on the shop floor at each location.
RECOMMENDA TION
Installation of additional shop floor terminals in Key West and Marathon
shops would provide better access for mechanics to time on and off of jobs
and cause less disruption than requiring multiple mechanics to alternate
between one floor terminal.
Although the Fleet Director and Fleet Coordinator use the system daily,
additional training to increase its use as a management tool would be
beneficial.
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APPENDIX
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Example Performance Measures
Performance Measure Description
"
The age and accumulated use of a fleet has a
great impact on cost and service level
performance indicators. As such, relative fleet age
Average Fleet Age should be tracked over time in parallel to key
performance measures in order to track trends
and to document the impact of lower or higher
capital spending levels.
Fleet Operating Rates Properly constructed and calculated operating
Hourly Labor Rate rates provide a strong indication of cost
Parts Markup competitiveness, and an ongoing mechanism of
Fuel Markup per Gallon comparison with other service providers.
Sublet Markup
A measure of staffing adequacy. In a fleet of
reasonable age and condition, each FTE
Number of Vehicle technician should be able to support the
Equivalents per Technician benchmark number of vehicle equivalents of
between 100 and 120.
A measure of maintenance program productivity,
this measures the average number of hours billed
Trades Worker Utilization to work orders by each FTE technician annually.
(direct labor hours) Low utilization indicates possible over-staffing
and/or inefficient work processes.
A measure of staffing efficiency and effectiveness.
A benchmark level of productivity coupled with
reasonable overtime levels indicates an optimally
staffed operation. Low productivity and high
Overtime Rate overtime indicates serious staffing imbalances.
High productivity and high overtime indicates
probable staffing inadequacies.
Measures the portion of all repairs identified and
conducted in a controlled, planned manner. The
combined purpose of the PM program, operator
inspections, and service writing is to identify and
Scheduled Repair Rate take care of problems in a planned, scheduled
manner so they do not result in unscheduled and
costly breakdowns.
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Performance Measure Description
This measures the percentage of all repairs
conducted on broken-down vehicles that cannot
Road Call Rate be driven to the shop. In combination with the
scheduled service rate, it provides an indication of
PM program effectiveness.
This measures the percentage of time a customer
returns a vehicle or piece of equipment to the
maintenance operation for the same problem
within a specified period of time. It is a measure of
Comeback Rate service quality that reflects the accuracy of service
writing and diagnostic activities as well as repair
quality.
Preventive Maintenance This measures the number of PMs that are
Compliance Rate performed within a predefined range of the
scheduled PM.
This is one of the key measures of success in a
fleet management program; the degree to which
the fleet service provider is able to ensure the
Fleet Availability Rate regular availability of fleet units to their user
departments. Availability rates should be highest
for mission critical fleet units
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Parts Inventory Performance Measures
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INVENTORY PERFORMANCE MEASURES
Measure of Performance
Inventory Value On-Hand
Rate of Inventory Turnover
Stock Fill Rate
Calculation
Information Provided
Sum of unit price multiplied by Trends in overall inventory
quantity on-hand at a point in investment in absolute terms,
time. and relative to issues.
Average value of inventory on-
hand at the end of a specified
period divided by the value of
issues from inventory during
that period.
The value of issues from stock
during a specified period
divided by the value of all
(stock and non-stock) issues
during the period.
The net value of all
adjustments to inventory
(positive and negative) during
a period divided by the
average value of inventory on-
hand during the period.
The value of all inventory line
items that have not had an
issue transaction in the past
Inventory twelve months, minus the
value of all items on-hand
divided by the average value
of inventory on-hand during
that period.
Rate of Inventory Shrinkage
Rate of
Obsolescence
A measure of inventory
efficiency, "turns" provides an
indication of how much
inventory is used to provide a
required level of service.
A measure of inventory
effectiveness, this ratio of
issues from stock to total
issues indicates how much
total demand for products are
being satisfied from stock on-
hand versus special orders.
A measure of inventory
control, "shrinkage" represents
the total cost of lost, and
damaged inventory.
A measure of management
effectiveness, obsolescence
indicates how well slow
moving items are identified
and purged from the inventory.
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Light Vehicle Replacement Guidelines
Factor Points
Age
One point for each year of chronological age, based
on in-service date.
Miles/Hours
One point for each 10,000 miles of use.
1, 3, or 5 points are assigned based on the type of
service that vehicle receives. For instance, a police
patrol car would be given a 5 because it is in severe
duty service. In contrast, an administrative sedan
would be given a 1.
Type of Service
Reliability
Points are assigned as 1,3, or 5 depending on the
frequency that a vehicle is in the shop for repair. A
five would be assigned to a vehicle that is in the shop
two or more times per month on average, while a 1 be
assigned to a vehicle in the shop an average of once
every three months or less.
M&R Costs
1 to 5 points are assigned based on total life M&R
costs (not including repair of accident damage). A 5
is assigned to a vehicle with life M&R costs equal or
greater to the vehicle's original purchase price, while
a 1 is given to a vehicle with life M&R costs equal to
20% or less of its original purchase cost.
Condition
This category takes into consideration body condition,
rust, interior condition, accident history, anticipated
repairs, etc. A scale of 1 to 5 points is used with 5
being poor condition.
Point Ranges
Under 18 points
18 to 22 points
23 to 27 points
Condition I
Excellent
Condition II
Good
Condition III
Qualifies for replacement
28 points and above
Condition IV
Needs immediate consideration
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