Copyright © 2013 Mercury Associates, Inc. All rights reserved Basic Fleet Management for Property...

Copyright © 2013 Mercury Associates, Inc.All rights reserved

Basic Fleet Management for

Property ManagersGary Hatfield

Vice President Mercury Associates

NPMA

Asset Management Strategies in a Changing World

July 29, 2013


Personal Property and Fleet Overlap

• Motor vehicles are a form of personal property

• Fleet has its own, specialized terminology

• Data requirements and management metrics are unique

• Other differences?


Basics of Fleet Costs: Typical Dollar

Depreciation$.45

Maintenance & Repair

$.34

Fuel$.19

Indirect Costs $.02

What are the fixed costs?What are the variable costs?


Common (and IRS) Cost Categories

• Variable or Operating Costs – Fuel– Maintenance– Tires

• Capital or Fixed Costs– Depreciation – Insurance– License– Registration

• Indirect Costs – Management costs, parking fees, tolls, finance

charges, sales or other taxes, information system cost, etc.


DepreciationOperating = Fuel + Maintenance

Total Cost of Ownership TCO

Time/Usage

Cost

Life Cycle Costs of a Vehicle

*


Personal Property Management• The spectrum of life-cycle

management tasks associated with the ownership of personal property:– Plan – Acquire– Receipt– Store– Distribute– Proper utilization and care of property– Property accounting control– Disposition of property


Vehicle Assignment Vehicle Acquisition

VehicleOperation

Vehicle Utilization

Mechanic Supervision

RegistrationRenewal

Enforcing Policy

Vehicle Maintenance &

Repair

Vehicle Replacement

Outsourcing

Alternative Fuels

Accident Management

Parts Procurement & Supply

FuelProcurement & Supply

Dispatching Mission &Authority

Facility Management

Motor PoolManagement

Vehicle Disposal

Operator/DriverTraining

Fleet Management

EFFECTIVE FLEET

MANAGEMENT


Fleet Management• To manage and control, you need

Accounting and reporting tools and methods, including:

– Fleet Management Information System (FMIS)

– Performance standards (metrics)– Processes for field reporting – Data for fleet management decision-

making


FMIS - Essential Functionality

• Acquisition Details and Costs• Upfitting/Modifications• Asset Details• Financial Records• Licensing• Fuel & Alternative Fuels• Utilization – miles, hours, trips• Tracking? (GPS)• Motor Pool Reservations/Dispatching/Billing• Disposal


FMIS – Maintenance Functionality

• Maintenance– Preventive Maintenance (Scheduled)– Unscheduled Repairs– Field Breakdowns, Tow-Ins– Commercial Repairs– Shop Management & Worker Productivity

• Work Orders• Labor Hours • Parts Management, Barcoding• Warranty Tracking and Alerts

• Accidents


Essential Financial Data Elements

• Direct costs:– Capitalized value, depreciation, amortization, and disposal proceeds– All vehicle modifications and accessory equipment, (add to the

capitalized value)– All fuel by type, cost, and source– All repair/unscheduled maintenance costs– All preventive maintenance costs – Commercial lease costs– GSA Fleet lease costs

• Indirect costs:– Facilities, including building purchase/lease, utilities, and maintenance– Equipment costs, including office and shop equipment, and tools– Computer systems including hardware, software, and support– Miscellaneous cost of in-house operations, including shop supplies– Staffing costs of headquarters, field, and shop personnel– Staffing overhead costs, including training and staff support offices– Administrative costs


If asked these fleet questions, could you answer?

• How many vehicles do you have? Types?

• Do you have too many vehicles?• What's your maintenance cost? Fuel

cost? Current value? Average age of the fleet?

• Is it cheaper to lease or to purchase (own)?

• Do all your vehicles receive PM? On time?

• What is your fleet average MPG? 5 years ago?

• How many accidents do you have? Cost?


Types of Performance Metrics

Cost Quality of Service Timeliness of Service Customer Satisfaction Conformance with Best Practices Compliance with Legal

Requirements Contractor or worker performance Safety Accidents


Examples of Performance Metrics

U.S. Postal Service

National Aeronautics and Space Administration

Department of Transportation

Environmental Protection Agency

United States Marine Corps

Department of the Interior

Department of Navy

Department of Health and Human Services

Tennessee Valley Authority

Department of Justice

Office of Personnel Management

Department of Labor

General Services Administration

0 2 4 6 8 10 12 14 16 18

Average Age of Owned Fleet

Years



US Agency for International Development

Department of Energy


Department of Navy

Department of Homeland Security

Department of Army

Environmental Protection Agency



Department of Veterans Affairs

Department of Labor


Department of Treasury

$0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00

Total Cost per Mile




Department of State

U.S. Postal Service

Department of Navy

Department of Energy


Department of Commerce

Corps of Engineers, Civil Works

Department of Health and Human Services

Department of Treasury

Office of Personnel Management



0 2,000 4,000 6,000 8,000 10,00012,00014,00016,000

Average Miles per Vehicle per Year


Some basic metrics• Basic Fleet

• Inventory (also true for property management)• Utilization (also true for property management)• CPM / CPH (Cost per Mile or Hour)

• Maintenance Shop• PM Compliance• Mechanic Productivity• Scheduled versus Unscheduled Maintenance• Parts • Fleet Availability

• Fuel• Cost• MPG• Alternative Fuel Use


What is a Vehicle Allocation Methodology?

Simply put:A structured process of defining the

proper number of vehicles and the proper types of vehicles to meet the organization’s mission and

budget requirements.


Why Do Fleets Get Too Large?

• Retention of old vehicles (fleet creep)

• Easier to add vehicles than “manage”

• Lack of structured approach • Failure to adjust for mission

change• Poor data• Failure to use (good) data to

manage• Lack of technology tools


Fleet Rightsizing Approach

• Uses existing fleet as starting point• Requires fleet utilization study• Assumes current usage signifies valid

need for respective missions• Right-sizes fleet based on utilization

and mission criticality• “Locks In” size and composition of the

fleet for each organizational unit at a point in time – the optimal inventory


Utilization• Great data driven metric• Right-sizing metric• Establishes a standard justification

for assignment• ObjectiveQuantify as:• Miles driven• Hours operated or in use• Number of trips• Gallons of fuel used


Mission Criticality

– Life or valuable property depend on the availability of the vehicle(s)

– The organization’s mission strongly depends on availability

– Routine operations and/or productivity are affected by availability

– Alternatives are available

Lo

w

Hig

h

An essential component of fleet rightsizing studies

0 10 20 30 40 50 60 70 80 90 1000

10

20

30

40

50

60

70

80

90

100

Medium SUVAll Depts

Utilization %

Mis

sio

n C

riti

cality

%

PASSFAIL ?

Use Data to Rightsize


Fleet Management Challenges

• Training• Competing for Funding• Capturing the Right Data and

Accurate Data• Using Data to Manage – Performance

Metrics• Using TCO to Optimize Replacement

Cycles• Fleet Rightsizing• Balancing Customer “Needs” vs.

“Wants”


Summary• An old fleet is a costly and “dirty”

fleet• Fleet management has unique

information requirements that are often not satisfied by property, financial, and enterprise systems

• Use of performance metrics can help track how the fleet is performing

• One of the most practical ways to cut fleet cost is to reduce the number of vehicles


DepreciationOperating = Fuel + Maintenance

Total Cost of Ownership TCO

Time/Usage

Cost

Life Cycle Costs of a Vehicle

*


The Future Fleet• Your fleet inventory will change over time • Capturing fleet data is an ongoing requirement• Vehicle technology is rapidly evolving

2013 Tesla Electric Car Wins “Car of the Year”

Mars Rover

Smart Cars


Questions??

MERCURY ASSOCIATES, INC.“Specializing in the science of fleet

management”

Gary HatfieldVice President

941-685-6907 (cell)[email protected]

mailto:[email protected]


• Auction• Biofuels• Capital Cost • Cost per Mile• Depreciation• Fixed Cost• Fleet Creep• Home-to-Work• Hybrid• Indirect Costs• Life Cycle Costs• LogWorld• Motor Pool

• Over-fleeting• Personal Use• Replacement Cycle• Variable Cost• Vehicle Availability• Vehicle Downtime• Vehicle Utilization• Work Order

An Introduction to Fleet Terms

Others?


• AFV – Alternative Fuel Vehicle• B20 – Biodiesel (20%)• CNG – Compressed Natural Gas• CPM – Cost Per Mile• E85 – Ethanol 85% (15% gasoline)• FFV – Flex Fuel Vehicle (E85)• FMIS – Fleet Management Information System• LPG – Liquid Propane Gas• MPG – Miles Per Gallon• M&R – Maintenance & Repair

• NGV – Natural Gas Vehicle

• OEM – Original Equipment Manufacturer

• PM – Preventive Maintenance

• POV – Personally Owned Vehicle

• VIN – Vehicle Identification Number

• VMT – Vehicle Miles Traveled

Some Fleet Acronyms

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