Basic Fleet
Management for
Property Managers
Gary Hatfield
Vice President
Mercury Associates
NPMA
Asset Management Strategies in a
Changing World
July 29, 2013
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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?
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
Basics of Fleet Costs: Typical Dollar
Indirect Costs $.02
Maintenance
& Repair
$.34
Depreciation
$.45
What are the
fixed costs?
What are the
variable costs?
Fuel
$.19
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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.
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
Life Cycle Costs of a Vehicle
Cost
Total Cost of Ownership TCO
Operating = Fuel + Maintenance
Depreciation
*
Time/Usage
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
Fleet Management
Dispatching
Vehicle Assignment
Enforcing Mission &
Authority
Policy
Vehicle Acquisition
Motor Pool
Management
Accident Management
Vehicle
Disposal
Registration
Renewal
Facility
Management
Vehicle Replacement
EFFECTIVE
FLEET
MANAGEMENT
Fuel
Procurement & Supply
Vehicle
Utilization
Outsourcing
Operator/Driver
Training
Vehicle
Maintenance &
Repair
Alternative Fuels
Parts
Mechanic Procurement & Supply
Supervision
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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?
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
Examples of Performance Metrics
Average Age of Owned Fleet
General Services Administration
Department of Labor
Office of Personnel Management
Department of Justice
Tennessee Valley Authority
Department of Health and Human Services
Department of Navy
Department of the Interior
United States Marine Corps
Environmental Protection Agency
Department of Transportation
National Aeronautics and Space Administration
U.S. Postal Service
0
2
4
6
8
10
Years
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
12
14
16
18
Examples of Performance Metrics
Total Cost per Mile
Department of Treasury
Office of Personnel Management
Tennessee Valley Authority
United States Marine Corps
Department of Labor
Department of Commerce
Department of Veterans Affairs
Department of Transportation
General Services Administration
Department of Health and Human Services
Department of Justice
Corps of Engineers, Civil Works
Environmental Protection Agency
Defense Agencies
Department of Army
Department of Agriculture
Department of Homeland Security
Department of the Interior
Department of Navy
Department of Air Force
National Aeronautics and Space Administration
U.S. Postal Service
Department of Energy
Department of State
US Agency for International Development
$0.00
$0.50
$1.00
$1.50
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
$2.00
$2.50
$3.00
Examples of Performance Metrics
Average Miles per Vehicle per Year
Tennessee Valley Authority
Department of Homeland Security
Department of Justice
Environmental Protection Agency
Office of Personnel Management
Department of Transportation
Department of Treasury
Department of Veterans Affairs
Department of Health and Human Services
United States Marine Corps
Corps of Engineers, Civil Works
Department of Army
Department of Commerce
Department of Agriculture
General Services Administration
Department of Labor
Department of Energy
Department of the Interior
Department of Navy
Defense Agencies
U.S. Postal Service
Department of Air Force
Department of State
US Agency for International Development
National Aeronautics and Space Administration
0
2,000
4,000
6,000
8,000 10,000 12,000 14,000 16,000
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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.
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
Utilization
• Great data driven metric
• Right-sizing metric
• Establishes a standard justification for
assignment
• Objective
Quantify as:
• Miles driven
• Hours operated or in use
• Number of trips
• Gallons of fuel used
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
Low
High
An essential component of fleet rightsizing studies
Use Data to Rightsize
Medium SUV
All Depts
100
Mission Criticality %
90
80
70
60
50
40
30
20
?
FAIL
10
PASS
0
0
10
20
30
40
50
60
Utilization %
70
80
90
100
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”
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
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
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
Life Cycle Costs of a Vehicle
Cost
Total Cost of Ownership TCO
Operating = Fuel + Maintenance
Depreciation
*
Time/Usage
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
The Future Fleet
• Your fleet inventory will change over time
• Capturing fleet data is an ongoing requirement
• Vehicle technology is rapidly evolving
Mars Rover
Smart Cars
2013 Tesla Electric Car
Wins “Car of the Year”
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
Questions??
MERCURY ASSOCIATES, INC.
“Specializing in the science of fleet management”
Gary Hatfield
Vice President
941-685-6907 (cell)
ghatfield@mercury-assoc.com
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
An Introduction to Fleet Terms
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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
Others?
Copyright © 2013 Mercury Associates, Inc.
All rights reserved
Some Fleet Acronyms
•
•
•
•
•
•
•
•
•
•
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
Copyright © 2013 Mercury Associates, Inc.
All rights reserved