Running a Profitable, Customer Driven Motor Pool Operation

1. Running a Profitable, Customer Driven Motor Pool Operation Mike Wilson, Fleet Manager University of Iowa Andrea Paxton, Technical Support Specialist CCG Systems, Inc.

2. Outline for Today’s Presentation • Overview of the University of Iowa’s Fleet • Vehicle Utilization • Cost Containment • Revenue Generation • Lifecycle Costing • Rate Setting

3. About the University of Iowa Fleet • We have 545 vehicles in our total fleet. (Another105 on Campus that we fuel and maintain) • 58 in the daily rental fleet • 455 in the lease fleet • 32 awaiting sale • Operational Budget of $3,000,000 • 5,006 rentals in FY 07 • 4,579 from my fleet, 427 outsourced • 12,910 rental days • 11,859 from my fleet, 1,051 outsourced • 1,664,617 rental miles • 1,504,088 from my fleet, 160,529 outsourced

4. More About University of Iowa Fleet • 600,000 gallons of fuel in CY 2006 • 220,000 gallons of B-10 diesel • 250,000 gallons of E-10 • 130,000 of E-85 • 11.5 FTEs • 1 Mgr, 1 Asst Mgr, 1 Acct. Clerk • 1 Dispatcher, 1 Prep Person, 5 Students (2.5 FTE) • 3.5 Techs, .5 Shop Manager • Self-Sufficient Entity

5. Our Facility 4/13/06

6. Our Facility 4/14/06

10. Our Home for 16 Months

11. Our Newest Facility

12. What We Learned • Keep your server safe, you can replace workstations • Focus on operations and priorities will become clear • Use your weight, be your vendors 1st priority • Keep your keys safe

13. Vehicle Utilization • Daily Rental Fleet Size • Too Big • Too Small • Just Right (Maybe) • How Get More From the Motor Pool Calendar Applet • Minimize “Honeycombing” • Optimize Outsourcing

14. 100% of Customers Served

15. Better?

16. Best (Maybe)

17. Optimal Rental Fleet Size

18. 2 Vehicles needed from 10/15/07 to 10/17/07

22. Should you have a Daily Rental Fleet? • If not, then what do you do? • Driver Reimbursement • Outsourcing • Local Pooling

23. Keeping Your Daily Rental Fleet Profitable (or at least break-even) • Two ways to manage this: • Reduce costs • Increase Revenues • We’ll start with reducing costs since that is probably where your boss starts

24. Number 1 Operating Expense Your vehicles! • Don’t buy the low bid vehicle, buy the vehicle with the lowest Life Cycle Cost (LCC) • LCC Can Include: depreciation, fuel, maintenance, interest, insurance, • Use guides to help you project: Blackbook, NADA, Vincentric, EPA Mileage Guide More on LCC Later

25. Another Cost You Can Control The “stuff” you buy • Bid Everything!!! • Doesn’t have to be formal • Take Advantage of Buying Groups • State Bids Are Usually Open to Political Subdivisions • Don’t buy gold plated parts

26. Outsourcing Can Save You Money • What makes sense to outsource? • Try not to do anything low volume • Try not to do anything that requires expensive tools/equipment • Don’t take up valuable space • Don’t pay for talent when you can rent it • Try not to buy things when you don’t have leverage to negotiate good pricing

27. Don’t Overstaff • Don’t pay for skills you don’t need • When someone leaves STOP, this is an opportunity!! • Do you need to replace this person at the same skill level? • Can you change job to lower skill requirements?

28. Don’t Overstaff Cont. • Replace with person with higher skill set • Can you automate tasks/report • Can you reassign/redistribute workload • Can you eliminate work that no one would miss?

29. Share!! • Share part of your fleet with other agencies • Share staff • Share volume on contracts • Share resources

30. Stop (or limit) the Freebies!! • Free maintenance loaners • Contract negotiation • Accident reporting/subrogation • Fuel settlements • Shop rags, ice scrapers, safety kits, oil, tools, staff time, etc.

31. The Other Side of the Equation • Raising revenue does not mean raising rates • Surcharges • Parts (5-30%) • Fuel ($0.03 to $0.36/gallon) • Credit card processing • Better yet a % of fuel cost • Sublets, towing • Shop Expense (Flat or % of WO) • Haz Mat Disposal • Tire Disposal • Vehicle Disposal

32. Revenue cont • Offer New Services • Cell Phone Rental • Navigation System Rental • Pick-up/Drop-off Service • Work with Shop also • Chauffer Service • Tour Service • New types of equipment in rental fleet • Detailing service • PM Service for employee cars

33. Revenue cont • Solicit New Customers • Other governmental agencies (VA, State, DNR, Prisons, County, GSA, Post Office, Sheriff, National Guard, Fire Dept) • Get your own agency employees to use your services • Consistent Image • Vehicle safety • Employee Oversight • Accounting Efficiencies • Reimbursement is unfair to employees • Your government at work • Prove that other services are too expensive

34. Fleet Rate ($26/day, $0.19/mile) vs. Federal Reimbursement Rate ($.485/mile)

35. Better Resale on Your Vehicles • Any increased sale price goes to your bottom line • Manage your disposal • Manage your mix • Manage your volume • Manage your channel • Build your “Brand”

36. Lifecycle Costing • What is it? • A financial calculation to calculate the total lifetime costs of a piece of equipment. • One goal of lifecycle costing is compare different pieces of equipment against then acquire the piece with the lowest total cost.

37. What Is Included in Lifecycle Costing? • Any cost that affect the cost of ownership • Purchase price, rebates, interest, delivery cost, insurance, out of service costs, preventative maintenance, repairs, accident repair costs, management fees, resale price,etc.

38. Lifecycle Example

39. LCC at 36 Months