Speaker Name & Title

2. Larry Campbell, CPFP Director of Fleet Management, Ft. Wayne, IN Samuel P. Lamerato, CPFP Superintendent of Fleet Maintenance, City of Troy, MI Speaker Name & Title

3. Revenue Down • Budget cuts (more for Less) • Demands for Service Up • State and Federal Mandates Up • Aging Fleet • Reduction of fleet Challenges with Fleet life cycles

4. Two basic categories of Fleet expense: Fixed and variable Fixed expense: Depreciation, Lease or Purchase outright Variable expense: Fuel, Maintenance and repair Tires Oils Fleet Costs

5. You may “like” to replace them at the end of lifecycle , but are not in the financial position to do so. Lifecycles for each class code of equipment may be dramatically different: Criteria used in replacement schedules will be generally tailored to the average use of the equipment Ability of the government agency to fund a replacement budget. What if age is not the only discriminator used? Point system – mileage, condition, maintenance history/costs. Question to ask? What is the average age of each vehicle type/class Is it a seasonal piece of equipment? At what age do you “like” to replace vehicles?

6. Equipment inventory Replacement criteria Equipment over $5,000 Replacement funds for General & Non-General Fund Departments Specification writing (do it right) uniformity with in your fleet Bid Process (Best Bid not the cheapest bid) Underutilized equipment (<4,000 miles or 100 hrs.) Fleet additions (budget request to Administration & Council) Annual equipment replacement proposal list (life, miles/hrs., repair costs, condition, use) Five, Seven and Ten year replacement projections (strategic budget) Are these numbers growing in your fleet? Equipment disposal list, Auction companies or trade ins. Equipment purchase status list (as approved by Administration & Council) Equipment purchases carried forward from one year to the next (budget amendments) Equipment Replacement Policy

7. Geographical area you operate in Annual usage miles, hrs, fuel consumption (also extended idling). Image (What image do you want projected to your customer). Severity of usage (hauling pipes, stone, asphalt, snow removal etc., does equipment get torn up) Available funds (internally). Interest rate, if funds are to be borrowed/leased Effectiveness of your vehicle/equipment maintenance program Vendor maintenance and parts support Skill of maintenance personnel Availability of vehicles/equipment (is new equipment available and does your equipment spend more time in the shop than on the job) Vehicle/equipment obsolescence Resale value after life cycle New equipment cost as compared to maintaining an older piece of equipment. Equipment Replacement Policy 2

8. On-going evaluation of the departments job requirements. Working together with the Purchasing, / Departments and manufactures to meet the needs of individual departments. By purchasing the proper equipment the departments are more efficient and there is a overall lower cost. A by-product of efficiency is fuel savings, it takes less time to complete each task. V-8 to V-6 V-6 to 4cyl Will it work for the current job function or Vehicle application Proper equipment usage for the job

9. Properly maintaining equipment has proven not only financial savings but it can reduce emissions. By utilizing a regular Preventative Maintenance schedule the vehicles/equipment last longer and run more efficiently. Maintenance procedures

10. Other considerations to reduce costs and impact organizational Changes: Review “Take-Home” vehicle us Consider outsourcing non-core tasks to experts who specialize (– Use a Fuel Card management program w/controls Use nationwide purchasing consortiums like (NJPA) Use automation and technology where possible (i.e. GPS, etc) Remember: Vehicles always cost something

13. Vehicle Replacement Derailed Tight Budgets Furlough Days Reduced Staff Deferment of Vehicle Replacement Dealing with City Management Attending City Council Meetings

14. Budgets Zero Growth Budgets Reduce or Deferment of Vehicle Replacement Budgets Transfer Funds from Capital to Operating? Reduced Staff Positions and Hours Significant Increase in Maintenance Costs Avoid Peaks and Valleys – Reserve Fund? Meet with Management and Finance director Reduced resale value of equipment – (replacement fund)

15. Furlough Days & Reduced Staff Same Equipment Fewer Repair Hours (96 per Tech) Same Equipment Fewer Techs Same Equipment Same Repair Dollars

16. Deferment of Vehicle Replacement Deferred vehicle replacement appears to be the key factor behind the increase in maintenance expenses. More expensive repairs due to aging inventory. Older fleets were incrementally impacted by a spike in unscheduled, higher cost maintenance. Increased downtime Source: Automotive Fleet Magazine

17. Replacement Funding • Even in good economic times, securing sufficient funds for timely vehicle replacement is a challenge for many organizations. This challenge stems in part from a lack of understanding of the trade-off between a vehicle capital and operating cost. Source: Government Fleet Magazine • “Pennies up-front dollars in the rear”

18. Dealing with City Management Vehicle Replacement Plan Life Cycle Cost Analysis – Best Practices Project Long-Term Replacement (5 – Year Plan) Extended Warranties (5 years 100,000 Miles – Power Train) Advanced Design & Technologies Lower Cost per Mile/Hour Vehicle/Equipment Availability % Reduced Downtime (track downtime) Reduce Overtime Proactive not Reactive

19. Vehicle Replacement Program Best Practice Method Survey a number of Best in Classfleet organizations which have comparable fleets. Take into account factors unique to each fleet organization such as annual usage levels, types of use, number of back-up units available, weather and operating terrain. FASTER 15 Point Report 3109 - This report shows vehicles due for replacement on or before the ending replacement date you enter. Points are accrued as follows: current life compared to the life expectancy, life-to-date meter compared to the life expectancy of the meter, repair dollars spent compared to original cost.

20. Vehicle Replacement Program (cont.) Developing a set of vehicle replacement criteria establishes the foundation for a planned approach to fleet replacement. Fleet organizations can use one of two primary methods for establishing vehicle replacement cycles. Empirical Method:Involves using a formal life-cycle cost analysis technique (such as equivalent annual costs) to calculate the least costly life-cycle per class of vehicle.

21. Vehicle Replacement Program (cont.) Best Practice Method:Involves surveying peer organizations with similar fleet and operating conditions. Regardless of which method is used, life-cycles must be developed with the goal to: Minimize overall fleet cost; Maximize vehicle availability; Provide fleet users with safe and reliable tools to perform their jobs. Source: APWA Vehicle Replacement Guide

22. Vehicle Replacement Funding • Ideally, a vehicle should be replaced around the same time that the total cost of ownership is at a minimum – before the total cost curve begins to turn upward. • Decision makers who assume cutting replacement purchases is a good way to help balance the budget must understand such cuts usually transfer a portion of the fleet costs from capital to operating. Source: Government Fleet Magazine

23. Life-Cycle • Calculates ownership and operating expenses throughout the working life of the equipment. • The process includes the valuation of equipment availability, service, resale value and downtime or rental expense for replacement equipment. • When the cost for these factors are determined, the most economical vehicle method provides the lowest net cost. Source: APWA Managing Public Equipment

24. Life-Cycle • Life-cycle cost analysis enables management to evaluate new equipment purchases and determine if it is more economical to retain equipment. • Economic replacement follows these premises: • As the unit ages average maintenance and operating cost increase. • As a unit grows older, investment cost decrease. • There is a point in the equipment’s life at which the total average cost is minimum. This is the optimum economic life point Source: APWA Managing Public Equipment

25. * * ECONOMIC REALITY OF VEHICLE REPLACEMENT TOTAL COST OPERATING CAPITAL TIME/USAGE

26. Quality of Service • The quality of services declines when the fleet wears out, becomes technologically deficient or requires repetitive or ongoing maintenance. Fleet assets have at least three lives: • Service Life – Amount of time (years, miles or hours) it is capable of providing service. • Technological Life – Productivity decline of current fleet asset compared to newer assets. • Economic Life – Total allocation of cost associated with the vehicle over a period of time. Source: APWA Calculating Public Fleet Rates

27. Vehicle Score Card (Sedans & Lt. Truck) • Age – One point for each year – based on in service date. • Miles/Hours – One point for each 10,000 miles or 250 hrs. of usage. • Type of Service – Points assigned as 1 - 5 depending on the type of service the vehicle performs. • Reliability – 1 – 5 points based on frequency that a vehicle is in the shop for repairs per month (P.M. work is not included). • M&R Cost – 1 to 5 points based on the total life M&R cost (not including accident repairs). • Condition - 1 – 5 points for body condition, rust, interior condition, anticipated repairs, etc. • Point Range – Under 18 Excellent, 18 – 22 Good, 23 – 27 Qualifies for replacement and 28 and above Immediate Replacement

33. Attending City Council Meetings “When it is time to perform, the time to prepare has passed” Be prepared to answer tough questions. Know Your Fleet - Run it like a business. Have your facts straight and in-hand. Convert Engine Hours into Miles (30 - 40 miles per hour) Utilization of Vehicle/Equipment Life-cycle Cost – 15 point FASTER report, etc. Inform Mayor and Council of the importance of timely vehicle replacement. Cost Savings Information – Reduced Downtime, Operating Cost & Overtime.

34. Keys To Success • Keep Management and Councils in the loop with quarterly Fleet updates. • Invite Management and Council for a site visit of your Fleet Operation. • Don’t replace underutilized vehicles. • Buy the correct vehicle for the job (Right Size). • Avoid Fleet Creep. • Maximize resale & trade-in values. (benchmark) • “In a successful organization, no detail is too small to escape close attention.” Vince Lombardi

35. Quotes ABILITY is what you are capable ofMOTIVATION determines what you doATTITUDE determines how well you do it. Lou Holtz Excellence is not a skill. It is an attitude. Individual commitment to a group effort - that is what makes a team work, a company work, a society work, a civilization work. Vince Lombardi

37. Quote

38. Questions

39. THANK YOU Larry Campbell, CPFP, Ft. Wayne, IN larry.campbell@cityoffortwayne.org & Samuel P. Lamerato, CPFP, City of Troy, MI lameratosp@troymi.gov 39