Vehicle Replacement Cycles

Sam P. Lamerato, CPFPSuperintendent of FleetCity of Troy, MI

Vehicle Replacement Derailed

Tight Budgets

Furlough Days

Reduced Staff

Deferment of Vehicle Replacement

Dealing with City Management

Attending City Council Meetings

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?

Budget 2010-11 10/12/2010

SECTION A - REPLACEMENT UNITS

ITEM QTY. REPLACES DESCRIPTION UNIT COST EST. COST

1 10 A Police Patrol Cars $24,500 $245,000

2 5 B Detective Cars $23,000 $115,000

3 1 C Police Command 4X4 $28,000 $28,000

4 2 D Fire Department 4X4 $28,000 $56,000

5 2 E Staff Vehicles Hybrid $25,500 $51,000

6 2 F Cargo Vans $18,000 $36,000

7 4 G Pickup Trucks $17,000 $68,000

8 2 H Pickup Trucks 4X4 W/Plows $25,000 $50,000

9 4 I 2 1/2Yd. Dump Trucks 4X4 W/Plows $30,000 $120,000

10 1 J Catch Basin Cleaner/Sewer Jet $325,000 $325,000

11 1 K Crew Truck W/Air Compressor $100,000 $100,000

12 1 L 5-7 Yard Dump Truck Stainless $140,000 $140,000

W-Snow Plow, Salt Spreader & Float

13 1 M 10-12 Yard Dump Truck Stainless $170,000 $170,000

W-Snow Plow, Salt Spreader & Float

14 1 N Skid Steer Loader $32,000 $32,000

15 1 O 72" Riding Mowers Zero Turn $17,000 $17,000

$1,553,000

SECTION B - ADDITIONAL UNITS

ITEM QTY. REQUESTED DESCRIPTION

BY EST. COST

1 1 Fleet Tractor W/Snowblower (sidewalks) $18,000

$18,000

SECTION C - EQUIPMENT TO BE REPLACED

ITEM EQUIP. # DESCRIPTION

A Police Patrol Cars @ $3,500 each 10 $35,000

B Detective Cars @ $3,500 each 5 $17,500

C 902 2007 Ford Expedition 4X4 Command $8,000

D 63 2003 Chevrolet Tahoe 4X4 $6,000

77 2002 Ford Explorer 4X4 $4,500

E 172 1999 Plymouth Breeze $2,000

173 1999 Plymouth Breeze $2,000

F 247 2000 Chevrolet Cargo Van $2,500

256 2000 Chevrolet Cargo Van $2,500

G 236 2002 Dodge Pickup $3,000

242 2002 Dodge Pickup $3,000

246 2002 Dodge Pickup $3,000

262 2002 Dodge Pickup $3,000

H 202 1998 Dodge Pickup 4X4 $3,500

266 2002 Dodge Pickup 4X4 W/Plow $5,000

I 400 2001 Dodge 21/2 Yd. Dump Truck 4X4 $5,500

401 2001 Dodge 21/2 Yd. Dump Truck 4X4 $5,500

406 2001 Dodge 21/2 Yd. Dump Truck 4X4 $5,500

411 2001 Dodge 21/2 Yd. Dump Truck 4X4 $5,500

J 414 2002 Vactor Catch Basin/Sewer Jet $125,000

K 421 1991 GMC Crew Truck W/Compressor $5,000

L 439 1994 GMC 5-7 Yard Dump W/Plow $5,000

M 435 1997 Ford 10-12 Yard Dump W/Plow $8,000

N 470 1997 John Deere Skid Steer Loader $6,000

O 622 1999 John Deere 72" Mower $2,000

$273,500

Furlough Days & Reduced Staff

Same Equipment Fewer Repair Hours (96 per Tech)

Same Equipment Fewer Techs

Same Equipment Same Repair Dollars

Deferment of Vehicle Deferment of Vehicle ReplacementReplacement Deferred vehicle replacement appears to be

the key factor behind the increase in maintenance expenses in CY-2009.

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 – March 2010.

Replacement FundingReplacement 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 March/April 2010

Dealing with City ManagementDealing 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

Reduced Downtime

Vehicle Replacement Program

Best Practice Method

Survey a number of Best in Class fleet 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

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.

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

Vehicle Replacement FundingVehicle 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 March/April 2010

ECONOMIC REALITY OF VEHICLE REPLACEMENT

CAPITALOPERATING

TOTAL

TIME/USAGE

CO

ST

* *

Quality of ServiceQuality 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

Vehicle Score Card (Sedans & Lt. Vehicle Score Card (Sedans & Lt. Truck)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

Attending City Council MeetingsAttending City Council Meetings 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 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

Keys To SuccessKeys 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.

Maximize resale & trade-in values. (benchmark)

QuotesQuotes

ABILITY is what you are capable of MOTIVATION determines what you do ATTITUDE determines how well you do it.

Excellence is not a skill.It is an attitude.

Doctors have concluded that if you find the man in the coffee beans in 3 seconds, the right half of your brain is better developed than most people.

If you find the man between 3 seconds and 1 minute, the right half of the brain is developed normally.

If you find the man between 1 minute and 3 minutes, then the right half of your brain is functioning slowly and you need to eat more protein.

If you have not found the man after 3 minutes, the advice is to look for more of this type of exercise to make that part of the brain stronger!!!

And, yes, the man is really there!!!

THE TRICK IS TO FIND THE MAN IN THE COFFEE BEANS: This is bizarre - after you find the guy - it's so obvious.

Once you find him - it's embarrassing, and you think, 'Why didn't I see him immediately?'

QuestionsQuestions