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

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

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

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 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

Our Facility 4/13/06

Our Facility 4/14/06

Our Home for 16 Months

Our Newest Facility

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

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

100% of Customers Served

Better?

Best (Maybe)

Optimal Rental Fleet Size

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

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

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

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

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

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

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?

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?

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

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.

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

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

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

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

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”

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.

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.

Lifecycle Example

LCC at 36 Months