1. Copyright © 2013 Mercury Associates, Inc. All rights reserved Basic Fleet Management for Property Ma nagers Gary Hatfield Vice President Mercury Associates NPMA Asset Management Strategies in a Changing World July 29, 2013

2. 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?

3. Copyright © 2013 Mercury Associates, Inc. All rights reserved Basics of Fleet Costs: Typical Dollar Depreciation $.45 Maintenance & Repair $.34 Fuel $.19 Indirect Costs $.02 What are the fixed costs? What are the variable costs?

4. 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.

5. Copyright © 2013 Mercury Associates, Inc. All rights reserved Depreciation Operating = Fuel + Maintenance Total Cost of Ownership TCO Time/Usage Cost Life Cycle Costs of a Vehicle *

6. 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

7. Copyright © 2013 Mercury Associates, Inc. All rights reserved Vehicle Assignment Vehicle Acquisition Vehicle Operation Vehicle Utilization Mechanic Supervision Registration Renewal Enforcing Policy Vehicle Maintenance & Repair Vehicle Replacement Outsourcing Alternative Fuels Accident Management Parts Procurement & Supply Fuel Procurement & Supply Dispatching Mission & Authority Facility Management Motor Pool Management Vehicle Disposal Operator/Driver Training Fleet Management EFFECTIVE FLEET MANAGEMENT

8. 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

9. 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

10. 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

11. 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

12. 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?

13. 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

14. Copyright © 2013 Mercury Associates, Inc. All rights reserved Examples of Performance Metrics

15. Copyright © 2013 Mercury Associates, Inc. All rights reserved Examples of Performance Metrics

16. Copyright © 2013 Mercury Associates, Inc. All rights reserved Examples of Performance Metrics

17. 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

18. 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.

19. 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

20. 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

21. 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

22. 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 Low High An essential component of fleet rightsizing studies

23. PASSFAIL ? Use Data to Rightsize

24. Copyright © 2013 Mercury Associates, Inc. All rights reserved 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”

25. 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

26. Copyright © 2013 Mercury Associates, Inc. All rights reserved Depreciation Operating = Fuel + Maintenance Total Cost of Ownership TCO Time/Usage Cost Life Cycle Costs of a Vehicle *

27. 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 2013 Tesla Electric Car Wins “Car of the Year” Mars Rover Smart Cars

28. 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

29. Copyright © 2013 Mercury Associates, Inc. All rights reserved 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 An Introduction to Fleet Terms Others?

30. Copyright © 2013 Mercury Associates, Inc. All rights reserved 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 Some Fleet Acronyms