2. Kelly Reagan Administrator Division of Fleet Management Administrator Division of Fleet Management City of Columbus

3. The Keys to Developing a Replacement Standard Kelly Reagan, Fleet Administrator City of Columbus Division of Fleet Management

4. Columbus Fleet Management- We utilize all the latest technology

5. City of Columbus Statistics Fleet Mgmt. services approximately 5600 pieces of vehicles/equipment –3000 on-road (cars, trucks, SUVs, etc.) –2600 off-road (construction equipment, tractors, mowers, etc.) Primary customers include Refuse, Police, Fire, Transportation, Development and Rec and Parks Approximately $32 million budget Obtained ASE Blue Seal in 2008-2012 – largest municipality in US and only city in Ohio to obtain Ranked as 3 rd Best Fleet and #1 Greenest Fleet in North America in 2011

6. How was Columbus Replacement Standard Developed? Industry standards Consultation with City divisions and management (i.e. Finance Department) Internal Data Realistic goals

7. Lesson: Involve management in developing replacement standard- don’t bite the hand that feeds you

8. City of Columbus Replacement Standard

9. What Goes First Three criteria used to determine order of replacement: –Age- over 10 years or useful life –Maintenance history Do maintenance costs exceed acquisition cost? –100,000+ miles Underutilized report generated every 2 years –Discussion with divisions –Justification reporting –Typically leads to 50-100 units being decommissioned or reassigned GPS data will be used in the future to drive replacement needs

10. Use Data to Drive Decisions Use data in budget discussions with both division heads and Finance Department Data should drive the vehicle replacement budget each year –Conduct lifecycle cost analysis

11. Lesson: Use resources to take control

12. Lifecycle costs Fleet replacement schedule should minimize the lifecycle cost of the fleet Lifecycle costs consist of: –Capital, i.e. debt service –Operating costs- maintenance, fuel, etc. Longer replacement schedules will lower annual debt service costs, but will increase annual maintenance costs Need a lifecycle cost analysis

13. Lifecycle Cost Analysis Lifecycle cost analysis identifies the minimum of total costs by analyzing: –the relationship between vehicle age/usage –capital costs –operating costs Minimum lifecycle cost is found at the lowest point on the total cost curve

14. Lifecycle Cost Analysis

15. Lifecycle Cost Analysis: Fire Engines

16. Example: Fire Engines The analysis suggests that fire engines should be replaced every ten years on average. This assumes: –Purchase price of $400K financed at 4.5% interest –Depreciation rate of 22.3%/year –Lifetime maintenance costs should be less than 50% of acquisition costs –Minimum lifecycle cost is estimated at $70K/year: $46.5K in debt service and $23.5K in maintenance

17. Columbus progress through the years

18. Costs of Delayed Fleet Replacement Delaying fleet replacement may yield savings in the capital budget but the savings may be more than offset by increased maintenance costs Example: Fire apparatus exceeding both age and maintenance cost replacement criteria Net loss of approximately $100K/year

19. The Cost of Lengthened Replacement Cycles According to Fleet Management’s 2012 annual survey regarding vehicle operating costs, the consequence of lengthened replacement cycles is an increase in unexpected and sometimes costly repairs Last year, the cost of unscheduled vehicle repairs rose 10.2% Nearly double the rate of increase reported for the 2012 survey Repair Costs Vehicle Age

20. Lesson: Short term rewards are not worth the long term costs

21. Summary Include both customers and management in development of replacement standard –Involve Finance Department Use data to drive decisions –Use your resources to take control of your replacement standard Conduct a lifecycle analysis and determine costs Do not delay fleet replacement- be able to demonstrate costs of delay –Short term savings are not worth long term costs

22. Questions? Kelly Reagan (614) 645-6254 kwreagan@columbus.gov