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

Kelly ReaganKelly Reagan

Administrator

Division of Fleet Management

Administrator

Division of Fleet Management

City of ColumbusCity of Columbus

The Keys to Developing a Replacement Standard

Kelly Reagan, Fleet Administrator

City of ColumbusDivision of Fleet Management

Columbus Fleet Management- We utilize all the latest technology

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 3rd Best Fleet and #1 Greenest Fleet in

North America in 2011

How was Columbus Replacement Standard Developed?

• Industry standards• Consultation with City divisions and management (i.e. Finance

Department)• Internal Data• Realistic goals

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

City of Columbus Replacement Standard

Vehicle type

Useful Life (years)

Front Line

Useful Life (years)

Reserve

Miles

Administrative cars (non-patrol)/ station wagons

7 N/ A 100,000

Marked patrol cars 2 2 150,000 Unmarked patrol cars 7 N/ A 100,000 Motorcycles 7 N/ A 50,000 Vans/ pickups 8 N/ A 125,000 Light duty trucks 8 N/ A 125,000 Medium duty trucks 8 N/ A 100,000 Heavy duty trucks 10 N/ A 100,000 Refuse trucks: Automated Side Loader

6 N/ A N/ A

Front Box Loader 8 N/ A N/ A Rear Loader 10 N/ A N/ A Manual Side Loader 8 N/ A N/ A Compactor Truck 8 N/ A N/ A Knuckle-boom Truck

8 N/ A N/ A

Flatbed 10 N/ A N/ A Fire Apparatus: Engines 8 2 N/ A Ladders 12 3 N/ A Rescues 8 2 N/ A Medics 4 3 N/ A Sweepers 5 2 N/ A Large and specialty equip.

Review on individual basis

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

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

Lesson: Use resources to take control

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

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

Lifecycle Cost AnalysisCo

sts

Vehicle Age/Usage

Lifecycle Cost Analysis

Capital Operating Total

Lifecycle Cost Analysis: Fire Engines

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

Columbus progress through the years

Total Fire vehicles at or below replacement age

79%

57%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2008 2011

Total vehicles at or below recommended replacement age

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

Apparatus Added Annual

Maintenance Costs Debt Service

Annual Savings Excess Costs from

Delayed Replacement 15 Fire Engines $245,832 $181,054 $64,778 4 Platforms $79,887 $55,367 $24,520 32 Medics $122,369 $108,890 $13,479

TOTALS $448,089 $345,311 $102,778

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

Veh

icle

Ag

e

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

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

Questions?

Kelly Reagan(614) 645-6254

[email protected]