Mayor to city departments: be competitive or be gone!
The Central Equipment Management Division (CEMD) manages Indianapolis' fleet. John McCorkhill, CEMD Administrator since December 1990, his management team, and the officers of the local AFSCME union who staff the garage, began working on a proposal to reduce the cost of managing and maintaining the city's fleet of vehicles. Meeting the mayor's challenge was the goal.
CEMD was brought about through fleet centralization in 1979. Before centralization, each city agency managed its own fleet; since centralization, CEMD has managed the fleet. Vehicle ownership rests with the using departments while CEMD provides vehicle acquisition, fuel, repairs, record keeping, and disposal services.
The city fleet consists of 2,106 pieces of rolling equipment and 1,188 pieces of miscellaneous equipment for a total inventory of 3,294 units. Vehicles are maintained at two places: Riverside, an 81,100-sq ft facility, and the Belmont facility, which is 56,200 sq ft. A new 80,900-sq ft facility is under construction to replace Belmont; it will be completed in January 1993. CEMD has a staff of 60 mechanics, 33 garage support persons including foremen, and 20 administrative personnel.
The fleet is divided into 245 different class codes, which all have their own distinct operating characteristics and management exception criteria. CEMD's fleet operation processes about 47,000 work orders per year. CEMD is also an authorized warranty repair facility for several manufacturers such as GMC, Ford, Navistar, John Deere, and Jacobsen.
Warranty recovery varies with the influx of new vehicles. In 1991, $121,000 was credited through warranty recovery. A total of $430,000 was recovered and credited over the last two years.
In meeting the mayor's demands, CEMD prepared a proposal that discussed methods to reduce the cost of managing and maintaining the city's fleet, and the benefits of full service fleet management. In discussions with the mayor, McCorkhill was given the go ahead on the proposals with the directive that CEMD had a year to get its act together. It was also noted that a study for privatization within the city would continue.
Methods to Reduce Costs
CEMD proposed several new programs to ensure cost reduction:
* Eliminate or reduce take home vehicles. Less wear and tear on vehicles means less repair parts and costs and less fuel consumption.
* A one color fleet. Using a standard paint color (white suggested) will realize a cost savings on base price.
* Eliminate city programs that damage equipment. For example, a program for picking up trash promotes vehicle abuse because drivers are interested in getting out and back as soon as possible. If a problem occurs, the vehicle is still operated until the route is completed. This compounds the problem, causing more repair expense than necessary. A special program for leaf collection causes extreme damage to the city's vacuum fleet. This misapplication of equipment has caused over $50,000 of unnecessary repairs during the past year.
* Downsize vehicles or engines. By using mid-size or compact instead of full size cars, savings are realized in purchase price and fuel consumption. Look at smaller V8's and use six-cylinder engines in administrative vehicles.
* Consolidate other city/county operations into CEMD. Overhead costs to each department would be lower if CEMD could spread costs over a larger customer base. Proposed new customers include Citizens Gas, city fire department, sheriff, township fire departments, and the city's transit bus maintenance operations.
Centralized Fleet Ownership And Management
CEMD contracted with Fleet Counselor Services (Fort Collins, Colorado) to construct a proposal on complete fleet management. The firm found that giving CEMD full fleet ownership and management would save $3 to $6 million. The ability to assign vehicles and equipment to city agencies based on need will reduce the fleet by an estimated 5 to 7 percent. Major savings will come from eliminating replacement of vehicles scheduled to be retired in 1992, 1993, and 1994. A conservative saving estimate is $1.9 million.
By managing fleet utilization, vehicle usage is monitored monthly to identify low usage units. Based upon this utilization study, the city could reduce its fleet size by a considerable amount. To operate efficiently with a reduced fleet size, CEMD would combine extra units in a centralized equipment pool. This allows CEMD to control duplication within the fleet. This analysis also includes justifying continued assignment of each unit in each operating department. This analysis would pay for itself with saving realized from the reduction in fleet size, operation, and maintenance cost reductions. Projected savings are about $2.6 million.
CEMD computerized maintenance management of the fleet actually began several years ago. The resultant database will now be used to establish utilization levels for all classes of equipment . The maintenance management system and the automated fuel management system are eventually expected to provide data for the Vehicle Network Utilization System (VENUS), which the city already owns but is only now fully implementing. VENUS may eventually save the city up to $1.5 million a year.
Becoming proactive in vehicle and equipment repair would increase fleet availability, in turn allowing even more vehicles to be monitored for utilization. The projected impact on demand repairs versus preventive maintenance work will be considerable. Over half of all work could be scheduled, allowing CEMD to manage its resources in a highly predictable method. Projected saving in repair costs is $250,000.
After initial efforts are completed, strictly enforced policies will be used to monitor fleet size. Considerable savings will be realized by not having to perform normal annual duties associated with vehicle and equipment replacement, specification development, purchasing and bidding, contract review, shop labor, paper work and accounting, and parts inventories. This translates to a projected saving of over $100,000.
Through planned budget reductions in personnel services, supplies, capital expenditures, and other miscellaneous services, CEMD has proposed a $1.7 million reduction in expenses, much of which is the result of a smaller fleet.
CEMD has established a public relations program to extol the benefits of full service fleet management.
Solid management, solid research, and a strong spirit has propelled CEMD to face competition. Support for CEMD from the mayor's office reiterates his commitment to lean and mean government.
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|Title Annotation:||Mayor Stephen Goldsmith of Indiana, Indiapolis|
|Date:||Nov 1, 1992|
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