March 2008, Government Fleet - Feature
How King County Beat the High Cost of Off-Road Equipment
By Windell Mitchell
In my 30-plus years as a fleet professional, I have found some things never change. Agencies are always competing for limited resources, policymakers are always demanding that we do more with less, and fleet managers are always being asked to reduce rates in balancing the budget. All these pressures have been felt within the context of our expanding organizations and growing demands for fleet services.
Some fleet managers have responded by extending equipment lifecycles, only to discover their operations have been saddled with increased maintenance costs for parts and labor, longer downtime, and low customer satisfaction.
Others have responded by purchasing cheaper vehicles and equipment only to realize that, over time, these vehicles and equipment cost more to maintain and are less reliable than the more expensive reputable brands. Less-expensive equipment may require frequent repairs that result in longer downtime, lower customer satisfaction, and reduced customer productivity. In both cases, lower performance records prove that neither strategy is effective.
The King County Experience
The pressure placed on King County fleet administration to keep rates competitive and maintain short vehicle maintenance turnaround time was particularly intense because about one-third of road services provided by the County are through service to local contract cities. Losing these contracts would affect about one-third of the road work crew. These cities expect cost-effective, reliable, and high-quality services, which makes the need for a viable solution even more urgent.
Both the County and contract cities are interested in keeping equipment costs low and maintaining high levels of effective and responsive services. Both also benefit from economies of scale that result from the county spreading its fixed overhead cost over a wider customer base.
I have always recognized the fact that contract cities have choices. They are free to go to any provider that promises greater, more responsive levels of services at a lower cost. These cities can choose from several providers or they can opt to do the work themselves. It is important, therefore, for the County to maintain its competitive edge and retain these mutual arrangements to provide cost-effective services to the taxpayer.
In reviewing our options, the question that we kept asking was: "Why should we have to sacrifice quality by opting for low-cost equipment or keeping old, worn-out equipment in service to balance our budget?"
There had to be another way. The old paradigm had to go. We needed to put the whole notion of quick fixes to rest. It had to be buried so it would not come back to haunt us. The answer, of course, was a buy-back strategy.
Vendors such as John Deere must include parts prices, labor hours, and maintenance intervals over 5,000 hours in their buy-back offer.