Maintenance

GFX Coverage: Conference Session Covers Justifying In-House PM to Managers, Stakeholders

June 21, 2012

Craig M. Croner, administrative services manager for the City of Boise, Idaho
Craig M. Croner, administrative services manager for the City of Boise, Idaho

DENVER – One of the conference sessions, given by Craig M. Croner, administrative services manager for the City of Boise, Idaho, discussed the topic of how fleet managers can justify providing in-house preventive maintenance (PM) services to managers and other stakeholders in a government organization.

To start, Croner said that in today’s environment, fleet managers are often questioned about their PM rates for services, such as oil changes, primarily when other government administrators compare fleet’s rates to those of private-sector, retail auto repair businesses (i.e. the $19.95 oil change). Croner said his previous experience in the private sector gave him insight into the concept of a “loss leader,” a low-cost offering that entices customers so a company can sell them other products or services at higher prices, thereby compensating for the low-priced offering that draws customers in.

In Croner’s case, he was able to successfully defend his fleet maintenance organization’s fee structure by breaking down, in detail, what specific services the fleet budget goes to, including outsourced/sublet aspects of the budget. He provided detailed cost data on administrative costs, labor, parts, fuel administration, and vendor/sublet costs.

Croner’s analysis found that the total amount of money discussed for basic PM services, such as oil changes for light-duty vehicles, the type of vehicles that outside service providers in the area could service, was a very small percentage of the total fleet budget. Total savings from outsourcing oil changes would have been less than 1% of a $2.8 million budget, his analysis found.

He also used the loss leader concept to explain that when looking at other services private-sector auto repair providers offer, many of their more involved services aside from oil changes cost more than the in-house rate that Croner’s organization provides. He also detailed the wide range of services that his organization provides above and beyond what outside providers offer. His presentation detailed a breakdown of the types of vehicles Croner’s organization services, for example the large number of specialized vehicles that local private auto repair organizations wouldn’t normally maintain and repair (fire and police assets, off-road equipment, etc).

When working with other administrators in the City, however, Croner said he took an approach where he demonstrated that he was willing to outsource services that made sense, and that his organization was already doing this in areas in specific areas (outsourcing services was already 56% of his fleet budget). Croner said outsourcing allowed him to shift labor hours to the shop floor and provide even better, more cost-effective services in the areas where his team has expertise, for example maintaining the large number of specialized vehicles in the fleet.

He also discussed with administrators and stakeholders other areas where his fleet organization could work to save its in-house customers more money, thereby showing an attitude of being willing to work with other administrators and stakeholders instead of becoming defensive.

By Greg Basich

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