Operations

Utilization Studies Do More Than Right-Size Fleets

May 2015, Government Fleet - Feature

by Shelley Mika

The Denver International Airport recently conducted a utilization study of its fleet, which consists of 1,700 units, including the one of the largest snow removal fleets in the nation. Photo for Ron Anderson for DIA
The Denver International Airport recently conducted a utilization study of its fleet, which consists of 1,700 units, including the one of the largest snow removal fleets in the nation. Photo for Ron Anderson for DIA

Fleets conducting utilization studies can generally expect one of two outcomes: The results will either help them right-size their fleet, or it will validate that the fleet already operates with an optimal number of vehicles. But two fleets, Sarasota County, Fla., and Denver International Airport in Colorado, discovered a third outcome: a better understanding of their customers and their fleet needs. Although these fleets approached their utilization studies differently — one conducting an internally performed audit, the other hiring a consulting firm — they agree they’re both better as a result of their studies.

At a Glance

Utilization studies can help fleets:

  • Identify and dispose of under-utilized equipment
  • Validate that all fleet vehicles are optimally utilized
  • Gain a better understanding of fleet needs.

Airport Fleet Reduction Saves $2.2M

It takes a surprising variety of fleet assets to run an airport. Denver International operates more than 950 vehicles and 750 pieces of equipment, totaling more than 1,700 assets. These include pickups; dump trucks; loaders; cranes; road construction equipment such as graders, asphalt pavers, and rollers; motorcycles; Aircraft Rescue and Fire Fighting equipment; and one of the largest snow removal fleets in North America.

With such a wide expanse of assets to review, it had been a while since the fleet had conducted a major utilization study. In order to so do, the Fleet Management Department teamed up with the Finance Division, pairing fleet knowledge with analytical support.

Initial planning began in July 2014. “Our goal was to not only identify under­utilized vehicles but also to use this data to build better projections for our capital replacement process,” said Jeff Booton, director of fleet management. “We have a lot of high-value vehicles that perform very specific functions, and we wanted to validate that these assets are truly required so we don’t waste money replacing vehicles that are underutilized.”

“As you get to know your fleet and your customers, you begin to notice trends like which vehicles are consistently in the shop, when and where vehicles are parked, and how the vehicles are used in their day-to-day mission." - Jeff Booton, director of fleet management, Denver International Airport

Booton and team looked at several items to gather the appropriate data: vehicle mileage or hours of use, customer manpower and shift schedules, and utilization patterns. The team also talked to customers to get their feedback and understand their justification for low-use vehicles and equipment. “The analysis focused on miles/hours per year to develop a list of vehicles that were driven less than 4,000 miles per year. This new list was then offered to our customers [for them] to provide the reasons for the low usage,” he said. “After receiving the responses, we worked with customers to look at their manpower and mission requirements to find opportunities for better utilization of their vehicles.” 

After working through the project for six months — on top of individuals’ regular daily duties — the team was able to identify areas of improvement. Through optimized utilization of similar vehicles, the team immediately reduced the number of vehicles in its fleet by 16, saving $2.2 million in replacement costs. “We have also projected the reduction of 11 more vehicles when they reach the end of their programmed lifecycle, saving an additional $4.1 million in replacement costs,” Booton said. “Due to the large scope of this study, we continue to work with our customers to optimize the use of their resources, which we anticipate will reap additional benefits.”

Aside from the obvious benefit of saving money by right-sizing the fleet, Booton discovered an unexpected outcome: a better understanding of customer needs. “As you get to know your fleet and your customers, you begin to notice trends like which vehicles are consistently in the shop, when and where vehicles are parked, and how the vehicles are used in their day-to-day mission. As a fleet manager, it’s all about awareness and looking for opportunities to be more efficient,” he explained. “Understanding your customers’ needs is a vital component of managing a fleet.”

As the team had hoped, the benefits of the utilization study also extended into the department’s Capital Replacement Plan. Under the previous plan, fleet management only looked two to three years into the future to plan for replacement. But when the team looked at the actual end of life cycle projections for the fleet’s high-value vehicles, members found there was a significant fluctuation in the dollars required to replace vehicles five to 10 years into the future — a fact that made budgeting for these vehicles difficult, especially when they compete with other priorities at the airport. “This study helped us project replacement vehicles 10 years out by reallocating our replacement distribution and removing equipment that is no longer required,” Booton said.

5 Steps to Conduct Your Own Utilization Study

Thinking about conducting your own utilization study? Start with these five basic steps.

Step 1: Develop a list of miles driven or hours of use per year for each unit, ideally going back three years.

Why It’s Important: Doing so provides a data-driven baseline to develop a utilization trend.

Step 2: Identify what qualifies as a “low utilization vehicle” (e.g., less than 5,000 miles per year/per light-duty vehicle).   

Why It’s Important: Establishing an agreed-upon standard with your employer will provide the leadership support needed when working with your customer.

Step 3: Talk to your customers to gather additional data such as the employee-to-vehicle ratio, employee shift schedules, and unique vehicle or mission requirements.

Why It’s Important: You’ll get a truer picture of each customer’s needs. This will also help your customer feel like a partner in the effort and will help everyone understand that any changes made come down to a business decision.

Step 4: Use all the information — the data and the anecdotal evidence — to identify candidate vehicles for elimination or co-utilization.

Why It’s Important: Combining the data and customer interviews will help you to see the entire picture. Raw data doesn’t drive everything — the process is, in part, subjective.

Step 5: Inform and educate.

Why It’s Important: This step should happen throughout the process, but ensuring final decisions are communicated to customers will give them closure and promote buy-in.

Bonus Step: Follow these words of advice, courtesy of Jeff Booton, director of fleet management, Denver International Airport, Colo.:

  • There is more to a utilization study than just the raw numbers.
  • Building rapport with your customer in advance of a utilization study will make for a smoother path forward.
  • Losing vehicles can be a sensitive and emotional subject for user departments, so tread lightly.
  • The study may reveal you actually need more vehicles. Be open to this possibility.

Greg Morris, CEM, fleet services manager for Sarasota County, Fla., (center) is pictured here with administration and acquisitions staff. Photo courtesy of Sarasota County, Fla.
Greg Morris, CEM, fleet services manager for Sarasota County, Fla., (center) is pictured here with administration and acquisitions staff. Photo courtesy of Sarasota County, Fla.

Changing Perception with a Utilization Study

The Fleet Services Department for Sarasota County took a slightly different approach from the Denver International Airport’s do-it-yourself model: Under constant pressure to right-size the fleet and optimize utilization, in 2009, the team hired consultants to provide an unbiased review of utilization for the county’s 1,500 vehicle and equipment fleet.

Using data from the fleet’s database, the consulting firm analyzed assets in areas where utilization was low based on miles driven and hours operated each year over several years.

“Miles and hours are great tools as a preventive maintenance driver but very poor indicators for utilization,” said Gregory Morris, CEM,  fleet services manager. “For example, if a dump truck is driven to a site for recovery of debris from a water or sewer line operation and the project lasts for months but it only makes one or two dumps a day, it is being fully utilized even if it isn’t getting miles or hours on the asset. Another example would be if a building inspector is working in a large new subdivision with only a few miles being driven.  Telematics with location geo-fencing is the best indicator for utilization of the assets.”

Knowing that there was more to the story than miles driven or hours of use, talking to customers was an important next step. The consulting firm visited the departments where the assets were assigned, reviewed the operation/utilization of each asset, talked with operators and managers and discussed emergency operations and the need for the asset, then made a recommendation as to whether right-sizing was an option.

Start to finish, the study lasted 90 days. At the conclusion, less than 20 assets were identified as underutilized — of those, more than half were mission critical for the department’s operation. The study didn’t reveal low utilization, but did reveal another important result: The fleet team was doing things right.

“The completed study changed the perception of Fleet Services overnight. High level management opinion was that the county had a large number of vehicles and equipment being underutilized. They were pleasantly surprised that the county fleet was being utilized correctly and was at the right quantity,” Morris said. “The Fleet Services team was confident that our processes were identifying low utilized assets and that the fleet had been reduced to adequate numbers to support daily and contingency operations. The study proved that our annual reviews of utilization were spot on. After the study, the confidence in our abilities as a professional fleet service team was greatly improved.”

Following the study, the department has continued to conduct yearly utilization and replacement reviews with customers, where together they discuss utilization, maintenance, life cycle, and condition of each asset assigned. Like Denver International Airport, an unexpected result of the Sarasota County’s right-sizing efforts was an improved relationship with fleet customers.

“Utilization studies help set a road map for future improvements, provide new ideas, and provide the opportunity to discuss a process. We are working closely with operators to rotate assets within the department and procure the right asset to accomplish the daily tasks of the department,” Morris said. “By meeting with department managers, supervisors, and operators, this has helped generate a more trusting, honest, and approachable fleet services. We now understand the importance of taking time to listen, and get involved with the daily operations of the departments we support. ”

As a result of fleet’s increased interaction with customers, Morris and team have implemented a “try before you buy” program, where asset capabilities are challenged by the operators, and those who maintain the asset review how difficult it would be to maintain. This includes reviewing items in categories such as safety, reliability, warranty support, service, and parts availability. “As an organization, we must be open to new ideas and better ways of doing business,” Morris concluded.

Meeting & Creating Statewide Standards Through Rightsizing

In 2009, the State of Washington’s legislature mandated that by 2020 all state agencies had to reduce their greenhouse gas 15% below the 2005 level. Greg Hansen, Washington State Department of Transportation (DOT) fleet administrator, said conducting utilization studies has helped the DOT work toward this goal. “With our efforts to improve the efficiency of the fleet and reduce our emissions, our comprehensive in-house review of fleet utilization has become a key component of managing the fleet efficiently,” he said.

Right-sizing and right-typing the fleet has also helped the Washington DOT have a greater understanding of fleet needs; as a result, the agency has used the knowledge it has gained to create statewide fleet standards. “Working with managers as a group statewide, the right-sizing and right-typing of the fleet has created statewide fleet standards,” Hansen said. “Managers have learned the fleet makeup and unit locations and are collaborating and sharing vehicles and equipment more effectively.” 

In total, the DOT’s utilization reviews have resulted in significant vehicle reductions. Passenger vehicle inventory has been reduced by 28% since 2008 — going from 666 to 480 units — with a reduction of 65 vehicles in the last two years alone. The DOT’s utilization efforts have saved it more than $1 million annually in current and future savings. The agency’s work resulted in other benefits: “The utilization study has improved our relations with our customers…as we work together to gain efficiencies and to understand their needs and help the customer understand options,” Hansen said.

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