In the current economy, spending money on passenger fleets and heavy construction equipment can make a big dent in a transportation department's budget. So, how can that process be turned around and become an asset with money saved and efficiency increased? Just ask the Alabama Department of Transportation (ALDOT), which has been garnering a lot of attention on how its equipment program is saving big dollars.
Legislation Helped with Funding
In 1980, state legislation was passed allowing ALDOT to establish a revolving fund within the State Road and Bridge Fund to collect a monthly depreciation and replacement rate along with a rental rate (operating cost) from the end user. This allowed ALDOT to have good equipment ready to respond to the needs of the state's infrastructure without directly impacting budgetary funds.
Additional legislation was passed in 1995 to allow ALDOT to sell and auction its equipment by using an outside auction company. Since that time, ALDOT began turning in most of its passenger fleet at 55,000 miles or five years (whichever occurs first), the optimum time for replacement before operating costs begin to climb. It also allows ALDOT to determine the best time to replace all other equipment and to get the most return on investment.
The process also generates extra dollars into the State's economy through direct sales to counties and municipalities that receive high-quality equipment with a lower acquisition cost, the collections of sales tax revenue from auction sales, and monies spent by out-of-town bidders who stay at local hotels and eat at local restaurants. The October 2011 auction, projected to take in approximately $3 million, generated just under $4 million and collected $49,000 in sales tax.
Providing Top-Notch Vehicles for High Yield at Auction
ALDOT auctions are held twice annually. Auction bidders participate on site and online from all over the globe as far away as the United Kingdom, Australia, and the United Arab Emirates. In fact, online bidding continues to increase at each auction. During ALDOT's October 2011 auction, 48 items sold over the internet for $777,500.
To ensure buyers receive top-notch vehicles, ALDOT has the auction equipment refurbished and inspected to ensure it is ready to roll and be put to work. By using local vendors to renovate and detail equipment for auction, jobs were maintained or created, and $1.8 million was put back into the local economy in fiscal year 2011.
Annually, ALDOT spends about $25 million on equipment purchases and receives around $10 million in revenue from the sale of surplus equipment at auction, a significant savings in fleet operations.
In 2011 alone, ALDOT will save, through the efficiency of the fleet, $6.6 million that can be used on routine maintenance and construction projects. Additionally, ALDOT will save another $600,000 on parts and repairs by negotiating with vendors for better discounts. ALDOT has also reduced its light- and medium-duty truck diesel fleet, which represents a savings in procurement costs and, in combination with a retrofit program installing diesel oxidation catalyst filters on older trucks and equipment, producing a significant reduction in the fleet's carbon footprint.
Therefore, from the pounding of the auctioneer's gavel to the last satisfied buyer, significant savings are created and at the same time, ALDOT has funding for new equipment. ALDOT officials are "sold" on their equipment renewal process and believe it helps make ALDOT's fleet one of the most efficient in the country.
About the Author
Ron Pruitt is the equipment management coordinator at the Alabama Department of Transportation.