The City and County of Denver’s Department of Public Works implemented a three-phase process that delivered $8 million more in cuts than the mayor requested with a total investment of $4,000, resulting in more than $10 million in savings, a return on investment of 2,500 to one.
Beginning the Savings Process
Common elements occurred in all three phases. Fleet management sent a utilization report to customer departments listing vehicles within each department that did not meet usage standards as established by the Fleet Counselor Services (FCS) program, Utilization Management. Asked to respond within 30 days, the departments were to justify keeping the targeted vehicles or to “bring the keys,” meaning the vehicle would be disposed of or reassigned.
Establishing a Utilization Review Committee
A utilization review committee was established using implementation plan recommendations (based on industry best practices) contained in Category 10 of FCS’ Fleet Certification Program. The key to a successful committee is involving other agency management staff in the decision-making process and minimizing the role of the fleet management director, who should participate only as an industry expert. According to James Wright, CEO of FCS, “Fleet directors, by themselves, normally do not have the management horsepower to make such recommended cuts in the fleet size. Also, by making them the ‘bad guys,’ fleet managers are placed in a very difficult position. Trying to provide customer support to departments one day and taking away vehicles the next will not work.”
Denver’s committee included representatives from city finance, budget, public works, the mayor’s staff, and fleet.
The committee evaluated usage and application data on vehicles that were underutilized, overutilized, or improperly utilized (with abnormally high maintenance and/or damage costs), which therefore, did not meet established class parameters.
Once a vehicle fell into one of these exception categories, the committee interviewed the customer department to review usage records and present justification for maintaining the vehicle’s assignment and status. If the committee concluded that there was insufficient justification for the current assignment, the unit could be reassigned, replaced, or used as a substitute to replace another older vehicle. The vehicle could also be disposed of as surplus or replaced with a more functionally appropriate vehicle. Vehicles also could be transferred to a department pool.
Creating a Redeployment Program
In Phase 1 of the Utilization Management Program, prior to meeting with customer departments, 380 vehicles were identified as not meeting utilization standards. After evaluating the participating departments’ justifications, the committee achieved cuts through a variety of methods. They found opportunities for significant savings by reassigning 103 low-usage vehicles and equipment, turned in by various departments, to replace other vehicles and equipment. This task became known as the Redeployment Program, a spin-off from the FCS Utilization Management Program.
Other direct savings came from reductions in parts inventory, staff repair time, and fuel costs.
The first utilization committee meeting lasted a full day, but resulted in more than $3.2 million in savings — $1.8 million more than the mayor had requested.
Sending Utilization Reports
Phase 2 of the Utilization Management Program proceeded much like Phase 1. Fleet management sent a utilization report to all customer departments, listing vehicles that did not meet utilization standards and allowing 30 days for affected departments to respond with justification for keeping their vehicles or equipment.
However, by Phase 2, the customer departments had become much wiser in their own decision-making, so it was more difficult to make further cuts in fleet size. Nevertheless, an additional 41 vehicles were cut or reassigned, and vehicles and equipment whose actual needs were questionable were placed on hold for further investigation, or until the implementation of Phase 3.
Phase 2 budget cuts netted $1.8 million in savings.
Implementing a Financial Incentive Program
Phase 3 netted the best results. The City and County of Denver exceeded savings targets by reporting and implementing a financial incentive program. For example, when a vehicle was turned in, 20 percent of the replacement funds and one year’s operation and maintenance expense were returned to the department. The departments used this funding for other unfunded needs.
After committee members completed all utilization evaluations, they disposed of approximately 88 vehicles and equipment. Phase 3 budget cuts netted $5 million in savings.
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Rules to Implement a Program
Implementing a utilization management policy.
Using FCS utilization review standards as a starting point and continuing to raise the bar by increasing standards.
Using rental firms and short-term leasing for heavy-usage periods.
Forming a utilization review committee of senior management staff who managed departments with few or no vehicles, yet understood the agency’s financial health.
Limiting the role of the fleet management department to act only as a technical advisor to the utilization review committee. Why the Program was Successful
After Phase 1, the City and County of Denver used financial incentives. Equally important was the impact of strong management support, particularly from Stephanie Foote, manager of public works and then-deputy mayor, and Margaret Browne, finance manager. Six Best Practices for Operating a Cost-Effective Fleet
1. Be sure that only experienced people operate off-road equipment. An inexperienced seasonal operator can trash a backhoe in a matter of minutes causing several thousands of dollars in damage. 2. Schedule an annual utilization review committee meeting during budget preparation season. 3. The fleet manager should not be the decision-maker, but rather an advisor to the utilization review committee. 4. Don’t set your sights too high on the first few review processes. Cutting too deeply can leave an agency unprotected during an emergency or special event. Transfer some vehicles and equipment to an internal equipment pool to accommodate this situation. 5. Customer departments should look to fleet as a resource. If a department is challenged by the review process, it should ask for the support of its fleet department. Often, a good fleet management department can offer an operating department a less-expensive way to do business, thus preventing a privatization effort. 6. Avoid exempting emergency departments, such as police or fire, from cost-effective utilization management practices. If the number of pieces of reserve equipment for emergency departments is an issue, then monitor other types of data, such as:Fire Department:
Police or Sheriff’s Departments:
Number of calls per location versus number of calls that experienced an equipment failure. Also, check take-home vehicles.
Number of in-service vehicles during heaviest request for response times (weekend, weather-related calls). Also, number of times officers are required to team up (two officers in one patrol vehicle) because of vehicle failure.
