Transportation Department

Transcription

1 Transportation Department

2 MISSION STATEMENT Provide a High Level of Technical and Analytical Support Through an Efficient Mechanism for Funding Capital Equipment Replacements Which Will Demonstrate Fiscal Responsibility, End User Applicability and Quality Procurements EQUIPMENT REPLACEMENT & UTILIZATION PROGRAM The Equipment Maintenance and Fleet Services of the Transportation Department retains ownership and has primary responsibility ( cradle to grave ) of all the City equipment and vehicle assets. We also assist with the Equipment Replacement Fund (ERF) vehicle replacements and budgeting of these assets while working closely together with the City Budget Office. The works in conjunction with Purchasing when removing vehicles and equipment from permanent service in the disposal process. Usual methods for disposal are through auctions whereby the City can better use its resources in allowing an auction company to have the responsibility of shipping and selling the City s old vehicles and equipment. The City obtains funds for the future replacement of vehicles and equipment through periodic rental rate charges (amortization) to the using departments and/or divisions over the expected life cycle of each unit. The City s Chief Financial Officer (CFO) invests the funds and credits interest or dividend earnings into the fund. The CFO also places the residual (disposal) value of the assets back into the fund after the sale is finalized. This system assures availability of funds when it becomes necessary to purchase vehicles and equipment replacements. The ERF is self-supporting and is the main vehicle for budgeting and providing adequate funding for all vehicles and equipment for the City. The Equipment Maintenance establishes useful life (life cycles) for all types of vehicles and equipment that are incorporated into a technical amortization schedule. This amortization schedule guides departments in their annual cost for purchase/ownership and replacement costs for vehicles and equipment at the termination of the life cycle. This also becomes the fiscal budget for all City assets. Using departments justify and budget for the initial procurement of all capital assets. When the City receives new equipment, the Equipment Maintenance and the Budget Office adds the vehicles and equipment into the main asset inventory systems (fleet management and accounting systems), establishes an estimated useful life, calculates the future replacement costs that includes adjustments for CPI and inflation, and then establishes the amortization schedule for the new piece of equipment. The Equipment Maintenance will communicate on an annual basis (or more frequently) with all City Departments those vehicles and equipment that are eligible for replacement. 1

3 This is based on the termination of life cycles, which then enables those vehicles and equipment to become replacement candidates. Life cycle analysis is the benchmark for replacing equipment. Each year during budget preparation, the Equipment Maintenance evaluates the vehicles and equipment that are eligible, or requested to be replaced. During this period, departments are required to submit their requests to replace or change their vehicles/equipment. Once the technical evaluations have been completed, we then assemble a recommendation for replacement including any new estimated purchase costs. Because a particular piece of equipment is eligible for replacement (based on its useful life and amortization cycles), does not automatically guarantee the replacement. Many other factors go into the evaluation process to make certain the equipment is no longer feasible to retain, or is otherwise unusable in its originally designed capacity relative to the division s mission. Age, mileage, repair history, current condition, forecasted repair costs, depreciation and market value are included in the evaluation process. After the vehicle evaluations have been completed, the Equipment Maintenance meets and discusses the eligible equipment with the affected departments to: Review the list of equipment candidates. Decide further whether to replace or retain the recommended vehicles and equipment. Aid the departments with a budget forecast. Discuss necessary operational equipment needs. The Transportation Department through the, has established a City Council ERF Sub-Committee to inform the Council of the ERF process and those equipment and vehicles eligible for replacement. Each year a meeting is held with our ERF Sub-Committee and all departments that have vehicles for replacement to review the list of candidates, evaluate the recommendations, discuss any issues about the process or equipment, and approve the recommendations. The ERF Sub-Committee acts as the initial approving mechanism for the new ERF budget, including all the recommended vehicles and equipment which are then finalized for inclusion into the City s new fiscal year budget. ECONOMIC ANALYSIS AND REVENUES The Equipment Replacement Fund must continue to maintain an appropriate fund balance that is sustainable and available for equipment replacements. The oversight of this fund is administered through the Equipment Maintenance and the City s Budget Office. The revenue projections for this fund are increased using a 3.5% inflation rate growth factor for forecasting purposes. Once the actual replacement cost of a vehicle is determined, this amount is entered into an amortization schedule. Until this time, an estimated budgeted amount is used for calculation purposes. 2

4 Yearly contributions amounts are based on initial acquisition cost (with all make-ready costs) then calculated based on this estimated future year (end of the life cycle) replacement cost. Often vehicle replacement costs are less than the budgeted amount, thus enabling the fund to cover unanticipated or emergency replacements when authorized. This is an important mechanism as emergency vehicle replacements do in fact occur. Each vehicle is entered into the amortization document with the actual cost of the vehicle and estimated useful life. A formula is then calculated that gives the estimated replacement cost based in part on a 3.5% inflation growth rate per year. The formula is: year acquired, useful life, estimated replacement year, inflation rate, interest earning and the estimated replacement cost equal the annual contribution. Once a vehicle has reached its useful life and is not recommended for replacement, only the 3.5% inflation rate is charged to the using. The fund is required by Council to be maintained at a level that is 25 percent above replacements costs to ensure a quality fund balance. UTILIZATION POLICY The Equipment Maintenance recognizes that the City has a substantial investment in vehicle and equipment assets, which its departments require for the delivery of services to customers. Effective management of these fleet assets is imperative in order to keep the City s operations at peak efficiency and readiness. An important element in achieving this objective is the establishment of an aggressive utilization policy. The shall establish and make decisions to retain, reassign, eliminate or assign pool vehicle status to inefficiently utilized vehicles and equipment. The Equipment Maintenance and the ERF Sub-Committee shall also examine program applications and make recommendations on alternatives to ownership of such units as/if required. It is the responsibility of the Equipment Maintenance to inform the ERF Sub- Committee (ERFSC) of analytical information and usage/condition of the fleet just before the budget development process and the annual vehicle purchasing cycle. The ERFSC shall be comprised of representatives from various using departments or as approved by the Transportation Director. Required Committee Members: Two members of the City Council (Council Sub-Committee) Transportation Director Chief Financial Officer (or his/her designee) Equipment Maintenance/Fleet Manager Budget and Finance Manager Various Customer Department Representative/s Optional Attendance Assistant City Manager Department/ Heads not on the annual distribution list 3

5 SUMMARY OF FLEET UTILIZATION REVIEW COMMITTEE RESPONSIBILITIES Evaluate usage reports generated by the fleet management system Review and/or develop new standards Evaluate equipment technology Evaluate the need for required fleet additions (not including replacements) Evaluate all replacement vehicles that do not meet replacement criteria (age or mileage) Review the use of vehicles that have already been replaced and kept in the fleet as reserve or special use vehicles Evaluate/review all recommended replacements Serve as a key resource of information to the City for budgetary program review and fleet asset management decisions Evaluate structure and use of pool equipment, including cost benefits As of July 1, 2007 all additional vehicle requests must first be approved by the City Manager ERF Sub-Committee members can be assigned or removed but the there shall be a committee in effect. An annual meeting shall be scheduled to establish fleet customer department needs, inventories and replacement costs. ERF Sub-Committee shall meet during budget preparation season or as required to discuss issues that have not been resolved through normal channels between the Equipment Maintenance and the user divisions. UTILIZATION REVIEW PURPOSE The purpose of the committee is to evaluate the application and ownership data on vehicles/equipment that are being improperly utilized (units with abnormally high maintenance and/or damage costs to unusually low mileage), which therefore do not meet the established class parameters (standards). Once a vehicle falls into one of these exception categories, the customer department shall be notified to review the vehicle/equipment records and to present justification for maintaining the vehicle s assignment and status. Should the Equipment Maintenance and the user division decide that there is insufficient justification for the current assignment, the unit may be reassigned, replaced, or used as a substitute to replace another older vehicle (recycled and redeployed). The vehicle may also be disposed of as surplus or replaced with a more applicable vehicle to meet operational needs. Some vehicles may be transferred into pool service to allow other departments to use the vehicle. Some equipment may be termed as Specialized Equipment and may require specially developed (one unique type) applications for use. The City has several one-type pieces of equipment. 4

6 LIFE CYCLE STANDARDS Life Cycle standards are levels of usage/age according to class of vehicle or piece of equipment (attached). These standards may only be changed through the budget process synchronized with the current amortization schedule. However, low usage class standards will be under the constant scrutiny of the Equipment Maintenance. Vehicle class, not by individual unit, shall establish the life cycle parameters (an exception to this applies only to the unique one-type piece of equipment). Most of the usage data shall be from historical fleet records such as an analysis of usage patterns for a class or unit for a period of one to two years. Historical data from the current fleet management system may be used to establish these usage patterns. The customer department s usage patterns by class may be further separated to compensate for seasonal usage or peaks and valleys kinds of applications. The life-cycle costing approach uses an accumulation of component costs in developing a total cost curve (see attachment A). There is a point in the unit s life where the annualized total cost is a minimum, giving the economic impact/s (if any), this is the optimum life point that resides at the bottom of the cost curve. As total annualized costs increase, the economic cost curve exhibits an upward trend, thus indicating that it is more costly to retain the equipment. Each component cost has its own value and needs to be analyzed individually. The components are defined as follows: Purchase Price Resale Value M&O Costs Age Mileage Mechanical Condition Usability Future cost of vehicle at anticipated time of purchase including inflation. Value of the vehicle at the time of replacement. Yearly operation and maintenance costs over the life of the vehicle. The age of the equipment. Age may be misleading if replacement parts are not readily available. The amount of miles on a vehicle. Mileage is a good historical indicator on the condition of equipment as to when costly repairs may occur. Relative condition of the vehicle in respect to anticipated major repairs. Do maintenance costs exceed replacement costs? Does the equipment allow the operator to perform the function in an efficient and effective manner? Life Cycles and utilization must be evaluated using age, miles, fuel consumption, or hour meter readings. Customer departments may have to be polled for usage updates (accurate meter readings) to ensure accurate information. Like most agencies, we have specialized vehicles that can be excluded from monthly or quarterly analysis by the committee, but all such units should come under evaluation at least once per year. The analysis should include alternatives to owning the unit, such as arranging a short-term rental or lease. In establishing these parameters, the unique needs and characteristics of the user department should be kept in mind. Optimum service delivery to the citizens is of paramount importance, as is operational effectiveness and is the primary mission of the Equipment Maintenance and the City. 5

7 PROCESS Unless special circumstances dictate, the ERF Sub-Committee shall meet periodically at times that correspond closely to upcoming fiscal events such as budget generation, budget implementation, budget review, or other related budgetary events. The Equipment Maintenance is responsible for writing and developing fleet specifications, assessing joint entity procurements, developing Request for Proposals (RFP s, as needed), purchase recommendations, cost benefit analysis, buying equipment (working together with Purchasing) and the replacement schedule for all City vehicles and equipment assets. Annually, the Equipment Maintenance generates vehicle and equipment information and disseminates this information to customer departments to notify them of their vehicle/equipment inventories, replacement candidates, repair costs, and/or requests for evaluation by the Equipment Maintenance. The customer departments may request more information from the Equipment Maintenance and, if not represented on the committee, send a representative to the meeting to clarify their vehicle/equipment information and provide additional detail as required. It vitally important that these efforts remain synchronized for effective and efficient operations. Results of the meetings shall be documented and summarized for review by the Transportation Director (as required). This information may also become a part of the City s budget program review process to evaluate departmental program needs and effectiveness. This policy is a guidance resource tool for protecting City assets using best practice applications for funding and replacing vehicles and equipment while executing appropriate and prudent asset management techniques. MULTI-FUNCTIONAL UNITS The ERF committee places a priority on identifying locations or tasks that are conducive to converting existing single task units into units with multiple capabilities. For example, a low-usage, single application pickup may have multiple applications if a van was substituted in its place. A more versatile, larger backhoe or a loader with optional quickconnect backhoe attachments could replace a backhoe used for small jobs. A more versatile unit may be acquired during the normal replacement cycle. Funding for the upgraded or more versatile unit may come from the equipment replacement fund and supplemented by capital funds from the departments that will benefit from the upgrade. Should the fleet replacement reserve have sufficient funds, the decision to fund an upgrade shall be based on a recommendation made by the Equipment Maintenance Manager to the ERF Sub-Committee. If it is practical to acquire a multi-functional unit outside the normal replacement cycle, the unit or units that shall be replaced and can be used in trade for the upgraded unit. These units may also be sold at auction, combining the sales revenue with accumulated replacement funds in order to acquire the more appropriate vehicle (if appropriate). 6

8 The guidelines used by the committee are intentionally kept general so that a maximum amount of creativity and inter-departmental cooperation may be applied to a wide variety of tasks, applications, and programs and that will enhance department operations and save the City money. FLEET CONFIGURATION The City is committed to the continuous improvement of clean air through a sustainable community. The City is also obligated by specific rules ( Fleet Rules ) from the South Coast Air Quality Management District (SCAQMD) and the California Air Resources Board (CARB) to adhere to stringent emission requirements, engine types, and the promulgation (use) of alternative fuels. The use of alternative fuels reduces our dependency on foreign oil/fuel, is less costly to operate (fuel cost), and improves the quality of life for all City residents. The use of alternative fuels enhances the City s efforts towards a true sustainable community, reduces our carbon footprint and greatly reduces our fossil fuel consumption. To comply with the Fleet Rules, our current alternative fuel of choice is Compressed Natural Gas (CNG). The City owns and operates its own CNG refueling station and has been committed to the use of CNG powered vehicles since The City currently has over 105 vehicles operating on CNG fuel. Natural gas is currently the best and most advanced alternative technology, most viable, most economical, delivered directly from the supply line and is the safest of all alternative fuels available for widespread use today. The City has a sizable investment in CNG technology. This fleet policy ensures our continued use of CNG as our current fuel of choice and therefore we will continue to acquire these vehicles wherever possible while maintaining our compliance under the SCAQMD Fleet Rules program. The City is committed to the widespread use of alternative fuels as the technology becomes available and as they become proven technology, safe, available and is sustainable as a viable alternative-fuel solution. Other technologies include: 1. Gasoline Hybrid powered vehicles (the City will acquire hybrid vehicles in application where CNG is unavailable, or the use of CNG prohibits the operational requirements for the fuel) 2. CNG Hybrid technology 3. Hydrogen/compressed natural gas (HCNG); this technology is being developed 4. Hydrogen powered vehicles (technology is being developed) 5. Electric vehicles 7

9 RECOMMENDED EQUIPMENT LIFE CYCLES Vehicle Class Equipment Example Type Recommended Useful Life 1 Mowers Ride-on Toro/Hustler 8 Years 2 Passenger Car/Sedan (Includes sub-compacts, Full- Size, Non-Police/Detective Units & Station Wagons) Ford (fleet standard) /Chevrolet/Dodge 8 Years. 3 Police Vehicle Patrol Car Ford/Chevrolet 4 Years 4 Police Motorcycle Kawasaki 5 Years 5 Three Wheel Vehicles Cushmans 5 Years 6 Light Duty Vans, Also "Mini" (Under 1 Ton) Ford/Chevrolet 8 Years Medium Duty Vans (Over 1 Ton, Gasoline Powered) Ford/Chevrolet 10 Years Light Truck - Pick-Up (Includes Sport Utility Vehicles) CNG or Gasoline Powered Dodge/Ford/Chevrolet 10 Years Medium Truck - Gasoline Powered (Includes Dump Bodies) or CNG Powered Ford/International 10 Years Medium Truck - Diesel Powered (Includes Dump Ford/International Bodies) ore CNG Powered Harvester/GMC 15 Years Heavy-Duty Truck Gasoline or CNG Powered (Includes Dump Bodies) Heavy-Duty Truck Diesel or CNG Powered (Includes Dump Bodies) Heavy Duty Refuse Collection Truck, Front Loader/Packer (Includes Auto-Rear/Side Loaders) CNG Powered Refuse Drop Body Trucks (Roll-Off) Ford/International Harvester/GMC Ford/GMC/International Harvester/GMC Autocar, PeterBilt Heil, Amrep Autocar, PeterBilt Heil, Amrep 15 Years 15 Years 8 Years 10 Years 8

10 15 Heavy Duty Truck, Semi- Tractor Freightliner/GMC/PeterBilt 15 Years 16 Heavy Duty Refuse Transfer Trailer 45 Foot Star/Peerless/Imco 8 Years 17 Utility Trailers Various 15 Years Sewer Equipment-Trucks (Special Use Vehicle) CNG VAC-CON 18 Powered GMC/Ford/Sterling 10 Years Medium Duty Tractor/Loaders (Off Road) Ford/Case 15 Years Heavy Duty Tractor/Loaders Off-Road, Articulated Body Caterpillar/John Deer 15 Years Fork Lifts. CNG, Propane or Electric Powered Caterpiller/Hyster/ Komatsu 15 Years Trailer Mounted Equipment. (Includes Air-Compressors) Ingersol-Rand 15 Years Aerial Lifts Tree Trimming Vehicles, "Man-Lifts/Bucket Altec, Electrical Bucket Trucks" CNG Powered Trucks 10 Years Aerial Cranes/Derricks (Boom Trucks) JBL 15 Years Fire Truck Engines "Pumpers" 26 Fire Trucks "Ladder Trucks" Seagrave. American La France Spartan, LTI, Seagrave or American La France 20 Years (20Years Front Line, 5 Years in Reserve) 20 Years (15 Years Front Line, 5 Years in Reserve) Other miscellaneous equipment is determined by the equipment type and the duty cycle. 9