Review of Fleet Services Operation Port Everglades Department

Transcription

1 Exhibit 1. Review of Fleet Services Operation Port Everglades Department February 16, 2011 Report No Evan A. Lukic, CPA County Auditor

2 Table of Contents Topic Page Executive Summary... 1 Purpose and Scope... 2 Background... 2 Finding and Recommendations... 4

3 Executive Summary This report presents the results of our evaluation of the Port Everglades Department s (Port) Fleet Service operations. The purpose of our review was to evaluate utilization and maintenance costs of Port vehicles and equipment in service as of December 31, We previously performed an evaluation of the Broward County Fleet Services Division dated June 1, The Fleet Services Division is responsible for procurement and maintenance of all County vehicles except vehicles managed by the Port. This review therefore completes our County-wide assessment of fleet service operations. We found the Port does not track or monitor key elements of fleet service operations; as a result, there is a lack of sufficient evidence to determine whether Port s fleet is efficiently and effectively managed. We recommend the Board of County Commissioners direct the County Administrator to take steps to appropriately manage the fleet including: 1) Tracking, reporting, and monitoring of mechanic labor hours, inventory usage, and equipment utilization, 2) Developing a complete record of general and special purpose equipment, annually updated for acquisitions and disposals and reconciled to accounting records, 3) Performing physical inventory counts and reconciling to inventory usage and accounting records, at least annually, and 4) Complying with the County s policy on replacement of vehicles or develop a Port replacement policy. With respect to the above recommendations, the Port should consider utilizing the Broward County Fleet Service Divisions fleet management work order system. Alternatively, based on operational and cost assessments, evaluate the feasibility of integrating some level of the Port fleet operations with the Broward County Fleet Services Division. Based on discussions with management, some of the recommendations relative to data collection and monitoring may be applicable to other maintenance operations within the Port. 1

4 Purpose and Scope The purpose of our review was to evaluate utilization and maintenance costs of Port vehicles and equipment in service as of December 31, To accomplish our objectives, we: Interviewed Port Operations Division (Operations) staff, Toured the Port Maintenance Facility, Analyzed equipment maintenance and cost records, Reviewed applicable chapters of the Broward County Internal Control Handbook, Reviewed the June 1, 2009 report entitled Review of [Broward County] Fleet Service Division, Reviewed the U.S. General Services Administration s (GSA) Guide to Federal Fleet Management. Background Organizational Structure The maintenance/public works section (maintenance section) 1 at the Port Everglades Department (Port) oversees the Port s Fleet Service operations. The Port fleet service operations are independent of the Broward County Fleet Services Division but according to staff, the Port generally relies upon centralized County fleet policies and procedures. Fleet Service operations are performed by three mechanics 2 within the maintenance section with assistance from storekeepers and an administrative assistant. The superintendent and manager of the maintenance section are responsible for supervising and managing fleet service operations. Fleet service operations are located within the Port maintenance facility which includes a repair garage and connected offices. Port Fleet Services mechanic labor and parts costs total approximately $500,000 per year as compared to approximately $93 million in annual Port operating expenses. This represents approximately 0.5% of total Port expenses. Fleet Composition The Port fleet consists of approximately 82 general purpose vehicles representing an investment of approximately $1.6 million (e.g., cars, light duty trucks, vans, and sport utility vehicles). In addition the Port maintains over 100 special purpose vehicles and equipment including heavy duty trucks, construction equipment, trailers, generators, forklifts, lawn service equipment and compact electric cars. According to staff, vehicles are replaced when major repairs exceeding the value of the vehicle are required or when necessary repairs 1 This section comes under the Port s Operations Division 2 A fourth mechanic worked part time during fiscal year

5 become frequent occurrences or the accumulated wear makes the appearance of the vehicle unacceptable. Table 1 shows the general purpose vehicles by type and age at December 31, Maintenance Process Table 1 General Purpose Vehicles by Type and Age at December 31, 2009 Vehicle Type Vehicle Age (Years) Total Sedans Pickups SUVs Vans Total Source: analysis of vehicle listing provided by the Port Maintenance Section. Mechanics perform preventative maintenance every three months on general purpose vehicles and heavy equipment. The maintenance dates are tracked manually on a board in the garage. Other special purpose equipment is maintained on an as needed basis. Preventative maintenance generally includes oil changes and inspections of tires, brake pads, air filter, and fluids. Additional inspections, fluid changes, and air filter changes are also performed if necessary. Most repairs are performed in-house except for transmission, major collision, and repairs covered under the vehicle or equipment warranty. After performing preventative maintenance or repair, the mechanics complete a work order identifying the vehicle or equipment, labor hours, work performed, and parts and materials used. They submit the work order to the administrative assistant for entry into the maintenance section s work order system called MP2. Mechanics are also responsible for fueling the fleet. Using a fueling truck, the mechanics obtain fuel at the Broward County Fleet Services Division Motor Pool II location and distribute fuel to the Port fleet. Inventory Process Inventory is stored in the repair garage and consists of parts and materials used to service and repair the fleet. Mechanics are responsible for purchasing and oversight of most inventory items. Storekeepers purchase bulk materials such as batteries and tires under master purchase agreements. As discussed in the proceeding section, the mechanics record inventory usage onto work orders. Inventory purchases total approximately $200,000 per year. 3

6 Finding and Recommendations Port Everglades does not track and monitor key elements of fleet service operations; as a result, there is a lack of sufficient evidence to determine whether Port s fleet is efficiently and effectively managed. According to the Equipment Management section of the Broward County Internal Control Handbook (ICH), the Port should maintain statistical cost control records of all vehicles under their care. The ICH also requires reports to be generated for analyzing, planning, scheduling, and controlling maintenance operations. The handbook also specifies management reports as the basis for formal analysis and monitoring and controlling performance indicators is essential for all motor vehicles activities. Management does not track and monitor key elements of Port s fleet such as mechanic labor hours, inventory usage, and vehicle utilization. Although this information is recorded on manual work orders and filed by equipment type, it is not compiled, reported, or otherwise monitored by management. Each of these three key elements is outlined as follows: A) Mechanic Labor Hours The Equipment Section of the ICH directs management to analyze labor hour utilization to determine whether or not assigned personnel are being used effectively. There is a lack of standard reports which identify the equipment category or item to which labor hours are charged. Staff prepared a report from the work order system of labor hours by equipment category but these were incomplete and did not include all hours incurred. Although payroll records indicate total labor hours and cost, they are not in sufficient detail to identify the equipment category or item to which labor hours were charged. As a result, management cannot readily assess mechanic productivity or properly evaluate equipment maintenance costs. B) Inventory Usage The Equipment Section of the ICH specifies that inventory items over $1 are to be charged directly to the vehicle on which the item is used. The ICH also provides procedures for counts and reconciliations of physical inventories to accounting records. Proper accounting for inventory is essential to monitor inventory and vehicle repairs costs. 4

7 There is a lack of standard reports which identify the equipment category or item to which inventory items are charged. We also found that annual counts and reconciliations of physical inventories to purchase records are not performed. As a result, management has limited ability to prevent or detect inventory loss, theft, or otherwise inefficient usage. C) Vehicle and Equipment Utilization According to General Services Administration (GSA) Guide to Federal Fleet Management Section 4.3.4, oversight of vehicle utilization is an important best practice in managing a vehicle fleet. It represents a significant opportunity for cost avoidance. There is a lack of standard reports showing annual utilization of vehicles and equipment such as miles driven or hours operated. We also found special purpose equipment reports did not contain a complete record of all special purpose equipment. Some items were missing from the list while others had no odometer or hour readings. As a result, management has limited ability to review vehicle and equipment usage to ensure that these assets are properly maintained in accordance with specifications and appropriately assigned to personnel and functional areas. We also found the Port does not follow the County s replacement policy. This policy specifies vehicles are to be maintained for 10 years or 100,000 miles. According to Port staff, vehicles are replaced when major repairs exceeding the value of the vehicle are required or when necessary repairs become frequent occurrences or the accumulated wear makes the appearance of the vehicle unacceptable. The lack of utilization and maintenance data cited in this report raises questions regarding the Port s stated replacement practice. Labor, Inventory and Utilization are not tracked and monitored because the current work order system (MP2) or other reporting tool is not effectively utilized. MP2 is used for all Port maintenance operations including terminal operations, facility maintenance, fleet maintenance, etc. According to staff, MP2 is not fully utilized for fleet maintenance reporting because it represents a relatively small percentage of the overall maintenance operation and lacks capabilities specific to fleet service. We found over 500 manual work orders from fiscal years 2007, 2008, and 2009 that were not entered into MP2. Failure to track and monitor mechanic labor hours, inventory usage, and vehicle utilization results in a lack of sufficient evidence to determine whether the fleet is efficiently and effectively managed. This limited our ability to evaluate the average annual maintenance cost per item for general and special purpose equipment. For example, the Broward County Fleet Services Division incurs approximately $2,800 per general purpose vehicle per year. We 5

8 were unable to determine and compare the Port s average maintenance cost per general purpose vehicle. This performance measure is commonly used to determine efficiency levels of Fleet Service operations. Recommendations We recommend the Board of County Commissioners direct the County Administrator to take appropriate steps to: 1) Implement tracking, reporting, and monitoring of labor hours and inventory usage by equipment type and item, including exception reporting of equipment with potentially excessive labor hours and/or inventory usage, utilization of vehicles and equipment including exception reporting of vehicles with potentially high or low utilization, 2) Develop a complete record of general and special purpose equipment including period reporting of usage (miles/hours), warranty information, and scheduled maintenance; Also, implement procedures to: update the list in a timely manner with acquisitions and disposals reconcile the list, annually, to fixed asset accounting records, 3) Perform physical inventory counts and reconcile to inventory usage and accounting records, at least annually, and 4) Comply with the County s policy on the replacement of vehicles or develop a Port replacement policy. With respect to the above recommendations, the Port should consider utilizing the Broward County Fleet Service Divisions fleet management work order system. Alternatively, based on operational and cost assessments, evaluate the feasibility of integrating some level of the Port fleet operations with the Broward County Fleet Services Division. 6