City of Largo, Florida
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1 City of Largo, Florida Post Office Box 296, Largo, Florida MEMO DATE: October 24, 2007 AGENDA DATE: PREPARED BY: TITLE: November 13, 2007, Work Session Brian Usher, Director of Public Works Virgil Wasko, Fleet Manager Charles R. Jordan, Management Analyst REPORT ON THE STATUS OF FLEET MANAGEMENT ACTIVITIES AND ANALYSIS BACKGROUND: In February 2007, the City Commission decided against moving forward with a Request for Proposal (RFP) to conduct a Fleet Study. The City Commission noted that with the addition of a new Public Works Director, Fleet Manager, and Management Analyst, that it was in the City's best interest to allow these individuals the opportunity to analyze the Fleet Operation prior to soliciting the services of an outside consultant. The City Commission requested the new management team observe the Fleet Management operation and update and inform the City Commission with it's findings. The new Public Works management team is prepared to share it's observations, accomplishments and direction following eight months of research of the City's Fleet Management operation. This report is organized into three distinct phases to parallel the original RFP. Phase 1: Phase 2: Phase 3: Operational study of the Fleet Management division and the City's vehicles to evaluate cost effective behavior, determine efficiencies and prepare recommendations for improvement. Fleet replacement study whose objective is to evaluate and identify opportunities to improve the City's vehicle replacement cycles and fleet replacement planning. Fleet sizing study aimed at ensuring that the City's Fleet is appropriately sized, composed, and utilized. Fleet Maintenance Operational Improvements During the past eight months the Fleet Management Division has implemented a number of operational changes to improve accountability, efficiency, and/or the operational management of the division. Many changes were implemented as a result of information gathered in the course of developing statistics for this report. These include the following: Completion of the annual parts inventory, making the process more efficient by returning slow moving parts for credit and cleaning up the inventory database.
2 Subject:: Status of Fleet Management Activities and Analysis Agenda Date: November 13, 2007, Work Session Realizing volume pricing discounts on parts by using cooperative bidding procedures. Enhanced record keeping by creating a hard file for each vehicle. Enhanced the preventive maintenance process by configuring fleet software to print inspection checklist for preventive maintenance services. Networked computer information between the fuel management and the maintenance software records, allowing programs to properly track and flag when vehicle maintenance is due. Corrected maintenance software data to track inventory items under warranty, allowing the City to capture reimbursements as appropriate. Purchased equipment allowing for the bar coding of parts held in inventory. This allows for more efficient inventory reconciliation and tracking. This system will be fully operational by early Upgraded electronic diagnostic equipment, allowing technicians to better diagnose and repair electrical problems on newer vehicles. Newer vehicle electronics and batteries are more sensitive to power alterations and cannot be efficiently diagnosed with the older equipment previously employed. Coordinated with the fleet management software provider in order to allow better interface between City software packages and the Fleet Management software. This interfacing allows for the import of data into the City system where it can be sorted and reviewed more efficiently. Preserving the environment by purchasing two environmental friendly parts washers. Also provided employee training from the Florida Department of Environmental Protection regarding Florida's New Storage Tank Rules and Issues for 2007 Considered alternative vehicles and fuel (gas/electric hybrids and bio diesel fuel pricing). Enhanced employee development by providing training in: hurricane preparedness, the fleet software program, emergency vehicles, new products, batteries and electrical systems. Improved the work environment by painting garage floors and installing wall fans for cooling. Included staff in developing strategic goals and objectives dealing with the Public Works Strategic Plan. Working toward American Public Works Association (APWA) accreditation including review of division operating policies and procedures. Participated in the 2007 Solid Waste Association of North America (SWANA) Road E O. Fleet Replacement Vehicles scheduled for replacement in FY 2007, as part of the FY Capital Improvements Program (CIP), were analyzed using a scoring sheet developed by Assistant to the City Manager Jonathan Evans utilizing APWA Best Practices. The purchase of sixteen (16) vehicles was deferred for an immediate savings of $225,000. This is not a long term savings as these vehicles will have to be replaced at a later date. Vehicles scheduled for replacement in FY 2008, as part of the FY CIP, were analyzed using the same process. This process was accomplished in a timely manner, occurring immediately after the 2007 replacement evaluations were completed. The purchase of twelve (12) vehicles was deferred for an additional savings of $293,300. Again, this is not a long term savings as these vehicles will have to be replaced at a later date. After staff completed researching prices for the 2007 vehicle purchases, those prices were utilized to adjust the expenditure projections of the FY CIP to better reflect anticipated costs. This adjustment of the anticipated CIP replacement costs resulted in a bottom line reduction of $230,830 over the five year period. In order to develop a long term replacement strategy, three methods of vehicle replacement were studied. Each method has its advantages and disadvantages. There are advantages and disadvantages in determining a long term replacement strategy: 1. Maximum Life Using maximum life, a vehicle is used for as many years as possible. Preventive maintenance is performed on a regular basis and repairs are made as needed. A vehicle may last up to 15 years or more. A benefit of this method is minimization of capital expenditures. However, the 2
3 Subject:: Status of Fleet Management Activities and Analysis Agenda Date: November 13, 2007, Work Session longer life of the vehicles results in higher operating costs during that term, less aesthetically pleasing vehicles, more and unpredictable vehicle downtime, higher repair costs at the end of the vehicle life. Additionally, deferring vehicle purchases once they have been budgeted creates a temporary savings, but unless the budgeted dollars are reserved in a dedicated fund, it creates a deficit in future years. 2. Life Cycle Using this approach involves modeling the stream of costs associated with acquiring, maintaining and disposing of vehicles over various replacement cycles, and then determining the cycle with the lowest life time cost. Vehicles may be replaced sooner than is currently practiced with the goal of recapturing additional funds through the earlier resale of the vehicle. The vehicle would be sold before it needs parts replaced due to wear, age, and weather exposure. The benefit of this approach is lower operating and maintenance costs, aesthetically pleasing vehicles, less downtime, and vehicles with newer technology. The downside is that this method of replacement is timeconsuming and difficult to implement due to the continuous monitoring of each vehicle. Preliminary work in this area suggests the City should consider the following life cycles: Life Cycles (preliminary) Vehicle Type Age Criteria Usage Criteria Police Patrol Cars 5 years 80,000 miles Cars & Compact Trucks 6 8 years 40,000 miles Pickup Trucks 8 10 years 63,000 miles 3. Best Practice Using this method involves replacing different class vehicles at different intervals. Intervals are set through surveying multiple fleet organizations which have comparable fleet types and best replacement practices. The results of the survey are compiled and adjustments (if required) are made in order to take into account factors unique to each fleet. This approach is straight forward and relatively easy to implement. Replacement cycles should be designed to meet the specific needs of each organization. That being said, both the American Public Works Association (APWA) and the National Association of Fleet Administrators provide representative replacement criteria for vehicle types that tend to be common in public works fleet organizations. The APWA example is: Example APWA Vehicle Replacement Criteria Vehicle Type Age Criteria Usage Criteria Administrative Sedans 5 years 75, ,000 miles Emergency Response Sedans 3 years 85, ,000 miles Pickup Trucks 7 years 100, ,000 miles Dump Trucks, Diesel 7 10 years 150, ,000 miles or 8,000 10,00 miles Fire Trucks years NA Backhoe, Loader 7 10 years 6,000 7,500 hours Motor Grader 7 10 years 8,000 10,000 hours 3
4 Subject:: Status of Fleet Management Activities and Analysis Agenda Date: November 13, 2007, Work Session Both the Life Cycle and Best Practices will, over the long term, provide additional indirect savings in operational overhead realized through reduced parts needs, reduced labor costs and improved operational efficiencies. While difficult to quantify, these savings would be anticipated to appear during the fourth or fifth year of the plan. Fleet Sizing and Utilization Each department was surveyed on the status of their current equipment as the first step in determining the overall fleet size. Departments provided a compilation of their equipment, consisting of one sheet for each vehicle or piece of equipment. The sheets contain information such as the year, make, model, purchase price, mileage, in service date, age, and average miles traveled per year. Each department was requested to fill in additional information in blank spaces and answer questions such as what type of special equipment is on the vehicle, how is the vehicle utilized by the department, how often is the vehicle used, who approves the repair or replacement of the vehicle, expected life, and what type of replacement vehicle will be needed when the vehicle is due for replacement. The survey sheets are one tool which will be used by the Director of Public Works and the Fleet Manager as they schedule meetings with each department to discuss their vehicle needs and replacement cycles. In such a joint meeting between the Fleet Management Division and the Community Development Department (CD), it was agreed to reduce the number of vehicles in the fleet by three in the FY 2008 budget. After discussing current usage patterns and future needs it was determined that CD will be able to retire four older compact Chevrolet Cavaliers and one Jeep while purchasing two new Ford Escapes, thus an overall reduction of three vehicles in the CD inventory. Another example of purchase review resulted in discussions involving Recreation, Parks and Arts (RPA) and Fleet Management, culminating with the order of a flatbed truck without the originally requested crane being ordered for the vehicle. It was determined that, when needed, RPA could borrow a crane from the Environmental Services or Public Works Departments to accomplish their tasks. Purchase of a crane may be needed at a later date, but only after a documented study is performed and which justifies the need. Fleet Management is working with the Police Department (PD) to study the potential impact of a new take home car policy which may lead to an increase in fleet size. Staff is are currently tracking 39 vehicles in this study to determine any differential between the cost of thirteen (13) take home cars where officers reside within ten miles of City Hall, thirteen (13) take home cars where officers reside more than 10 miles from City Hall, and thirteen (13) cars shared by two officers each. If a new take home car policy is adopted, an increase in the take home fleet will most likely remove the possibility of reducing the PD vehicle inventory. OMB BACKGROUND: Not Applicable BUDGETARY IMPACT: Direction provided by Commission on replacement philosophy could impact Staff preparation of the Fiscal Year Capital Improvement Program. The compression, expansion or maintenance of the status quo of vehicle replacement will have a direct impact on the CIP planning process and therefore replacement cost. CONSEQUENT ACTION: N/A 4
5 Subject:: Status of Fleet Management Activities and Analysis Agenda Date: November 13, 2007, Work Session REVIEWED BY AND RECOMMENDATION: The City Manager, Assistant City Managers, Director of Public Works, Fleet Manager, Management Analyst and Public Works/Environmental Services Advisory Board have reviewed the analysis and attached data and find the results sound and within the scope originally directed by the City Commission. Staff requests that the City Commission provide direction on the philosophy for Fleet Replacement in the future. It is the recommendation of Staff that a mixed philosophy of Life Cycle and Best Practice Replacement Cycles be used for creation of the Capital Improvement Program's Vehicle Replacement Program. COMMISSION DIRECTION REQUESTED: Does the City Commission wish to change the replacement philosophy of the Fleet Replacement Program? Does the City Commission concur with the Staff approach for the evaluation of Fleet Sizing and Utilization? Attachments: RFP Proposal for Fleet Management Consultant Replacement Evaluation Sheet 5
6 City of Largo, Florida Post Office Box 296, Largo, Florida MEMO DATE: January 11, 2007 AGENDA DATE: TO: FROM: TITLE: January 23, Work Session Mayor and City Commission Steven B. Stanton, City Manager CITY COMMISSION DIRECTION ON REQUEST FOR PROPOSAL (RFP) FOR FLEET MANAGEMENT STUDY BACKGROUND: On November 14, 2006, the Largo City Commission requested Staff to prepare a Request for Proposal (RFP) to conduct an efficiency study of the management of the City's Fleet. Accordingly, sections of the RFP have been prepared for review by the City Commission. Staff is seeking direction from the City Commission prior to releasing the RFP on the appropriate direction, purpose and objective of the Fleet Management Study. The City of Largo operates a fleet consisting of 534 vehicles and pieces of equipment. Approximately 133 of these units are heavy construction equipment and trailers. Of the 401 remaining assets, 305 are cars and light trucks and 96 are large trucks (20 fire trucks, 42 solid waste trucks, 27 dump trucks, 4 vac trucks, and 3 buses). The Fleet is managed and maintained by the Public Works Department s Fleet Management Division. The Fleet Management Division has a $2,173,000 budget in FY 2007 and currently employs eighteen individuals including a Fleet Manager (vacant), two Lead Mechanics, twelve Mechanics, a Fleet Services Supervisor, and two Storekeepers. Under the direction of the Public Works Director, they maintain and determine replacement schedules for the entire City's Fleet. The intent of this study is to assist and support the Largo City Commission in the oversight of City operations. The consultant's knowledge and professional judgment will provide an independent appraisal of the Fleet Management financial, operational, and control activities. The consultant will report on the adequacy of internal controls, the accuracy and propriety of transactions, the extent which assets are accounted for, assigned, and safeguarded, and the level of compliance with City Commission policies, government standards and regulations. The proposed study consists of three distinct phases: 1) Fleet sizing study aimed at ensuring that the City s Fleet is appropriately sized, composed, and utilized. 2) Fleet replacement study whose objective is to evaluate and identify opportunities to improve the City s vehicle replacement cycles and fleet replacement planning. 3) Fleet Maintenance operational study of the division and the City's vehicles to evaluate cost effective behavior, determine efficiencies, and prepare recommendations for improvement.
7 Subject: Agenda Date: Commission Direction on RFP for Fleet Management Study January 23, 2007 Work Session RFP Process: Upon Commission approval of the Request for Proposal document for the Fleet Study, the following is the recommended process to select a consultant for the Fleet Management Study: 1. Request for Proposal to be finalized, mailed to suggested vendors and advertised on City of Largo, APWA, and other appropriate websites or media outlets. Vendors will be given thirty (30) days to submit responses. 2. Request for Proposal's received and recorded in the Office of Management and Budget. Responses are distributed to a Fleet Study Sub-Committee of the City Commission composed of three Commissioners. 3. Fleet Study Sub-Committee of the City Commission will evaluate proposals received and provide the Office of Management and Budget with the list of vendors to be interviewed, as well as possible dates and times for interviews. 4. Office of Management and Budget will mail letters to schedule interviews with the suggested vendors. 5. Office of Management and Budget will inform vendors and the Sub-Committee of schedule of interviews. 6. City Commission will conduct interviews with consultants, then determine which vendor will conduct the fleet analysis study. 7. Fleet Study Sub-Committee of the City Commission will negotiate terms of contract with c consultant then provide contract to City Attorney for review and approval prior to placing item on City Commission meeting agenda. 8. Fleet Study Sub-Committee of the City Commission will place item for recommendation on the Agenda for Commission Approval and prepare a commission memo for recommendation of the Fleet Study Consultant. 9. Fleet Study Sub-Committee of the City Commission will make a presentation to City Commission for award of Request for Proposal for the Fleet Study Consultant. 10. Upon approval of the City Commission a purchase order will be issued to approved consultant by the Office of Management and Budget. Recommended Terms of the Contract: 1. The duration of this study should be approximately fourteen (14) weeks. During this period the consultant will be required to meet with the Fleet Study Sub-Committee of the City Commission on a bi-weekly basis. 2. At six (6) weeks and twelve (12) weeks into the project, the consultant will be required to make a presentation to the City Commission at a Work Session on the progress of the project. The Fleet Study Sub-Committee of the City Commission will prepare a commission memo for these presentations to the City Commission for each Work Session. Process for Approval of Study: 1. The consultant will provide the Fleet Study Sub-Committee of the City Commission with a draft final report. 2. Fleet Study Sub-Committee of the City Commission will review this report, make changes/recommendations to consultant. 2
8 Subject: Agenda Date: Commission Direction on RFP for Fleet Management Study January 23, 2007 Work Session 3. Consultant will provide final report to Fleet Study Sub-Committee of the City Commission. 4. Fleet Study Sub-Committee of the City Commission will place the final report on a Commission Work Session. OFFICE OF MANAGEMENT & BUDGET BACKGROUND: Not applicable. BUDGETARY IMPACT: Based on similar studies in other municipalities, a study of this size could potentially cost $75,000 to $100,000. The FY 2007 Fleet Management budget includes $50,000 for this study (p. PW-12). CONSEQUENT ACTION: Staff will prepare an RFP based on the direction provided by the City Commission to perform a Fleet Management Study. REVIEWED BY AND RECOMMENDATION: The City Manager, Assistant City Manager, Assistant to the City Manager, and the Procurement Analyst do not recommend this process. Staff recommends that the Public Works Director be responsible for selecting, hiring and supervising a Fleet Management Consultant to perform the study. COMMISSION DIRECTION REQUESTED: Does the City Commission want to make any changes, deletions, and/or additions to the draft RFP to perform a Fleet Management Study? Does the City Commission wish for staff to proceed forward with the solicitation of the Fleet Management consultant RFP, once revision are made? Attachment: Draft RFP for Fleet Study Reviewed and Approved by: Henry Schubert Assistant City Manager Prepared by: Jonathan Evans Assistant to the City Manager Prepared by: Charles R. Jordan Management Analyst 3
9 Subject: Agenda Date: Commission Direction on RFP for Fleet Management Study January 23, 2007 Work Session DRAFT RFP FOR FLEET STUDY Background The City of Largo is seeking the assistance of a consultant experienced in the evaluation of fleet size, composition, utilization, and the evaluation of vehicle replacement cycles and replacement planning to identify opportunities to improve current processes and reduce costs in these areas. The City of Largo is located in Pinellas County in the Tampa Bay region of the State of Florida. It is the third largest municipality in Pinellas County after St. Petersburg and Clearwater, respectively. Currently the City is organized with ten departments: Administration, Community Development, Environmental Services, Fire Rescue, Human Resources, Library, Management Services, Police, Public Works and Recreation, Parks & Arts. Within these departments, the City operates a fleet of 534 vehicles and pieces of equipment. Approximately 133 of these units are heavy construction equipment and trailers. Of the 401 remaining assets, 305 are cars and light trucks and 96 are large trucks (20 fire trucks, 42 solid waste trucks, 27 dump trucks, 4 vac trucks, and 3 buses). The fleet is managed and maintained by the Public Works Department s Fleet Management Division. The Fleet Management Division has a current budget of $2,173,100 and currently employs 18 individuals including a Fleet Manager, Lead Mechanics, Mechanics, a Fleet Services Supervisor, and Storekeepers. Under the direction of the Public Works Director, they maintain and determine replacement schedules for the entire City fleet. Scope of Work Phase 1: Fleet Sizing Study Evaluate the utilization of and need for the vehicles and equipment currently in the fleet and identify opportunities to improve asset assignment, deployment, and usage practices and reduce associated fleet capital and operating costs. Collect and analyze detailed information on current practices, identify specific assets that may be candidates for reassignment or removal from the fleet, and communicate specific changes in fleet size and/or composition with affected City departments. Prepare a formal report documenting the analytical methods employed, analysis results, recommendations regarding the disposition of specific assets, and associated cost savings. Phase 2: Fleet Replacement Study Evaluate current fleet replacement practices and identify opportunities for process improvement and cost savings. Conduct a thorough review of current fleet replacement cycle guidelines and make recommendations for alternative methodologies. Develop a long-term (20-year) replacement plan for the fleet that quantifies future replacement costs by each City department based on current and recommended (if different) replacement cycle guidelines specific to each type of asset in the fleet. Quantify and comparatively evaluate the costs of financing future asset replacements under alternative financing approaches including, at a minimum, direct appropriations, a replacement reserve fund and charge-back system, and a lease-purchase program. Prepare a formal report documenting the analytical methods employed, planning and financing alternative analysis results, and recommendations regarding improvements to replacement planning, financing, and budgeting practices. 4
10 Subject: Agenda Date: Commission Direction on RFP for Fleet Management Study January 23, 2007 Work Session Phase 3: Fleet Maintenance Operational Study Evaluate current fleet maintenance operating practices and identify opportunities for process improvement and cost savings. Evaluate the current structure of the Fleet Management Division, staffing levels and procedures. Evaluate work scheduling, assignment and control, quality assurance, road calls and field service. Evaluate repair turnaround time, including length of time vehicles awaiting repairs. Determine whether management of inventory is appropriate. Evaluate charge-back rate structure and rate development methodology, current parts markup, current fuel markup, and billing structure against appropriate benchmarks and best practices. Analyze existing staff productivity levels and compare to appropriate benchmarks and best practices. Assess current fleet management software to determine its effectiveness and current staff use. Evaluate division effectiveness through reviewing work orders and reports to collect actual maintenance activity and costs. Evaluate warranty management and processes for tracking levels of warranty coverage and identifying covered repairs. Prepare a formal report documenting the analytical methods employed, staffing and operational alternatives analysis results, and recommendations regarding improvements to division staffing levels, operations, and pricing. Evaluation Criteria Proposals will be evaluated by the City Commission and the contractor will be selected based on, but not limited to, the following criteria: a. Ability, capacity and skill to perform the contract or provide the service required. b. Proposed Plan for implementation of project. c. Experience on similar projects in Florida and in the Tampa Bay Area. d. Personnel assigned to the project and qualifying credentials, including applicable experience, to perform. e. Examples of reports developed for recent studies conducted for similar size fleets. f. Location of office to perform the proposed service. The selected offeror(s) response to stated criteria may be verified by the City Commission. This verification may consist of reference checks, interviews, and site visits. 5
11 Subject: Agenda Date: Commission Direction on RFP for Fleet Management Study January 23, 2007 Work Session Vehicle Replacement Points Rating System Excellent: Vehicle is in exceptional mechanical, exterior and interior condition with no visible wear; it requires no reconditioning. Paint will have a glossy appearance. Vehicle has no mechanical and/or cosmetic problems and has a clean engine compartment. Exterior and interior are free of any damage. Tires are in nearly new condition. (0-18) Outstanding A Good: Vehicle shows some normal wear but has no major mechanical and/or cosmetic problems. Paint still has a glossy finish and may have slight scratches or dings. Some reconditioning may be needed. Interior will have minimal fading and wear. Tires have substantial tread remaining. (19-22) Good B Qualification for Replacement Poor-Rough: Vehicle may have a few to several mechanical and/or cosmetic problems and may require a considerable amount of reconditioning. Exterior paint has some dullness and interior need significant repairs. Vehicle may have a considerable amount of scratches or dings. Interior material is slightly worn and faded. Tires have some unstable tread remaining. (23-27) Poor C Damaged: Vehicle has major mechanical and/or body damage that may render it in non-safe running condition. Exterior and interior is damaged or worn. Tires need to be replaced. Vehicle may have a branded title (i.e. salvaged, flooded, frame damaged, etc.). Vehicle may require significant repairs to pass an emissions inspection. (28-Above) Needs immediate Replacement D-F Evaluation Criteria Age Miles/Hours Type of Service Reliability Major Repairs Replacement Cost Condition Points Vehicle Replacement Point System One point for each year of chronological age, based on in-service date. One point for each 10,000 miles of use/one additional point for each 30,000 miles. 1 is assigned for light duty trucks, administrative sedans, sport utility vehicles (SUV) in, Community Development and Engineering. 3 is assigned for service vehicles, in Facilities Maintenance, Parks maintenance, and Environmental Services. 5 is assigned Police, Fire, and all the City's heavy machinery. Points are assigned as 1 thru 5 depending on the frequency that a vehicle is in the shop for repair. A 5 would be assigned to a vehicle that is in the shop two or more times per month on average, while a 1 would be assigned to a vehicle in the shop an average of once every three months or less. 1 to 5 points are assigned based on total life M&R costs (not including repair of accident damage). A 5 is assigned to a vehicle with life M&R costs equal to or greater than the vehicle's original purchase price, while a 1 is given to a vehicle with life M&R costs equal to 20% or less of its original purchase cost. This category takes into consideration body condition, rust, interior condition, accident history, anticipated repairs, etc. A scale of 1 to 5 points is used with 5 being poor condition. Point Ranges Under 18 points Excellent (A) 18 to 22 points Good (B) 23 to 27 points Poor-Qualifies for replacement (C) 28 points and above Damaged-Needs immediate replacement (D-F) 6
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