Public Sector Fleets what experience tells us
Recent experience has highlighted the priorities in managing a mixed public sector fleet. So many of the challenges that result in unnecessary and high costs are related to the structure and age of the fleets, the lack of funds to implement sound replacement policies and management structures including personnel and tools such as IT.
Perhaps the biggest single challenge is the fleet structure. Inefficient fleets cost money in terms of downtime due to major mechanical repair, accidents and out of service vehicles. Excessive downtime (poor utilisation) results in a greater than necessary fleet size and the associated direct costs.
The causes of downtime are many but perhaps the most striking is administration. In an environment where bureaucracy and controls dominate, minor repairs and purchase of spares takes days and even weeks as vehicle stand idle waiting administrative go ahead. This process is delayed further by late payment to suppliers.
Sometimes for major repairs, budgeted funds have to be moved between cost centres, even great delay and there are extreme cases. The age of vehicles and mix of vehicles adds further difficulties as parts and / or tools are not available and personnel skills are in short supply.
In house workshops are often not viable because of the fleet mix, low volumes, lack of modern tools and equipment yet the public sector retains them because of staff retention and belief that outsourced work is expensive. Efficiency is not costed into this reasoning.
The limited availability of vehicle funding is often overcome by using external funds from leasing companies. The preferred method is an operating lease which utilises a residual value in its rental calculation. It does reduce the monthly rental cost but is based on strict time, kilometres and condition requirements. The lessor carries the risk of resale value and places great importance on condition and usage.
Public sector fleets do not always give these strict requirements their due attention as contracts and usage over run, services are missed and condition is not at required levels. There are significant penalty costs which are avoidable.
Organisations managing similar sized fleets utilise relatively inexpensive fleet management software that manages the full asset management, operating cost and personnel requirements of a fleet. Total vehicle costs are significant and typically are R100k per vehicle pa. These fleet systems are either not available or underutilised. Asset management with public sector fleets is poor. Audits review unfound vehicles, wrecks and out of service vehicles.
Fuel is an ever increasing cost (45 -50 % of operating costs) which requires detailed analysis and effective management control. Tools to achieve this are seldom utilised.
There are solutions to the needs of public sector fleets such as the development of, or utilisation of a skilled team of fleet managers who have the tools and authority to manage daily, the right sizing of fleets in terms of quantity and types and disposal of out of service or underutilised vehicles. The abandonment of in house workshops and use of outsource services with the caveat that administrative controls are not neglected, strict cost controls are applied and current personnel are accommodated. Competent professional suppliers are available to assist public sector fleets but they
require a strong fleet management interface within the public sector fleets to achieve mutual objectives.
Vehicle fleets are vital for public sector service delivery.
Published by Nigel Webb, Latitude Fleet Services (Pty) Ltd, March 2018. nigelw@latitudefleet.co.za. Cell 083 381 3054