Kelly ReaganKelly Reagan

Administrator

Division of Fleet Management

Administrator

Division of Fleet Management

City of ColumbusCity of Columbus

The Keys to Developing a Replacement Standard

Kelly Reagan, Fleet Administrator

City of ColumbusDivision of Fleet Management

Columbus Fleet Management- We utilize all the latest technology

City of Columbus Statistics

• Fleet Mgmt. services approximately 5600 pieces of vehicles/equipment– 3000 on-road (cars, trucks, SUVs, etc.)– 2600 off-road (construction equipment, tractors, mowers, etc.)

• Primary customers include Refuse, Police, Fire, Transportation, Development and Rec and Parks

• Approximately $32 million budget• Obtained ASE Blue Seal in 2008-2012 – largest

municipality in US and only city in Ohio to obtain• Ranked as 3rd Best Fleet and #1 Greenest Fleet in

North America in 2011

How was Columbus Replacement Standard Developed?

• Industry standards• Consultation with City divisions and management (i.e. Finance

Department)• Internal Data• Realistic goals

Lesson: Involve management in developing replacement standard- don’t bite the hand that feeds you

City of Columbus Replacement Standard

Vehicle type

Useful Life (years)

Front Line

Useful Life (years)

Reserve

Miles

Administrative cars (non-patrol)/ station wagons

7 N/ A 100,000

Marked patrol cars 2 2 150,000 Unmarked patrol cars 7 N/ A 100,000 Motorcycles 7 N/ A 50,000 Vans/ pickups 8 N/ A 125,000 Light duty trucks 8 N/ A 125,000 Medium duty trucks 8 N/ A 100,000 Heavy duty trucks 10 N/ A 100,000 Refuse trucks: Automated Side Loader

6 N/ A N/ A

Front Box Loader 8 N/ A N/ A Rear Loader 10 N/ A N/ A Manual Side Loader 8 N/ A N/ A Compactor Truck 8 N/ A N/ A Knuckle-boom Truck

8 N/ A N/ A

Flatbed 10 N/ A N/ A Fire Apparatus: Engines 8 2 N/ A Ladders 12 3 N/ A Rescues 8 2 N/ A Medics 4 3 N/ A Sweepers 5 2 N/ A Large and specialty equip.

Review on individual basis

What Goes First

• Three criteria used to determine order of replacement:– Age- over 10 years or useful life– Maintenance history

• Do maintenance costs exceed acquisition cost?– 100,000+ miles

• Underutilized report generated every 2 years– Discussion with divisions– Justification reporting– Typically leads to 50-100 units being decommissioned or

reassigned

• GPS data will be used in the future to drive replacement needs

Use Data to Drive Decisions

• Use data in budget discussions with both division heads and Finance Department

• Data should drive the vehicle replacement budget each year– Conduct lifecycle cost analysis

Lesson: Use resources to take control

Lifecycle costs

• Fleet replacement schedule should minimize the lifecycle cost of the fleet

• Lifecycle costs consist of:– Capital, i.e. debt service

– Operating costs- maintenance, fuel, etc.

• Longer replacement schedules will lower annual debt service costs, but will increase annual maintenance costs

• Need a lifecycle cost analysis

Lifecycle Cost Analysis

• Lifecycle cost analysis identifies the minimum of total costs by analyzing:– the relationship between vehicle age/usage

– capital costs

– operating costs

• Minimum lifecycle cost is found at the lowest point on the total cost curve

Lifecycle Cost AnalysisCo

sts

Vehicle Age/Usage

Lifecycle Cost Analysis

Capital Operating Total

Lifecycle Cost Analysis: Fire Engines

Example: Fire Engines

• The analysis suggests that fire engines should be replaced every ten years on average. This assumes:– Purchase price of $400K financed at 4.5% interest

– Depreciation rate of 22.3%/year

– Lifetime maintenance costs should be less than 50% of acquisition costs

– Minimum lifecycle cost is estimated at $70K/year: $46.5K in debt service and $23.5K in maintenance

Columbus progress through the years

Total Fire vehicles at or below replacement age

79%

57%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2008 2011

Total vehicles at or below recommended replacement age

Costs of Delayed Fleet Replacement

• Delaying fleet replacement may yield savings in the capital budget but the savings may be more than offset by increased maintenance costs

• Example: Fire apparatus exceeding both age and maintenance cost replacement criteria

• Net loss of approximately $100K/year

Apparatus Added Annual

Maintenance Costs Debt Service

Annual Savings Excess Costs from

Delayed Replacement 15 Fire Engines $245,832 $181,054 $64,778 4 Platforms $79,887 $55,367 $24,520 32 Medics $122,369 $108,890 $13,479

TOTALS $448,089 $345,311 $102,778

The Cost of Lengthened Replacement Cycles

• According to Fleet Management’s 2012 annual survey regarding vehicle operating costs, the consequence of lengthened replacement cycles is an increase in unexpected and sometimes costly repairs

• Last year, the cost of unscheduled vehicle repairs rose 10.2%• Nearly double the rate of increase reported for the 2012 survey

Repair Costs

Veh

icle

Ag

e

Lesson: Short term rewards are not worth the long term costs

Summary

• Include both customers and management in development of replacement standard– Involve Finance Department

• Use data to drive decisions– Use your resources to take control of your replacement standard

• Conduct a lifecycle analysis and determine costs• Do not delay fleet replacement- be able to

demonstrate costs of delay– Short term savings are not worth long term costs

Questions?

Kelly Reagan(614) 645-6254

kwreagan@columbus.gov