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Simplifying the federal fleet conundrum

Improving Fleet Efficiency and Compliance through Best Practices

Overview

The basic principles of fleet management are the same across all industries, from acquiring vehicles to conducting daily operations and maintenance to disposal activities—the aim is to be as efficient as possible while meeting the organization’s goals. Federal fleet managers, however, have the additional challenge of complying with federal mandates, which sometimes are long term and strategic in nature, and often not fully funded.

There is a common theme at the heart of all federal fleet mandates: implement a comprehensive fleet management program that uses best practices in the procurement, replacement, operation and maintenance of agency vehicles. While this is a simple idea to grasp, federal fleet managers know the difficulty of introducing and executing change to fleet processes and policies. Striking a balance between day-to-day fleet management responsibilities and complying with overarching mandates is daunting.

Accenture’s integrated fleet management approach is guided by nine “mile markers” that help fleet managers understand their options for decreasing total cost of ownership (TCO) throughout the fleet lifecycle. By using a structured, diagnostic approach to calculate TCO, fleet managers will have the information needed to make difficult changes.

Background

Accenture’s federal fleet management model is centered on the principles being mandated by the government. Using a repeatable diagnostic approach based on best practices allows federal fleets to increase efficiency and reduce cost for the length of the fleet lifecycle. Accenture uses a two-pronged approach:

  • Understand and calculate the TCO of the fleet from cradle to grave. Today, most fleet managers assume that their total fleet cost is simply the sum of costs incurred for leasing or acquisition, maintenance, fuel, insurance and registration fees. While most agencies accept this approach, it frequently—and often significantly—underestimates the true cost and complexity of owning and operating a fleet.

  • Develop a comprehensive fleet management program that is driven by TCO diagnostics and focused on improving value throughout the fleet lifecycle. With a concrete understanding of the TCO levers, federal fleet managers are better equipped to make important fleet policy and operational decisions.

Analysis

The TCO concept is closely tied to federal mandates for implementing an FMIS and developing a VAM. TCO is an easy-to-understand, but tricky to calculate, number that fleet managers can use to compare costs within their fleet, identify trends, and make replacement decisions. The most important contributors to TCO include:

  • Acquisition costs, including upfitting and delivery

  • Maintenance and repair costs

  • Operating costs (fuel, title/tax/ registration, permits, insurance, etc.)

  • Administration and overhead costs

  • Technology costs

  • Third-party fleet management services

  • Residual value

  • Disposal reimbursements

  • Life cycle (in years)

  • Vehicle utilization or miles driven per year

To calculate TCO, there must be a system in place to capture and share all transactional data for each vehicle. This concept is aligned with the federal mandate that all agencies implement a Fleet Management Information System. While a primary goal of any agency’s FMIS should be to meet Fleet Automotive Statistical Tool (FAST) reporting requirements, an FMIS also should be the foundational tool to capture TCO data throughout fleet lifecycles. It must also be flexible to account for new and changing FAST reporting requirements on a year-to-year basis. Moreover, an FMIS should be intuitive and user friendly while performing day-to-day vehicle operation functions as well as performing more occasional functions such as generating FAST or TCO reports.

Recommendations

Armed with a new awareness and understanding of TCO, federal agencies can begin implementing a comprehensive fleet management program that not only meets the requirements of the Vehicle Allocation Methodology but also maximizes the value of the fleet. Accenture’s model follows nine basic “mile markers:”

  • Data collection and validation

  • Fleet rationalization

  • Specification rationalization

  • Pooling

  • Disposition

  • Fleet sourcing

  • Maintenance and repair operations

  • Finance and administration

  • New fleet model

These mile markers include more than capturing TCO; integrated fleet management also involves organizational considerations. To have a well-run and cost-effective fleet, agencies need to do a better job of communicating within functions: Namely, procurement and operations departments need ongoing communications regarding standardizing the fleet and consolidating vendors.

In addition, integrated fleet management requires leadership buy-in, so that policies and procedures are put in place to create a centralized fleet management program supported by all appropriate departments. Benefits can be derived from focusing on just a few of these elements, but real value comes from a comprehensive, integrated approach accomplished in a logical order.