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Using fleet management best practices to meet federal mandates

Helping fleet managers strike the balance between mandates and day-to-day responsibilities.

Overview

Federal employees responsible for managing agency vehicle fleets are expected to make the most efficient use of their vehicles, but they also have to comply with federal mandates that may be long-term, strategic in nature and often are not fully funded.

For federal fleet managers, striking the balance between day-to-day responsibilities and complying with these overarching mandates is a perpetual challenge. They must implement comprehensive fleet management programs that use best practices for procuring, replacing, operating and maintaining agency vehicles, while wrestling with how to introduce changes to processes and procedures.

Many agencies do not count fleet management as a core competency. Simple bulletins, such as a mandate to meet alternate fuel quotas or a potential requirement to reduce all federal fleet sizes, may appear straightforward to agency heads, but present real challenges to fleet managers. It is crucial that fleet managers have the tools to identify the true total cost of ownership (TCO) to drive future rightsizing and green fleet decisions. By using a structured, diagnostic approach to calculate TCO, fleet managers will have the information needed to make difficult changes.

Background

The TOC concept is closely tied to federal mandates for implementing a fleet management information system and developing a vehicle allocation methodology. 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

Analysis

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. Most fleet managers assume that his or her 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.

Recommendations

Armed with a new awareness and understanding of TCO, federal agencies can begin implementing a comprehensive fleet management program that maximizes the value of the fleet. To have a well-run and cost-effective fleet, agencies need to do a better job of communicating within departments; 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.

Accenture’s model for integrated fleet management, driven by a heightened understanding of actual TCO, is directly applicable to federal fleet mandates. Accenture is positioned to not only help federal fleets meet these mandates, but to do so in a way that optimizes fleet performance and cost savings.