Section 3 Fleet Management

• DPT"s Enforcement Division currently has a sufficient number of vehicles in its fleet and available for service to meet its daily vehicle needs, and has made significant progress in improving its ability to track vehicle repair costs.   • Nonetheless, the average maintenance costs for DPT vehicles are very high. In FY 1997-98, DPT spent $0.39 per mile on maintenance costs (excluding fuel), or three times the manufacturer"s estimate of $0.13 per mile for 3-wheel motorcycles. We identified three principal reasons for this: (1) 65 percent of DPT"s vehicles are at the end or have already surpassed their recommended vehicle life; (2) the practice of repairing rather than retiring aging vehicles in need of costly repairs; and (3) an inadequate level of preventive maintenance.   • For example, we found that the average repair costs for older vehicles was 127 percent higher than the average repair costs for newer vehicles. In addition, we identified several examples of extremely costly repairs: repairs costing $5,625 were done on a seven-year old Cushman with a book value of only $534, while repairs costing $4,789 were performed on another six-year old Cushman with a book value of $1,205. One seven-year old Cushman with a book value of $124 incurred $6,898 in repair costs in one year, while another six-year old Cushman with a book value of $1,752 incurred repair costs of $5,868 in one year.  • DPT should implement a regular replacement schedule for its entire vehicle fleet. The estimated cost to replace its 3-wheel vehicle fleet would be $750,545 annually. A regular replacement schedule would eliminate the need for large acquisitions that result in a large part of the fleet aging at the same time, thus necessitating further large acquisitions in the future. Regularly replacing vehicles when they can no longer be operated economically would eliminate the need for costly repairs of aging vehicles, thereby reducing DPT"s maintenance costs. If the Enforcement Division can reduce its maintenance costs from $0.39 per mile to the manufacturer"s estimate of $0.13 per mile, this would result in on-going savings of $321,371 annually. This could be used to partially offset the cost of a vehicle replacement program.

This section of our report provides a review of the vehicle assignment practices, maintenance costs and acquisition policies of the Department of Parking and Traffic (DPT), with primary focus on the Enforcement Division. The general purpose of this review was to provide recommendations on vehicle assignment policies, vehicle maintenance practices, and a vehicle acquisition strategy which are consistent with the needs of DPT and the City"s budgetary resources. Within this general purpose were specific goals, including: (1) ensuring that an adequate number of vehicles are available for DPT staff; (2) a reduction in the cost of operating DPT vehicles; (3) increased reliability of DPT vehicles; and (4) a regular replacement schedule for DPT vehicles.

To accomplish these objectives, we:

• Interviewed the Enforcement Division"s Fleet Manager and the Assistant Superintendent of Central Shops;
• Obtained and reviewed data on fleet inventory, vehicle purchases and turn-ins, downtime, vehicle age, mileage, and manufacturer"s estimated vehicle maintenance costs for Enforcement Division vehicles;
• Selected a sample of 3-wheel motorcycles and reviewed their maintenance and repair histories, as maintained by the Central Shops Division, for the period from July 1, 1993 through July 31, 1998;
• Reviewed Enforcement Division vehicle assignment practices; and
• Evaluated various vehicle replacement plans for DPT vehicles.

As of the writing of this report, the Enforcement Division had a fleet of 261 vehicles, consisting of 217 3-wheel motorcycles (e.g., GO-4s, Cushmans, and Kosmans), 34 Geo Metros, five Chevrolet Trackers, and five vans. However, the average fleet size between July, 1995 and January, 1999, was only 241 vehicles per month, based on vehicle purchases and retirements that occurred at various times during that period. The Board of Supervisors approved the purchase of 65 new 3-wheel motorcycles (GO-4s) through a supplemental appropriation ordinance in FY 1997-98, when 65 new PCO positions were added to DPT"s budget. DPT advises that these 65 vehicles have been ordered and are scheduled to be delivered by April, 1999. In addition, DPT advises that, because of the positive experience it has had with the 34 4-wheel Geo Metros purchased in 1998, it is now considering expanding the use of Geo Metros, which cost only $11,000 each, versus the $20,285 cost of 3-wheel vehicles.

The Enforcement Division has one 1838 Equipment and Storage Assistant Supervisor (Fleet Manager), hired in November, 1997, to manage the fleet. Prior to this date, the Fleet Manager"s responsibilities were handled by a PCO. The Fleet Manager oversees a staff of four PCOs (including two PCOs on modified duty) and one clerical employee. Maintenance and repair of DPT vehicles is performed by the City"s Central Shops Division of the Purchasing Department. Funds to pay for the maintenance and repair of these vehicles are transferred from DPT"s budget to the Central Shops budget. In FY 1997-98, the Enforcement Division incurred $475,000 in expenditures for the maintenance and repair of its vehicles. The FY 1998-99 budget for maintenance is $520,070.

Vehicle Assignments and Availability

Section 6-2 of the Enforcement Division"s Policies and Procedures Manual contains general guidelines on vehicle assignments. According to the Fleet Manager, DPT has a "pride of ownership" policy, in which the same vehicle is normally assigned to each PCO for as long as that PCO is employed by DPT. The Fleet Manager advises that this policy is based on the assumption that a PCO will be more likely to take good care of a vehicle if that vehicle has been permanently assigned to him/her.

The Fleet Manager requires his staff to complete a Daily Vehicle Assignment Report in order to track vehicle assignments, reassignments and returns each day. When fleet management staff are off-duty (weekdays after 7:00 pm and on weekends), these reports are supposed to be completed by the on-duty PCO Supervisors. However, because the PCO Supervisors are not as conscientious about filling out the daily vehicle reports, the reports are often not filled out or are incomplete. In addition, PCO Supervisors often make changes in the normal vehicle assignments without documenting these changes on the daily vehicle report, therefore making it difficult for fleet management staff to track vehicle assignments and returns. This problem is further exacerbated by the fact that all 27 PCO Supervisors have access to the equipment room (where vehicle keys and radios are stored) and can come and go as they please without documenting their actions. This creates potential security and internal control problems. Only one PCO Supervisor per shift should have access to the equipment room when fleet management staff are off-duty, and this PCO Supervisor should be responsible for tracking all vehicle assignments and returns during his/her shift.

Vehicle Availability

It is essential that a sufficient number of vehicles are available in order for PCOs to be able to perform their duties effectively. If a sufficient number of vehicles are not available, PCOs are usually assigned to a walking beat. According to DPT, PCOs cannot cover as much ground on a walking beat as they can with a vehicle. As a result, parking regulations cannot be enforced as effectively, thereby contributing to increased congestion and parking violations on City streets, as well as a negative impact on revenues.

In order to assess vehicle availability in the Enforcement Division, we compared the Enforcement Division"s fleet inventory to its scheduled and available staffing levels on a daily basis. Based on information provided by Enforcement Division managers, Enforcement Division personnel are assigned the 256 3-wheel vehicles, Geo Metros, and Chevrolet Trackers as follows:

• Four vehicles are shared among six managers in the Enforcement Division.
• Vehicles are assigned to all PCO Supervisors in the field.
• Vehicles are assigned to all PCOs in the field, with the following exceptions: (1) 10 PCOs who are assigned to bicycle beats; (2) two PCOs in the Boot Detail who drive vans; and (3) two PCOs in the Yellow Zones Detail who ride in tow trucks.

We applied this vehicle assignment schedule to the scheduled and available staffing levels in the Enforcement Division in order to produce a profile of vehicle demand. We then compared this demand estimate with the current fleet inventory, adjusted for vehicle repair duration data received from the Enforcement Division"s Fleet Manager. Our analysis shows that, although the number of scheduled staff that need a vehicle exceeds the number of vehicles available on four days of the week (Tuesday through Friday), when actual attendance is taken into account, there is actually a daily surplus of vehicles in the Enforcement Division. Table 3.1 below summarizes the results of this analysis. Table 3.1 Vehicle Demand by Day of Week, DPT Enforcement Division

As shown in Table 3.1, we developed comparisons based on 80 percent attendance (the percentage of scheduled shifts that are actually worked by PCOs and PCO Supervisors). This figure is based on the actual attendance by PCOs and PCO Supervisors assigned to regular assignments (i.e., excluding staff on long-term disability or sick leave), as determined from our database of absences discussed in Section 1 of this report. In addition, based on vehicle duration repair data provided by the Fleet Manager, we found that the average vehicle downtime for Enforcement Division vehicles was approximately 4.3 days, which corresponds to an average of eight percent of vehicles out of service on any given day. This is slightly higher than DPT"s standard that no more than five percent of vehicles should be out of service on any given day.

In addition to conducting the above analysis, we also devised some scenarios in order to test vehicle demand under various circumstances. For example, we found that, even if there were a reduction in absenteeism to a more appropriate level among Enforcement Division staff (e.g., from 20 percent to 15 percent of scheduled shifts missed), the Enforcement Division would still experience a daily surplus of vehicles. On the other hand, if the Enforcement Division were fully staffed (i.e., an additional 39 PCO and PCO Supervisor positions were filled and available for a field assignment), and even if there were improvements in vehicle availability (to 95 percent availability), there could be a vehicle shortfall of up to 10 vehicles per day. Nonetheless, such a situation could be easily fixed once the 65 new vehicles currently on order are delivered. As such, it can be concluded that the Enforcement Division currently has a sufficient number of vehicles in its fleet and available for assignment in order to meet its vehicle needs on a daily basis.

Vehicle Maintenance Policies and Procedures

Section 6-3 of the Enforcement Division"s Policies and Procedures Manual states that each employee is responsible for the maintenance of the vehicle to which he/she has been assigned and describes the steps that must be taken by each PCO in order to ensure the safe operation of his/her vehicle. For example, each PCO must perform a pre-trip inspection prior to starting his/her shift, fill the gas tank upon completion of his/her shift, and make sure that the vehicle receives maintenance and repairs when necessary. According to the Central Shops Division, PCOs are supposed to bring in their Enforcement vehicles for routine service approximately once every 1,300 miles. A pool of reserve vehicles is available for PCOs when they take their vehicles in for maintenance.

From our interviews with the Fleet Manager, we learned that, prior to his hiring in November, 1997, the Enforcement Division did not track and monitor vehicle maintenance. For example, vehicle repairs were performed by Central Shops personnel without the prior authorization or even awareness of DPT supervisors. Repair costs for individual vehicles were not monitored, as the prevailing practice was to deposit all repair record slips received from Central Shops into a cardboard box, without sorting or filing them. The Fleet Manager reports that the cardboard box has since been misplaced and is now missing. Records on accidents and vehicle downtime and availability were also not maintained prior to November, 1997.

In November of 1997, the Fleet Manager started to maintain files for each vehicle. Each file contains repair and accident records, receipts, registration documents, photographs, etc. for each vehicle. In addition, the Fleet Manager maintains databases on vehicle downtime, accidents, vehicle inventory and mileage. All repairs must be authorized by fleet management staff before they can be completed by Central Shops. The Fleet Manager requires his staff to obtain a cost estimate for each repair from Central Shops before authorizing the repair. Fleet management staff are notified by Central Shops when the repair is complete. Repair costs are now tracked for each vehicle. In addition, through working with the City Attorney"s Office, DPT now makes attempts to obtain reimbursement for vehicle repairs in accidents in which the other driver was at fault.

Vehicle Maintenance Costs

Although the Enforcement Division has made significant progress since November, 1997 in implementing policies and procedures for tracking vehicle repairs, the average repair costs for Enforcement Division vehicles are still quite high compared to industry standards. We obtained the manufacturer"s estimated vehicle maintenance costs for 3-wheel motorcycles from the Enforcement Division"s Fleet Manager. According to this standard, based on an average of 7,800 miles per vehicle per year, the average annual cost to maintain a 3-wheel motorcycle should be approximately $1,033 per year (including parts and labor but excluding fuel ¹). However, based on the Enforcement Division"s actual FY 1997-98 expenditures for vehicle maintenance of $475,000, the Enforcement Division spent $2,179 per vehicle ², or $1,146 more (111 percent) than the manufacturer"s estimate.

We also found that Enforcement Division vehicles travel an average of only 5,568 miles per year, or 2,232 fewer miles than the manufacturer"s cost estimate assumes. Therefore, we calculated the Enforcement Division"s maintenance cost on a per mile basis and compared it to the manufacturer"s estimated maintenance cost per mile. Based on these calculations, we found that the Enforcement Division spent $0.39 per mile on maintenance, or three times higher than the manufacturer"s estimate of only $0.13 per mile.

We identified three principal reasons for the Enforcement Division"s high maintenance costs:

• The average age of Enforcement Division vehicles has historically been above the expected life for such vehicles;
• In the past, rather than retiring aging vehicles that required costly repairs, such repairs were often made in order to ensure that a sufficient number of vehicles were available for PCOs; and
• There has been an inadequate level of preventive maintenance for Enforcement Division vehicles.

The high cost of maintaining DPT"s 3-wheel vehicles also indicates a potential problem with vehicle reliability. Although we found that this does not currently cause problems in terms of vehicle availability, as DPT"s fleet ages, its vehicles will become less and less reliable, and therefore less likely to be available for assignment. As noted earlier, if a sufficient number of vehicles are not available, PCOs will be unable to enforce parking regulations as effectively, thereby contributing to increased congestion and parking violations on City streets, as well as a negative impact on revenues.

An Aging Vehicle Fleet

According to DPT, the recommended life cycle for 3-wheel vehicles is between five and seven years and the Bay Area average life cycle for such vehicles is 4.5 years. The average age of the Enforcement Division"s fleet is currently 6.6 years. Prior to the purchase of 71 new vehicles in 1998, the average age of Enforcement Division vehicles was 7.7 years. There are 109 vehicles (42 percent of the fleet) that are over seven years old. There are an additional 61 vehicles (23 percent of the fleet) that are now seven years old and are therefore at the end of the recommended life cycle. Thus, approximately 170 vehicles (65 percent of the fleet) may need to be replaced within the next year. The oldest group of 3-wheel vehicles (16 Honda Kosmans) are now 14 years old.

This aging vehicle fleet could potentially impact service levels, since older vehicles are likely to be less reliable and thus out of service more frequently. Furthermore, as vehicles age, the cost to repair them tends to increase. To confirm this, we randomly selected a sample of 81 vehicles from the Enforcement Division"s fleet and reviewed their maintenance and repair histories using data obtained from Central Shops for the period from July 1, 1993 through July 31, 1998. Based on a comparison of annual repair costs between older and newer vehicles, we found that the average annual repair cost for vehicles more than seven years old was 127 percent higher than the average annual repair cost for vehicles of seven years of age or less. Moreover, 62 percent of the annual maintenance costs incurred by the Enforcement Division were for vehicles in excess of seven years old, which represent only 44 percent of the fleet.

Costly Vehicle Repairs

In addition to the aging vehicle fleet, DPT"s practice of repairing rather than retiring vehicles in need of costly repairs has contributed to the high average cost of maintaining Enforcement Division vehicles. To verify this, we compared the cost of individual repairs in our database to the book value of vehicles at the time of each repair (based on an estimated useful life of seven years). We identified 793 repairs (27 percent of the 2,951 repairs in our database) where the cost of the repair exceeded the book value of the vehicle at the time the repair was done. For example, in one instance, repairs costing $5,625 were done on a seven-year old Cushman with a book value of only $534. In another instance, repairs costing $4,789 were performed on a six-year old Cushman with a book value of $1,205. We estimate that DPT spends approximately $124,000 on such repairs on an annual basis.

We also identified 131 instances (60 percent of the sample size of 220) in which annual repair costs for a vehicle exceeded the vehicle"s book value. For example, one seven-year old Cushman with a book value of $124 incurred $6,898 in repair costs in one year, while another six-year old Cushman with a book value of $1,752 incurred repair costs of $5,868 in one year.

DPT has also identified numerous examples of vehicles in the Traffic Engineering and Operations Division that incurred excessive repair costs in a single year. For example, one 15-year old pick-up incurred repair costs of $6,288 in one year and was out of service for 38 days. Another 18-year old pick-up incurred repair costs of $4,739 and was out of service for 23 days in one year. A 12-year old passenger vehicle incurred $4,373 in repair costs and was out of service for 29 days in one year.

Inadequate Preventive Maintenance

A third reason that may be contributing to the high cost of maintaining Enforcement Division vehicles is the inadequate level of preventive maintenance provided to such vehicles. As noted earlier, PCOs are responsible for maintaining their own vehicles and are required to bring in their vehicles for routine service approximately once every 1,300 miles. Thus, based on the average mileage for 3-wheel vehicles of 5,568 miles per year, one would expect that each vehicle should be brought in for routine maintenance 4.3 times per year (on average). However, from our sample, we found that vehicles received routine service on average only 2.9 times per year, or about one-third less than necessary. This indicates that PCOs are not always paying careful attention to when service is needed in order to ensure that their vehicles are properly maintained. This inadequate level of preventive maintenance may lead to more costly repairs later on in the vehicle"s life cycle, thereby contributing to the high cost of maintaining Enforcement Division vehicles.

Vehicle Replacement

Administrative Code Section 4.10-1 states that the Purchaser should inspect each vehicle once it has reached six years of age or 60,000 miles, and based on the vehicle"s condition, usage, and maintenance and repair history, recommend its retention or replacement. According to DPT, Central Shops usually expects individual City departments to determine if and when vehicle replacements are necessary. However, a department"s ability to replace vehicles is often constrained by budgetary limitations, since funding is usually not immediately available to replace vehicles that need to be replaced. Therefore, DPT"s only option has often been to repair vehicles, regardless of their age and condition, since retiring such vehicles without replacing them would have a negative service (and revenue) impact. As noted earlier, this practice has contributed to the high average cost of maintaining DPT vehicles.

There currently is no vehicle replacement schedule for DPT vehicles. DPT purchased 113 vehicles for the Enforcement Division in its first two years of existence (1990 and 1991). No additional vehicles were purchased until FY 1995-96, when 14 vehicles were purchased. In FY 1996-97 and FY 1997-98, 22 and 49 vehicles were purchased, respectively, for a total of 85 vehicles purchased in the past three years. Although DPT implemented a seven-year vehicle replacement plan in FY 1997-98, this initiative was funded by the Mayor"s Office for only one year and discontinued in FY 1998-99, despite a large budget surplus and the creation of reserves for investment. DPT"s inability to consistently replace vehicles each year has resulted in an aging vehicle fleet with escalating repair costs.

DPT needs to implement and the City needs to fund a vehicle replacement plan for all DPT vehicles. As previously noted, there are currently 109 3-wheel vehicles (42 percent of the Enforcement Division"s fleet) that exceed the recommended life cycle of five to seven years for 3-wheel vehicles. As many as 65 of these could be replaced once DPT receives delivery of its most recent purchase of 65 new vehicles, without negatively impacting service levels. This would still leave 44 vehicles in need of replacement. Moreover, an additional 61 vehicles are now seven years old and therefore need to be replaced soon.

We therefore recommend that DPT implement a regular replacement schedule for its entire vehicle fleet. For example, to replace the Enforcement Division"s fleet of 261 vehicles on a seven-year cycle, approximately 37 vehicles would have to be purchased each year. Rather than automatically replacing 37 vehicles each year, however, we recommend that DPT and Central Shops assess each vehicle that has reached or surpassed seven years of age in order to determine whether it can no longer be operated economically and should therefore be replaced. Thus, sufficient funding should be set aside to replace as many as 37 vehicles each year; however, if less than 37 vehicles require replacement in a particular year, a portion of the funding earmarked for vehicle replacement in that year can be carried forward to the next fiscal year.

At an estimated cost of $20,285 per vehicle, the total cost to purchase 37 replacement 3-wheel vehicles would be $750,545 annually. However, this amount may decline over time if DPT is able to retain vehicles that can still be operated economically beyond the seven-year lifecycle. In addition, expanding the use of Geo Metros, which cost only $11,000 each, would reduce the required investment substantially. Nonetheless, this investment represents an expenditure that will have to be incurred by the City in any event, since DPT will eventually have to replace all of its vehicles, or else face severe service and revenue impacts. It is preferable that the City incur these expenditures sooner rather than later, in order to avoid losing control of DPT"s escalating vehicle maintenance costs.

A regular vehicle replacement schedule would eliminate the need for large (and costly) periodic acquisitions that result in a large part of the fleet aging at the same time, thus necessitating further large acquisitions in the future. In addition, regularly replacing vehicles when they can no longer be operated economically would eliminate the need for costly repairs of aging vehicles, thereby leading to a reduction in DPT"s maintenance costs. Improved preventive maintenance of Enforcement vehicles by PCOs would also contribute to lowering vehicle maintenance costs. If the Enforcement Division can reduce its maintenance costs from $0.39 per mile to the manufacturer"s estimate of $0.13 per mile, this would result in on-going savings of $321,371 annually (based on estimated annual mileage of 1,236,042 miles for all Enforcement Division vehicles). Alternatively, if the Enforcement Division can reduce its maintenance costs by approximately one-half, from $0.39 per mile to $0.20 per mile, this would result in on-going savings of $234,848 annually. Additional savings in maintenance costs could be achieved by regularly replacing vehicles in the Traffic Engineering and Operations Division"s fleet. These savings could be used to partially offset the cost of a vehicle replacement program.

Once DPT"s current fleet is completely replaced, there would be a savings over time since large sums of money would no longer have to be separately appropriated to fund replacement vehicles every few years. For example, the 65 new Enforcement vehicles most recently purchased required a lump sum appropriation of $1,318,525. Thus, in the long run, there would be no net additional costs associated with implementing this recommendation. In addition, DPT would realize savings in its vehicle maintenance costs over time.

Conclusions

DPT"s Enforcement Division currently has a sufficient number of vehicles in its fleet and available for service to meet its daily vehicle needs, and has made significant progress in improving its ability to track vehicle repair costs.

Nonetheless, the average maintenance costs for DPT vehicles are very high. In FY 1997-98, DPT spent $0.39 per mile on maintenance costs (excluding fuel), or three times the manufacturer"s estimate of $0.13 per mile for 3-wheel motorcycles. We identified three principal reasons for this: (1) 65 percent of DPT"s vehicles are at the end or have already surpassed their recommended vehicle life; (2) the practice of repairing rather than retiring aging vehicles in need of costly repairs; and (3) an inadequate level of preventive maintenance.

For example, we found that the average repair costs for older vehicles was 127 percent higher than the average repair costs for newer vehicles. In addition, we identified several examples of extremely costly repairs: repairs costing $5,625 were done on a seven-year old Cushman with a book value of only $534, while repairs costing $4,789 were performed on another six-year old Cushman with a book value of $1,205. One seven-year old Cushman with a book value of $124 incurred $6,898 in repair costs in one year, while another six-year old Cushman with a book value of $1,752 incurred repair costs of $5,868 in one year.

DPT should implement a regular replacement schedule for its entire vehicle fleet. The estimated cost to replace its 3-wheel vehicle fleet would be $750,545 annually.A regular replacement schedule would eliminate the need for large acquisitions that result in a large part of the fleet aging at the same time, thus necessitating further large acquisitions in the future. Regularly replacing vehicles when they can no longer be operated economically would eliminate the need for costly repairs of aging vehicles, thereby reducing DPT"s maintenance costs. If the Enforcement Division can reduce its maintenance costs from $0.39 per mile to the manufacturer"s estimate of $0.13 per mile, this would result in on-going savings of $321,371 annually. This could be used to partially offset the cost of a vehicle replacement program.

Recommendations

The Executive Director should:

The Enforcement Director should:

Costs and Benefits

The total cost to purchase 37 replacement 3-wheel vehicles would be $750,545 annually. However, this amount may decline over time if DPT is able to retain vehicles that can still be operated economically beyond the seven-year lifecycle. In addition, expanding the use of Geo Metros, which cost only $11,000 each, would reduce the required investment significantly.

A regular and stable vehicle replacement schedule would eliminate the need for large, high-cost acquisitions that result in a large part of the fleet aging at the same time, thus necessitating further large acquisitions in the future. In addition, regularly replacing vehicles when they can no longer be operated economically would eliminate the need for costly repairs of aging vehicles, thereby leading to a reduction in DPT"s maintenance costs. Improved preventive maintenance of Enforcement vehicles by PCOs would also contribute to lowering vehicle maintenance costs. If the Enforcement Division can reduce its maintenance costs from $0.39 per mile to the manufacturer"s estimate of $0.13 per mile, this would result in on-going savings of $321,371 annually. If the Enforcement Division can reduce its maintenance costs by approximately one-half, from $0.39 per mile to $0.20 per mile, this would result in on-going savings of $234,848 annually. Additional savings in maintenance costs could be achieved by regularly replacing vehicles in the Traffic Engineering and Operations Division"s fleet.