Are you spending too much on replacing underutilised fleet? Is it best to own or hire your fleet?
In any council the fleet portfolio is a significant cost of providing services with the annual replacement and operating costs consuming 20-30% of the annual cash spend.
CT Management Group assists councils to reduce the total cost of their plant and fleet portfolio. We analyse the current utilisation and cost of all plant and fleet assets, establish optimal utilisation and replacement targets, establish cost control measures, compare the cost of hire to ownership and develop an affordable 10-year Fleet Replacement Program.
We have developed fleet strategies and policies, developed a calculator for estimating FBT liability and establishing leaseback arrangements, and completed cost benefit analysis on dry and wet hire of plant and fleet.
Understanding the full-cost recovery hire rates for fleet is essential and comparing the internal hire rates to the wet and dry hire available in the local market enables a council to decide whether to own or hire fleet.
Our clients have successfully increased the claimable fleet costs on contracted works with the State Government and works completed under the National Disaster Financial Assistance (NDFA) Scheme.
- Reduced size of fleet through disposal of underutilised plant and fleet.
- Savings from improved plant management (replacement, utilisation, recovery hire rates).
- 10-year Replacement Program (predicted replacement costs).
- Review internal hire rates for full-cost recovery.
- Ensure full-cost recovery of fleet used in Disaster Recovery Funding Arrangements.
- Review the management of repairs under warranty.
- Compare current utilisation compared to industry benchmarks and identify fleet to be disposed of.
- Review management practices for safety and compliance.
- Cost control measures for major cost items (eg maintenance, fuel, tyre management).
- Fleet Management Strategy and Policy
- Calculated achievable savings.
- 10-year Replacement Program.
- Recommendations on sustainable composition of plant and fleet.
- Detail report with a business case for change.
- Detailed analysis of the fleet, including costs, utilisation, buy/hire analysis.
- Risk assessment on fleet items.
- Full-cost recovery hire rates and comparison to market hire rates.
A Fleet Review can potentially deliver significant savings in a 10-year capital plan
CT Management Group has combined the expertise of our associates and developed our own fleet analyser tool to provide councils with answers to the questions you may have been asking.
Is it better to hire or buy that particular fleet item?
Fleet replacement decisions are too commonly made without understanding the utilisation of the fleet item and whether dry hire rates are more economical. Fleet items are replaced based on condition/age without consideration of utilisation. We will analyse each fleet item and determine what you should own and what you should hire.
Is the current fleet management financially sustainable?
CT Management Group will provide you with the current annual operating costs as well as a 10-year Replacement Program, compared to the current recovery through internal charges. We will also provide you with alternative cost structures through dry hire as well as savings through more efficient uses and higher utilisation of a smaller fleet.
What should the internal hire rates be?
Most internal hire rates are too low. They do not recover the full price of the fleet item, which includes recovery through externally funded activities. Our whole-of-life costing tool provides the annual cost of each fleet item based on a full cost recovery, including optional inclusions such as garaging costs and cost of capital.
What fleet costs can I claim under Disaster Recovery Funding Arrangement (DRFA) funded projects?
There are tight controls around what fleet costs can be recovered through DRFA. CT Management Group can assist councils determine the hire rates used for DRFA claims.
On what basis do you decide which fleet to replace and with what?
We can review how council purchases fleet items and provide opportunities to improve the purchase price, risk and appropriateness of the fleet selection process.
Why don’t we use dry hire arrangements?
Most local governments have a sufficient dry hire market, yet continue to own fleet items rarely used. CT Management Group can provide the buy/hire analysis to identify what fleet items should be disposed of and use a dry hire supply panel instead.
How much fleet do we have sitting and rusting in the depot?
Disposal of unused or rarely used fleet items can produce $500,000+ cash injection, as well as reducing cash demand for fleet replacement. We will provide you with a report on the expected cash recoverable through sale of unused or rarely used fleet.
How many fleet items do we own and what does it cost?
Councils are often unaware of the size of the fleet they own and fail to see the true cost of the fleet, as these costs are commonly dispersed through internal charges. Often executives or managers are not aware of the age of the fleet and the risk to safety and operational downtime due to poor condition of the fleet. We will provide you with a full report on your fleet, the composition of the fleet, the condition and your projected 10-year replacement costs.
Why are the operators complaining about the old fleet breaking down?
Downtime for operations due to maintenance of fleet is a real cost. It could be due to old fleet that needs to be replaced or it could be due to your workshop practices. Do your workshop operations require a review to improve the scheduling and programming of maintenance?
How customer-orientated is your fleet service?
We will provide you with a review of what the customers say about your fleet services.
Does your fleet service provide performance reports of the fleet utilisation, workshop performance and replacement program?
We can assist in developing appropriate reporting and performance management framework for your fleet services.
Our experienced fleet managers will provide a service review of your fleet management. We will review performance measures such as, efficiency of scheduled and reactive maintenance, fleet utilisation, use of hired fleet, safety management and downtime costs. Our associates will share their experience in managing and resourcing workshops, establishing supply arrangements and procurement of fleet.
Time to review your council’s fleet? Get in touch today to see how CT Management Group can assist your council make vital cash savings with our Fleet Management service.Contact us