w of light fleet & heavy plant avy plant

REVIEW OF LIGHT FLEE

REVIEW OF LIGHT FLEET & HEAVY PLANT

21st November

T & HEAVY PLANT

November 2015

V1.02

TO BE TABLED ATTACHMENT A ITEM 14.220/15 - Page 1 of 131

Uniqco is a plant and vehicle management consulting business

offering innovative solutions for the

plant and vehicles. Our partnership approach works for the client

because the client is included in the process of determining the

most appropriate solution. We have clients in government and

agencies at a local, state and feder

contractors in the corporate sector.

Uniqco is headquartered in Australind, Western Australia and has personnel located in Perth,

Brisbane and Melbourne.

Uniqco is a client centric organisation

Under the charter, Uniqco shall:

1. Operate professionally at all times in an environment of integrity and honesty;

2. Only undertake work in areas of competency and when we have the capacity to deliver;

3. Strive to understand and meet our client’s expectations;

4. Provide a partnership approach with our client;

5. Provide value and value adding in our services;

6. Be innovative in our solutions;

7. Strive for knowledge transfer to our client through our reports and bureau

8. Ensure our market data is current to within 3 months;

9. Respond to the client within agreed timeframes and advise in advance of any unavoidable

delays and the reasons for any delay; and

10. Provide balanced recommendations that consider efficiency, cost

safety issues

Uniqco Declarations of Interest

Uniqco is a partner with the Institute of Public Works Engineering Australia in delivering plant &

vehicle management services and derives income from the online plant & vehicle

and the fleet management certificate.

Uniqco provides ongoing professional fleet management services to clients including reporting on key

performance indicators.

Review of Light Fleet & Heavy Plant

CONTENTS AMENDMENT R

Uniqco is a plant and vehicle management consulting business

offering innovative solutions for the operation and management of

plant and vehicles. Our partnership approach works for the client

because the client is included in the process of determining the

most appropriate solution. We have clients in government and

agencies at a local, state and federal level as well as civil contractors and resource enterprise

contractors in the corporate sector.


Uniqco is a client centric organisation that operates aligned to a “Client Services Charter”.

Operate professionally at all times in an environment of integrity and honesty;

Only undertake work in areas of competency and when we have the capacity to deliver;

ve to understand and meet our client’s expectations;

Provide a partnership approach with our client;

Provide value and value adding in our services;

Be innovative in our solutions;

Strive for knowledge transfer to our client through our reports and bureau

Ensure our market data is current to within 3 months;

Respond to the client within agreed timeframes and advise in advance of any unavoidable

delays and the reasons for any delay; and

Provide balanced recommendations that consider efficiency, cost, environmental impact and

Uniqco Declarations of Interest

niqco is a partner with the Institute of Public Works Engineering Australia in delivering plant &

vehicle management services and derives income from the online plant & vehicle

and the fleet management certificate.


CONTENTS AMENDMENT RECORD 2

al level as well as civil contractors and resource enterprise


that operates aligned to a “Client Services Charter”.

Operate professionally at all times in an environment of integrity and honesty;

Only undertake work in areas of competency and when we have the capacity to deliver;

Strive for knowledge transfer to our client through our reports and bureau service;

Respond to the client within agreed timeframes and advise in advance of any unavoidable

, environmental impact and

niqco is a partner with the Institute of Public Works Engineering Australia in delivering plant &

vehicle management services and derives income from the online plant & vehicle management tools



CONTENTS AMENDMENT RECORD 3

CONTENTS AMENDMENT RECORD

Document Title & Client Reference


Clarence Valley Council

Document Control

This document has been issued and amended as follows:

Rev Description Date Prepared by Reviewed by Authorised by

0.1 Draft for comment 28/10/15 RVM GA GA

0.2 Final comments 29/10/15 DDR GA GA

0.3 Issue to client 30/10/15 DDR GA GA

0.6 Draft for client review 3/11/2015 DDR RM GA

0.7 Draft following client meeting 16/11/2015 RM/GA DDR GA

1.0 Final for issue 18/11/2015 DDR GA GA

1-02 Revised Final 21/11/2015 GA RM GA

Copyright

Reports produced by Uniqco are intended for the exclusive use and benefit of the client. Any

distribution, copying, disclosure, dissemination, reproduction, or publication thereof without the written

consent of Uniqco is strictly prohibited and would constitute an infringement of copyright.


CONTACT DETAILS 4

CONTACT DETAILS

If any further clarification is required as to the content of this report, please contact:

Company Name: Uniqco International Pty Ltd

Contact Name: Grant Andrews

Contact Position Title: Managing Director

Address PO Box A366

Australind WA 6233

Telephone: 0418 931 116

Fax: 08 9797 0729

Email: [email protected]

Date 20 November 2015


<TABLE OF CONTENTS - INDEX 5

TABLE OF CONTENTS - INDEX

CONTENTS AMENDMENT RECORD ................................................................................................... 3

CONTACT DETAILS .............................................................................................................................. 4

TABLE OF CONTENTS - INDEX ........................................................................................................... 5

BACKGROUND ...................................................................................................................................... 7

EXECUTIVE SUMMARY ........................................................................................................................ 8

OVERVIEW ............................................................................................................................................. 8

SUMMARY RECOMMENDATIONS ..................................................................................................... 10

1. LIGHT FLEET ............................................................................................................................... 18

1.1. KEY DELIVERABLES .................................................................................................................. 18

1.2. BACKGROUND .......................................................................................................................... 19

1.3. LIGHT FLEET INTELLIGENCE AND TRENDS .................................................................................. 19

1.4. LIGHT FLEET UTILISATION ......................................................................................................... 20

1.5. AVERAGE ANNUAL VEHICLE OPERATING COSTS ........................................................................ 23

1.6. ANNUAL HIRE CHARGES TO DEPARTMENTS FOR LIGHT FLEET .................................................... 25

1.7. OPTIMUM CHANGEOVER OF LIGHT FLEET .................................................................................. 27

1.8. OPTIMAL 10 YEAR LIGHT FLEET REPLACEMENT PROGRAM. ........................................................ 30

1.9. RISK MANAGEMENT IN LIGHT FLEET .......................................................................................... 30

1.10. FUEL OPTIONS ......................................................................................................................... 33

1.11. MAKE & MODEL SELECTION...................................................................................................... 35

1.12. VEHICLE OPTIONAL EXTRAS ..................................................................................................... 35

1.13. PRIVATE USE AND FRINGE BENEFITS TAX ................................................................................. 37

1.14. VEHICLE VALUES TO BE INCLUDED IN SALARY PACKAGES .......................................................... 46

1.15. OPTIONS FOR PROCURING COUNCIL OWNED LIGHT VEHICLES ................................................... 47

1.16. LIGHT FLEET FUNDING OPTIONS ............................................................................................... 47

1.17. OPTIONS FOR PROVISION OF VEHICLES (OTHER THAN COUNCIL OWNED OR LEASED) ................. 49

1.18. IMPROVED LIGHT FLEET REPORTING ......................................................................................... 53

1.19. TRAINING ................................................................................................................................. 54

1.20. ORGANISATIONAL REALIGNMENT OF FLEET & PLANT MANAGEMENT RESPONSIBILITY .................. 54

1.21. LIGHT FLEET SUMMARY ACTIONS.............................................................................................. 54

2. PLANT & HEAVY VEHICLES ...................................................................................................... 55


2.2. HEAVY FLEET INTELLIGENCE AND TRENDS ................................................................................ 56

2.3. HEAVY FLEET REVIEW PROCESS .............................................................................................. 56

2.4. UTILISATION ............................................................................................................................. 57

2.5. OPTIMUM REPLACEMENT TIMING .............................................................................................. 62

2.6. WHOLE OF LIFE COST .............................................................................................................. 65

2.7. PLANT & HEAVY VEHICLES BEST PRACTICE .............................................................................. 70

3. MECHANICAL SERVICES ........................................................................................................... 71


3.2. PROVISION OF MECHANICAL SERVICES ..................................................................................... 71

3.3. MAINTENANCE FAILURE RECORDS ............................................................................................ 73

3.4. DOWNTIME COST ..................................................................................................................... 74

3.5. SCHEDULED VERSUS UNSCHEDULED MAINTENANCE RATIO ....................................................... 75

3.6. MAINTENANCE STANDARDS AND SPECIFICATIONS ...................................................................... 76


<TABLE OF CONTENTS - INDEX 6

3.7. LABOUR FLAT RATES ............................................................................................................... 78

3.8. ESTIMATED MECHANICAL MAINTENANCE LABOUR REQUIREMENTS ............................................. 79

3.9. ANCILLARY EQUIPMENT AND MINOR PLANT ............................................................................... 82

3.10. MINIMISING RISK IN MECHANICAL MAINTENANCE ....................................................................... 84

3.11. CONTRACT MAINTENANCE ON NEW PLANT ................................................................................ 86

3.12. SERVICE LEVEL AGREEMENTS (SLA’S) ..................................................................................... 87

3.13. SUMMARY MECHANICAL WORKSHOP BEST PRACTICE ................................................................ 88

4. MANAGEMENT ............................................................................................................................ 89

4.1. INTRODUCTION ......................................................................................................................... 89

4.2. FLEET MANAGEMENT REPORTING ............................................................................................. 90

4.3. GPS ....................................................................................................................................... 92

4.4. GOVERNANCE IN FLEET ............................................................................................................ 93

4.5. PROCUREMENT – CATEGORY MANAGEMENT FLEET ................................................................... 94

4.6. TEN YEAR PLANT & VEHICLE REPLACEMENT PLAN (REFER SEPARATE XL SHEET)....................... 96

4.7. FUNDING THE PLANT & VEHICLE FLEET ..................................................................................... 97

4.8. MANAGEMENT RISK ISSUES ...................................................................................................... 98

4.9. FLEET MANAGEMENT – STRUCTURE, STAFF SKILLS AND KNOWLEDGE TRANSFER ..................... 101

4.10. PERFORMANCE ASSESSMENT CRITERIA .................................................................................. 102

4.11. IDENTIFICATION OF NEXT STEPS TO “ACTION” THE RECOMMENDATIONS ...................................... 102

4.12. ESTIMATED SAVINGS BY ADOPTING THE RECOMMENDATIONS .................................................... 104

APPENDIX 1 – VEHICLE COMPARISONS – BASED ON AVERAGE ANNUAL WHOLE OF LIFE

COSTS ................................................................................................................................................ 106

APPENDIX 2 – LIGHT VEHICLE FLEET ANALYSIS - SURVEY QUESTIONNAIRE TEMPLATE .. 109

APPENDIX 3 – FBT SAMPLE CALCULATIONS .............................................................................. 112

APPENDIX 4 - NEW PLANT/VEHICLE/EQUIPMENT PURCHASE – BUSINESS CASE TEMPLATE

115

APPENDIX 5 – OPTIMUM REPLACEMENT POINT CALCULATION – ROAD GRADER............... 118

APPENDIX 6 – GUIDELINES FOR THE CALCULATION OF INTERNAL HIRE RATES ................ 119

APPENDIX 7 - WHOLE OF LIFE COST CALCULATIONS ............................................................... 121

APPENDIX 8 – DRAFT SERVICE LEVEL AGREEMENT BETWEEN FLEET

MANAGEMENT/MECHANICAL SERVICES/END USERS ............................................................... 124

APPENDIX 9 – EXAMPLE FLEET REPORTING TO EXECUTIVE MANAGEMENT (SOURCE

UNIFLEET).......................................................................................................................................... 128


BACKGROUND 7

BACKGROUND

Vehicle and heavy plant assets represent a significant component of the cost of service delivery at

Clarence Valley Council. The present light fleet and heavy plant asset base consists of operational

work vehicles as well as cars that are part of employment packages and items of heavy plant used to

build Council infrastructure.

Some operational vehicles have included with them electrical gear, machinery and pumps, and are

not available for private use. Council staff that have a vehicle provided as part of their employment

package pay a leaseback fee of between $92 and $131 per week to cover private use. For the

2014/15 financial year council received $417,000 from light fleet vehicle leaseback fees. All running

costs associated with light fleet vehicles such as registration, insurance, fuel and maintenance are

covered by council, with the leaseback fee being set at a rate to cover the private component of

vehicle use.

It is intended that this review will provide support to the Council’s focus on long term organisational

financial sustainability and improved strategic capability. An integral part of this will be the

development of a light fleet and heavy plant asset base which is operationally justified and well

managed. To do this a review of Council’s light fleet and heavy plant asset base is necessary and

also whether Council is managing life-cycle costs, and actively reducing the environmental impact of

its light fleet and heavy plant asset base.

For Council’s light fleet and heavy plant asset base size and mix to be justified, the number and type

of vehicles and plant should reflect operational requirements. Too many or too few vehicles and plant

can create excessive costs. The cost of running these assets goes beyond the purchase price. It

includes insurance, registration and other life-cycle costs, such as fuel, maintenance, and accident

repair. To manage these costs, Councils should monitor and report on vehicle and plant usage and

costs, and use the information to improve the running of these assets accordingly.

In order for the review to be embraced, implemented and operated it must be based upon sound

operational and sustainability principles, be flexible and clearly understood by all who work with it.

This report on our fleet review for Clarence Valley Council is delivered in 4 parts:

1. Light Fleet

2. Heavy Fleet

3. Mechanical Maintenance

4. Management

The Asset Management Plan for fleet assets is provided in a separate report.


EXECUTIVE SUMMARY 8

EXECUTIVE SUMMARY

Overview

Uniqco has substantial experience in delivering professional plant & vehicle management services

and we are confident from our past experience that implementation of our recommendations will result

in lower fleet operating costs.

1. There is a significant financial, OHS and regulatory risk in operating plant and vehicles and

systems must be in place to minimise those risks.

2. Fleet assets represent a significant capital investment and ongoing cost.

3. Apart from ensuring value for money is achieved from procurement and operational

performance, actively managing the plant and vehicle fleet is essential to delivering efficient

works and services.

4. Managing the mechanical plant and vehicle fleet requires accurate, reliable, timely, relevant

and quantifiable information. Such data are required to set charge-out rates, undertake needs

analysis and buy/hire assessments, develop maintenance programs, and set service and

works programs and budgets. Next to employment costs, the plant and vehicle fleet rates a

close second in determining total service and works costs in outside operations.

5. Procurement decisions need to be made on a best value assessment and be fully

documented.

6. Plant and vehicle management is a dynamic environment in which to work and is subject to

constant change. Keeping up to date with changing technology, markets and regulations is

very difficult for today’s operational managers.

7. A total life cycle ‘value for money’ approach is essential to assessing plant and fleet

requirements. Applying systematic analysis to the procurement, management and

maintenance of the plant and vehicle fleet will provide a foundation to maximise the return on

investment. This is difficult to achieve without effective fleet management reporting.

8. Plant and vehicle fleet items are capital goods. They need to be treated and accounted for in

a similar way to fixed capital assets, such as land and buildings. Investments in plant and fleet

form part of the strategies of an organisation focussed on maintaining, extending and

improving the delivery of works and services.

9. The investment in plant and fleet vehicles must be aimed at increasing the performance and

output potential of the operating areas of Council. Higher levels of efficiency are delivered

through increased productivity and optimising service delivery.

The recommendations in this review are aimed at addressing these business imperatives.

Although voluminous, the majority of the recommendations made in this report will have significant

impact on the organisation and should be relatively straightforward to implement at an operational

level.


EXECUTIVE SUMMARY 9

The risk to the organisation will be in developing an aligned executive that recognises the value

provided at the operational level and the opportunity available to Clarence Valley in the successful

implementation of these recommendations.

In order to implement a sustainable change within Clarence Valley, we strongly advise:

1. The creation of a steering group to champion the change and provide regular updates to the

Executive Management Team and provide governance over the implementation.

2. Sequencing and prioritisation of the recommendations detailed in this report into an

implementation plan.

3. Establishment of a reporting framework for both the operational (plant and fleet) performance

/ compliance and the realisation of the benefits achieved from implementing these

recommendations.

4. Close liaison with finance to ensure accurate data provision and measurement of financial

outcomes.

We estimate that adoption of the recommendations of the report can deliver net savings of

between $400,000 to $600,000 per year plus significantly reduce risk.

We offer a service through Uniqco Operations to action the recommendations of the review and guide

Council through the improvement process. This will unlock the benefits of the review and provide the

critical management reporting needed to action the most critical recommendations. We have been

doing this successfully with clients over many years.


SUMMARY RECOMMENDATIONS 10

SUMMARY RECOMMENDATIONS

The following recommendations are categorised by the level of:

1. Relative positive impact the recommendation will have on the organisation will benefit from

through the application of best practice ( High, Medium & Low)

2. The ease of implementing the recommendation based on Uniqco’s assessment of current

practices and organisational culture. ( Ease, Somewhat easy & Difficult)

Light Fleet Recommendations Impact to Organisation

Ease of Implementation

Average Annual Vehicle Operating Costs

1. Council adopts average annual costs to represent the

true cost of providing a fully maintained council vehicle.

Annual Hire Charges to Departments for Light Fleet

2. End user departments be charged an annual cost for

their allocated light vehicles based on full cost

recovery.

3. The funds generated by these charges, including

depreciation, be paid to Fleet to fully fund ongoing

operating and replacement costs.

Optimum Changeover of Light Fleet

4. Council adopts the optimum economic changeover of

light fleet vehicles (based on resale value, servicing

and maintenance costs, downtime costs and

changeover costs) of 5 years or 150,000km whichever

occurs first and subject to a risk assessment (at

150,000km and 200,000km) extending up to

250,000km for specialised vehicles such as the Toyota

Landcruiser.

5. Vehicles are not held beyond 5 years due to increasing

risk in terms of vehicle safety and breakdowns and

increasing maintenance costs.

6. Where vehicles exceed their warranty period, continue

to purchase roadside assistance from NRMA (or

similar) or the manufacturer of the vehicle.

Risk Management in Light Fleet

7. A balanced assessment with weighted criteria including

Annual Whole of Life Costs (including FBT & fuel

consumption), CO2 Emissions, Air Pollution Rating and

Safety be used in purchase decisions for light fleet

vehicles.

8. The following minimum standards be adopted:

a) ANCAP 5 star rating for passenger cars and 4

star rating for utilities.

b) Green vehicle star rating of 3.5 for passenger

cars and 2.5 for 4WD wagons, utilities & vans





9. Where utilities are required for operational reasons,

passenger air bags, ABS braking and diesel fuel

(where available) be included in the standard vehicle

specification.

10. A Safe Driving Policy is adopted and distributed to all

employees required to drive a council vehicle with the

requirement that the employee sign off as having read

and understood the policy.

11. Consideration is given to staff undertaking the IPWEA

Online Safe Driving Program.

Vehicle Optional Extras

12. The following recommended accessories are included

in specifications for new vehicle purchases.

a) Recommended (for safety & resale value)

• Air Conditioning

• ONLY Light metallic paint

• Floor mats/ Mud flaps front & rear

• Passenger air bag where if not standard

• Cruise control (adaptive if available)

• ABS braking (Essential)

• Stability Control (where available as standard)

• Cargo barriers for station wagons/vans

• Central locking

• Auto adjustable rear mirrors

• Lane assist if available

• Reverse warning sensors or a reversing camera

where available as part of a standard package

b) Optional

• Headlight and bonnet protector

• Weather shield

c) Not Recommended (can detract from resale

value)

• Tow pack

• Dark colour duco (reduces resale value)

• Manual other than 4WD Utility

• Installation of solar tint to windows post

manufacture

• Bull bars (from a pedestrian safety perspective)

Private Use and Fringe Benefits Tax

13. Where light vehicles that attract FBT are used for a

substantial amount of work-related travel, Council

should use logbooks in accordance with Australian

Taxation Office guidelines to minimise FBT liability

noting that this will also provide invaluable information

on business use for managing the fleet.

14. For the purpose of FBT calculations Council note the

opportunity for low utilisation vehicles that are held for

5 years, to reduce the base value of a car by one-third





in the FBT year that starts after the car has been

owned or leased for four years.

15. To further minimise FBT liability and light fleet

operating costs and to provide a greater incentive for

car pooling, Council consider a surcharge of 14

cents/km where private/commuter use exceeds 50% of

annual kilometres travelled.

Vehicle Values to be Included in Salary Packages

16. Light vehicle values be included in staff salary

packages

Own or Lease?

17. The Council continues to own rather than lease light

vehicles.

Car Allowance

18. Subject to the staff vehicle not being required for car

pool use the Council offer a Car Allowance option to

senior staff on the proviso that the employee must

provide their own vehicle for their business use without

any additional payments from Council.



Heavy Fleet Recommendations Impact to Organisation


Utilisation

19. Actual utilisation is regularly reported to management. 20. Consideration is given to:

a) Downsize a number of gravel haulage trucks and

loaders.

b) Extend the change-over of graders to

12yrs/10,000hrs subject to a risk assessment

beyond 8yrs/8,000hrs.

c) Dispose of a skid steer loader and increase the

utilisation of other such loaders with shared use.

d) A business case review to be undertaken for 2

rollers and 4 mowers identified in Table 16 of the

report.

21. A business case review is based on actual utilisation

(Kilometres or Engine Hours) and not on timesheet

hours.

22. External plant hire and hours on hire be recorded so

that plant can be identified as a cost by category and

as wet or dry hire to assist in future audits and any

business case analysis for retention/disposal/purchase

of plant.

Optimum Replacement Timing

23. The IPWEA optimum replacement benchmarks based

on a combination of age and utilisation are adopted.

24. Prior to holding an item beyond optimum replacement

an operating risk analysis is undertaken.

Whole of Life Cost

25. Internal hire rates are based on whole of life costs and

annual “budget” internal hire rates reflect full cost

recovery including the cost of replacement.

26. The proposed internal hire rates be adopted applied

either as an annual charge to the end user department

or recovered through time sheet hours.

27. A comparison is made between timesheet hours

against actual utilisation and regularly monitored to

ensure that any changes in actual utilisation must be

matched by a corresponding increase or decrease in

the timesheet hours.

28. To simplify administrative work whole of life costs be

recovered through an annual charge rather than hourly

rates for maintenance plant such as mowers.

29. Whole of life costs be used in purchasing decisions for

all items over $20,000.



Mechanical Workshop Recommendations Impact to Organisation


Maintenance Failure Records

30. Maintenance failures and the reasons for failures are

documented in a future management reporting system

by the mechanical service team.

Downtime Cost

31. Downtime is recorded on job cards to facilitate future

management reporting.

Scheduled to Unscheduled Maintenance Ratio

32. An overall scheduled to unscheduled maintenance

ratio of 70/30 be considered as a future KPI target

once a fleet management reporting capability is in

place.

Maintenance Standards and Specifications

33. The planned and preventative maintenance schedules

detailed in Table 19 of the report be adopted as a

minimum to reduce OH&S risk and downtime.

Labour Flat Rates

34. In the long term flat rate labour times are adopted for

standard servicing by internal and external service

providers.

Estimated Mechanical Maintenance Labour

Requirements

35. Council note the current level of mechanical resources

is appropriate to the size of the fleet and the challenges

of a rural environment.

36. A further resourcing assessment is undertaken 12

months following the implementation of the 2

workshops scenario.

37. Light fleet maintenance be outsourced for cars and

station wagons only. Because of operational demand

utilities continue to be serviced in house as these can

be completed when staff do not require the vehicle.

Ancillary and Minor Plant

38. A separate budget allocation is made for ancillary plant

and funds for this are recovered through an annual

charge to end users.

39. Ancillary plant and small items be subject to

accountability along the lines proposed in the report.

40. Each item of minor plant is serviced at least once every

12 months and checked for safety every 6 months by a

mechanic.

Minimising Risk in Mechanical Maintenance

41. In order to minimise risk the items listed in Section 3.9

of the report be included in processes and procedures.

42. Operational supervisors are reminded of their

responsibilities under OH&S laws to ensure staff are



Mechanical Workshop Recommendations Impact to Organisation


adequately (and continuously) trained in the proper use

of plant/vehicles/equipment, noting that induction

training is required each time a new item of

plant/vehicle is introduced or the operator will use an

existing item for the first time.

Contract Maintenance

43. For new and replacement plant & vehicle purchases,

where practical a contract maintenance option be

included as part of the tender specification.

Service Level Agreements

44. Service level agreements are put in place with regular

external service providers when work is outsourced.



Management Recommendations Impact to Organisation


Fleet Management Reporting

45. Fleet management reporting is given a priority in order

to optimising plant & fleet utilisation, reducing fleet life

cycle costs and minimising financial and WHS risk.

46. Accurate records are maintained of the type and

amount of fuel issued, together with the plant number

and mileage or engine hours of the item receiving the

fuel including where items are refuelled from a bulk fuel

trailer/tanker in the field.

47. GPS units are only used to gather data to improve

productivity or improve the engine hour or mileage data

provided for remotely located assets

Governance in Fleet

48. The assessment criteria and methodology detailed in

the IPWEA best practice Plant & Vehicle Management

Manual be adopted for the analysis of tenders and

quotations.

49. Fleet Management and Procurement should jointly and

comprehensively document procedures that govern the

various steps in the procurement process under their

control. Such documentation should be extensively

used for training purposes and should be easily

accessible to staff who handle these functions.

50. It is a good practice to include supplier measurement

and monitoring in all contracts so that quality, price,

delivery and service level can be monitored.

51. All stages of the procurement process are fully

documented to ensure governance compliance.

Ten Year Plant & Heavy Vehicle Replacement Plan

52. The 10 year plant and heavy vehicle replacement

budget based on optimum replacement principles of

age and utilisation be adopted.

53. Rather than defer replacement, the Council lease

major items of the heavy fleet with predictable

utilisation such as graders, loaders, backhoes and

selected trucks if there is a shortage of capital.

Management Risk Issues

54. Council notes the increasing organisation

responsibilities as a result of the Heavy Vehicle

National Law (HVNL) and the Work Health and Safety

Act (2011).

Negative Impact

Fleet Management – Structure, Staff Skills and

Knowledge Transfer

55. Fleet management team needs to be autonomous and

able to report through a management structure directly

to the Executive Management Team.

56. Consideration is given to staff training and skills



Management Recommendations Impact to Organisation


transfer needs identified in Section 4.9 of the report in

order to implement the recommendations of the fleet

management review.

Performance Assessment Criteria

57. Plant and heavy vehicle management assessment

criteria detailed in Table 24 of the report are

considered as providing a framework for further

development during implementation of the Fleet

Management Review.

Identification of next steps to “action” the

recommendations;

58. Establish a Steering Group to govern the


59. Prioritise the recommendation aligned to Clarence

Valley corporate objectives.

60. Establish a reporting framework to measure operations and benefits related to the recommendations.

61. Establish close ties with Finance.

Coding Green Amber Red

Impact to Organisation High Impact Medium Impact Low Impact

Ease of Implementation Easy to implement Somewhat easy to

implement

Difficult to

implement


LIGHT FLEET 18

1. LIGHT FLEET

1.1. Key deliverables

A detailed review of Clarence Valley Council’s existing light fleet asset base identifying aspects and

areas where changes and improvements can occur.

The review is to:

• Identify the best options for possession of light fleet (i.e. purchase vs lease), and optimal

size of the asset base.

• Review Council policies, procedures and protocols related to light fleet.

• Examine light fleet age and utilisation against industry benchmarks, including:

o Cost of under utilisation

o Cost of vehicles travelling excess km’s

• Review current internal hire rates for light fleet and make recommendations for

improvements.

• Investigate value add opportunities:

o Process for optimising fleet utilisation

o Improved fleet and plant reporting

o Training

o Cost reduction opportunities

o Organisational realignment of fleet & plant management responsibility

o Detailed fleet and plant intelligence

o Trend data

o Improved risk management (covering issues related to environmental, safety and

social risks).

o Outsourcing options.

o Optimal 10 year light fleet replacement program.

• Disclose the impact of recommended changes to light fleet on Council’s ability to attract

and retain staff.

• Provide an Asset Management Plan for plant & fleet assets.

The report should also contain recommendations in relation to minimising whole of life costs, covering

the following areas:

• Asset replacement (including review of changeover processes and make

recommendations on model mix and optimum changeover – highlighting impacts of

deferring replacement)

• Calculation of depreciation

• Calculation of average annual costs (for use in cost comparisons, tender assessments

and vehicle costs included in employment packages).

• The value or otherwise of optional extras for light fleet.

• Various fuel options.

• FBT minimisation for light fleet.

• Purchasing, disposal and financing strategies.


LIGHT FLEET 19

1.2. Background

The objective of the review is to identify opportunities to improve the efficiency of the

Fleet operation and ensure that vehicles are fit for purpose and appropriate to the

organisation’s needs.

Relevant light fleet documents provided by the Council for this review include:

• Protocol #16 for Reimbursement for Damage to Private Vehicles While on Council Business

• Light Fleet Weekly Plant Check/Report

• Motor Vehicle Commuter Use Agreement

• Vehicle Lease Agreement

• Pool Car Operations Procedure (Proposed)

• Motor Vehicle Management

KPI’s for Light Fleet for 2015/16 Frequency

Report to Manager & Director on % of variation

of actual usage v budgeted usage for light fleet

& small plant

Quarterly report due by end of proceeding month

– commence October 2015


of actual expenditure v budgeted expenditure for

light fleet & small plant




of actual replacement costs v budgeted

replacement costs for light fleet & small plant



5.2.9.15 - Implement new Fleet management

software within Works and Assets module December 2015

1.3. Light Fleet Intelligence and Trends

There have been significant changes in the light vehicle market since 2008 including:

• Far lower resale values driven by low cost Chinese manufactured vehicles now on the

market. These offer an attractive price entry option for people who would previously have

purchased second hand vehicle.

• The new vehicles available from the mainstream manufacturers being far more

technologically advanced and far more reliable

• The availability of extended warranties of up to 5 years becoming the norm.


LIGHT FLEET 20

For the above reason the trend for light fleet replacement has been an extension to the optimum

replacement point. With few exceptions the modelling now shows the lowest cost changeover occurs

after 5 years/120,000km and this can be extended to 150,000km with little risk for all light vehicles.

Because of public perception regarding fuel economy, 4 Cylinder vehicles will continue to hold higher

resale values compared to 6 cylinder vehicles. The more 4 cylinder vehicles in the fleet the lower the

fleet costs should be.

Medium sized 4 cylinder vehicles are becoming more acceptable as people’s perception of the need

for a large car is challenged. Medium cars often have excellent leg room and reasonable luggage

capacity. By moving to medium sized cars overall costs can be reduced by as much as $3,000 per

car per year.

By purchasing 4 cylinder vehicles, fuel costs will be minimised, CO2 outputs minimised and whole of

life cost increases minimised because of higher resale values of low fuel consumption cars. Opting for

diesel fuel vehicles further enhances fuel and environmental savings.

1.4. Light Fleet Utilisation

The average annual utilisation of the 182 light vehicle fleet is 28,275 km which is well above the

national benchmark of 20,000 km.

The breakdown of average annual utilisation across each of the categories of vehicle use is also

above the benchmark. Operational vehicles show the lowest average annual usage and this would be

expected given they are purely used for operational use with no commuting component.

Table 1 – Average Annual Use by category

Vehicle by use Category Number Average Annual Utilisation

Operational 73 20,950

On Call (assume operational) 9 26,425

Commute 18 25,317

Lease Back 72 36,940

Pool 8 26,947

Not under leaseback 2 23,980

Fleet Total 182 28,275

Table 2 below shows a breakdown of the number of vehicles by category across a range of utilisation

brackets. As would be expected operational vehicles make up just over 80% of the vehicles travelling

on average less than 20,000 km/year.


LIGHT FLEET 21

Table 2 – Average Annual Use Range by Category

Average Annual

Utilisation

Total Number

Breakdown by Category

Operational On-Call

Commute Lease Back

Pool N/A

<10,000 km 6 6 0 0 0 0 0

10,000 – 20,000 km

46 36 0 6 3 1 0

20,000 – 30,000 km

59 23 4 7 18 5 2

30,000 – 40,000 km

42 8 3 3 26 2 0

40,000 – 50,000 km

18 1 0 1 16 0 0

50,000 - 60,000 km

9 1 0 1 7 0 0

>60,000 km 2 0 0 0 2 0 0

Total 182 75 7 18 72 8 2

Only six (6) operational vehicles are travelling less than 10,000 km/year and based on their

application (to transport people and equipment to site) there is no concern regarding the lower level of

utilisation of these vehicles (refer Table 3).

One of the six (6) was identified as a pool vehicle in the survey and this could be subject to closer

review. Based on the light fleet survey and the fleet utilisation there appears to be little scope to

reduce the size of the asset base other than to remove vehicles by providing options for staff to

provide their own vehicle or cash out. These options are detailed in Section 1.16.


LIGHT FLEET 22

Table 3 – Operational Vehicles with Average Annual Use < 10,000km

Rego # Make Model Application Purchase

Date

Average Annual

Utilisation Use

BW67DD Holden Colorado 4X4 D Cab 11/10/2013 6451 Pool?

Review use

BY90UR Holden Colorado LX Space Cab 22/05/2014 7521

Carries passengers/

Gear to site

CD02AQ Holden Colorado 4x4 S Cab 10/06/2015 8395

AI18LR Holden Rodeo Tipping Body

19/09/2006 8637

BR54VP Toyota Landcruiser 4x4 S Cab 26/09/2012 9630

AW20UY Holden Rodeo 4x4 S Cab 17/12/2008 9927

Cost of Under Utilisation

Underutilisation of the light vehicle fleet is not an issue for concern based on our analysis and given

all the vehicles are owned there is no cost penalty other than a component of the fixed costs including

depreciation.

Example using 20,000 km baseline utilisation and $3,500 average annual depreciation over 5

years

Depreciation per km = $3,500/20,000 = $0.175/km

If the vehicle doesn’t travel 20,000 km the lower utilisation costs 17.5c per Km below 20,000 Also

need to add other fixed costs of say $1,350 a year for rego/insurance.

Other fixed cost = $1,350/20,000) = $0.0657/Km below 20,000 km.

Total cost = $0.245/Km

For a vehicle travelling 10,000 km/yr the underutilisation cost is $2,425 annually.

Cost of Over Utilisation

At the other end of the utilisation spectrum, high utilisation associated with commuting (including

within lease back) comes at a high cost which needs to be identified as an employment cost rather

than a fleet cost. Annual charges to departments should reflect the true cost of each vehicle based on

utilisation and this principle forms the basis of our proposed internal hire rates (refer Section 1.6).

Part of the full cost is being recovered through lease back and commuting charges but these charges

do not reflect the amount of commuting or private use. It is accepted that the Council does not want to

limit its employees based on where they live. However, we believe that true costs should be identified

with the gap being funded as an “employment cost” rather than a fleet cost. Alternatively an additional

charge could be levied on staff for excess commuting/private use. This is discussed further in Section

1.13.


LIGHT FLEET 23

Based on our work for other clients we find that leasing companies are charging $0.14/km for

utilisation that exceeds a lease agreement.

There is no obvious scope to reduce the size of the vehicle fleet based on utilisation other than one

operational vehicle allocated to pool use which needs further review.

1.5. Average Annual Vehicle Operating Costs

Uniqco uses a first principles methodology to calculate average annual costs over the life of the

vehicle (based on optimum changeover) and include; depreciation, fuel, repairs & maintenance, tyres

and FBT (does not apply to utilities if the vehicle is only used for commuting).

Average annual vehicle costs provide the full economic impact of various vehicle types and are a tool

that can be used:

• To provide a cost of vehicles included in employment packages

• To provide the annual charge out rate for full cost recovery

• As a comparison of costs between make/model of vehicles

• To assist in fleet mix selection

Adopting the total average annual cost for vehicle providing a council vehicle ensures the true value

can be shown in a salary package. This also enables comparisons with other options for providing

vehicles such as novated leasing.

True value can only be shown by an assessment for each individual based on their private and

commuting use.

Table 4 provides the average annual costs for a range of fleet vehicles travelling 30,000 km/yr over 5

years.

RECOMMENDATION

Average Annual Vehicle Operating Costs Impact to

Organisation Ease of

Implementation 1. Council adopts average annual costs to represent the

true cost of providing a fully maintained council vehicle.


LIGHT FLEET 24

Table 4 - Average Annual Vehicle Costs (Based on 5 years / 150,000 kms (average 30,000

km/yr)

Vehicle Make/Model

Cy

lin

de

rs

Av

era

ge

A

nn

ua

l C

os

t

FB

T

An

nu

al

WO

L

Co

st

inc

lud

ing

FB

T

(5 y

rs /

1

50

,00

0 k

m)

AN

CA

P S

afe

ty

Ra

tin

g

Premium Executive

Honda Accord Euro 4 $9,543 $6,877 $16,420 5

Toyota Camry Atara SL 4 $9,554 $6,492 $16,046 5

Toyota Orion Presara 6 $11,077 $7,913 $18,990 5

VW Passat (Diesel) 4 $9,804 $7,899 $17,703 5

Executive

Toyota Camry Atara S 4 $8,875 $5,524 $14,399 5

Toyota Camry Hybrid 4 $7,888 $5,776 $13,664 5

Volkswagen Tiguan 4 $9,356 $7,266 $16,622 5

Subaru Liberty 4 $11,767 $7,225 $18,992 5

Holden Captiva SX 7ST(Diesel) 4 $10,295 $6,736 $17,031 5

VW Golf Comfortline (Diesel) 4 $7,500 $5,234 $12,734 5

Hyundai I40 Active 4 $7,793 $5,552 $13,345 5

Medium

Toyota Corolla 4 $6,953 $4,307 $11,260 5

Hyundai I30 SX Diesel 4 $6,791 $4,294 $11,085 5

Holden Cruz CDX - Petrol 4 $7,515 $4,573 $12,088 5

Small

Toyota Yaris 4 $5,862 $3,273 $9,135 5

VW TSI 61 Trend 4 $6,286 $3,977 $10,263 5

Ford Fiesta 4 $5,563 $3,271 $8,834 5

4 Wheel Drive Wagons

Nissan X Trail (Diesel) 4 $7,305 $5,581 $12,886 4

Subaru Forester (Petrol) 4 $6,870 $4,361 $11,231 5

Toyota Kluger (Petrol) GXL 7 Seat 6 $13,030 $9,371 $22,401 5

Holden Captiva CX 7ST (Diesel) 4 $10,295 $6,736 $17,031 5

Mitsubishi Pajero (Diesel) 4 $11,999 $10,841 $22,840 4

Station Wagon 4x2

Holden Captiva SX 7ST(Diesel) 4 $9,449 $6,022 $15,471 5

Ford Mondeo TDCi 4 $8,372 $5,440 $13,812 5

Toyota RAV 4 4 $9,177 $5,278 $14,455 5

Nissan X Trail ST 4 $8,024 $5,616 $13,640 5

Nissan Quashqai 4 $9,698 $5,872 $15,570 5

VW Golf Comfortline (Diesel) 4 $7,912 $6,270 $14,182 5

Utilities

Ford Ranger 4X2 (Dual Cab) (Diesel) 4 $6,676 $4,566 $11,242 5

Toyota Hilux SR (Dual cab) 4X2 (Petrol) 6 $7,962 $5,133 $13,095 5

Holden Colorado Crew Cab Utility 4X2 (Petrol) 6 $7,705 $4,564 $12,269 3

Utilities 4x4 Crew Cab

Ford Ranger XLT DT 4 $9,996 $6,985 $16,981 5

Holden Colorado LX RC DT 4 $9,652 $6,469 $16,121 5

Mitsubishi Triton GLX DT 4 $9,338 $6,205 $15,543 5

Toyota Hilux SR DT 4 $9,441 $7,014 $16,455 5

Isuzu D-MAX LS 4 $8,828 $6,418 $15,246 5


LIGHT FLEET 25

1.6. Annual Hire Charges to Departments for Light Fleet

Departments are currently charged an annual amount for each of their allocated vehicles. The amount

is based on the vehicle make/model. For example the charge for a Toyota RAV 4 is $12,630 and a

Holden Colorado is $18,815. Additional charges are applied for customisation such as flashing lights.

Our recommended methodology is to base charges to end user departments on the whole of life costs

for each vehicle and this takes into account the important variable of utilisation.

We have calculated the required annual charge out rate for each individual vehicle for full cost

recovery not including FBT. Refer XL sheet. The rate includes depreciation, fuel, tyres, scheduled

and an allowance for unscheduled maintenance. These are the charges that should be made to end

user department and be paid to Fleet to recover the cost of providing the fleet.

Table 5 provides a sample of the charge out rate calculations and comparison to the Council’s

current charges. There are some gaps in the vehicle data which preclude a comparison of the total

variation between the current and proposed charges. There may not be a great difference between

the total being recovered overall but there are some substantial variations with individual vehicles as a

result of applying the true cost methodology.

FBT is currently largely recovered from charges directly to staff based on the benefit received.

RECOMMENDATION

Annual Hire Charges to Departments for Light Fleet Impact to

Organisation Ease of

Implementation 2. End user departments be charged an annual cost for

their allocated light vehicles based on full cost

recovery.

3. The funds generated by these charges, including

depreciation, be paid to Fleet to fully fund ongoing

operating and replacement costs.


Table 5 – Sample Hire Rate Comparison

Item Data

Fle

et

#

Po

sit

ion

Ma

ke

Mo

de

l

00010105 Director

Corporate Toyota Rav4

00010205 Building

Inspector Toyota Hilux

00010306 Works

Engineer West Toyota Rav4

00010404 Coordinator

CSS Toyota Rav4

00010505 Building

Surveyor G12 Toyota Rav4 GX

00010604 Sen Econ Dev

officer Toyota Rav4

00010805 Technical

officer desig Holden Colorado

00010907 Supervisor Rural West

Holden Colorado

00011105 Rangers Assistant

Holden Colorado 4x4 Dual

Cab COMMUTE

00011205 Man OPAG Holden Commodore

00011302 Waste

Services Supervisor

Mitsubishi Triton OPERATE


LIGHT FLEET 26

Calculated Hire Rate Schedule

Ma

in U

se

Av

era

ge

An

nu

al

Uti

lis

ati

on

De

pre

cia

tio

n

Fu

el

co

st

Ty

re C

os

t

Ma

inte

na

nce

co

st

LEASEB 40,173 7,030 5,785 803 904

LEASEB 47,893 8,381 8,276 958 1,078

LEASEB 47,583 8,327 6,852 952 1,071

POOL 19,628 3,500 2,826 393 442

LEASEB 39,950 6,991 5,753 799 899

LEASEB 36,776 6,436 5,296 736 827

LEASEB 43,377 7,591 7,496 868 976

LEASEB 58,938 10,314 10,185 1,179 1,326

COMMUTE 33,383 5,842 5,769 668 751

LEASEB 57,306 10,029 9,077 1,146 1,289

OPERATE 12229 3,500 2,289 245 275

Calculated Hire Rate Schedule Comparison to

Current

Un

sc

he

du

led

M

ain

ten

an

ce

co

st

Ca

lcu

late

d A

nn

ua

l H

ire

co

st

wit

ho

ut

FB

T

Cu

rre

nt

An

nu

al

Ch

arg

e

Va

ria

tio

n

136 14,658 12,630 2,028

162 18,854 18,815 39

161 17,362 12,630 4,732

66 7,227 12,630 -5,403

135 14,577 12,630 1,947

124 13,419 12,630 789

146 17,076 18,815 -1,739

199 23,203 18,815 4,388

113 13,142 19,464 -6,322

193 21,735 12,630 9,105

41 6,350 18,815 -12,465


0

20000

40000

60000

80000

100000

Year 1Year 2Year 3Year 4Year 5

$

Years

1.7. Optimum Changeover of Light Fleet

To deliver lowest cost light fleet the decision of when to change over the light fleet should be based

on optimum replacement timing.

best estimate the optimum timing, in kilometres and time, to achieve the lowest average annual cost

during the life of the vehicle.

What drives replacement timing today?

Replacement timing today is driven by more than just cost and considerations include:

• Resale Value

• Technology

• Repairs and maintenance

• WHS Risk (Safety)

• Environmental footprint

• FBT

There are also the human factors

• Vested interests of staff

• Attraction & retention driven

We are finding that the latter is limiting the extent of savings that can be achieved in local

government.

Our focus in this section is what can be achieved if lowest cost is the outcome sought.

Actual depreciation figures will show t

is immediately post purchase. The second drop is prior to a major component overhaul, which is

when second hand buyers are aware of a large impending maintenance bill. (Refer

which is provided for demonstration purposes only)

Figure 1 Optimum Changeover


LIGHT FLEET

Year 5Year 6Year 7Year 8



on optimum replacement timing. The optimum replacement timing (point) for a vehicle is calculated to


What drives replacement timing today?

ing today is driven by more than just cost and considerations include:

Repairs and maintenance

There are also the human factors

Attraction & retention driven by HR departments.



Actual depreciation figures will show two distinct steep drops in resale value. The first significant drop


when second hand buyers are aware of a large impending maintenance bill. (Refer

which is provided for demonstration purposes only)

Optimum Changeover (Sample only)

Green Line (Maintenance/Downtime cost

curve)

White Line (Depreciation curve)

Red Line (Average Cost curve)

LIGHT FLEET 27


The optimum replacement timing (point) for a vehicle is calculated to


ing today is driven by more than just cost and considerations include:



wo distinct steep drops in resale value. The first significant drop


when second hand buyers are aware of a large impending maintenance bill. (Refer Figure 1 below

(Maintenance/Downtime cost

White Line (Depreciation curve)

(Average Cost curve)


The optimum replacement point in the life of the vehicle is near the lowest point on the average cost

curve which is near when the decreasing line of depreciation intersects with the increasing cost of

repairs and maintenance costs. Utilisation (kilometres

changeover.

The Council’s current light vehicle policy is to change the fleet at 80,000km for cars and 120,000km

for utilities.

This sits well in comparison to other councils based on a recent IPWEA ligh

July 2015 which involved 100 plus respondents.

Figure 2 - IPWEA Survey July 2015

Replacement based on years

Only 20% of participants are changing their

vehicles at 5 years or more.

The Light Vehicle comparison charts in

available on the IPWEA website. The average annual costs of up to 10 vehicles can be compared in a

single chart. The charts also provide a guide to the optimum changeover year of each vehicle which is

generally the year of lowest whole of life cost. The charts are drawn from an extensive data base of

vehicles where whole of life costs are updated quarterly.

Visit www.ipwea.org/fleet for access to the model and other online fleet management tools. Access is

available on an annual subscription basis. Please note Uniqco is a partner with IPWEA in delivering

this service and derives income from subscriptions and the help desk service.

The charts show the average annual cost comparisons of different vehicles based on whole of life

costs with changeover at 1, 2, 3, 4 & 5 years based on average annual utilisation of 20,000km. With

few exceptions the model shows the lowest cost changeover occurs after 5 years for all vehicles in

the 4 & 6 cylinder range. There is little to no risk in extending the change point for vehicles to

150,000km and for specialised vehicles such as the Toyota Landcru

replace at 5 years but extend the kilometres to 250,000 to obtain full value from the vehicle

extension being subject to a risk assessment at 150,000km and again at 200,000km

New release models will initially show a lowe


LIGHT FLEET



Utilisation (kilometres travelled) is an important consideration in fleet

’s current light vehicle policy is to change the fleet at 80,000km for cars and 120,000km

This sits well in comparison to other councils based on a recent IPWEA light fleet survey conducted in

July 2015 which involved 100 plus respondents.

IPWEA Survey July 2015

Replacement based on utilisation

Only 20% of participants are changing their Only 24% are changing at 120,000km or

more.

The Light Vehicle comparison charts in Appendix 1 are generated from the light fleet selection model


harts also provide a guide to the optimum changeover year of each vehicle which is


vehicles where whole of life costs are updated quarterly.

for access to the model and other online fleet management tools. Access is


ncome from subscriptions and the help desk service.



eptions the model shows the lowest cost changeover occurs after 5 years for all vehicles in


150,000km and for specialised vehicles such as the Toyota Landcruiser our recommendation is to

replace at 5 years but extend the kilometres to 250,000 to obtain full value from the vehicle

subject to a risk assessment at 150,000km and again at 200,000km

New release models will initially show a lower whole of life cost in year 1 but this should be ignored.

LIGHT FLEET 28



travelled) is an important consideration in fleet

’s current light vehicle policy is to change the fleet at 80,000km for cars and 120,000km

t fleet survey conducted in

Replacement based on utilisation

are changing at 120,000km or

are generated from the light fleet selection model


harts also provide a guide to the optimum changeover year of each vehicle which is


for access to the model and other online fleet management tools. Access is




eptions the model shows the lowest cost changeover occurs after 5 years for all vehicles in


iser our recommendation is to

replace at 5 years but extend the kilometres to 250,000 to obtain full value from the vehicle. The

subject to a risk assessment at 150,000km and again at 200,000km.

r whole of life cost in year 1 but this should be ignored.


RECOMMENDATION


4. Council adopts the optimum economic changeover of




occurs first and subject to a risk assessment (at

150,000km and 200,000km)


Landcruiser.

5. Vehicles are not held beyond 5 years due to increasing



6. Where vehicles exceed their warranty period, continue




LIGHT FLEET

Optimum Changeover of Light Fleet Impact to

Organisation Council adopts the optimum economic changeover of




subject to a risk assessment (at

km and 200,000km) extending up to


beyond 5 years due to increasing



s exceed their warranty period, continue



LIGHT FLEET 29



1.8. Optimal 10 year Light Fleet Replacement Program.

Our draft 10 year plan is based on the optimum replacement recommendations of 5yr/150,000km’s.

The table below shows a summary of the expected net annual expenditure with an average annual

funding requirement of $865,622.

Table 6 - 10 Year Light Vehicle R

Variation to the Current 10 Year Plan

Year

1 2015/16

2 2016/17

3 2017/18

4 2018/19

5 2019/20

6 2020/21

7 2021/22

8 2022/23

9 2023/24

10 2024/25

Total Estimated Savings over 10 Years

Refer XL sheet for details of individual vehicles.

The 10 year plan is based on like for like vehicles with a best value assessment of make/model

options at the time of replacement using the IPWEA Light Fleet Selection Model.

1.9. Risk Management in Light Fleet

There are 2 elements of risk assessed in this section. Firstly Purchase (financial) risk and secondly

WHS risk.

Purchase Risk

Purchase decisions at CVC are currently driven by a combination of operational needs and safety but

there is no weighted methodology for decision making. Where possible an ANCAP 5 star rating is

selected but this is not always possible with some operational needs.

Cost and fit for purpose are not the only considerations in the purchase decision with most local

governments now placing a greater emphasis on safety and many also including environmental

impact of the fleet. The latter addressing the organisations social obligat

Some of our clients are stipulating Green Vehicle star ratings rather than CO

vehicle star rating is based on the sum of the air pollution and greenhouse ratings. Equal weighting is

given to both these ratings to arrive at a combined GVG rating (out of 20), which then is translated

into the star rating. Clarence Valley is not currently considering Green Vehicle Star Ratings.

One of the prime problems in trying to protect the environment is the public perception

changing vehicles to an alternative fuel can potentially “save” the environment. The negative impact


LIGHT FLEET

Optimal 10 year Light Fleet Replacement Program.



funding requirement of $865,622.

10 Year Light Vehicle Replacement Summary Funding Requirement

Variation to the Current 10 Year Plan

Net Replacement Cost (Uniqco 10

Year Plan)

Current 10 Year Plan

$555,739 $1,005,865 $450,126

$680,006 $1,285,572 $605,512

$1,282,587 $1,034,374 $248,123

$1,041,571 $1,378,950 $337,379

$766,298 $849,945 $83,647

$791,212 $1,171,016 $379,804

$753,759 $1,113,277 $359,518

$1,069,074 $1,228,671 $159,597

$1,035,948 $561,763 $474,185

$831,237 $1,143,025 $311,788

Total Estimated Savings over 10 Years $1,964,973

Refer XL sheet for details of individual vehicles.


options at the time of replacement using the IPWEA Light Fleet Selection Model.



s at CVC are currently driven by a combination of operational needs and safety but


selected but this is not always possible with some operational needs.

fit for purpose are not the only considerations in the purchase decision with most local


impact of the fleet. The latter addressing the organisations social obligations to the community.

Some of our clients are stipulating Green Vehicle star ratings rather than CO2 emissions. The green


to arrive at a combined GVG rating (out of 20), which then is translated


One of the prime problems in trying to protect the environment is the public perception


LIGHT FLEET 30



eplacement Summary Funding Requirement Showing

Variation

450,126

605,512

248,123

337,379

83,647

379,804

359,518

159,597

474,185

311,788

1,964,973



s at CVC are currently driven by a combination of operational needs and safety but


fit for purpose are not the only considerations in the purchase decision with most local


ions to the community.

emissions. The green


to arrive at a combined GVG rating (out of 20), which then is translated


One of the prime problems in trying to protect the environment is the public perception that simply



on the environment from motor vehicles is not only from CO

such as total hydro carbons (THC), oxides of

Evaluation of the environmental impact of light vehicles should involve a balanced decision making

process based on a number of contributing criteria which should include: Annual Whole of Life Costs,

CO2 Emissions, Air Pollution Rating and Safety (ANCAP rating). Fuel consumption is included within

the whole of life costs and CO2 Emission assessment and should not be considered in isolation. Our

recommended methodology provides the opportunity to also appl

with whole of life costs.

We recommend future purchase decisions be based primarily on

together with minimum ANCAP safety and Green Guide Ratings.

Table 7 Weighting Factors in Purchase Decisions

Criteria

Annual Whole of Life Costs (including FBT & fuel consumption)

CO2 Emissions

Air Pollution Rating

Safety

Local purchase preference

Note: Fuel consumption is included within the whole of life costs and CO

be considered in isolation. Weightings can be varied to suite the Council’s safety and environmental objectives

The IPWEA light fleet model comparison charts allows the user

annual whole of life costs, CO2 emissions, air pollution rating and safety and provides a total score for

each vehicle. Scores can then be compared. Fuel consumption is included within the whole of life

costs and CO2 emission assessment and should not be considered in isolation. The output table for

the above weightings for the vehicles selected for the charts is shown in

chart.

The charts themselves compare whole of life costs (including estimated

optimum replacement timing for each vehicle. The table below each chart shows the weighted

analysis data.

Choice of Fleet Vehicles

CVC staff has done an excellent job of vehicle make/model selection and our only recommendation

for change is that fleet vehicle selection includes environmental considerations. The recommended

criteria being:

• Vehicles that are fit for the use/application proposed;

• Lowest whole of life costs;

• Safety with minimum ANCAP rating of 5 where possible;

• Environmental considerations with minimum Green Guide ratings.


LIGHT FLEET

on the environment from motor vehicles is not only from CO2 but also the other noxious substances

such as total hydro carbons (THC), oxides of nitrogen (NOx) and diesel particulate matter (PM).



Emissions, Air Pollution Rating and Safety (ANCAP rating). Fuel consumption is included within

Emission assessment and should not be considered in isolation. Our

recommended methodology provides the opportunity to also apply weightings to these factors along

We recommend future purchase decisions be based primarily on 4 weighted criteria shown in

together with minimum ANCAP safety and Green Guide Ratings.

7 Weighting Factors in Purchase Decisions

Criteria Suggested Weighting (%)

Annual Whole of Life Costs (including FBT & fuel consumption)

included within the whole of life costs and CO2 Emission assessment and should not


The IPWEA light fleet model comparison charts allows the user to apply their own weightings to

emissions, air pollution rating and safety and provides a total score for


ion assessment and should not be considered in isolation. The output table for

the above weightings for the vehicles selected for the charts is shown in Appendix 1

The charts themselves compare whole of life costs (including estimated residual values) and the



change is that fleet vehicle selection includes environmental considerations. The recommended

Vehicles that are fit for the use/application proposed;

Safety with minimum ANCAP rating of 5 where possible;

Environmental considerations with minimum Green Guide ratings.

LIGHT FLEET 31

but also the other noxious substances

nitrogen (NOx) and diesel particulate matter (PM).



Emissions, Air Pollution Rating and Safety (ANCAP rating). Fuel consumption is included within

Emission assessment and should not be considered in isolation. Our

y weightings to these factors along

4 weighted criteria shown in Table 7

Suggested Weighting (%)

70

5

5

5

15

Emission assessment and should not


to apply their own weightings to

emissions, air pollution rating and safety and provides a total score for


ion assessment and should not be considered in isolation. The output table for

Appendix 1 below each

residual values) and the



change is that fleet vehicle selection includes environmental considerations. The recommended


We recommend the IPWEA Light Fleet Selection Model is used prior to making a new purchase to

ensure up to date information is being used in the purchase decision. Visit

access to the model and other online fleet management tools. Online Videos demonstrate how to use

the tools.

RECOMMENDATION


7. A balanced assessment with weighted criteria including




vehicles.

8. The following minimum standards be adopted:

a) ANCAP 5 star rating for passenger cars and 4


b) Green vehicle star rating of 3.5 for passenger

cars and 2.5 for 4WD wagons, utilities & vans

9. Where utilities are required for operational reasons,



specification.

WHS Risk

In our experience few organisations are aware of the Work, Health & Safety Risk associated with staff

driving company vehicles and the only requirement is a current driver’s licence. This risk can be

mitigated through driver training.

7 out of 10 companies do not have a ‘motor vehicle’ policy or at least the employees are unaware of

the policy. Whether there is a policy or not an organisation is at risk of failing to ensure an employee

who is required to drive/operate their vehicles (or plant) on the road has the necessary skills. A

sample policy is available from IPWEA.

Research published in the National

reported that, 90% of all incidents and collisions are caused by driver actions (decision making),

which are expressions of their behaviour, attitude and personal choices, not their inability to dri

The IPWEA ‘On-Line’ Diver Training Program, is a road safety initiative designed to improve driver

skills. It allows drivers to participate at their own pace in their own time. Once enrolled a participant

has 12 months unlimited access to up to 24 dr

By focusing on a targeted and methodical approach to driver education the organisation is able to

understand the risk and mitigate the risk and the online driver training can highlight policies.

The advantages of undertaking driver a

limited to: -

• 90% of Driving incidents are decision based

• Continuous awareness changes driver behaviour

• Skills based driver training if not practiced deteriorates over time


LIGHT FLEET


ensure up to date information is being used in the purchase decision. Visit www.ipwea.org/fleet


Risk Management in Light Fleet Impact to Organisation

sessment with weighted criteria including




The following minimum standards be adopted:

ANCAP 5 star rating for passenger cars and 4


Green vehicle star rating of 3.5 for passenger

cars and 2.5 for 4WD wagons, utilities & vans.

Where utilities are required for operational reasons,





mitigated through driver training.


ere is a policy or not an organisation is at risk of failing to ensure an employee


sample policy is available from IPWEA.

Research published in the National Motor Vehicle Crash Causation Survey Report, April 2008.


which are expressions of their behaviour, attitude and personal choices, not their inability to dri

Line’ Diver Training Program, is a road safety initiative designed to improve driver


has 12 months unlimited access to up to 24 driver training modules.



The advantages of undertaking driver awareness using ‘on-line’ Driver training is based on but not

90% of Driving incidents are decision based

Continuous awareness changes driver behaviour

Skills based driver training if not practiced deteriorates over time

LIGHT FLEET 32


www.ipwea.org/fleet for






ere is a policy or not an organisation is at risk of failing to ensure an employee


Motor Vehicle Crash Causation Survey Report, April 2008.


which are expressions of their behaviour, attitude and personal choices, not their inability to drive.

Line’ Diver Training Program, is a road safety initiative designed to improve driver




line’ Driver training is based on but not


• Skills based driver training promotes ‘over confidence’ in drivers and highlights reactive skills

• On-line driver training is measured, referenced and promotes proactive skills

• On-line driver training is more cost effective

Monitoring of the on-line modules allows for reports to

consistently poor performers. Remedial action can be implemented and driver training programs such

as ‘one on one’ driver assessments undertaken in order to correct these anomalies.

The rewards for being proactive include:

• safer work and commuter driving for employees

• lower fleet and insurance costs

• improved fleet productivity

• enhanced image and reputation

• more effective driving safety management system

• enhanced OHS/WHS compliance

NRMA Insurance recently called

to reduce staff injuries and avoid preventable fatalities on the road. Refer

http://www.insurancebusinessonline.com.au/news/insurer

206166.aspx

RECOMMENDATION


10. A Safe Driving Policy is adopted and




11. Consideration is given to staff undertaking the IPWEA


1.10. Fuel Options

The future is expected to deliver an era of more sophisticated fuels, better engine technology, and

improved recycling of plant and vehicle

include:

Readily Available

• Ethanol ULP mix (E10) – Ethanol is now standard in the eastern states.

• Hybrid cars are now common place in Australia. However, using these vehicles in a rural

environment (in their present configuration) does not offer environmental savings due to the

requirement for the vehicles engine to provide power at speeds over 60km/hr. These vehicles

are best applied in an inner city urban environment where they see full bene

in resale value are making Hybrid vehicles more viable for inner city commuter use.


LIGHT FLEET

aining promotes ‘over confidence’ in drivers and highlights reactive skills

line driver training is measured, referenced and promotes proactive skills

line driver training is more cost effective

line modules allows for reports to be generated, which highlight drivers who are



tive include:

safer work and commuter driving for employees

lower fleet and insurance costs

improved fleet productivity

enhanced image and reputation

more effective driving safety management system

enhanced OHS/WHS compliance

on employers to improve and adopt safe vehicle fleet policy in a bid

to reduce staff injuries and avoid preventable fatalities on the road. Refer

http://www.insurancebusinessonline.com.au/news/insurer-nrma-calls-for-increased

Risk Management in Light Fleet Impact to Organisation

A Safe Driving Policy is adopted and distributed to all




Consideration is given to staff undertaking the IPWEA



improved recycling of plant and vehicle waste. Future fuels that will reduce the environmental impact

Ethanol is now standard in the eastern states.

Hybrid cars are now common place in Australia. However, using these vehicles in a rural

nment (in their present configuration) does not offer environmental savings due to the


are best applied in an inner city urban environment where they see full bene


LIGHT FLEET 33

aining promotes ‘over confidence’ in drivers and highlights reactive skills

line driver training is measured, referenced and promotes proactive skills

be generated, which highlight drivers who are



on employers to improve and adopt safe vehicle fleet policy in a bid

increased-employee-safety-



waste. Future fuels that will reduce the environmental impact

Hybrid cars are now common place in Australia. However, using these vehicles in a rural

nment (in their present configuration) does not offer environmental savings due to the


are best applied in an inner city urban environment where they see full benefit. Improvements



• LPG – Commonly available in Australia. Greenhouse ratings are average due to fuel

consumption being higher when compared to the same vehicle powered by

combined with their higher air pollution rating does not necessarily make them an

environmentally friendly fuel alternative.

Not Readily Available

• Fuel cell technology – The cleanest concept available to date, however only available in limited

numbers and extremely expensive due to emerging technology status. Perth currently

operates some trial buses using this technology.

• Compressed Natural Gas (CNG)

due to fuel consumption being higher

This combined with their higher air pollution rating does not necessarily make them an


• Electric vehicles – are in the early stages of commercial availability in

Miev and Nissan Leaf vehicles should be available for delivery in the next 12 months. An

electric vehicle may have a low direct environmental impact. However, it is important to

consider the birth to death environmental impact. We

purchase of electric vehicles until such time as the full cost and environmental impact is

known.

Many of the above fuels and the technology involved in using them are still largely at an early

developmental stage. As a result of reliability issues with some fuels, the resultant downtime,

mechanical failures, and low resale value can make the cost of using them expensive.

Other comments:

• With the introduction of Euro 6 diesel will be cleaner with fuel consumptions expecte

- 100km and diesel cars are excellent for long distance driving.

• When evaluating diesel vehicles, pollution ratings must be considered and with the

introduction of Euro 6 the diesel engine will be cleaner than ever before.

• Re-refined oils are not considered suitable as they conflict with manufacturers’

recommendations.

• Organic fuels are at an early stage of development and there are major quality issues at this

time.

• Synthetic oils are often included in manufacturers’ recommendations where serv

are increased. There is no requirement to specify them as manufacturers are fully aware of

the responsibilities to the environment.

• Noise reduction is part of the development of Australian Design Rules (ADR). All vehicles on

the road have to comply with ADR.

• Fuel economy is addressed in our recommended fleet mix and is considered in whole of life

costs. Its environmental impact is considered in CO2 output and pollution ratings.


LIGHT FLEET

Commonly available in Australia. Greenhouse ratings are average due to fuel

consumption being higher when compared to the same vehicle powered by



The cleanest concept available to date, however only available in limited

mbers and extremely expensive due to emerging technology status. Perth currently

operates some trial buses using this technology.

Compressed Natural Gas (CNG) – Limited use in Australia. Greenhouse ratings are average

due to fuel consumption being higher when compared to the same vehicle powered by ULP.



are in the early stages of commercial availability in Australia. The Mitsubishi



consider the birth to death environmental impact. We suggest the Council



sult of reliability issues with some fuels, the resultant downtime,


With the introduction of Euro 6 diesel will be cleaner with fuel consumptions expecte

100km and diesel cars are excellent for long distance driving.

When evaluating diesel vehicles, pollution ratings must be considered and with the

introduction of Euro 6 the diesel engine will be cleaner than ever before.

not considered suitable as they conflict with manufacturers’

Organic fuels are at an early stage of development and there are major quality issues at this

Synthetic oils are often included in manufacturers’ recommendations where serv


the responsibilities to the environment.

Noise reduction is part of the development of Australian Design Rules (ADR). All vehicles on

comply with ADR.

Fuel economy is addressed in our recommended fleet mix and is considered in whole of life


LIGHT FLEET 34

Commonly available in Australia. Greenhouse ratings are average due to fuel

consumption being higher when compared to the same vehicle powered by ULP. This


The cleanest concept available to date, however only available in limited

mbers and extremely expensive due to emerging technology status. Perth currently

Limited use in Australia. Greenhouse ratings are average

when compared to the same vehicle powered by ULP.


Australia. The Mitsubishi



Council hold off any



sult of reliability issues with some fuels, the resultant downtime,


With the introduction of Euro 6 diesel will be cleaner with fuel consumptions expected to be 6lt

When evaluating diesel vehicles, pollution ratings must be considered and with the

not considered suitable as they conflict with manufacturers’

Organic fuels are at an early stage of development and there are major quality issues at this

Synthetic oils are often included in manufacturers’ recommendations where service intervals


Noise reduction is part of the development of Australian Design Rules (ADR). All vehicles on

Fuel economy is addressed in our recommended fleet mix and is considered in whole of life



A comparison of vehicles show

• 4 cylinder vehicles produce less

cylinder vehicles

• Per litre of fuel burnt Diesel produces more CO

consumption of diesel vehicles results in a lower CO

• Hybrid vehicles rank highly for low CO

and Toyota Yaris.

While there is a perception that LPG vehicles have a lower CO

vehicles, this is not the case as the fuel consumption on LPG vehicles is higher than ULP

vehicles. This results in higher CO

The argument made against diesel is that it has a higher pollution rating. However, current technology

using exhaust after treatment has, in some cases, reduced air pollution of diesel

than ULP and LPG vehicles. Diesel emissions will be even cleaner following the introduction of Euro

6 vehicles planned for early 2017.

In most cases Council is advised to consider diesel vehicles that have a lower CO

LPG and with an equivalent pollution rating.

CO2 outputs and pollution ratings provide a useful tool in comparing the environmental impacts of

different vehicles. However we recommend against using environmental considerations alone in

vehicle purchase decisions. Hence our recommendation for a weighted criteria approach.

It is predicted by the major manufacturers that in the near future the international vehicle market will

comprise of 20% hybrid technology, 20% ULP and its derivatives, 50% diesel and the

will be a mix of LPG, CNG and bio

fuel cell technology for the longer term.

1.11. Make & Model Selection

A detailed review of Council’s existing make/model light fleet asset base has been undertaken using

our Light Fleet Survey template (refer

The current structure of the fleet by way of make and model is totally suitable for the application at

Clarence Valley. There is however an opportunity to downsize the physical size of vehicles. Many

small cars are now designed with a larger interior space but are still achieving a 5 star safety rating.

Given the large average mileage of the fleet fuel con

vehicles will deliver fuel savings.

For example the current RAV 4 model has physically grown and could be replaced by the Mazda

CX3, Hyundai i40, Nissan Qashqai or Mitsubishi ASX.

1.12. Vehicle Optional Extras

Optional extras fitted to light-fleet vehicles can have a substantial effect on the resale value and

capital purchase costs. Vehicle extras in the not recommended category are not encouraged as they

can reduce resale values.


LIGHT FLEET

A comparison of vehicles shows

4 cylinder vehicles produce less CO2 and have a lower pollution impact compared to 6

Per litre of fuel burnt Diesel produces more CO2 than ULP. However the lower fuel

consumption of diesel vehicles results in a lower CO2 output.

Hybrid vehicles rank highly for low CO2 outputs but so does the Honda Jazz, VW Polo Petrol

While there is a perception that LPG vehicles have a lower CO2 output than ULP and diesel fuelled

vehicles, this is not the case as the fuel consumption on LPG vehicles is higher than ULP

vehicles. This results in higher CO2 outputs in some cases.


using exhaust after treatment has, in some cases, reduced air pollution of diesel vehicles to lower


6 vehicles planned for early 2017.

In most cases Council is advised to consider diesel vehicles that have a lower CO

LPG and with an equivalent pollution rating.

outputs and pollution ratings provide a useful tool in comparing the environmental impacts of


cisions. Hence our recommendation for a weighted criteria approach.


comprise of 20% hybrid technology, 20% ULP and its derivatives, 50% diesel and the

will be a mix of LPG, CNG and bio-products. Most manufacturers are investing heavily in hydrogen

fuel cell technology for the longer term.

Make & Model Selection


our Light Fleet Survey template (refer Appendix 2).




Given the large average mileage of the fleet fuel consumption is a major consideration and smaller

vehicles will deliver fuel savings.


CX3, Hyundai i40, Nissan Qashqai or Mitsubishi ASX.


fleet vehicles can have a substantial effect on the resale value and


LIGHT FLEET 35

and have a lower pollution impact compared to 6

than ULP. However the lower fuel

utputs but so does the Honda Jazz, VW Polo Petrol

output than ULP and diesel fuelled

vehicles, this is not the case as the fuel consumption on LPG vehicles is higher than ULP and diesel


vehicles to lower


In most cases Council is advised to consider diesel vehicles that have a lower CO2 output rather than

outputs and pollution ratings provide a useful tool in comparing the environmental impacts of


cisions. Hence our recommendation for a weighted criteria approach.


comprise of 20% hybrid technology, 20% ULP and its derivatives, 50% diesel and the balance of 10%

products. Most manufacturers are investing heavily in hydrogen





sumption is a major consideration and smaller


fleet vehicles can have a substantial effect on the resale value and



Options that add resale value

• Passenger Airbag if 4 star is not available for commercial vehicles

• Cruise control

• Remote central locking

• Air-conditioning

• Light coloured paint (not black, red, dark blue etc)

reduces resale value by up to $1,000

• Floor mats (rubber preferred)

• Mudflaps front and rear

• ABS

• Stability control (ESP) where available as standard

part of the safety considerations in the purchase decision where available as standard


Options that detract from resale value

• Tow bar on passenger vehicles

heavy loads all its life

• Dark coloured duco

• Manual transmission

• Additional solar tint - Is pe

now offer glass that minimises UV rays. All air

quite capable of cooling the vehicle without additional tinting. Tinting film ages and often

requires replacing at resale.

Note:

• Driving with headlights on should be considered as a policy issue rather than an extra to be

specified. Auto headlight on ignition comes at an extra cost and does not currently add to

resale value.

• Care should be taken in drill


LIGHT FLEET

Options that add resale value

Passenger Airbag if 4 star is not available for commercial vehicles

Light coloured paint (not black, red, dark blue etc) - Dark colour duco costs more to repair and

reduces resale value by up to $1,000 at changeover.

Floor mats (rubber preferred)

Stability control (ESP) where available as standard - Stability control should be considered as

part of the safety considerations in the purchase decision where available as standard

Auto adjustable rear mirrors

Options that detract from resale value

Tow bar on passenger vehicles – this creates the perception that the vehicle has been towing

Is perceived as reducing the impact of UV rays but all manufacturers

now offer glass that minimises UV rays. All air-conditioning supplied by manufacturers is


s replacing at resale.

Driving with headlights on should be considered as a policy issue rather than an extra to be


Care should be taken in drilling holes for mobile phones, radios and other fittings.

LIGHT FLEET 36

Dark colour duco costs more to repair and

Stability control should be considered as

part of the safety considerations in the purchase decision where available as standard.

this creates the perception that the vehicle has been towing

rceived as reducing the impact of UV rays but all manufacturers

conditioning supplied by manufacturers is


Driving with headlights on should be considered as a policy issue rather than an extra to be


ing holes for mobile phones, radios and other fittings.


RECOMMENDATION


12. The following recommended accessories are included


a) Recommended (for safety & resale value)

• Air Conditioning

• ONLY Light metallic paint

• Floor mats/ Mud flaps front & rear

• Passenger air bag where if not standard

• Cruise control (adaptive if available)

• ABS braking (Essential)

• Stability Control (where available as

• Cargo barriers for station wagons/vans

• Central locking


• Lane assist if available

• Reverse warning sensors or a reversing

camera where available as part of a standard

package

b) Optional

• Headlight and bonnet protector

• Weather shield

c) Not Recommended (can detract from resale

value)

• Tow pack

• Dark colour duco (reduces resale value)

• Manual other than 4WD Utility

• Installation of solar

manufacture

• Bull bars (from a pedestrian safety

perspective)

1.13. Private Use and Fringe Benefits Tax

Private and commuting use of council owned vehicles introduces additional costs to employers. In this

section we look at fringe benefits tax

Council’s FBT liability in 2014/15 amounted to $50,623 for motor vehicles.

This amount of FBT is low for such a large fleet and reflects the level of lease back contributions

being made by staff with full private use and commuting u

Firstly we need to explain how FBT applies and consider the options to minimise FBT.

When does FBT apply?

For Fringe Benefit Tax reasons, a car is:

• a station wagon, sedan, panel van or ute (including four

• any other goods-carrying vehicle that has a capacity to carry 1 tonne or less; or

• any other vehicle which is designed to carry less than nine passengers


LIGHT FLE

Impact to Organisation

The following recommended accessories are included


(for safety & resale value)

ONLY Light metallic paint

Floor mats/ Mud flaps front & rear

Passenger air bag where if not standard

Cruise control (adaptive if available)

ABS braking (Essential)

Stability Control (where available as standard)

Cargo barriers for station wagons/vans

Auto adjustable rear mirrors

Lane assist if available

Reverse warning sensors or a reversing

camera where available as part of a standard

Headlight and bonnet protector

Not Recommended (can detract from resale

Dark colour duco (reduces resale value)

Manual other than 4WD Utility

Installation of solar tint to windows post

Bull bars (from a pedestrian safety



section we look at fringe benefits tax – how it applies and strategies to minimise FBT liabilities. The

Council’s FBT liability in 2014/15 amounted to $50,623 for motor vehicles.


being made by staff with full private use and commuting use. This is addressed in Section 1.13.3.


For Fringe Benefit Tax reasons, a car is:

a station wagon, sedan, panel van or ute (including four-wheel drive utes);

carrying vehicle that has a capacity to carry 1 tonne or less; or

any other vehicle which is designed to carry less than nine passengers

LIGHT FLEET 37



e FBT liabilities. The


se. This is addressed in Section 1.13.3.


carrying vehicle that has a capacity to carry 1 tonne or less; or


Exempt Vehicles

Provided they are only used for home to work travel, business purposes and

and irregular travel:

• Motor Cycles

• Vehicles designed to carry a load of at least 1 tonne

• Taxis, panel vans, utilities and commercial vehicles designed to carry a load of less than 1

tonne but not principally designed to carry pas

o According to MT 2024 this includes Nissan Navara Dual Cab Ute DX, Mazda Bravo

4WD Dual Cab Ute DX5, Toyota Hilux 4x2 Dual Cab Ute, Ford Courier 4x2Crew Cab

pick-up GL and Holden Ute Series III 179kw V8. Other vehicles that have more load

space than passenger space may well qualify.

1.13.1 Fringe Benefit Tax Assessment Methods

There are two methods available to determine the value of a motor vehicle benefit for FBT purposes:

• The statutory method; and

• The operating cost method (log book).

The statutory formula method must be used unless an employer elects to use the operating cost

method. A decision to use the operating cost method must be made no later than the day on which an

FBT return is due to be lodged with the ATO or, by 21 May if a return is

Employers are free to choose whichever method yields the lowest taxable value. There is no need to

notify the ATO of the method chosen as business records are sufficient evidence of this.

A reportable benefit must be included on

benefit. This is calculated by taking the driver’s share of FBT and grossing up to the pre

The reportable benefit will not be included in staff’s assessable (or taxable) income.

reportable benefit is taken into account by the Australian Taxation Office (ATO) for various income

tests. Eg. Superannuation and termination surcharges, HECS, child support etc.

The statutory formula method calculates the taxable value of the

percentage of the car's value, based on the number of days during the FBT year on which the car was

available for private use. The percentage is called the ‘statutory fraction’. Since 1 April 2014 the

statutory rate of 20% applies regardless of kilometres travelled.

Availability for Private Use

A car is considered by the Australian Taxation Office to be available for private use if it is garaged at

or kept at or near an employee’s private residence and/or in their custody and con

from home to work is considered private use for tax purposes.

Situations in which a car is considered

a. the car is off the road for any reason for more than three days e.g. extensive repairs are

carried out, as opposed to a routine service or maintenance;


LIGHT FLEET

Provided they are only used for home to work travel, business purposes and other minor, infrequent

Vehicles designed to carry a load of at least 1 tonne

Taxis, panel vans, utilities and commercial vehicles designed to carry a load of less than 1

tonne but not principally designed to carry passengers.

According to MT 2024 this includes Nissan Navara Dual Cab Ute DX, Mazda Bravo


up GL and Holden Ute Series III 179kw V8. Other vehicles that have more load

an passenger space may well qualify.

1.13.1 Fringe Benefit Tax Assessment Methods


The statutory method; and

The operating cost method (log book).

tory formula method must be used unless an employer elects to use the operating cost


FBT return is due to be lodged with the ATO or, by 21 May if a return is not required to be lodged.



A reportable benefit must be included on the employee’s group certificate for the notional value of that

benefit. This is calculated by taking the driver’s share of FBT and grossing up to the pre

The reportable benefit will not be included in staff’s assessable (or taxable) income.


tests. Eg. Superannuation and termination surcharges, HECS, child support etc.

The statutory formula method calculates the taxable value of the motor vehicle benefit as a



es regardless of kilometres travelled.


or kept at or near an employee’s private residence and/or in their custody and con

from home to work is considered private use for tax purposes.

Situations in which a car is considered not to be available for private use are:

the car is off the road for any reason for more than three days e.g. extensive repairs are

carried out, as opposed to a routine service or maintenance;

LIGHT FLEET 38

other minor, infrequent

Taxis, panel vans, utilities and commercial vehicles designed to carry a load of less than 1

According to MT 2024 this includes Nissan Navara Dual Cab Ute DX, Mazda Bravo


up GL and Holden Ute Series III 179kw V8. Other vehicles that have more load


tory formula method must be used unless an employer elects to use the operating cost


not required to be lodged.



the employee’s group certificate for the notional value of that

benefit. This is calculated by taking the driver’s share of FBT and grossing up to the pre-tax position.

The reportable benefit will not be included in staff’s assessable (or taxable) income. However the


motor vehicle benefit as a




or kept at or near an employee’s private residence and/or in their custody and control. Driving a car

the car is off the road for any reason for more than three days e.g. extensive repairs are being


b. the vehicle is not garaged overnight at the employees place of residence e.g. it is garaged at

work and the keys to the vehicle are held by your office and there is a prohibition on the

private use of the vehicle.

The lower the number of days available for private use, the lower the value for FBT purposes. This

means a lower reportable benefit shown on an employee payment summary and less fringe benefits

tax paid by the employer.

The Statutory Method

Under the statutory formula method, the value of the benefit is calculated as follows:

Cost of the Car X Statutory Percentage

Employee Contribution is any after tax

reimbursed by the employer.

The Operating Cost (Log Book) Method

This method calculates the taxable value as a % of the total costs of operating the car during the FBT

year.

• The value for FBT purposes is the private use %.

• To determine the business and private use %, a logbook must be used.

• As a minimum the logbook is required to be maintained for a continuous period of 12 weeks

for the first year the logbook method is used and then ev

2 tax years.

Under the Operating Cost method, the value of the benefit is calculated as follows:

Total Operating Costs

Reducing the value after 4 years

For the purpose of FBT calculations an employer can reduce the base value of a car by one

the FBT year that starts after the car has been owned or leased for four years.

• The reduction applies from 1 April after the fourth anniversary of the date

was first owned or leased.

• The reduction applies only once for a particular car and the reduced base value is used for

subsequent years.

• The reduction does not apply to non

Example:

An employer purchases a car for $30,000 (including GST) on 1 July 2013. The employer can reduce

the base value of the car by one-


LIGHT FLEET

the vehicle is not garaged overnight at the employees place of residence e.g. it is garaged at


private use of the vehicle.




Statutory Percentage X Days Vehicle Available for Private Use

less Employee Contribution

after tax payment made towards the cost of the car that has not been

The Operating Cost (Log Book) Method


or FBT purposes is the private use %.

To determine the business and private use %, a logbook must be used.

As a minimum the logbook is required to be maintained for a continuous period of 12 weeks

for the first year the logbook method is used and then every 5 years. The period may overlap


Total Operating Costs X Percentage of Private Use less Employee Contribution

Reducing the value after 4 years

For the purpose of FBT calculations an employer can reduce the base value of a car by one

the FBT year that starts after the car has been owned or leased for four years.

The reduction applies from 1 April after the fourth anniversary of the date

was first owned or leased.

The reduction applies only once for a particular car and the reduced base value is used for

The reduction does not apply to non-business accessories added after the car is acquired.


-third ($10,000) in the FBT year beginning 1 April 2018.

LIGHT FLEET 39

the vehicle is not garaged overnight at the employees place of residence e.g. it is garaged at





Days Vehicle Available for Private Use / Days in the Year

payment made towards the cost of the car that has not been


As a minimum the logbook is required to be maintained for a continuous period of 12 weeks

ery 5 years. The period may overlap


Employee Contribution

For the purpose of FBT calculations an employer can reduce the base value of a car by one-third in

The reduction applies from 1 April after the fourth anniversary of the date on which the car

The reduction applies only once for a particular car and the reduced base value is used for

business accessories added after the car is acquired.


third ($10,000) in the FBT year beginning 1 April 2018.


If our recommendation to extend vehicle replacement to 5 years/150,000

applied to low utilisation vehicles.

Utilities

Provided the private use of a utility is limited to:

• travel between home and work,

• travel that is incidental to travel in course of duties of employment, or

• non-work related use that is minor, infrequent and irregular (e.g. occasional use of the ute to

remove domestic rubbish)

then the private use is FBT exempt.

Private use beyond the above is subject to FBT as a residual benefit and this is the most expensive

method of fringe benefits tax calculation based on 55 cents per private use kilometer and this rate is

then also applied to the commuting use.

Further information on FBT and example calculations is provided in

Opportunities to Reduce FBT

While the statutory method is the most commonly used method for calculating FBT payable for car

fringe benefits, the Operating cost method may deliver the lowest FBT liability, particularly where

there is a high percentage of business use. In the case of commercial vehicles used

log books should be used permanently.

CVC predominantly uses the Statutory Formula Method, except for 14 vehicles for which the

operating cost method is used. Most of these vehicles are high business use.


LIGHT FLEET

If our recommendation to extend vehicle replacement to 5 years/150,000km the above benefit can be

applied to low utilisation vehicles.

Provided the private use of a utility is limited to:

travel between home and work,

travel that is incidental to travel in course of duties of employment, or

that is minor, infrequent and irregular (e.g. occasional use of the ute to

remove domestic rubbish)

then the private use is FBT exempt.


enefits tax calculation based on 55 cents per private use kilometer and this rate is

then also applied to the commuting use.

Further information on FBT and example calculations is provided in Appendix 3.

Opportunities to Reduce FBT

hod is the most commonly used method for calculating FBT payable for car


there is a high percentage of business use. In the case of commercial vehicles used

log books should be used permanently.


operating cost method is used. Most of these vehicles are high business use.

LIGHT FLEET 40

km the above benefit can be

that is minor, infrequent and irregular (e.g. occasional use of the ute to


enefits tax calculation based on 55 cents per private use kilometer and this rate is

hod is the most commonly used method for calculating FBT payable for car


there is a high percentage of business use. In the case of commercial vehicles used for private use



Table 8 – Vehicles with FBT Calc

Plant Number

Registration Number

0123-06 BU09ZV

0128-03 BM57VF

0153-04 BS04FM

0157-04 BP78DV

0165-04 BT97YR

0170-04 BS03FM

0177-03 BV80RE

0178-02 BJ95UE

0190-03 BQ99FS

0194-04 BN19PE

0197-05 BV09ZE

0210-04 BV39ZE

0221-04 BT25MP

* From Uniqco light fleet staff survey

The only way to be sure of which method will minimise FBT liability is to use log books

all private use vehicles and make the decision of which method to adopt on an annual basis. Our

recommended strategy to minimise FBT is:

(i) Selection of vehicles with lower FBT liabilities

(ii) Ensure there are post tax staff contributions for priv

(iii) Use of log books

• For a minimum of 3 months per year for all vehicles (only current practice for selected

vehicles)

• Permanently for FBT applicable vehicles with high business use and commuting use as well

as private use

• Permanently for commercial vehicles with private use

The use of log books can reduce FBT liabilities and provide invaluable information on business use

for managing the fleet.


LIGHT FLEET

Vehicles with FBT Calculated Using Operating Cost Method

Registration Number

Description * Percentage Business Use

BU09ZV Toyota Kluger KXS 62

BM57VF Toyota Corolla Conquest

Sedan 65

BS04FM Hyundai Santa Fe 72

BP78DV Toyota RAV4 CV 4WD 88

BT97YR Toyota Corolla Sedan 60

BS03FM Toyota Corolla Conquest

Sedan 56

BV80RE Holden Colorado 88

BJ95UE Subaru Forester 41

BQ99FS Mitsubishi Triton GLX 4x4

Dual Cab 48

BN19PE Holden Berlina VE Sedan 46

BV09ZE Toyota RAV4 20

BV39ZE Subaru Forester Wagon 82

BT25MP Holden Colorado 4WD Dual 77

From Uniqco light fleet staff survey

The only way to be sure of which method will minimise FBT liability is to use log books


recommended strategy to minimise FBT is:

Selection of vehicles with lower FBT liabilities

Ensure there are post tax staff contributions for private use (current practice)

For a minimum of 3 months per year for all vehicles (only current practice for selected

Permanently for FBT applicable vehicles with high business use and commuting use as well

ly for commercial vehicles with private use


LIGHT FLEET 41

Percentage Business Use

62

65

72

88

60

56

88

41

48

46

20

82

77

The only way to be sure of which method will minimise FBT liability is to use log books permanently in


ate use (current practice)

For a minimum of 3 months per year for all vehicles (only current practice for selected

Permanently for FBT applicable vehicles with high business use and commuting use as well



Car Pooling

An increase in car pooling can result in a lower FBT cost particularly

employees receiving benefits below $300 which are exempt under the minor and infrequent rule. If

however the value of the use for employees exceeds the $300 threshold there is no benefit in pooling

versus providing vehicles for exclusive use by staff. The only other benefit that results from pooling is

that the taxable value of the benefit may not need to be reported on the employees PAYG payment

summary as a reportable fringe benefit.

RECOMMENDATION


13. Where light vehicles that attract FBT are used for a

substantial amount of work


Taxation Office guidelines to minimise FBT



14. For the purpose of FBT calculations Council note the


5 years, to reduce the base value of a car



Current Commuter and Private

From the background provided for this review:

“Council staff that have a vehicle provided as part of their employment package pay a leaseback fee

of between $92 and $131 per week to cover private use

received $417,000 from light fleet vehicle leaseback fees.

vehicles such as registration, insurance, fuel and maintenance is covered by council, with the

leaseback fee being set at a rate to cover the privat

All staff allocated a council vehicle for commuting or private use pay a post tax (lease back)

contribution towards the benefit provided. Being post tax means every dollar paid can be used to both

offset operating costs and FBT.

Current staff contributions for private use are shown in

Table 9 - Current Staff Contributions

Vehicle Type

Lease Back Hilux/Colorado/Commodore/Aurion/Triton

Lease Back

Rav4/Forester/Corolla/Hyundai

Commuting Only

Operational On-call


LIGHT FLEET

An increase in car pooling can result in a lower FBT cost particularly if the use results in individual



for exclusive use by staff. The only other benefit that results from pooling is


summary as a reportable fringe benefit.

Benefits Tax Impact to Organisation

Where light vehicles that attract FBT are used for a

substantial amount of work-related travel, Council


Taxation Office guidelines to minimise FBT liability



For the purpose of FBT calculations Council note the


5 years, to reduce the base value of a car by one-third



Current Commuter and Private Use Contributions

From the background provided for this review:


of between $92 and $131 per week to cover private use. For the 2014/15 financial year counc

7,000 from light fleet vehicle leaseback fees. All running costs associated with light fleet


leaseback fee being set at a rate to cover the private component of vehicle use.”



Current staff contributions for private use are shown in Table 9 below.

Current Staff Contributions

CVC Staff Contributions weekly (after tax)

Hilux/Colorado/Commodore/Aurion/Triton $130.60

Rav4/Forester/Corolla/Hyundai $121.00

$22.30

$11.10

LIGHT FLEET 42

if the use results in individual



for exclusive use by staff. The only other benefit that results from pooling is




financial year council

All running costs associated with light fleet





As mentioned in the introduction to this section the current level of staff contributions is substantially

offsetting FBT but they are not covering FBT. To further

could increase the level of contributions across the board or take a more targeted approach and

consider applying an additional charge for “excess” private use. This would also address the higher

operating cost to council.

The light fleet survey revealed a high level of commuting/private travel by a number of staff and as

current lease back charges are based on vehicle categories there is no mechanism to recover any

additional contribution to reflect high levels

to charge an additional contribution to staff with “excess” commuting/private use kilometres. The

challenge is to define the level of usage where any excess would be triggered and at the same time

ensure fairness.

Based on our work with other clients the typical surcharge applied by leasing companies for excess

kilometres above a lease agreement is 14 cents/km.

Table 10 below shows how a lease back surcharge could be applied for excess kilometres

The base line to negate the current level of FBT is 35,000km. In other words if staff whose allocated

vehicle travelled greater than 35,000 km were levied a post tax surcharge of 14 cents per km the

additional income would offset FBT and also c

(see XL sheet V0.13)

Table 10 – Lease Back Surcharge Impact for “Excess” Kilometres

Excess Km > Income $

25,000 142,720

30,000 94,710

35,000 59,238

40,000 36,112

45,000 20,149

50,000 9,875

*Not including Call out vehicles

However, this methodology would not in our view pass a “fairness test” as staff would be penalised by

car pool use and their own business use. Any excess kilometre charges would have to be based on

private/commuting use exceeding a nominated level. Using t

11 identifies vehicles with greater than 50% commuter/private use. The table also includes actual

average annual utilisation and the estimated amount based on the survey.

Council could consider applying a

50% or some lower amount. The surcharge being applied at the rate of 14 cents/km for km exceeding

50% commuting/private use would realise an estimated additional $31,091. Applying a surcharge i

this manner is considered fairer and provides an additional incentive for high private/commuting use

staff to make their allocated vehicle available for car pool use to increase the business percentage

business use. This would conversely lower their exce


LIGHT FLEET


offsetting FBT but they are not covering FBT. To further negate the outstanding FBT liability Council





additional contribution to reflect high levels of commuting/private use. An option available to Council is




kilometres above a lease agreement is 14 cents/km.

below shows how a lease back surcharge could be applied for excess kilometres



additional income would offset FBT and also contribute the same amount to reducing operating costs.

Lease Back Surcharge Impact for “Excess” Kilometres

Income $

142,720

94,710

59,238 Will negate FBT completely

36,112

20,149

9,875

*Not including Call out vehicles



private/commuting use exceeding a nominated level. Using the results of the light fleet survey

identifies vehicles with greater than 50% commuter/private use. The table also includes actual

average annual utilisation and the estimated amount based on the survey.

Council could consider applying a surcharge for vehicles where private use kilometres exceed say


50% commuting/private use would realise an estimated additional $31,091. Applying a surcharge i



business use. This would conversely lower their excess private use liability.

LIGHT FLEET 43


negate the outstanding FBT liability Council





of commuting/private use. An option available to Council is




below shows how a lease back surcharge could be applied for excess kilometres travelled.



ontribute the same amount to reducing operating costs.



he results of the light fleet survey Table

identifies vehicles with greater than 50% commuter/private use. The table also includes actual

surcharge for vehicles where private use kilometres exceed say


50% commuting/private use would realise an estimated additional $31,091. Applying a surcharge in




If a surcharge is applied only to excess commuting it would unfairly penalise staff that don’t use lease

back for much more than commuting. There are other options that can achieve a similar outcome but

this relies on the vehicle not being available for car pool use.

Any increase in lease back and commuting charges to staff whether across the board or aligned to an

excess kilometre charge may have HR impacts.

RECOMMENDATION


15. To further minimise FBT liability and light fleet


car-pooling, Council consider a surcharge of 14


annual kilometres travelled.


LIGHT FLEET



not being available for car pool use.


excess kilometre charge may have HR impacts.

Private Use and Fringe Benefits Tax Impact to Organisation

To further minimise FBT liability and light fleet


, Council consider a surcharge of 14


es travelled.

LIGHT FLEET 44






Table 11 - Private Use Vehicles Exceeding 50%

Plant # Actual

Utilisation Km

Estimated Utilisation

from survey

000101.05 40,173

000102.05 47,893

000106.05 36,776

000108.05 43,377

000112.05 57,306

000114.05 39,121

000118.06 57,194

000120.05 31,148

000124.04 32,787

000151.06 47,831

000155.06 55,765

000156.04 34,100

000169.05 33,347

000176.05 47,770

000178.03 63,150

000181.04 35,298

000183.06 51,724

000185.05 37,288

000190.04 45,974

000191.05 62,696

000192.05 36,492

000197.06 35,213

000198.05 33,866

000201.06 42,341

000203.06 43,088

000205.06 30,587

000224.04 33,046

000230.05 30,147

000241.05 24,218

000505.06 45,097

000538.03 59,145

000101.05 40,173

000102.05 47,893

000106.05 36,776

000108.05 43,377

000112.05 57,306

000114.05 39,121

000118.06 57,194

000120.05 31,148

000124.04 32,787

000151.06 47,831

Estimated surcharge collected at 14 cents/km for more than




LIGHT FLEET

Private Use Vehicles Exceeding 50%

Estimated Utilisation rom survey

Km

% Business Use

% Commuting

% Commuting

/ Private

41,280 19% 70% 81%

76,800 50% 47% 50%

42,240 50% 23% 50%

42,240 26% 28% 74%

43,200 6% 72% 94%

24,000 40% 0% 60%

50,880 8% 82% 92%

24,000 40% 30% 60%

28,800 30% 58% 70%

43,200 39% 44% 61%

69,600 49% 37% 51%

32,160 36% 12% 64%

34,944 26% 14% 74%

142,896 13% 75% 87%

57,600 42% 50% 58%

24,000 40% 0% 60%

36,000 20% 67% 80%

34,080 14% 68% 86%

60,000 48% 48% 52%

55,200 35% 61% 65%

32,016 13% 25% 87%

29,280 20% 8% 80%

39,360 49% 39% 51%

38,400 38% 50% 63%

41,520 32% 52% 68%

24,960 48% 4% 52%

36,000 29% 0% 71%

24,576 27% 37% 73%

33,648 44% 37% 56%

40,800 47% 47% 53%

30,720 47% 47% 53%

41,280 19% 70% 81%

76,800 50% 47% 50%

42,240 50% 23% 50%

42,240 26% 28% 74%

43,200 6% 72% 94%

24,000 40% 0% 60%

50,880 8% 82% 92%

24,000 40% 30% 60%

28,800 30% 58% 70%

43,200 39% 44% 61%

Estimated surcharge collected at 14 cents/km for more than 50% private use



LIGHT FLEET 45

Commuting Private

Excess $ payable for over 50%

Private use

81% 1,766

50% 0

50% 0

74% 1,449

94% 3,566

60% 548

92% 3,324

60% 436

70% 918

61% 744

51% 81

64% 677

74% 1,116

87% 2,445

58% 737

60% 494

80% 2,172

86% 1,875

52% 129

65% 1,336

87% 1,903

80% 1,503

51% 58

63% 741

68% 1,063

52% 82

71% 956

73% 973

56% 201

53% 186

53% 259

81% 1,766

50% 0

50% 0

74% 1,449

94% 3,566

60% 548

92% 3,324

60% 436

70% 918

61% 744

$31,091

$17,804

$8,962


1.14. Vehicle Values to be Included in Salary Packages

Vehicle values need to be identified in salary packages to firstly ensure existing and potential new

staff are aware of the real cost of providing a motor vehicle. Management staff in particular could be

provided with a number of alternative options such as novated leasing. In order to do this it is

essential to recognise average annual vehicle values in the employment package. Refer

Section 1.5 and example of the Honda Accord Euro at $16,420.

It is recommended that vehicle package values are based on the vehicle make/model and not a set

value according to position in the organisation. This will assist in developing options to attract

employees to select lower cost vehicles with the objectives to redu

emissions. The other reason is to enable comparison with other options for providing vehicles such as

novated leasing.

Increased Vehicle Selection Flexibility for Executive and Senior Management

Senior management could be given t

own personal requirements (and at the same time meet council’s environmental objectives) and take

the balance in cash. Alternatively to upsize and take less cash.

For example a Director currently allocated a Toyota Kluger or equivalent vehicle valued at $22,401 in

their salary package, could opt to take a Toyota Orion Presara valued at $18,990 and salary sacrifice

the difference or take it in salary and pay income tax. Vice versa applies if

upsize.

Cash Out Option for Executive and Senior Management

If an employee is to be offered a cash option in lieu of provision of a fully maintained Council vehicle

then we would recommend a lesser value (say 70

provide a suitable vehicle for business use. This would compensate the employer for the cost of the

use of a pool vehicle or taxis. We estimate this could cost on average $500

addition to the running costs for a pool vehicle.

A cash out option can be particularly attractive to a staff member who lives close to the council

offices.

Where an employee does not provide a vehicle for business use this may also put pressure on the

use of other Council vehicles and c

are used by the staff member who cashed out. If the staff member is offered a lesser cash value when

a vehicle is not provided by him/her for business use then a sense of fairness is more like

experienced by other employees.

If the employee uses his/her own personal car on Council business in terms of workers compensation

insurance, there would be no change to the present position. The employee's workers compensation

would only cover him/her at work or when travelling undertaking duties directed by the employer.

Council could consider using the following policy clause where this option is taken:

Where an employee accepts cash out option in lieu of a motor vehicle the following conditi

apply: -

The employee shall arrange their own transportation:

• To commute to and from home to work


LIGHT FLEET




vided with a number of alternative options such as novated leasing. In order to do this it is

essential to recognise average annual vehicle values in the employment package. Refer

and example of the Honda Accord Euro at $16,420.

recommended that vehicle package values are based on the vehicle make/model and not a set


employees to select lower cost vehicles with the objectives to reduce vehicle costs and CO



Senior management could be given the option to downsize their vehicle selection to better suite their


the balance in cash. Alternatively to upsize and take less cash.

rrently allocated a Toyota Kluger or equivalent vehicle valued at $22,401 in


the difference or take it in salary and pay income tax. Vice versa applies if the employee chooses to

Cash Out Option for Executive and Senior Management


then we would recommend a lesser value (say 70-80%) be offered where the employee does not


use of a pool vehicle or taxis. We estimate this could cost on average $500 - $1000 per annum in

a pool vehicle.



use of other Council vehicles and could cause resentment from other staff whose allocated vehicles


a vehicle is not provided by him/her for business use then a sense of fairness is more like

experienced by other employees.



im/her at work or when travelling undertaking duties directed by the employer.

Council could consider using the following policy clause where this option is taken:

Where an employee accepts cash out option in lieu of a motor vehicle the following conditi


To commute to and from home to work

LIGHT FLEET 46



vided with a number of alternative options such as novated leasing. In order to do this it is

essential to recognise average annual vehicle values in the employment package. Refer Table 4

recommended that vehicle package values are based on the vehicle make/model and not a set


ce vehicle costs and CO2



he option to downsize their vehicle selection to better suite their


rrently allocated a Toyota Kluger or equivalent vehicle valued at $22,401 in


the employee chooses to


re the employee does not


$1000 per annum in



ould cause resentment from other staff whose allocated vehicles


a vehicle is not provided by him/her for business use then a sense of fairness is more likely to be



im/her at work or when travelling undertaking duties directed by the employer.

Council could consider using the following policy clause where this option is taken: -

Where an employee accepts cash out option in lieu of a motor vehicle the following conditions shall


• To attend to Council business when a pool vehicle is not available during normal working

hours

• To attend to out of hours meetings. commute direct

required in the course of employment

RECOMMENDATION


16. Light vehicle values be included in staff salary

packages.

1.15. Options for Procuring Council Owned Light Vehicles

The main options available to procure council vehicles include:

(i) Purchase through the Local Government Procurement contract or State Government Contract

and trade the old vehicle to the new vehicle supplier;

(ii) Purchase through the Local Government Procurement contract or State Government Contract

and auction trade vehicles;

(iii) Purchasing through the tender process with an option to accept the trade price or auction the

trade vehicle using the tendered trade price as the reserve price;

In our experience best value is generally achieved through option (ii) above and this is current

practice.

1.16. Light Fleet Funding Options

(i) Capital purchase

(ii) Outsourcing through Leasing

• Fully maintained operating lease

• Standard operating lease with Council responsibility for fuel, tyres, repairs and maintenance

Leasing (Operating Lease)

The Council currently does not have any vehicles on an operating lease.

Operational Leases are similar to the finance lease with the exception that the risk of loss on sale is

born by the finance lease company and no capital is reported for the Council’s assets. Subs

this lease type carries a risk premium leading to a higher cost to the Council. However, once

agreement is made the Council does not carry any variation to their fleet capital costs. A fully

maintained operating lease includes all servicing in th

finance company or supplier takes the risk on the residual value of the item and the buyer therefore

pays for the risk.

All leases are tied to a period of ownership and budgeted utilisation for the vehicle

obtains the target utilisation within the period of ownership, the Council suffers a lost opportunity with

unused utilisation. Conversely the Council stands to attract additional costs if the budget utilisation is

exceeded. At the end of the lease term the lessee will have four alternatives:


LIGHT

To attend to Council business when a pool vehicle is not available during normal working

To attend to out of hours meetings. commute direct from home to a site where attendance is


Vehicle Values to be Included in Salary Packages Impact to Organisation

Light vehicle values be included in staff salary

Options for Procuring Council Owned Light Vehicles

The main options available to procure council vehicles include:

ough the Local Government Procurement contract or State Government Contract

and trade the old vehicle to the new vehicle supplier;

Purchase through the Local Government Procurement contract or State Government Contract

and auction trade vehicles;

ng through the tender process with an option to accept the trade price or auction the

trade vehicle using the tendered trade price as the reserve price;


Light Fleet Funding Options

Outsourcing through Leasing

Fully maintained operating lease

Standard operating lease with Council responsibility for fuel, tyres, repairs and maintenance

Leasing (Operating Lease)

currently does not have any vehicles on an operating lease.


born by the finance lease company and no capital is reported for the Council’s assets. Subs



maintained operating lease includes all servicing in the cost of the lease payments. In this option the


All leases are tied to a period of ownership and budgeted utilisation for the vehicle



of the lease term the lessee will have four alternatives:

LIGHT FLEET 47

To attend to Council business when a pool vehicle is not available during normal working

from home to a site where attendance is


ough the Local Government Procurement contract or State Government Contract

Purchase through the Local Government Procurement contract or State Government Contract

ng through the tender process with an option to accept the trade price or auction the


Standard operating lease with Council responsibility for fuel, tyres, repairs and maintenance


born by the finance lease company and no capital is reported for the Council’s assets. Subsequently,



e cost of the lease payments. In this option the


All leases are tied to a period of ownership and budgeted utilisation for the vehicle. Unless the vehicle




• Upgrade or replace with a new vehicle

• Extend the rental period

• Return the vehicle with no further payments required (conditions apply)

• Purchase the vehicle at a market price

Leasing (Operating lease) of light vehicles is generally not recommended due to the risk of penalties

for over utilisation and effectively “overpayment” for underutilisation. If there is a shortage of capital it

is preferable to lease major items of plant with predictable utilis

Purchase Versus Operating Lease Comparison

Table 12 provides an “apples for apples” comparison of lease versus ownership (purchase) for a

range of vehicles. Based on current low interest rates and if micro managed internally, leasing can

provide a competitive cost effective option. However, leasing of light vehicles is generally not

recommended due to the difficulty in managing varying utilisation and the inherent risk of penalties for

over utilisation and effectively “overpayment” for underutilisati

The average cost of overrunning a lease is $0.14/km however to underrun a lease by comparison is

on average of $0.20 -$0.30/km in lost opportunity. For example a lease on a RAV4 for 150,000

(Average 30,000 km/yr) would cost $33,900 over 5 years or

120,000 km the organisation will still pay $33,900 which represents a lost opportunity cost of $6,780

over the life of the vehicle.

If there is a shortage of capital it is preferable to lease major items of plant wit

The pros and cons of each option are summarised in

TABLE 12 –Lease versus Purchase (Based on 5 years/150,000kms and an average

30,000km/yr)

Vehicle Make / Model

Toyota Camry Atara S

Toyota Camry Hybrid

Volkswagen Tiguan

Holden Captiva SX 7ST(Diesel)

Nissan X Trail (Diesel)

Subaru Forester (Petrol)

Toyota RAV 4 (4x2)

Nissan X Trail (4x2) Diesel

Utilities 4x4 Crew Cab

Ford Ranger XLT DT

Holden Colorado LX RC DT

Mitsubishi Triton GLX DT

Toyota Hilux SR DT


LIGHT FLEET

Upgrade or replace with a new vehicle

Extend the rental period

Return the vehicle with no further payments required (conditions apply)

Purchase the vehicle at a market price

e) of light vehicles is generally not recommended due to the risk of penalties


is preferable to lease major items of plant with predictable utilisation.

Purchase Versus Operating Lease Comparison

provides an “apples for apples” comparison of lease versus ownership (purchase) for a


ompetitive cost effective option. However, leasing of light vehicles is generally not


over utilisation and effectively “overpayment” for underutilisation.


$0.30/km in lost opportunity. For example a lease on a RAV4 for 150,000

km/yr) would cost $33,900 over 5 years or $0.226/km. If the vehicle only travels

km the organisation will still pay $33,900 which represents a lost opportunity cost of $6,780

If there is a shortage of capital it is preferable to lease major items of plant with predictable utilisation.

The pros and cons of each option are summarised in Table 13.

Lease versus Purchase (Based on 5 years/150,000kms and an average

Cyl Annual Cost owned

4 $8,875

4 $7,888

4 $9,356

Holden Captiva SX 7ST(Diesel) 4 $10,295

4 $7,305

4 $6,870

4 $9,177

4 $8,024

4 $9,996

4 $9,652

4 $9,338

4 $9,441

LIGHT FLEET 48

e) of light vehicles is generally not recommended due to the risk of penalties


provides an “apples for apples” comparison of lease versus ownership (purchase) for a


ompetitive cost effective option. However, leasing of light vehicles is generally not



$0.30/km in lost opportunity. For example a lease on a RAV4 for 150,000 km

$0.226/km. If the vehicle only travels

km the organisation will still pay $33,900 which represents a lost opportunity cost of $6,780

h predictable utilisation.

Lease versus Purchase (Based on 5 years/150,000kms and an average

Lease cost

$6,204

$6,324

$9,120

$8,976

$9,468

$8,676

$6,780

$9,468

$9,000

$9,600

$8,640

$9,060


Table 13 – Own or Lease?

Organisation Owns Vehicle

Positive

• Can deal with varying utilisation

• Has complete control over the vehicle

• Can choose to maintain under a Service Level Agreement (SLA) externally OR internally

• Maintenance is normally well controlled

Positive

• No requirement to provide capital funds for replacement

• Scheduled maintenance included

• No risk on the residual value

RECOMMENDATION

Own or Lease?

17. The Council continues to own rather than lease light

vehicles.

1.17. Options for Provision of Vehicles (Other than Council Owned or

Leased)

There are 3 main options available to Council and these require provision of a car

• Novated lease

• Staff member provides their own vehicle

• Cash out with no vehicle

Each of these options takes away the need to provide for the capital cost of a vehicle and they will

also remove the environmental impact from the Council’s o

these options is inclusion of the real cost of providing a council owned vehicle in salary packages. For

the purpose of discussion we will call this a Car Allowance.

Novated Lease

Organisation packages the car costs

of the lease.


LIGHT FLEET


Negative

Can deal with varying utilisation

Has complete control over the

Can choose to maintain under a Service Level Agreement (SLA)

Maintenance is normally well

• Ties up capital

• Difficult to estimate true cost of ownership

• FBT paid by the organisation (if there is no leaseback)

Operating Lease

Negative

No requirement to provide capital

Scheduled maintenance included

the residual value

• Over or underutilisation costs

• Maintenance failures not recorded or controlled

• Scheduled maintenance is difficult to control

• FBT paid by the organisation (if there is no leaseback)

• Refurbishment cost of vehicle on return


The Council continues to own rather than lease light

Options for Provision of Vehicles (Other than Council Owned or

There are 3 main options available to Council and these require provision of a car

Staff member provides their own vehicle

Cash out with no vehicle


also remove the environmental impact from the Council’s operations. Paramount to the take up of


the purpose of discussion we will call this a Car Allowance.

Organisation packages the car costs by novating an operating lease and driver pays the FBT as part

LIGHT FLEET 49

Difficult to estimate true cost of

FBT paid by the organisation (if there

costs

Maintenance failures not recorded or

Scheduled maintenance is difficult to

FBT paid by the organisation (if there

Refurbishment cost of vehicle on


Options for Provision of Vehicles (Other than Council Owned or

There are 3 main options available to Council and these require provision of a car allowance include:


perations. Paramount to the take up of


by novating an operating lease and driver pays the FBT as part


Under a Novated Lease the vehicle is registered in the name of the council but through a lease

novation agreement belongs to the employee. Because the ATO require this type of lea

the maintenance and running costs for the vehicle, these costs are included in the lease (post tax

payments) and the service is provided by the lease company.

The onus of responsibility is placed on the employee once the novation is signed.

protected at all times by the novation agreement and by indemnities provided by the employee at the

time they enter into the lease. The employee meets all associated costs including the FBT from their

gross pay. Should the employee leave,

lease become the responsibility of the employee.

While the leasing option provides benefits, the difficulty is in obtaining agreement for use of these

vehicles by other staff during work hours.

lease vehicles.

By adopting total vehicle costs in the salary package, a novated lease is a viable option for staff.

Offering a Novated Lease as an option to senior staff

vehicle has significant advantages in staff attraction and retention. Council is also placed at an

advantage in not having to provide funding for capital replacement.

Where the novated lease is an option taken in lieu of an existing Cou

make their leased vehicle available at all times for their business use without any additional payments

from Council or access to the Council’s car pool.

Associated Lease

An Associate Lease is an agreement where an associate

partner), leases an existing or replacement car to the employee’s employer. The employer then

provides the car to the employee via a pre tax

most of the vehicles operating costs from their pre tax salary as a salary sacrifice arrangement.

The associate usually has a lower income than the employee. So after the associate claims

depreciation and car loan interest

minimal or zero.

The cars operating costs (fuel, insurance et

may also be GST savings, depending on how the lease is structured.

results in tax savings for the employee.

age limit.

The downside of an Associated Lease

company, the partner, and the employee.

individual employee our concern is

disagreement arise between the related parties.

Council is advised to seek professional advice

Lease be considered. If approved the car supplied must meet all the guidelines of the council fleet

policy covering individuals using their own cars for Council business


LIGHT FLEET


novation agreement belongs to the employee. Because the ATO require this type of lea


payments) and the service is provided by the lease company.

The onus of responsibility is placed on the employee once the novation is signed.



gross pay. Should the employee leave, or the end of the lease term is reached, the full terms of the

lease become the responsibility of the employee.


vehicles by other staff during work hours. Car pool use would be out of the question for novated


Offering a Novated Lease as an option to senior staff who wants the flexibility of choosing their own


advantage in not having to provide funding for capital replacement.

Where the novated lease is an option taken in lieu of an existing Council vehicle the employee must


from Council or access to the Council’s car pool.

An Associate Lease is an agreement where an associate of the employee (typically spouse or


provides the car to the employee via a pre tax salary sacrifice arrangement. The employee

ting costs from their pre tax salary as a salary sacrifice arrangement.


depreciation and car loan interest, if any, the associate’s taxation liability from the le

The cars operating costs (fuel, insurance etc) are paid for in pre tax salary by the employee.

may also be GST savings, depending on how the lease is structured. The pre tax salary sacrifice

employee. Unlike a Novated Lease, an Associate lease has

downside of an Associated Lease is the organisation is dealing with three parties

company, the partner, and the employee. While the lease arrangement may well

employee our concern is the potential complications for Council particularly should

between the related parties.

eek professional advice and clarification from the ATO should an Asso

If approved the car supplied must meet all the guidelines of the council fleet

policy covering individuals using their own cars for Council business.

LIGHT FLEET 50


novation agreement belongs to the employee. Because the ATO require this type of lease to include


The onus of responsibility is placed on the employee once the novation is signed. The employer is



or the end of the lease term is reached, the full terms of the


Car pool use would be out of the question for novated


choosing their own


ncil vehicle the employee must


of the employee (typically spouse or


The employee pays for

ting costs from their pre tax salary as a salary sacrifice arrangement.


if any, the associate’s taxation liability from the lease rentals is

) are paid for in pre tax salary by the employee. There

The pre tax salary sacrifice

Unlike a Novated Lease, an Associate lease has no car

is the organisation is dealing with three parties - the lease

arrangement may well be beneficial to the

particularly should a

should an Associated

If approved the car supplied must meet all the guidelines of the council fleet


Cash Out Option

If an employee is to be offered a cash option in lieu of pr

then we would recommend a lesser value say 70% be offered where the employee does not provide a

suitable vehicle for business use. This would compensate the employer for the cost of the use of a

pool vehicle or taxis. We estimate this could cost on average $500

the running costs for a pool vehicle.


use of other council vehicles and cou

are used by the staff member who cashed out. If the staff member is offered a lesser cash value then

a sense of fairness is more likely to be experienced by other employees.

The productivity of the employee taking this option may be affected were they to use public transport

to undertake their normal council duties.

Where an employee accepts a “cash out” option the following conditions are recommended:

The employee shall arrange their own trans

• To commute to and from home to work

• To attend to council business when a car pool vehicle is not available during normal working

hours

• To attend to out of hours meetings. commute direct from home to a site where attendance is


Staff providing their own Vehicle for Council Business Use

A further option is for the staff member to take the full amount of the package value of the vehicle in

cash or salary sacrifice and supply their own vehicle. If such a request is

should meet all the guidelines for a Council vehicle including:

• Less than 5 years old

• Regularly serviced as per manufacturers guidelines and service records kept

• Business use noted on the insurance certificate

Note that under this scenario all of the costs of owning and operating the vehicle for business and

private use are the responsibility of the employee and a vehicle provided under these circumstances

would not be available for use by other staff.

Discussion on Private Use Ve

In summary there are only 2 scenarios that should be considered.

Scenario 1 - Organisation Owns Vehicle

Use private use contributions to reduce FBT and fleet operating costs

• FBT is the most expensive component of a company supplied vehicle

• FBT can offset by private use contributions (lease back)


LIGHT FLEET

If an employee is to be offered a cash option in lieu of provision of a fully maintained council vehicle



taxis. We estimate this could cost on average $500 - $1000 per annum in addition to

the running costs for a pool vehicle.


use of other council vehicles and could cause resentment from other staff whose allocated vehicles


a sense of fairness is more likely to be experienced by other employees.

the employee taking this option may be affected were they to use public transport

to undertake their normal council duties.

Where an employee accepts a “cash out” option the following conditions are recommended:


To commute to and from home to work

To attend to council business when a car pool vehicle is not available during normal working


rse of employment

their own Vehicle for Council Business Use


cash or salary sacrifice and supply their own vehicle. If such a request is to be granted the vehicle

should meet all the guidelines for a Council vehicle including:

Regularly serviced as per manufacturers guidelines and service records kept

Business use noted on the insurance certificate

s scenario all of the costs of owning and operating the vehicle for business and


would not be available for use by other staff.

Discussion on Private Use Vehicles

In summary there are only 2 scenarios that should be considered.


Use private use contributions to reduce FBT and fleet operating costs

FBT is the most expensive component of a company supplied vehicle

offset by private use contributions (lease back)

LIGHT FLEET 51

ovision of a fully maintained council vehicle



$1000 per annum in addition to


ld cause resentment from other staff whose allocated vehicles


the employee taking this option may be affected were they to use public transport

Where an employee accepts a “cash out” option the following conditions are recommended: -

To attend to council business when a car pool vehicle is not available during normal working



to be granted the vehicle


s scenario all of the costs of owning and operating the vehicle for business and



• Level of contributions has HR implications

Example calculation

• An average car will cost $33,000

• FBT @ 20% = $6600

• Lease back contribution to offset FBT = $127 + GST/week

• This payment will also contribute

• The average $33,000 car costs approx $18,000 a year including FBT to run 20,000km/yr.

• $18,000 – Contributions $6,600 = $11,400

• Cost to organisation = $4,800 per/

Table 14 – Organisation Owns Vehicle

Positive

• The vehicle is available for pool use

• The organisation has complete control over vehicle choice

• If the vehicle is used for pool use the FBT does not appear on the employees group certificate

Scenario 2 - Annual Vehicle Allowance in Lieu of Council Vehicle

• Calculate annual costs and include in employee salary package

• Provides more options for employees and employer

Example calculation

• $18,000 car allowance

• Employee earns $100,000 plus $18,000 car

• Take home after tax $7,020 of their car allowance what can they get for $7,020

• Post tax (and after factoring in a tax deduction based on a 20% business use) the employee

would have $12,384 to spend on vehicle expenses each year

• For a car travelling 20,000km/yr fuel costs = approx $3,100 a year

• What can be leased (operating lease) for $9,300 inc GST

• Toyota Camry Altise $6,600

• Holden Captiva SX $9,240

• Ford Territory Diesel 2WD $10,164


LIGHT FLEET

Level of contributions has HR implications

An average car will cost $33,000

Lease back contribution to offset FBT = $127 + GST/week

This payment will also contribute $6600 towards the operating cost of the car.

The average $33,000 car costs approx $18,000 a year including FBT to run 20,000km/yr.

Contributions $6,600 = $11,400 – there is NO FBT so deduct another $6,600.

Cost to organisation = $4,800 per/yr.


Negative

The vehicle is available for pool use

The organisation has complete control over vehicle choice

If the vehicle is used for pool use the FBT does not appear on the employees group certificate

• Costs are difficult to control

• Employees tend to take less care of the vehicle

• There is always conflict regarding the choice of vehicle

• Little or no control over the total private utilisation (depends where employee lives and extent of private use)

Annual Vehicle Allowance in Lieu of Council Vehicle

Calculate annual costs and include in employee salary package

Provides more options for employees and employer

Employee earns $100,000 plus $18,000 car allowance.

Take home after tax $7,020 of their car allowance what can they get for $7,020

Post tax (and after factoring in a tax deduction based on a 20% business use) the employee

would have $12,384 to spend on vehicle expenses each year

travelling 20,000km/yr fuel costs = approx $3,100 a year

What can be leased (operating lease) for $9,300 inc GST

Toyota Camry Altise $6,600

Holden Captiva SX $9,240

Ford Territory Diesel 2WD $10,164

LIGHT FLEET 52

$6600 towards the operating cost of the car.

The average $33,000 car costs approx $18,000 a year including FBT to run 20,000km/yr.

there is NO FBT so deduct another $6,600.

Costs are difficult to control

Employees tend to take less care of the

There is always conflict regarding the

Little or no control over the total private utilisation (depends where employee lives and extent of private use)

Take home after tax $7,020 of their car allowance what can they get for $7,020

Post tax (and after factoring in a tax deduction based on a 20% business use) the employee


Above figures obtained from a Uniqco lease survey

Table 15 – Car Allowance

Positive

• The true value of the vehicle is understood

• The employee has a number of choices

� Cash out (eg 70-allowance)

� Provide their own vehicle

� Novated lease

� Hire purchase

� Take a council vehicle

A further option is for the staff member to take the full amount of the package value of the vehicle (car

allowance) in cash or salary sacrifice and supply their own vehicle. If such a request is to be granted

the vehicle should meet all the guidelines for a Company vehicl

• Less than 5 years old

• Regularly serviced as per manufacturers guidelines and service records kept

• Business use noted on the insurance certificate

In this situation all of the costs of owning and operating the vehicle for business and private use are

the responsibility of the employee and a vehicle provided under these circumstances would not be

available for use by other staff.

It should be noted that where an employee receives a car allowance within his or her salary and uses

that car to travel to work and to meetings, in the eyes of the law it is part of the company fleet. In the

eyes of most fleet managers it probably isn’t.

Reducing the number of council owned vehicles reduces the effective ‘car pool’ for general staff

transport. The Council already operates at least 5 dedicated pool vehicles and taking out

Executive/Managers vehicles plus ensuring all council owned vehicles are made available for pool

use should minimise any impact.

RECOMMENDATION

Car Allowance

18. Subject to the staff vehicle not being required for car




any additional payments from Council

1.18. Improved Light Fleet Reporting

This is addressed in Section 4 of the report.


LIGHT FLEET

Above figures obtained from a Uniqco lease survey

Negative

The true value of the vehicle is

The employee has a number of

-80% of

Provide their own vehicle

Take a council vehicle

• Establishing a fair value to provide for a vehicle

• Vehicle not available for car pool use

• Can appear too complicated for employees

• Employees providing their own car may to try to use Council vehicles for business

• By law it is still part of the company fleet

is for the staff member to take the full amount of the package value of the vehicle (car


the vehicle should meet all the guidelines for a Company vehicle:


Business use noted on the insurance certificate




ork and to meetings, in the eyes of the law it is part of the company fleet. In the

eyes of most fleet managers it probably isn’t.


already operates at least 5 dedicated pool vehicles and taking out


use should minimise any impact.


Subject to the staff vehicle not being required for car




s from Council.

Improved Light Fleet Reporting


LIGHT FLEET 53

value to provide

Vehicle not available for car pool use

Can appear too complicated for

Employees providing their own car may to try to use Council vehicles for

By law it is still part of the company

is for the staff member to take the full amount of the package value of the vehicle (car






ork and to meetings, in the eyes of the law it is part of the company fleet. In the


already operates at least 5 dedicated pool vehicles and taking out




1.19. Training


1.20. Organisational Realignment of Fleet & Plant Management

Responsibility


1.21. Light Fleet Summary Actions

� Ensure vehicle specifications meet business use requirements and only include optional

extras that add to resale value.

� Set minimum acceptance standards for ANCAP Safety Rating and Vehicle Green Guide

Rating.

� Establish vehicle selection criteria and allocate weightings (suggested) for a best value

outcome – Whole of Life Cost (80%), Safety (10%) and Environmental impact (10%).

� Use the IPWEA online Light Fleet Selection model for a whole of life cost comparison of up to

9 vehicles that meet business use requirements and minimum acceptance standards. Charts

will compare the average annual whole of life cost of each vehicle each ye

the associated output table will rank the vehicles on best value.

� Choose from the highest ranked vehicles and use the IPWEA charts to counter any staff

challenges.

� Hold the vehicle for a period of 5 years or up to 150,000km (whichever oc

minimise loss of value in resale. Irrespective of

longer (up to 5 years) will reduce annual ownership costs. High utilisation vehicles can be

held up to 150,000km with little risk

� Purchase roadside assistance for the full 5 years.

� Apply private use contributions (lease back) for private/commuting use vehicles that attract

FBT with a minimum contribution to offset the FBT value.

contributions or a vehicle allowance

� Consider applying an “excess” for high commuting/private use drivers to offset additional

operating costs and encourage greater car pool use.

� Offer a vehicle allowance in lieu of a car for staff whose vehicle is not required for car pool

use. Allowance allows st

opens the door to staff providing their own supplied vehicle including a Novated lease.

� Ensure vehicle policy includes all rules regarding staff supplying their own vehicles where this

option is available.

Our light fleet recommendations, if implemented, have the potential to improve both pooled vehicle

arrangements and salary packaging for employees.


LIGHT FLEET


Realignment of Fleet & Plant Management


Light Fleet Summary Actions

Ensure vehicle specifications meet business use requirements and only include optional

extras that add to resale value.

nimum acceptance standards for ANCAP Safety Rating and Vehicle Green Guide

Establish vehicle selection criteria and allocate weightings (suggested) for a best value

Whole of Life Cost (80%), Safety (10%) and Environmental impact (10%).

Use the IPWEA online Light Fleet Selection model for a whole of life cost comparison of up to


will compare the average annual whole of life cost of each vehicle each ye

the associated output table will rank the vehicles on best value.

Choose from the highest ranked vehicles and use the IPWEA charts to counter any staff

Hold the vehicle for a period of 5 years or up to 150,000km (whichever oc

minimise loss of value in resale. Irrespective of make or model holding on to the vehicle


held up to 150,000km with little risk.

sistance for the full 5 years.

Apply private use contributions (lease back) for private/commuting use vehicles that attract

FBT with a minimum contribution to offset the FBT value. Offset FBT by either Leaseback

contributions or a vehicle allowance

r applying an “excess” for high commuting/private use drivers to offset additional

operating costs and encourage greater car pool use.

Offer a vehicle allowance in lieu of a car for staff whose vehicle is not required for car pool

use. Allowance allows staff choice and the organisation has more control over cost. This


Ensure vehicle policy includes all rules regarding staff supplying their own vehicles where this


arrangements and salary packaging for employees.

LIGHT FLEET 54

Realignment of Fleet & Plant Management

Ensure vehicle specifications meet business use requirements and only include optional

nimum acceptance standards for ANCAP Safety Rating and Vehicle Green Guide

Establish vehicle selection criteria and allocate weightings (suggested) for a best value

Whole of Life Cost (80%), Safety (10%) and Environmental impact (10%).

Use the IPWEA online Light Fleet Selection model for a whole of life cost comparison of up to


will compare the average annual whole of life cost of each vehicle each year for 5 years and

Choose from the highest ranked vehicles and use the IPWEA charts to counter any staff

Hold the vehicle for a period of 5 years or up to 150,000km (whichever occurs first) to

holding on to the vehicle


Apply private use contributions (lease back) for private/commuting use vehicles that attract

Offset FBT by either Leaseback

r applying an “excess” for high commuting/private use drivers to offset additional

Offer a vehicle allowance in lieu of a car for staff whose vehicle is not required for car pool

aff choice and the organisation has more control over cost. This


Ensure vehicle policy includes all rules regarding staff supplying their own vehicles where this



2. PLANT & HEAVY VEHICL

2.1. Key deliverables

A detailed review of Clarence Valley Council’s existing heavy plant asset base identifying aspects and


The review is to:

• Identify the best options for possession of heavy plant (i.e. purchase vs lease), and

size of the asset base.

• Review Council policies, procedures and protocols related to heavy plant.

• Examine heavy plant age and utilisation against industry benchmarks, including:

o Cost of under utilisation

o Cost of vehicles travelling excess km’s

• Review current internal hire rates for heavy plant and make recommendations for

improvements.

• Investigate value add opportunities:

o Process for optimising fleet & plant utilisation

o Improved fleet and plant reporting

o Training

o Cost reduction opportunities

o Organisational realignment of fleet & plant management responsibility

o Detailed fleet and plant intelligence

o Trend data

o Improved risk management (covering issues related to environmental, safety and

social risks).

o Outsourcing options.

o Optimal 10 year heavy

• Provide Asset Management Plans for heavy plant assets.


the following areas:

• Asset replacement highlighting impacts of deferrin

• Calculation of depreciation

• Purchasing, disposal and financing strategies.


PLANT & HEAVY VEHICL

PLANT & HEAVY VEHICLES



Identify the best options for possession of heavy plant (i.e. purchase vs lease), and

Review Council policies, procedures and protocols related to heavy plant.

Examine heavy plant age and utilisation against industry benchmarks, including:

Cost of under utilisation

Cost of vehicles travelling excess km’s

iew current internal hire rates for heavy plant and make recommendations for

Investigate value add opportunities:

Process for optimising fleet & plant utilisation

Improved fleet and plant reporting

Cost reduction opportunities

Organisational realignment of fleet & plant management responsibility

Detailed fleet and plant intelligence

Improved risk management (covering issues related to environmental, safety and

social risks).

Outsourcing options.

Optimal 10 year heavy plant replacement program.

Provide Asset Management Plans for heavy plant assets.


Asset replacement highlighting impacts of deferring replacement

Calculation of depreciation

Purchasing, disposal and financing strategies.

PLANT & HEAVY VEHICLES 55


Identify the best options for possession of heavy plant (i.e. purchase vs lease), and optimal

Review Council policies, procedures and protocols related to heavy plant.

Examine heavy plant age and utilisation against industry benchmarks, including:

iew current internal hire rates for heavy plant and make recommendations for

Organisational realignment of fleet & plant management responsibility

Improved risk management (covering issues related to environmental, safety and



2.2. Heavy Fleet Intelligence and Trends

The biggest change in the area of Plant and Heavy Vehicles is the introduction of On Road Chain of

Responsibility (COR) legislation and this will be followed by the impending legislation around Chain of

Responsibility maintenance requirements. The maintenance aspect is largely covered by the

workplace health and safety legislation but incorporating this into a formalised system at

on road COR will close the loop.

What does this mean?

• All organisations that own, hire or contract in functions that use plant or fleet will need a

systematic process and policy to ensure there are no breaches of COR legislation.

• Fleet Governance including reporting and detailed records will form part of the requirement to

demonstrate compliance.

• Specifications will need to be confirmed and formalised as compliant

• Procurement process will have to demonstrate best value for the organisation

• Operationally organisations will be expected to hold detailed records on compliance, training,

and reporting on risk.

• In the disposal phase there is also associated risk and this needs to be incorporated in the

process.

Resale values will continue to be low for the foreseeable future thereby

review the timing on replacement in order to amortise the depreciation over a longer period. There will

also be a need to review the business case for conti

available.

Technology changes are also going to improve productivity and make it easier and safer to operate

plant and fleet but will require a new level of training and competence in this area.

2.3. Heavy Fleet Review Pro

At the core of Uniqco’s review of heavy fleet is an assessment of the following key performance

indicators:

• Utilisation

• Optimum Replacement Points

• Whole of Life Costs

There are 4 other major key performance indicators for both heavy and light fleet m

these are related to maintenance and addressed in Section 3 Mechanical Maintenance.

• Maintenance Failure Records

• Downtime

• Scheduled Versus Unscheduled Maintenance

• Flat Labour Rates



Heavy Fleet Intelligence and Trends


ion and this will be followed by the impending legislation around Chain of


workplace health and safety legislation but incorporating this into a formalised system at

All organisations that own, hire or contract in functions that use plant or fleet will need a


nance including reporting and detailed records will form part of the requirement to

demonstrate compliance.

Specifications will need to be confirmed and formalised as compliant

Procurement process will have to demonstrate best value for the organisation

erationally organisations will be expected to hold detailed records on compliance, training,

In the disposal phase there is also associated risk and this needs to be incorporated in the

Resale values will continue to be low for the foreseeable future thereby requiring organisations


also be a need to review the business case for continued ownership where other options are



Heavy Fleet Review Process


Optimum Replacement Points

There are 4 other major key performance indicators for both heavy and light fleet m



Scheduled Versus Unscheduled Maintenance



ion and this will be followed by the impending legislation around Chain of


workplace health and safety legislation but incorporating this into a formalised system attached to the

All organisations that own, hire or contract in functions that use plant or fleet will need a


nance including reporting and detailed records will form part of the requirement to

Procurement process will have to demonstrate best value for the organisation

erationally organisations will be expected to hold detailed records on compliance, training,

In the disposal phase there is also associated risk and this needs to be incorporated in the

requiring organisations to


nued ownership where other options are




There are 4 other major key performance indicators for both heavy and light fleet management and



2.4. Utilisation

Utilisation is the extent of use of a particular i

measured by hours worked, or distance travelled in a nominated time frame (generally the calendar

year). Knowledge of actual utilisation in kilometres or engine hours (levels and usage patterns)

enables the fleet management to:

• Service vehicles based on manufacturer's recommended service intervals (programmed

maintenance).

• Track actual use versus timesheet allocations to optimise operational requirements.

• Develop a floating replacement program to reduce co

change of plant at the optimum replacement point.

• Develop accurate budget forecasts.

Utilisation is the key to the procurement and management of the plant and vehicle fleet. Under

utilisation, low, or poor utilisation

coordination of use between work sites and operational units. It also raises the question of ownership

versus hire.

The first step in our review process is to calculate the average annual utilisati

mobile plant/vehicles and this is used to make a comparison against national benchmarks. Using

average annual utilisation provides a guide only as utilisation can vary during the life of the item and it

is important to be aware of trends

discussions with mechanical and operational staff to verify our utilisation assessment. For example an

item may be showing reasonable utilisation over its life but has dropped off in recent years o

versa. Hence we also seek data for the last year where we have reason to believe a variation is

occurring.

A number of heavy fleet items in civil works have shown a drop off in utilisation over the past 12

months. In discussions with the operational

in the type of work being undertaken (flood mitigation works) but this would not continue.

Table 16 identifies items with average annual utilisation at Clarence Valley below IPWEA national

benchmarks. While there are numerous items of plant & heavy vehicles achieving lower than national

benchmarks, the geographic layout of the municipality combined with regular flooding of low lying

areas that isolates communities creates a unique situation for which th

cannot be generally applied. There will always be cases where items are essential for the job

regardless of utilisation.

Our review process included discussions with operational managers on each item of the heavy fleet

and in particular those with lower than benchmark utilisation to identify the reason and also to explore

opportunities for potential rationalisation. Refer XL Sheet and notes in the Heavy Fleet Tab fit for

purpose column.

In summary

• There is potential to downsize a num

understand this has already been undertaken)

• In addition to the decision to dispose of a grader we recommend the change

remaining graders be extended to 12 yrs

yrs / 8,000 hrs.



Utilisation is the extent of use of a particular item of plant, vehicle or equipment and is usually



fleet management to:

Service vehicles based on manufacturer's recommended service intervals (programmed

Track actual use versus timesheet allocations to optimise operational requirements.

Develop a floating replacement program to reduce costs in periods of lower activity, and

change of plant at the optimum replacement point.

Develop accurate budget forecasts.

Utilisation is the key to the procurement and management of the plant and vehicle fleet. Under

utilisation, low, or poor utilisation raises questions about operational management, including


The first step in our review process is to calculate the average annual utilisation of each item of



is important to be aware of trends. Without detailed data over a number of years, we rely on


item may be showing reasonable utilisation over its life but has dropped off in recent years o



months. In discussions with the operational manager we were advised this has been due to a change


identifies items with average annual utilisation at Clarence Valley below IPWEA national

While there are numerous items of plant & heavy vehicles achieving lower than national


areas that isolates communities creates a unique situation for which the ownership benchmarks



lar those with lower than benchmark utilisation to identify the reason and also to explore


There is potential to downsize a number of gravel haulage trucks and loaders. (we

understand this has already been undertaken)

In addition to the decision to dispose of a grader we recommend the change

remaining graders be extended to 12 yrs / 10,000 hrs subject to a risk assessment beyond 8


tem of plant, vehicle or equipment and is usually



Service vehicles based on manufacturer's recommended service intervals (programmed

Track actual use versus timesheet allocations to optimise operational requirements.

sts in periods of lower activity, and

Utilisation is the key to the procurement and management of the plant and vehicle fleet. Under-

raises questions about operational management, including


on of each item of



. Without detailed data over a number of years, we rely on


item may be showing reasonable utilisation over its life but has dropped off in recent years or vice



manager we were advised this has been due to a change


identifies items with average annual utilisation at Clarence Valley below IPWEA national

While there are numerous items of plant & heavy vehicles achieving lower than national


e ownership benchmarks



lar those with lower than benchmark utilisation to identify the reason and also to explore


ber of gravel haulage trucks and loaders. (we

In addition to the decision to dispose of a grader we recommend the change-over of the

assessment beyond 8


• There is potential to dispose of a skid steer loader and increase the utilisation of other such

loaders with shared use.

• A business case review be undertaken for 2 rollers and 4 mowers

• Always base a business case review on actual utilisation (Kilometres or Engine Hours) and

not on timesheet hours

Service delivery options for heavy plant assets are buy, hire or contract out construction and

maintenance activities. Our business case templ

hire decision and the step by step process checklist is included at the end of this section. Contracting

out is a decision driven more by in

in the Fleet Asset Management Plan.



There is potential to dispose of a skid steer loader and increase the utilisation of other such

loaders with shared use.

A business case review be undertaken for 2 rollers and 4 mowers

Always base a business case review on actual utilisation (Kilometres or Engine Hours) and


Our business case template is provided in Appendix 4 addresses the own or


out is a decision driven more by in-house capability/capacity and cost and is addressed in more deta

in the Fleet Asset Management Plan.


There is potential to dispose of a skid steer loader and increase the utilisation of other such

Always base a business case review on actual utilisation (Kilometres or Engine Hours) and


addresses the own or


house capability/capacity and cost and is addressed in more detail


Table 16 - Low Utilisation Compared to National Benchmarks

Item Details A

ss

et

Nu

mb

er

Ma

ke

Mo

de

l

001300.02 Mitsubishi

FM67001301.02 Fuso



001308.02 Mitsubishi FM65FL


001515.02 Mitsubishi FK65

001000.02 Scania G440

001016.01 Scania

001302.02 Mitsubishi FM67


002203.02 Midland Industries

TAG TRAILER

003001.02 Cat

Grader

003003.02 John Deere

003007.02 Cat



003010.02 Cat

003200.01 Hitachi LX100

003201.02 Komatsu WA320 PZ-6003202.02 Komatsu

003203.02 Komatsu WA250 PZ-6

003204.02 Komatsu

003205.02 Komatsu

003208.01 Komatsu WA100

003300.02 John Deere Skid Steer Loader

003302.02 Cat Track Loader

003411.02 Komatsu Wb97r

003707.02 Cat Vibrating Roller



Low Utilisation Compared to National Benchmarks

Utilisation

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FM67

Gravel Haulage

14,323 22,151 35,000

8,813 8,665 35,000

13,567 11,535 35,000

16,815 16,401 35,000

FM65FL 10,881 10,222 20,000

11,878 10,914 20,000

FK65 Gravel/Sand Haulage

9,592 5,122 20,000

G440 Gravel Haulage/ Plant Trailer

26,897 27,382 35,000

21,050 25,381 35,000

FM67

Gravel Haulage/ Drop in water tank

13,992 6,807 35,000

Gravel Mulch Tree Limbs

11,751 7,906 35,000

TAG TRAILER

Plant Haulage 3,579 4,764 10,000

Grader

Mtce Grading Crew

789 776 1,000

749 779 1,000

Const Grading Crew

480 364 1,000

834 806 1,000

Const / Mtce Grading Crew

558 472 1,000

623 398 1,000

LX100

Gravel Loading

376 259

WA320 6

196 93

330 332

WA250 6

321 258

368 297

394 308

WA100-6 264 208

Skid Steer Loader

Mtce Water Cycle 214 204

Track Loader

Mtce/Const/ Drainage

297 318

Wb97r-5 Mtce Water Cycle 176 140

Vibrating Roller

Mtce Heavy Patch Crew

162 13


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35,000 Downsize Potential?



35,000 Drop in tank ok

20,000 Tows trailer ok


20,000 Drop 14/15

35,000 Float trailer ok

35,000 Tows excavator ok


35,000 Drop in tank Town use ok

10,000 Construction site ok

1,000 Geographical Locations may prevent further rationalisation. Consider extending replacement to 12 yrs/ 10,000hrs

1,000

1,000

1,000

1,000

1,000

800

Downsize Potential?

800

800

800

800

800

800

500 Dispose? Share other or hire

500 Utilisation to increase through shared use

500

350 Business case to


Item Details

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003708.01 Dynapac 3point Smooth Drum

003907.02 Cat Vibrating Roller


Tractor004210.02 John Deere




004214.01 Tractor

004601.02 John Deere Compact Tractor

004602.02 Toro 5040

004604.03 Toro Z7210

004606.02 Spider Slope Mower

ILD02


Mower004609.02 John Deere


004614.01 Kubota

F3680

004615.01 Kubota

004706.02 Kubota

004603.02 Kubota

004605.02 Kubota

004705.02 Kubota

F2880004713.02 Kubota


Mower











Utilisation

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3point Smooth Drum

Const/ Mtce Grading Crew

124 0

Vibrating Roller

General maintenance

133 103

Tractor

Slashing 162 214

Slashing/Loading 138 208

149 167

Parks Mowing/Loading

262 231

99 112

Landfill Slashing 183 161

Compact Tractor

Mowing

251 218

5040 64 63

Z7210 309 33

ILD02 63 55

Mower

206 96

147 119

128 184

F3680

108 110

250 253

96 94

316 267

153 133

F2880

263 386

119 144

Mower

42 38

93 113

36 60

71 251

124 103

79 57

47 47

27 25

42 300


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350 retain

150 Footpath roller ok

500 Airport ok

500 Depot/Town locations ok 500

300 Turf tyred tractor ok

300 Cemetery/multi use ok

300 Dedicated ok

300 ok

100 Bunker rake/other uses

500 Location ok

500

Used on dam wall. Potential to share but distance issue

200 Cemetery ok

300 Treatment works ok

500 Business Case to retain 500

500 Geographical location ok 500

500 Business Case to retain 500

500 ok

500 Business Case to retain

500 Dispose

150 ok

150 Community Mowing

150 ok

150 ok

150 ok

150 Community Mowing 150

150 Reservoir ok


Item Details

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005201.01 Lincoln W’POWER 230

005204.01 Kubota J112

005205.01 FG Wilson P500P3/P550E3

006205.01 Sykes Sykes

006206.01 Sykes

* Benchmarks were established through a consultation process conducted during the development of

the IPWEA best practice Manual and reviewed by the IPWEA

Utilisation needs to be constantly monitored throughout the year with monthly reports to management

and supervisory staff. Each year a “budget” or target utilisation should be established and will form the

basis for the internal hire rate.

Asset management plans for infrastructure assets will provide a degree of certainty for maintenance

works but new construction is more difficult to predict. Our recommended strategy is to maintain a

core level of plant & labour for contin

contract out excess work or hire in plant & labour. This is a proven strategy subject to the availability

of contractors or heavy plant for hire.

Over Utilisation

When it comes to plant and heavy

normally has little effect on resale value and only a marginal increase in depreciation. The only

increase in cost is the operational cost and this will be recovered from jobs. High utilisati

in earlier replacement and the need to ensure funds from depreciation are transferred to the plant

reserve. The earlier replacement will be catered for in the 10 year plan if reviewed annually.

Under Utilisation

Under utilisation does come at a cost as fixed costs have to be recovered over less operating hours.

Example - A truck with 20,000

expected $20,000 resale after 8 years

Depreciation = $110,000/8 years = $13,750

= $110,000/ (20,000*8) = $0.69/km

If the vehicle doesn’t travel 20,000

For a vehicle travelling 15,000 km


PLANT & HEAVY VEHICLES

Utilisation

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W’POWER 230

Welder/Generator 8 8

J112

Generator

23 134

P500P3/ P550E3

8 8

Sykes Flood Pump 0 0

0 0

Benchmarks were established through a consultation process conducted during the development of

the IPWEA best practice Manual and reviewed by the IPWEA Fleet Panel on a regular basis.





core level of plant & labour for continuity of work and high utilisation and be prepared to either


of contractors or heavy plant for hire.

When it comes to plant and heavy vehicles the aim is to maximise utilisation and high utilisation


increase in cost is the operational cost and this will be recovered from jobs. High utilisati



a cost as fixed costs have to be recovered over less operating hours.

km average annual utilisation, costing $130,000 and with an

expected $20,000 resale after 8 years

= $110,000/8 years = $13,750 / yr

$110,000/ (20,000*8) = $0.69/km

If the vehicle doesn’t travel 20,000 km the lower utilisation costs $0.69/Km below 20,000

km / yr the underutilisation cost is $0.69*5,000 km = $3,450 annually

AVY VEHICLES 61

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200 Workshop ok

200 Emergency

200 Shannon Creek Emergency

10 Maclean Emergency

10 Grafton Emergency

Benchmarks were established through a consultation process conducted during the development of

Fleet Panel on a regular basis.





uity of work and high utilisation and be prepared to either


vehicles the aim is to maximise utilisation and high utilisation


increase in cost is the operational cost and this will be recovered from jobs. High utilisation may result



a cost as fixed costs have to be recovered over less operating hours.

km average annual utilisation, costing $130,000 and with an

km the lower utilisation costs $0.69/Km below 20,000

km = $3,450 annually


External Plant Hire

CVC doesn’t keep any records of hire regarding type of plant hired or duration. Council calls an

annual tender for the supply of plant to Council. Council then engages plant on a job by job basis as

required to complete specific works after assessing the availability

Records of hire can provide a useful tool in supporting the case for ownership of plant or in raising

questions where similar Council

to continue long term, a business case review for ownership should be considered.

RECOMMENDATION

Utilisation

19. Actual utilisation is regularly reported to management.

20. Consideration is given to:

a) Downsize a number of gravel haulage trucks and

loaders.

b) Extend the change-over of graders to



c) Dispose of a skid steer loader and increase the


d) A business case review to be undertaken for 2

rollers and 4 mowers identified in Table 1

report.

21. A business case review is based on actual utilisation


hours.

22. External plant hire and hours on hire be recorded so




of plant.

2.5. Optimum Replacement Timing

The optimum replacement timing for a plant or heavy vehicle or an item of equipment is calculated th

same as has been explained for light fleet with the difference being with plant and some heavy

vehicles engine hours are the primary measure of utilization.

Hence the optimum time, will be determined in either kilometres or engine hours, and time, to

the lowest average annual cost during the life of the machine.

The optimum replacement point in the life of the plant item is near when the decreasing line of

depreciation intersects with the increasing cost of repairs and maintenance costs. Actual

figures will show two distinct steep drops in resale value. The first significant drop is immediately post

purchase. The second drop is prior to a major component overhaul, which is when second hand

buyers are aware of a large impending rep



keep any records of hire regarding type of plant hired or duration. Council calls an


required to complete specific works after assessing the availability and suitability of our own plant.


owned plant is not being fully utilised. If the level of hire is predicted

long term, a business case review for ownership should be considered.


Actual utilisation is regularly reported to management.

Downsize a number of gravel haulage trucks and

over of graders to



Dispose of a skid steer loader and increase the


A business case review to be undertaken for 2

rollers and 4 mowers identified in Table 16 of the

A business case review is based on actual utilisation


External plant hire and hours on hire be recorded so





The optimum replacement timing for a plant or heavy vehicle or an item of equipment is calculated th


vehicles engine hours are the primary measure of utilization.

Hence the optimum time, will be determined in either kilometres or engine hours, and time, to

the lowest average annual cost during the life of the machine.


depreciation intersects with the increasing cost of repairs and maintenance costs. Actual



buyers are aware of a large impending repair and maintenance bill. (Refer Figure 4


keep any records of hire regarding type of plant hired or duration. Council calls an


and suitability of our own plant.


owned plant is not being fully utilised. If the level of hire is predicted

long term, a business case review for ownership should be considered.


The optimum replacement timing for a plant or heavy vehicle or an item of equipment is calculated the


Hence the optimum time, will be determined in either kilometres or engine hours, and time, to achieve


depreciation intersects with the increasing cost of repairs and maintenance costs. Actual depreciation



Figure 4)


Figure 4 - Optimum Replacement Point

Optimum Replacement Calculations

An optimum replacement calculation has many variables and therefore can only really be applied to

each unit individually based on given utilisation. If the utilisation increases the optimum replacement

point will occur sooner and if the utilisation drops there may be an opportunity to delay replacing a

unit. The key drivers of optimum replacement are:

• Downtime costs (lost opportunity cost of existing plant + cost of hire equipment)

• Maintenance Costs

• Resale value

When calculated as per the above example and using Net Present Value (NPV) we can establish the

year of lowest average cost and this is the optimum replacement point.

We have prepared an optimum replacement calculation for a grader based on an average annual

utilisation of 1,000 engine hours. Refer

occurs at 8,000 hrs and hence the optimum replacement is 8 year

Optimum Replacement Benchmarks

IPWEA national benchmarks provide a guide to optimum replacement points in a simplified format

whereby high utilisation equipment is replaced on meter limits (hrs or kms) and lower utilisation

equipment is replaced (in years) before a significant drop in resale value is experienced. This is the

time when the unit becomes too old for the second hand buyer to finance in its entirety. This generally

occurs at 10 years.

While the Council has adopted optimum replacement benchmar

age and/or utilisation (whichever occurs first) some parameters need adjustment based on current



Optimum Replacement Point – Example only

Optimum Replacement Calculations


based on given utilisation. If the utilisation increases the optimum replacement


unit. The key drivers of optimum replacement are:

portunity cost of existing plant + cost of hire equipment)


year of lowest average cost and this is the optimum replacement point.


utilisation of 1,000 engine hours. Refer Appendix 5. The calculation shows the lowest average cost

occurs at 8,000 hrs and hence the optimum replacement is 8 years.

Optimum Replacement Benchmarks



rs) before a significant drop in resale value is experienced. This is the


has adopted optimum replacement benchmarks mostly based on a combination of




based on given utilisation. If the utilisation increases the optimum replacement


portunity cost of existing plant + cost of hire equipment)



. The calculation shows the lowest average cost



rs) before a significant drop in resale value is experienced. This is the


ks mostly based on a combination of



IPWEA benchmarks and in some cases corrections for the unique geographical constraints. (Refer

Table 18).

It is important to note that utilisation can be as critical in optimum replacement as age. A good

example in the Council’s fleet is the Komatsu Wheel Loader used at the landfill site which has an

average annual utilisation of 1638 hours. The optimum replacement benchmark

or 8,000 hrs. Based on this level of utilisation the loader could be changed at 5 years or less.

Adopting optimum replacement in practice will reduce annual plant replacement costs in the long

term, reduce maintenance costs and mos

We also recommend an operating risk analysis be undertaken prior to making a decision to hold an

item beyond its optimum replacement point. The process involved in undertaking an operating risk

assessment can be found in Section 1.8 of the IPWEA Plant & Vehicle Management Manual.

Given the relative low utilisation to benchmark of so many heavy fleet items there is the potential to

extend the replacement timing beyond the benchmark. A good example i

recommended the change-over of graders be extended to 12

assessment beyond 8 yrs / 8,000

Low utilisation has already lead to the decision to hold heavy fleet items longer than policy. A de

was made in May 2014 to hold off on any replacements pending a fleet review.

There are a relatively high number of items that have been held beyond optimum replacement

benchmarks and these are identified in

replacement of those items ie utilisation (hrs/km) or age. A number of older items beyond optimum

replacement have already been identified for disposal (Refer

Impact of Taxation

Elected members often ask why the public sector changes plant and vehicles more frequently than

the private sector. The answer lies in taxation liability:

• Government funded fleets do not have the requirement to pay tax on income from the sale of

fleet items.

• Income from the sale of

exposes the business to an increased tax liability.

• The tax liability results in an increase in the cost of owning plant and vehicles and extends the

optimum replacement point for the pri

Example - A public sector organisation purchases an item of plant for $200,000. After 8 years

the plant item has been depreciated to a net value of $50,000.

They resell the item for $100,000. The full $100,000 returns to the organisation as

private sector company does exactly the same but must pay tax on the difference between the written

down value (WDV) and the sale price. They pay tax on $50,000 at the company tax rate.




to note that utilisation can be as critical in optimum replacement as age. A good


average annual utilisation of 1638 hours. The optimum replacement benchmark for a loader is 8 years

hrs. Based on this level of utilisation the loader could be changed at 5 years or less.


term, reduce maintenance costs and most importantly minimise downtime in the outside operations.



sessment can be found in Section 1.8 of the IPWEA Plant & Vehicle Management Manual.


extend the replacement timing beyond the benchmark. A good example is the graders where we have

over of graders be extended to 12 yrs / 10,000 hrs subject to a risk

8,000 hrs.

Low utilisation has already lead to the decision to hold heavy fleet items longer than policy. A de

was made in May 2014 to hold off on any replacements pending a fleet review.


benchmarks and these are identified in Table 17 together with a comment on the t


replacement have already been identified for disposal (Refer Table 18). Their disposal is supported.

why the public sector changes plant and vehicles more frequently than

the private sector. The answer lies in taxation liability:

Government funded fleets do not have the requirement to pay tax on income from the sale of

plant in private enterprise results in increased profitability that

exposes the business to an increased tax liability.

The tax liability results in an increase in the cost of owning plant and vehicles and extends the

optimum replacement point for the private sector.

A public sector organisation purchases an item of plant for $200,000. After 8 years

the plant item has been depreciated to a net value of $50,000.

They resell the item for $100,000. The full $100,000 returns to the organisation as





to note that utilisation can be as critical in optimum replacement as age. A good


for a loader is 8 years

hrs. Based on this level of utilisation the loader could be changed at 5 years or less.


t importantly minimise downtime in the outside operations.



sessment can be found in Section 1.8 of the IPWEA Plant & Vehicle Management Manual.


s the graders where we have

hrs subject to a risk

Low utilisation has already lead to the decision to hold heavy fleet items longer than policy. A decision


together with a comment on the trigger for


). Their disposal is supported.

why the public sector changes plant and vehicles more frequently than

Government funded fleets do not have the requirement to pay tax on income from the sale of

plant in private enterprise results in increased profitability that

The tax liability results in an increase in the cost of owning plant and vehicles and extends the

A public sector organisation purchases an item of plant for $200,000. After 8 years

They resell the item for $100,000. The full $100,000 returns to the organisation as they pay no tax. A




RECOMMENDATION


23. The IPWEA optimum replacement benchmarks based


24. Prior to holding an item beyond optimum replacement


2.6. Whole of Life Cost

Whole of life cost is the total cost of owning and operating an item of fleet over the estimated life of

the item. Having established the optimum point at which to

management tool is knowledge of whole of life costs. Whole of life costs include:

• Annual depreciation to an anticipated residual.

• Finance or opportunity costs.

• Operating costs, tyres, fuel, repairs and maintenance.

• Fixed costs, overhead recovery, insurance, wages, license.

• FBT for light vehicles.

Whole of Life Costs should be used in calculating internal hire rates and in purchasing decisions.

The hire rate needs to be established at the time of purchase of a new ite

used to support the purchase decision) and should be generally retained over the life of the item. In

the early life of the item there is a substantial over recovery available to be transferred to reserve but

later in the life of the item this is needed to fund increasing maintenance costs.

Whole of life costs will reflect how much of the equipment’s annual costs will be based on annual

utilisation and an optimum replacement point that has already been established. The annual cos

calculated will provide a projected (budget) annual cost for the life of the equipment. A simple

spreadsheet can be used to develop whole of life costs and provide an estimate of the total annual

cost of an item of plant.

By dividing annual cost by the operational timesheet hours used to recover the cost of operating plant,

internal charge out rates can be determined.

hire rates. When these rates are applied they will provide the appropriate recover

replacement reserve to fund plant replacement at the optimum time. Example whole of life cost

calculations is included in Appendix 7.

Knowing whole of life costs we can provide:

• Annual maintenance budget

• Annual replacement provision

• Annual operational costs

• Internal hire rates.

Low internal hire rates combined with low utilisation compounds the under recovery of actual fleet

costs and can disguise the full cost of plant & vehicle ownership resulting in fleet effectively



Optimum Replacement Timing Impact to Organisation

The IPWEA optimum replacement benchmarks based


Prior to holding an item beyond optimum replacement


Whole of Life Cost


the item. Having established the optimum point at which to replace the vehicle/equipment, the next

management tool is knowledge of whole of life costs. Whole of life costs include:

Annual depreciation to an anticipated residual.

Finance or opportunity costs.

Operating costs, tyres, fuel, repairs and maintenance.

Fixed costs, overhead recovery, insurance, wages, license.


The hire rate needs to be established at the time of purchase of a new item (based on the utilisation



f the item this is needed to fund increasing maintenance costs.


utilisation and an optimum replacement point that has already been established. The annual cos



operational timesheet hours used to recover the cost of operating plant,

internal charge out rates can be determined. Appendix 6 provides an example of calculating internal

When these rates are applied they will provide the appropriate recovery of costs to a plant


calculations is included in Appendix 7.

Knowing whole of life costs we can provide:

Annual maintenance budget

Annual replacement provision

nnual operational costs






replace the vehicle/equipment, the next


m (based on the utilisation




utilisation and an optimum replacement point that has already been established. The annual costs



operational timesheet hours used to recover the cost of operating plant,

Appendix 6 provides an example of calculating internal

y of costs to a plant





subsidising operations. This can lead to retention of low utilisation items when other options such as

long term hire can be more cost effective.

Where utilisation will dictate the timing of replacement ahead of age as the trigger point, a higher level

of depreciation is allocated to fully fund the earlier replacement. This applies to only a few items of the

heavy fleet at Clarence Valley.

Table 17 - Items beyond Optimum Replacement

Asset Data

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001011.02 Mitsubishi FM61FM

001012.01 Nissan CWA445

001013.01 Nissan CWA445

001304.02 Nissan PK245

001305.02 Nissan PK245

001309.02 Mitsubishi FM65FL

001319.01 Mitsubishi FK61

001320.01 Isuzu FRR500

001500.02 Isuzu NKR200

001700.02 Isuzu FVY1400

Paveliner

001705.02 Nissan CW385

002201.01 Rogers Trailer

002204.01 Dean Trailer

003000.02 Cat Grader




003200.01 Hitachi LX100

003600.01 Cat 320CL

004003.01 Howard EHD180



rations. This can lead to retention of low utilisation items when other options such as

long term hire can be more cost effective.


allocated to fully fund the earlier replacement. This applies to only a few items of the

Items beyond Optimum Replacement Benchmarks

Changeover Years

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FM61FM Crew Truck 8.1 12,984 8 / 500,000

CWA445 Gravel Haul 9.1 34,089 8 / 500,000

CWA445 Gravel Haul 9.1 35,849 8 / 500,000

PK245 Gravel Haul 8.3 36,369 8 / 200,000

PK245 Gravel Haul 9.4 41,466 8 / 200,000

FM65FL Gravel Haul 8.0 11,878 8 / 200,000

FK61 Flood Gate

Maintenance 10.2 16,601 8 / 200,000

FRR500 Mobile library

18.7 15,709 8 / 200,000

NKR200 Carpenters 8.6 10,433 7 / 150,000

FVY1400 /

Paveliner Autopatcher 8.5 25,866 7 / 500,000

CW385 Watercart 9.2 10,118 8 / 500,000

Trailer Plant

Haulage 15.3 0 10

Trailer Plant

Haulage 15.3 0 10

Grader Mtce/Const/

Grading 10.1 589

8 / 8,000 hrs

Grader

Maintenance

Grading Crew

10.1 789 8 / 8,000

hrs

Grader

Maintenance

Grading Crew

10.1 870 8 / 8,000

hrs

Grader Mtce/Const/

Grading 10.1 623

8 / 8,000 hrs

LX100 Gravel

Loading 18.5 376

8 / 8,000 hrs

320CL Mtce/Const/

Drge 10.6 589

8 / 8,000 hrs

EHD180 Slashing 14.7 0 5


rations. This can lead to retention of low utilisation items when other options such as


allocated to fully fund the earlier replacement. This applies to only a few items of the

Changeover Years / Km / Hrs

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8/200,000 Age

8/500,000 Age

8/500,000 Age

8/500,000 Age

8/500,000 Age

8/200,000 Age

8/200,000 Age

8/200,000 Age

8/150,000 Age

8 Age

8 Age

8/150,000 Age

15/150,000 Age

10 / 8,000 hrs

Age

10 / 8,000 hrs

Age

10 / 8,000 hrs

Age

10 / 8,000 hrs

Age

8 / 8,000 hrs

Age

8 / 8,000 hrs

Age

5 Age


Asset Data

As

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Ma

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004019.02 Agrifarm APM/361

004020.02 Howard EHD180

004208.01 John Deere Tractor

004214.01 Tractor Tractor

004602.02 Toro 5040

004702.01 Ransome

160d

Ransome

160D

004703.02 John Deere Greens

Mower

004732.01 John Deere Mower



006002.01 Komatsu FD20T

12

007256.01 Ditch Witch 7020JD

001701.03 Hino RosmechSweeper

003207.02 Komatsu WA250

PZ

004506.02 Aebi TT270

004600.03 Toro Z7210

006500.01 Compair Hulman

001314.02 Mitsubishi FM61FM

001316.02 Nissan PK265

001511.02 Isuzu NPR200

002003.02 Shephards A399A

002005.02 Shephards A399A

002007.01 Trailer Peak

001504.02 Mitsubishi Canter



Changeover Years

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Yrs

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APM/361 Slashing 6.2 0 5


Tractor Roadwork

Broom 12.2 254

8 / 5,000 hrs

Tractor Landfill

Slashing 17.0 183

8 / 5,000 hrs

5040 Mowing 6.0 64 4

Ransome

160D Golf Course 10.2 211 8

Greens

Mower Golf Course 10.2 199 7

Mower Mowing 7.6 47 5



FD20T-12

Forklift 17.0 79 10

7020JD Water Cycle 18.7 143 10

Rosmech Sweeper

SWEEPER 4.6 1,450 4 / 6,000

hrs

WA250 PZ-6

Landfill Tip Face

5.1 1,638 6 / 8,000

hrs

TT270 All Terrain

Mowing 6.4 369 5

Z7210 Mowing 4.0 531 4

Hulman Trailer Air

compressor 14.7 381 15

FM61FM Road Patch

Crew 7.7 26,676 8 / 200,000

PK265 Road Patch

Crew 7.5 34,301 8 / 200,000

NPR200 Line Marking

& Signs 6.7 23,190 7 / 150,000

A399A Dog Gravel

Haulage 6.4 27,521 8

A399A Dog Gravel

Haulage 6.4 26,201 8

Peak Dog Gravel

Haulage 13.4 16,294 8

Canter Village

Maintenance 8.7 22,385 8 / 150,000


Changeover Years / Km / Hrs

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C

ha

ng

eo

ve

r

Ch

an

ge

T

rig

ge

r

5 age

5 age

7 / 5,000 age

7 / 5,000 age

5 / 2,000 age

5 / 2,000 age

5 / 2,000 age

5 / 2,000 age

5 / 2,000 age

5 / 2,000 age

10 / 5,000 age

15 / 5,000 age

8 / 8,000 hrs

8 / 8,000 hrs

5 / 2,000 age

5 / 2,000 hrs

15 / 5,000 hrs

8 / 200,000 km

8 / 200,000 km

8 / 150,000 km

15 /

150,000 km

15 /

150,000 km

15 /

150,000 km

8 / 150,000 km/age


Table 18 - Items Listed for Disposal 2015

Asset Data A

ss

et

#

Ma

ke

Mo

de

l

002008.01 Trailer Peak

003403.02 Komatsu WB97F

004006.01 Howard EHD180

004204.01 John Deere Tractor





007250.01 Pacific Pacific

Best practice involves charging an internal hire rate that reflects full cost recovery and we have

calculated rates for each individual item. The aim is to ensure over time that there will be sufficient

funds in the reserve to fully fund plant replacement.

Based on the data provided we believe that the council is recovering sufficient operational cost,

however to enable true costing, we recommend full cost recovery including depreciation as a hire

charge against every machine. This will allow council to t

external service delivery

Tabs in the master XL sheet provide the hire rates and details of the calculation methodology which

will enable the finance manager to make adjustments as required.

Some organisations are using net purchase price in purchase decisions and ignoring operating costs

and expected repair & maintenance costs over the life of the item and this can lead to decisions being

made that do not provide best value. Based on the advi

the Council is using whole of life costs as part of the weighted evaluation in the purchase decision.

While Council’s Purchasing Procedures don’t require whole of life costs to be considered for

purchases lower than $80,000 we recommend the level be set at $20,000 for fleet. At $80,000 there

would be no requirement to consider whole of life costs in purchase decisions for light vehicles for

example and this would not be delivering best value and would be inconsist

recommendations in this report.

Procurement and calculating whole of life costs is addressed in more detail in Section 4 Management.



Disposal 2015-16

Changeover Years/Km/Hrs

Mo

de

l

Ap

pli

ca

tio

n

Ag

e (

Yrs

)

Av

era

ge

A

nn

ua

l U

tili

sa

tio

n

CV

C

Ch

an

ge

ove

r

Peak Dog Gravel

Haulage 17.3 6,396 8

WB97F Maintenance

Civil Services

10.1 488 8 / 5,000

hrs


Tractor Slashing 10.4 451 6 / 5,000

hrs





Pacific Drawn Road

Broom 23.4 0 10



funds in the reserve to fully fund plant replacement.



charge against every machine. This will allow council to truly benchmark their internal costing against


will enable the finance manager to make adjustments as required.



made that do not provide best value. Based on the advice received via the questionnaire response

is using whole of life costs as part of the weighted evaluation in the purchase decision.


han $80,000 we recommend the level be set at $20,000 for fleet. At $80,000 there


example and this would not be delivering best value and would be inconsistent with other



Changeover Years/Km/Hrs

Be

nc

hm

ark

C

ha

ng

eo

ve

r

Ch

an

ge

T

rig

ge

r

8/150,000 age

8/8,000 age

5 age

7/5,000 age

5/2,000 age

5/2,000 age

5/2,000 age

5/2,000 age

15 age





ruly benchmark their internal costing against




ce received via the questionnaire response

is using whole of life costs as part of the weighted evaluation in the purchase decision.


han $80,000 we recommend the level be set at $20,000 for fleet. At $80,000 there


ent with other



RECOMMENDATION

Whole of Life Cost

25. Internal hire rates are based on whole of life costs and



26. The proposed internal hire rates be adopted applied



27. A comparison is made between timesheet hours




the timesheet hours

28. To simplify administrative work whole of life costs be



29. Whole of life costs be used in purchasing

all items over $20,000.




are based on whole of life costs and



The proposed internal hire rates be adopted applied



A comparison is made between timesheet hours




To simplify administrative work whole of life costs be



Whole of life costs be used in purchasing decisions for




2.7. Plant & Heavy Vehicles Best Practice

Figure 3 – Plant & Heavy Fleet Management Best Practice

Source: IPWEA Plant & Vehicle Management Manual Section 8.



Plant & Heavy Vehicles Best Practice

Plant & Heavy Fleet Management Best Practice




3. MECHANICAL SERVICES

3.1. Key Deliverables

A review of current mechanical workshop practices, recommend optimal service level for mechanical

maintenance including labour required, and provide a process for benchmarking performance.

The main KPI’s that provide a performance benchmarks in mechanical ma

• Scheduled Versus Unscheduled Maintenance

• Maintenance failure records

• Downtime costs

• Labour flat rates

3.2. Provision of Mechanical Services

Current Position Overview

Clarence Valley Council was formed in February 2004 by the amalgamation of the

Maclean Shire, and parts of Copmanhurst, Pristine Waters and

areas.

The legacy of the amalgamation remains with 4

close proximity in Grafton. The decision has already been made to reduce the number to one new

state of the art depot in Grafton and retention of the existing relatively new depot in north east corner

of the Shire at Townsend.

Each workshop has a Supervisor and there are 5 mechanics and 2 apprentices.

It is understood that all servicing and

Scheduled servicing is planned a fortnight in advance for the heavy fleet and

fleet.

Outsourced work includes hydraulic hose replacement, air conditioning repairs/re

electrical outside testing equipment capability, custom fabrication, and major repairs to items such as

tipper bodies, tipper tail gates and large hydraulic cylinder resealing.

Tyre management is outsourced to the tyre supplier.

The workshop is reliant on TechnologyOne’s Works & Assets for all records and reporting. There are

no regular fleet management reports available but there i

fleet reporting capability. However, we are not aware to what extent.

Current Position Assessment

Our assessment is that both the number and location of depots proposed is the correct decision.

To not have an in-house maintenance capability in a rural location like Clarence Valley would have a

detrimental impact on the Council’s operational services. The in

critical to:


MECHANICAL SERVICES

MECHANICAL SERVICES

review of current mechanical workshop practices, recommend optimal service level for mechanical


The main KPI’s that provide a performance benchmarks in mechanical maintenance are:

Scheduled Versus Unscheduled Maintenance

Maintenance failure records

Provision of Mechanical Services

was formed in February 2004 by the amalgamation of the

Maclean Shire, and parts of Copmanhurst, Pristine Waters and Richmond Valley

The legacy of the amalgamation remains with 4 Council depots, 3 of which are located in relative



Each workshop has a Supervisor and there are 5 mechanics and 2 apprentices.

servicing and most mechanical repairs is undertaken in house.

Scheduled servicing is planned a fortnight in advance for the heavy fleet and 3-4 days for the light

Outsourced work includes hydraulic hose replacement, air conditioning repairs/re-


l gates and large hydraulic cylinder resealing.

Tyre management is outsourced to the tyre supplier.


no regular fleet management reports available but there is an expectation that Works & Assets

. However, we are not aware to what extent.

Current Position Assessment


se maintenance capability in a rural location like Clarence Valley would have a

detrimental impact on the Council’s operational services. The in-house maintenance capability is

MECHANICAL SERVICES 71

review of current mechanical workshop practices, recommend optimal service level for mechanical


intenance are:

was formed in February 2004 by the amalgamation of the City of Grafton and

Richmond Valley local government

depots, 3 of which are located in relative



mechanical repairs is undertaken in house.

4 days for the light

-gassing, auto



s an expectation that Works & Assets has


se maintenance capability in a rural location like Clarence Valley would have a

house maintenance capability is


• Planning and conducting preventative maintenance

• Managing contractors

• Liaison with end users

• Capturing data for improved fleet management reporting

• Providing a quick response to analyse failures and to undertake minor repairs on site

• The maintenance "Chain of Responsibility" and the need to increase the frequenc

and compliance checks on plant/vehicles/equipment.

• Small plant servicing

While some work is currently outsourced we believe this has the potential to be increased in future for

a number of reasons:

• Increasing sophisticated technology plant/veh

equipment for servicing engines and new skills required by mechanics who conduct services.

This includes light fleet servicing.

• Purchase of the specialist equipment and training of staff in a small workshop for s

spread of plant, vehicles and equipment isn’t practical when other options are readily

available.

• Where available dealer service facilities are often better equipped to provide scheduled

service and maintenance.

• Improved resale values for vehic

Good recording and monitoring systems need to be in place for mechanical maintenance to ensure

that repair and maintenance times are controlled, performance standards are met and that accurate

records of each repair are kept. Apart from monitoring cost and performance, detailed workshop

records are essential to avoid the issue of liability in the case of operational accidents being open to

question. This will become even more important in future with national harm

The workshop will be required to keep maintenance records up to date and this will add to current

administrative workloads. Since the use of AusFleet was discontinued the workshop has been

severely disadvantaged and highly exposed to liabil

priority. Refer Section 4 Management.

What is the Council not doing that it should be doing?

We recommend Service Level Agreements

mechanical services (both internal and external) and Council’s operating departments to provide

greater accountability, a high level of service and control costs.

Documentation of the reasons for

system. While reasons for failures are being recorded on job cards the information is not readily

available to management. Failure records provide valuable management information in understanding

the reasons for repairs and enabling corrective action to be taken by operations manage

Documentation is also important in risk management and occupational health & safety considerations.


MECHANICAL SERVICES

Planning and conducting preventative maintenance

Capturing data for improved fleet management reporting

Providing a quick response to analyse failures and to undertake minor repairs on site

The maintenance "Chain of Responsibility" and the need to increase the frequenc

and compliance checks on plant/vehicles/equipment.


Increasing sophisticated technology plant/vehicles/equipment and the need for specialist


This includes light fleet servicing.

Purchase of the specialist equipment and training of staff in a small workshop for s


Where available dealer service facilities are often better equipped to provide scheduled

service and maintenance.

Improved resale values for vehicles maintained by authorised service agents



air are kept. Apart from monitoring cost and performance, detailed workshop


question. This will become even more important in future with national harmonisation laws.



severely disadvantaged and highly exposed to liability risk and this needs to be addressed as a

priority. Refer Section 4 Management.

not doing that it should be doing?

Service Level Agreements (SLA’s) be established between Fleet Management,

nal and external) and Council’s operating departments to provide

greater accountability, a high level of service and control costs.

Documentation of the reasons for maintenance failures (repairs) in a fleet management reporting

ailures are being recorded on job cards the information is not readily


the reasons for repairs and enabling corrective action to be taken by operations manage


HANICAL SERVICES 72

Providing a quick response to analyse failures and to undertake minor repairs on site

The maintenance "Chain of Responsibility" and the need to increase the frequency of safety


icles/equipment and the need for specialist


Purchase of the specialist equipment and training of staff in a small workshop for such a wide


Where available dealer service facilities are often better equipped to provide scheduled

les maintained by authorised service agents



air are kept. Apart from monitoring cost and performance, detailed workshop


onisation laws.



ity risk and this needs to be addressed as a

(SLA’s) be established between Fleet Management,

nal and external) and Council’s operating departments to provide

in a fleet management reporting

ailures are being recorded on job cards the information is not readily


the reasons for repairs and enabling corrective action to be taken by operations management.



There is a need for a formal process for follow up with Operational supervisors and this should be

addressed in the SLA.

Downtime brings with it additional costs associated with hire of external plant, lost time on the job,

inefficient redeployment of staff to other work etc. However, as it is not being measured the extent

and cost impact cannot be identified. While not a high priority at present, futu

reporting on downtime will provide important information for operations management.

A contract for scheduled servicing and maintenance

preparing tender documents for new and replacement plant purchases.

servicing would need to be specified to be conducted at the

possible.

Workshop Maintenance Processes

process (chain of responsibility requi

Manual and this will need to be a focus for internal maintenance staff.

What the Council is doing well?

We strongly believe that the Council

capability. This is essential to ensure a high level of service and emergency response capability. The

question is to what extent in the longer term.

The Council’s mechanical services section is providing a high level of preventative

maintenance/safety checks and this should continue to minimise downtime in operational

departments.

3.3. Maintenance Failure Records

All repair and maintenance work at the

failures.

Maintenance failure records provide th

identifying downtime, failures and repair costs which will be reflected in charge out rates. Failure

records also provide an understanding of the impact of failures that may not be directly attr

the equipment itself. Maintenance failure records identify:

• Lack of daily maintenance such as failure to check the oil and water at start up,

• Exceeding equipment application or incorrect operational use such as the wrong machine

being used for the task required to be performed),

• Operator negligence – in the field or lack of daily maintenance,

• Accidents,

• Manufacturer's design failures,

• Age of the machine (expected component failure), or

• Customisation.

The accurate recording of the reasons for fai

and vehicle fleet management. When an item fails in the field, the impact on costs is not restricted to


MECHANICAL SERVICES


tional costs associated with hire of external plant, lost time on the job,


and cost impact cannot be identified. While not a high priority at present, future recording and


contract for scheduled servicing and maintenance should be included as an option when

preparing tender documents for new and replacement plant purchases. For this to be efficient

servicing would need to be specified to be conducted at the Council’s workshop facility wherever

Workshop Maintenance Processes need to comply with the 8 step maintenance management

process (chain of responsibility requirements) detailed in the IPWEA Plant & Vehicle Management

Manual and this will need to be a focus for internal maintenance staff.

is doing well?

Council should continue to maintain an in house mechanical servic


question is to what extent in the longer term.

’s mechanical services section is providing a high level of preventative

hecks and this should continue to minimise downtime in operational


All repair and maintenance work at the Council is recorded on job cards including the reasons for

Maintenance failure records provide the historical information for decisions affecting equipment by


records also provide an understanding of the impact of failures that may not be directly attr

the equipment itself. Maintenance failure records identify:

Lack of daily maintenance such as failure to check the oil and water at start up,

Exceeding equipment application or incorrect operational use such as the wrong machine

the task required to be performed),

in the field or lack of daily maintenance,

Manufacturer's design failures,

Age of the machine (expected component failure), or

The accurate recording of the reasons for failures is a fundamental step in controlling costs in plant




tional costs associated with hire of external plant, lost time on the job,


re recording and


should be included as an option when

For this to be efficient

’s workshop facility wherever

need to comply with the 8 step maintenance management

rements) detailed in the IPWEA Plant & Vehicle Management

should continue to maintain an in house mechanical service


’s mechanical services section is providing a high level of preventative

hecks and this should continue to minimise downtime in operational

is recorded on job cards including the reasons for

e historical information for decisions affecting equipment by


records also provide an understanding of the impact of failures that may not be directly attributed to

Lack of daily maintenance such as failure to check the oil and water at start up,

Exceeding equipment application or incorrect operational use such as the wrong machine

lures is a fundamental step in controlling costs in plant



the repairs. Feedback to end users on the reasons for failures is critical if a failure is due

operator or inappropriate use of the item. Numerous hidden costs start to compound:

• The mechanic is sent to investigate the failure, resulting in the delay of planned maintenance

on items scheduled for service.

• The operator stands idle while

• A cost is involved to recover the item from the field to the workshop.

• The team relying on the item is held up until a replacement item is provided.

• Additional expenditure in replacement plant h

Being aware of the cause of the failures is particularly important to operational managers to provide

the information to become proactive in their approach to staff training and the correct equipment

application in the field. Recording the reasons for failures and reporting to operations management is

an important step to reducing repeat failures and thereby reducing costs attributable to failures. It will

also assist to optimise plant and vehicle availability by reducin

It is important that the mechanic (internal or external) records the failures of plant and fleet and the

cost of each failure is allocated to each category. With information on the reasons and cost of failures,

management will be in a better p

• action planned maintenance,

• assess the need for operator training,

• develop simple procedures to reduce the impact of these failures on operations, or

• make a decision on the need for replacement with a more appropriate item of plant.


Records kept in diaries or on timesheets can be damaged or lost and don’t meet current OH&S

requirements.

As mentioned in the Current Position Assessment while re

cards the information is not readily available to management.

RECOMMENDATION


30. Maintenance failures and the reasons for failures are



3.4. Downtime Cost

Downtime cost is all costs associated with an item of the fleet being out of action for repairs or

maintenance other than the costs of the work on the item. Downtime should be measured from when

the machine is reported down in normal working hours until th

Downtime should also be recorded in the case where a machine is brought to the workshop for

repairs. While the repair itself may only take a few hours there can be substantial delays (downtime)

in waiting for parts for unanticipated work.


MECHANICAL SERVICES

the repairs. Feedback to end users on the reasons for failures is critical if a failure is due


The mechanic is sent to investigate the failure, resulting in the delay of planned maintenance

on items scheduled for service.

The operator stands idle while the equipment is assessed for suitability for field repairs.

A cost is involved to recover the item from the field to the workshop.

The team relying on the item is held up until a replacement item is provided.

Additional expenditure in replacement plant hire should the activity be critical.



field. Recording the reasons for failures and reporting to operations management is


also assist to optimise plant and vehicle availability by reducing downtime.



management will be in a better position to;

action planned maintenance,

assess the need for operator training,

develop simple procedures to reduce the impact of these failures on operations, or

make a decision on the need for replacement with a more appropriate item of plant.

tation is also important in risk management and occupational health & safety considerations.


As mentioned in the Current Position Assessment while reasons for failures are being recorded on job

cards the information is not readily available to management.

Maintenance Failure Records Impact to Organisation

Maintenance failures and the reasons for failures are





the machine is reported down in normal working hours until the machine gets back on the road.



nticipated work.


the repairs. Feedback to end users on the reasons for failures is critical if a failure is due to either the


The mechanic is sent to investigate the failure, resulting in the delay of planned maintenance

the equipment is assessed for suitability for field repairs.

The team relying on the item is held up until a replacement item is provided.

ire should the activity be critical.



field. Recording the reasons for failures and reporting to operations management is




develop simple procedures to reduce the impact of these failures on operations, or

make a decision on the need for replacement with a more appropriate item of plant.

tation is also important in risk management and occupational health & safety considerations.


asons for failures are being recorded on job




e machine gets back on the road.




Downtime costs can accumulate and the associated increased operational costs often go undetected

unless accurate assessment of the downtime is made. Downtime needs to be tracked in order to

identify how much the downtime is costing for e

mechanical service provider needs to record the time:

• Vehicle arrived for service or breakdown was reported

• Mechanic commenced work on the vehicle

• Waiting for parts (if any)

• Job was completed

• Vehicle was collected

While not currently being recorded nor a high priority at present, future reporting on downtime will

provide important information for operations management if a fleet management reporting system is

reinstated.

RECOMMENDATION

Downtime Cost

31. Downtime is recorded on job cards to facilitate future

management reporting.

3.5. Scheduled Versus Unscheduled Maintenance Ratio

A comparison of scheduled versus unscheduled maintenance (repairs) can provide a valuable KPI

and tool in fleet management reporting but care should be taken when applying this as a mechanical

workshop performance indicator because repairs are generally outside the control of the workshop.

The terms scheduled and unscheduled maintenance have different interpretations and these are

defined as follows:

• Scheduled services includes all lube services which involve

and a general safety check including electronics, i.e. all of the tasks that be expected to

maintain the item within Manufacturer’s requirements.

• Scheduled maintenance includes tyre changes, clutch and brake repairs, cha

sharpening blades, replacing worn bearings, bushes etc, i.e. all of the tasks that be expected

to maintain the item within Manufacturer’s requirements.

• Unscheduled maintenance (repairs) is not part of normal preventative maintenance.

The target is that labour time allocated to scheduled services and maintenance should, as a

minimum, equal the time spent on unscheduled maintenance (repairs). However, if the fleet is not

being replaced at the optimum time or is being mismanaged by operations, this wil

substantially on the workshop’s ability to meet this benchmark.

If the organisation fails to adopt and fund optimum replacement, the incidence of failures will most

certainly increase. The workshop also has no control of failures due to:


MECHANICAL SERVICES



identify how much the downtime is costing for each item. In order to accurately record downtime, the

mechanical service provider needs to record the time:

Vehicle arrived for service or breakdown was reported

Mechanic commenced work on the vehicle




Downtime is recorded on job cards to facilitate future

Scheduled Versus Unscheduled Maintenance Ratio



mance indicator because repairs are generally outside the control of the workshop.


Scheduled services includes all lube services which involves changing oils, filters, greasing


maintain the item within Manufacturer’s requirements.

Scheduled maintenance includes tyre changes, clutch and brake repairs, cha


to maintain the item within Manufacturer’s requirements.

Unscheduled maintenance (repairs) is not part of normal preventative maintenance.

that labour time allocated to scheduled services and maintenance should, as a


being replaced at the optimum time or is being mismanaged by operations, this wil

substantially on the workshop’s ability to meet this benchmark.


certainly increase. The workshop also has no control of failures due to:




ach item. In order to accurately record downtime, the






mance indicator because repairs are generally outside the control of the workshop.


s changing oils, filters, greasing


Scheduled maintenance includes tyre changes, clutch and brake repairs, changing &


Unscheduled maintenance (repairs) is not part of normal preventative maintenance.

that labour time allocated to scheduled services and maintenance should, as a


being replaced at the optimum time or is being mismanaged by operations, this will impact



• operator negligence - in the field or lack of daily maintenance (such as failure to check the oil

and water at start-up) and

• application of the machine being used

However, the workshop does have a responsibilit

referral to operational management.

The ratio of scheduled maintenance to unscheduled maintenance (repairs) should be adopted as an

important organisation fleet performance indicator with the workshop

responsible for the outcome. The role of the workshop is to ensure manufacturers’ minimum service

standards are implemented and work is undertaken based on the agreed flat

Unfortunately, it is not uncommo

around 30/70. The aim should be to reverse this ratio to 70/30 and at minimum the target is to achieve

a 50/50 result. These KPI’s are overall targets only as there are high maintenance items su

sweepers, rubbish collection vehicles, landfill site plant where the average 30% unscheduled

maintenance will most certainly be exceeded.

Where 70% of workshop maintenance is reactive, responding to breakdowns, the end result is more

than just the downtime of the item and the repair costs. The flow

work crews and even more downtime costs associated with the repair.

RECOMMENDATION

Scheduled to Unscheduled Maintenance Ratio

32. An overall scheduled to unscheduled maintenance



place.

3.6. Maintenance Standards and Specifications

Manufacturer’s of fleet assets provide standards for both the timing (engine hours/kilometres

travelled) of scheduled services and the specification for the

should be undertaken. The risk of not following those standards includes:

• loss of warranty (during a warranty period)

• increased downtime due to breakdowns and

• liability being placed on the asset owner

Plant and vehicle operators are required to undertake daily checks and complete a “tick and flick”

sheet with responsibility for follow up resting with the works supervisors, workshop supervisors and

the Fleet Coordinator.

Table 19 details our recommended preventative mainte


MECHANICAL SERVICES

in the field or lack of daily maintenance (such as failure to check the oil

up) and

application of the machine being used – wrong machine for the task required to be performed.

However, the workshop does have a responsibility to record and report on the reasons for failures for

referral to operational management.


important organisation fleet performance indicator with the workshop playing their part but not being


standards are implemented and work is undertaken based on the agreed flat-rate labour hours.

Unfortunately, it is not uncommon for the ratio of scheduled to unscheduled maintenance to be


a 50/50 result. These KPI’s are overall targets only as there are high maintenance items su


maintenance will most certainly be exceeded.


he downtime of the item and the repair costs. The flow-on effects are idle and frustrated

work crews and even more downtime costs associated with the repair.

Scheduled to Unscheduled Maintenance Ratio Impact to Organisation

An overall scheduled to unscheduled maintenance





travelled) of scheduled services and the specification for the preventative maintenance work that

should be undertaken. The risk of not following those standards includes:

loss of warranty (during a warranty period)

increased downtime due to breakdowns and

liability being placed on the asset owner

erators are required to undertake daily checks and complete a “tick and flick”


details our recommended preventative maintenance strategies.


in the field or lack of daily maintenance (such as failure to check the oil

wrong machine for the task required to be performed.

y to record and report on the reasons for failures for


playing their part but not being


rate labour hours.

n for the ratio of scheduled to unscheduled maintenance to be


a 50/50 result. These KPI’s are overall targets only as there are high maintenance items such as road



on effects are idle and frustrated



preventative maintenance work that

erators are required to undertake daily checks and complete a “tick and flick”



Table 19 – Planned Maintenance Strategies

Strategy Activities

Driver/Operator initiated

• Daily checks by drivers/operators (must be recorded in duplicate)

• Documenting/reporting defects to workshop staff,

• Arrange unscheduled work if

• Document maintenance failures

Preventative Maintenance Servicing

• Maintenance schedules as per manufactures specification,

• Compare scheduled to unscheduled

• Recording of maintenance performed, labour and materials used.

• Maintain

• Prioritisation of maintenance work to minimise operational downtime

• Use of genuine parts

• Oil sampling and analysis on major plant items to include high utilisation items beyond manufacturer’s warranty pepreventative maintenance tool

Safety Inspections

• All plant including minor items

• Major high maintenance plant such as road sweepers

• Small engine plant/equipment and a minor service every 6 months by a mechanic

Service Standards for Availability of Plant

As a minimum Manufacturer’s recommendations should be adopted. There is also a need for

proactive safety checks in addition to Manufacturer’s scheduled servicing. We believe that the

proactive safety requirements required in the National Heavy Vehicle Main

Accreditation guide will eventually apply to all internal maintenance facilities.

As mentioned in Section 3.4, the ratio of

performance measure for the organisation more than the mechanical

Maintenance Management Accreditation encourages heavy vehicle operators to take more

responsibility for servicing their vehicles regularly and ensuring their vehicles are safe at all times. It

has been developed to provide c

reduce down time associated with breakdowns and annual inspections. It will also lead to greater road

safety. Further information can be obtained from the National Heavy Vehicle Accreditatio

(NHVAS).

There is also a need for proactive safety checks in addition to Manufacturer’s scheduled servicing. All

plant including minor items should be subject to a safety check a minimum of every 6 months. This

safety check is not only to ensure t

asset data base which is particularly important with minor plant.

We recommend the frequency of safety checks are even higher for major plant items such as road

sweeper vehicles (high utilisation, high risk maintenance items) to ensure downtime is minimised. For

example:

• replacing brake linings well before they cause subsequent damage to drums

• replacing bearings and bushes before they can cause any additional failure or safety risk

operating outside their known wear tolerances


MECHANICAL SERVICES

Planned Maintenance Strategies

Daily checks by drivers/operators (must be recorded in duplicate)

Documenting/reporting defects to workshop staff,

Arrange unscheduled work if required

Document maintenance failures

Maintenance schedules as per manufactures specification,

Compare scheduled to unscheduled – target is 50/50

Recording of maintenance performed, labour and materials used.

Maintain register of maintenance issues and condition reports

Prioritisation of maintenance work to minimise operational downtime

Use of genuine parts

Oil sampling and analysis on major plant items to include high utilisation items beyond manufacturer’s warranty periods as an important preventative maintenance tool

All plant including minor items - Min 6 months

Major high maintenance plant such as road sweepers –

Small engine plant/equipment - Weekly safety check by the operator minor service every 6 months by a mechanic

Service Standards for Availability of Plant



proactive safety requirements required in the National Heavy Vehicle Maintenance Management

Accreditation guide will eventually apply to all internal maintenance facilities.

As mentioned in Section 3.4, the ratio of scheduled to unscheduled maintenance

performance measure for the organisation more than the mechanical workshop where it is measured.



has been developed to provide clear procedures for ensuring vehicles are well maintained, and to


safety. Further information can be obtained from the National Heavy Vehicle Accreditatio



safety check is not only to ensure the mechanical condition of the item but also registration on the

asset data base which is particularly important with minor plant.


ation, high risk maintenance items) to ensure downtime is minimised. For

replacing brake linings well before they cause subsequent damage to drums

replacing bearings and bushes before they can cause any additional failure or safety risk

outside their known wear tolerances


Daily checks by drivers/operators (must be recorded in duplicate)

Maintenance schedules as per manufactures specification,

Recording of maintenance performed, labour and materials used.

register of maintenance issues and condition reports

Prioritisation of maintenance work to minimise operational downtime

Oil sampling and analysis on major plant items to include high utilisation riods as an important

– fortnightly

Weekly safety check by the operator



tenance Management

scheduled to unscheduled maintenance is a key

workshop where it is measured.



lear procedures for ensuring vehicles are well maintained, and to


safety. Further information can be obtained from the National Heavy Vehicle Accreditation Scheme



he mechanical condition of the item but also registration on the


ation, high risk maintenance items) to ensure downtime is minimised. For

replacing brake linings well before they cause subsequent damage to drums

replacing bearings and bushes before they can cause any additional failure or safety risk


Small engine plant and equipment should be subject to a weekly safety check by the operator and a

safety inspection every 6 months by a mechanic. We understand this requirement is being currently

addressed by small plant being checked or serviced when the parent item is being serviced.

The benefits of being proactive in safety checks can include:

• improvements in productivity and efficiency

• improved skills and accountability of drivers/operators and mechanics

• reduced down time

• greater confidence in the condition of the Council’s plant/vehicles/equipment

• increased vehicle life and lower maintenance costs

• improved driver/operator morale

• improved safety

RECOMMENDATION


33. The planned and preventative maintenance schedules

detailed in Table 19 of the report be adopted as a


3.7. Labour Flat Rates

Labour flat rates refer to an adopted industry standard for the expected time for a maintenance task.

The term is applied by the vehicle

machinery.

Flat rates determine the amount of time allocated for a mechanic to complete services and

maintenance on every item of plant, vehicle and equipment in the fleet. Once flat rates

with mechanical staff they provide the mechanic with the time to complete the task and can be

extrapolated over the whole fleet to determine workshop resourcing requirements. Flat rates provide

the opportunity for benchmarking against indus

For the purpose of assessing minimum workshop labour requirements we have developed flat rates

taking into consideration the rural location on the North Coast. These should be refined in consultation

with the Fleet Coordinator who will h

documented. Details of the proposed flat rates are included in the separately attached XL sheet tab

titled 10 Year Plan.

Flat rates however do not cover maintenance that is attributed to failures (unex

as:

• Lack of daily checks

• Incorrect application

• Age

• Manufacturers fault


MECHANICAL SERVICES



being checked or serviced when the parent item is being serviced.

The benefits of being proactive in safety checks can include:

improvements in productivity and efficiency

improved skills and accountability of drivers/operators and mechanics

greater confidence in the condition of the Council’s plant/vehicles/equipment

increased vehicle life and lower maintenance costs

improved driver/operator morale

Maintenance Standards and Specifications Impact to Organisation

The planned and preventative maintenance schedules

of the report be adopted as a


Labour Flat Rates


The term is applied by the vehicle industry to every task undertaken in the maintenance and repair of


maintenance on every item of plant, vehicle and equipment in the fleet. Once flat rates



the opportunity for benchmarking against industry best practice.



with the Fleet Coordinator who will have a very good idea of service times if these are not


Flat rates however do not cover maintenance that is attributed to failures (unexpected repairs) such

CAL SERVICES 78



being checked or serviced when the parent item is being serviced.

greater confidence in the condition of the Council’s plant/vehicles/equipment



industry to every task undertaken in the maintenance and repair of


maintenance on every item of plant, vehicle and equipment in the fleet. Once flat rates are negotiated





ave a very good idea of service times if these are not


pected repairs) such


• Operator inattention

RECOMMENDATION

Labour Flat Rates

34. In the long term flat rate labour times are adopted for


providers.

3.8. Estimated Mechanical Maintenance Labour Requirements

At the core of Uniqco’s estimated labour requirements is an assessment of:

• Average annual utilisation

• Age and utilisation over the life of each item

• Manufacturer’s scheduled servicing requirements and

• An assessment of annual unscheduled maintenance

As detailed in Section 2, Average Annual Utilisation

vehicle or equipment and is measured in either engine hours (for p

trucks. Actual annual utilisation data is used, along with age, to calculate the number of services

required for each plant/vehicle item.

Age and Life to date utilisation

been held beyond its optimum replacement it will impact on workshop labour requirements and

repairs & maintenance costs will increase. Maintaining an optimum replacement policy will minimise

annual plant replacement costs in the long term, re

reduce downtime in the outside operations. The

replacement and this has not been an issue for the labour assessment.

Scheduled maintenance intervals

a minimum. Scheduled maintenance is based on age or utilisation whichever occurs first.

Our assessment of flat rate labour hours

and experience and has been reviewed by the Fleet Coordinator. Similarly our estimates for

unscheduled maintenance are based on the age/utilisation of the fleet, our experience and

discussions with the Fleet Coordinator.

Section 11.7 of the IPWEA best Practice Plant & Vehicle Manageme

provides a step by step methodology for calculating workshop labour requirements using first

principles. This methodology was developed by us and peer reviewed by IPWEA’s national panel of

fleet managers prior to inclusion in

Principles followed in estimating mechanical workshop labour requirements

Step

1. Calculate the average annual utilisation of each item. This is needed to enable an estimate for

the number of services recommended by the manufacturer.

2. Obtain the manufacturer’s recommended service intervals. Scheduled service intervals are

specified by the manufacturer based on time or utilisation whichever comes first. This allows a


MECHANICAL SERVICES


In the long term flat rate labour times are adopted for


Estimated Mechanical Maintenance Labour Requirements

At the core of Uniqco’s estimated labour requirements is an assessment of:

Average annual utilisation

Age and utilisation over the life of each item

scheduled servicing requirements and

An assessment of annual unscheduled maintenance

Average Annual Utilisation is the extent of use of a particular item of plant,

vehicle or equipment and is measured in either engine hours (for plant) and kilometres travelled for


required for each plant/vehicle item.

Age and Life to date utilisation can have an impact on unscheduled maintenance. I



annual plant replacement costs in the long term, reduce maintenance costs and most importantly

reduce downtime in the outside operations. The Council is generally on target with optimum

replacement and this has not been an issue for the labour assessment.

Scheduled maintenance intervals are recommended by the manufacturer and must be followed as


flat rate labour hours for scheduled maintenance is based on industry standards

eviewed by the Fleet Coordinator. Similarly our estimates for


discussions with the Fleet Coordinator.

Section 11.7 of the IPWEA best Practice Plant & Vehicle Management Manual (3rd edition



fleet managers prior to inclusion in the Manual.

Principles followed in estimating mechanical workshop labour requirements

Calculate the average annual utilisation of each item. This is needed to enable an estimate for

the number of services recommended by the manufacturer.

Obtain the manufacturer’s recommended service intervals. Scheduled service intervals are




Estimated Mechanical Maintenance Labour Requirements

is the extent of use of a particular item of plant,

lant) and kilometres travelled for


can have an impact on unscheduled maintenance. If an item has



duce maintenance costs and most importantly

is generally on target with optimum

the manufacturer and must be followed as


for scheduled maintenance is based on industry standards

eviewed by the Fleet Coordinator. Similarly our estimates for


nt Manual (3rd edition - 2012)



Principles followed in estimating mechanical workshop labour requirements - Step by

Calculate the average annual utilisation of each item. This is needed to enable an estimate for

Obtain the manufacturer’s recommended service intervals. Scheduled service intervals are



schedule to be developed for the number and type of services required

scheduled services and scheduled maintenance.

3. When a major service is undertaken a minor service and safety check is undertaken at the

same time. When a minor service is undertaken we allow for a safety check at the same time.

An allowance is added for proactive safety checks in between scheduled services and

scheduled maintenance. Safety checks will be undertaken a minimum of every 6 months or

lesser period to meet local conditions or OH&S requirements.

4. In house services generally provide a

provided externally and we have made allowances for this in the flat rates. These were

discussed and agreed with Coordinator Fleet Management based on the tasks recommended

by the Manufacturer.

5. Obtain the number of services (minor and major) by dividing the utilisation by the service

interval or recommended minimum time. Round the number of services down to nearest

whole number.

6. Provision for scheduled maintenance is made based on agreed ratios for ea

plant/vehicle/equipment

7. Calculate total labour hours for scheduled maintenance.

8. Allocate a percentage allowance for repairs. The allowance will be higher for high wear/tear

items like a street sweeper than low wear items like a motor car. Apply

age of the fleet, local conditions, experience and in liaison with mechanical maintenance staff.

9. Allow a percentage of labour hours for administrative tasks such as completing job cards,

fleet management system entries, parts ordering an

10. Based on the estimated flat rates we are able to calculate the number of mechanic labour

hours required to meet the scheduled service and maintenance requirements including

proactive safety checks.

11. Calculate total hours and di

number of full time employees required to complete the work.

Note: Our estimate of the labour required to maintain Council’s fleet is based on the flat rate labour hours. These

rates should be incorporated within a service level agreement between fleet management and the mechanical

workshop. A ratio of scheduled maintenance to scheduled services has been applied and these rates vary

between for different items of plant/vehicles/equipment. For the Ap

available hours to be spent on mechanical maintenance.

Our “base load” estimates for labour requirements for the mechanical workshop are calculated in the

separately attached XL sheet refer Tabs Maintenance Hours L

based on:

• Current average annual utilisation

• the estimated flat rate labour rates to maintain each item of the fleet

• the recommended level of additional servicing and proactive safety checks in between

manufacturer’s servicing requirements

• A ratio of scheduled to unscheduled maintenance as detailed in the XL sheet


MECHANICAL SERVICES

schedule to be developed for the number and type of services required annually, i.e.

scheduled services and scheduled maintenance.

When a major service is undertaken a minor service and safety check is undertaken at the


s added for proactive safety checks in between scheduled services and


lesser period to meet local conditions or OH&S requirements.

In house services generally provide a higher level of service to their customers than would be



n the number of services (minor and major) by dividing the utilisation by the service


Provision for scheduled maintenance is made based on agreed ratios for ea

Calculate total labour hours for scheduled maintenance.

Allocate a percentage allowance for repairs. The allowance will be higher for high wear/tear

items like a street sweeper than low wear items like a motor car. Apply allowance based on


Allow a percentage of labour hours for administrative tasks such as completing job cards,

fleet management system entries, parts ordering and other non mechanical tasks.

Based on the estimated flat rates we are able to calculate the number of mechanic labour


Calculate total hours and divide by 1400 annual hours available/mechanic to obtain the

number of full time employees required to complete the work.


rporated within a service level agreement between fleet management and the mechanical


between for different items of plant/vehicles/equipment. For the Apprentices we have adopted a percentage of

available hours to be spent on mechanical maintenance.


separately attached XL sheet refer Tabs Maintenance Hours LF & Maintenance Hours HP and are

Current average annual utilisation

the estimated flat rate labour rates to maintain each item of the fleet

the recommended level of additional servicing and proactive safety checks in between

ing requirements

A ratio of scheduled to unscheduled maintenance as detailed in the XL sheet


annually, i.e.

When a major service is undertaken a minor service and safety check is undertaken at the


s added for proactive safety checks in between scheduled services and


higher level of service to their customers than would be



n the number of services (minor and major) by dividing the utilisation by the service


Provision for scheduled maintenance is made based on agreed ratios for each item of

Allocate a percentage allowance for repairs. The allowance will be higher for high wear/tear

allowance based on


Allow a percentage of labour hours for administrative tasks such as completing job cards,

d other non mechanical tasks.

Based on the estimated flat rates we are able to calculate the number of mechanic labour


vide by 1400 annual hours available/mechanic to obtain the


rporated within a service level agreement between fleet management and the mechanical


prentices we have adopted a percentage of


F & Maintenance Hours HP and are

the recommended level of additional servicing and proactive safety checks in between

A ratio of scheduled to unscheduled maintenance as detailed in the XL sheet


• Up to date fleet and no items in operation beyond their optimum replacement in terms of

utilisation or age

Assumptions for Available Hours

• Workshop Supervisor wil

• Workshop Supervisor will be 80% admin / overhead at Grafton

• Of the current 2 additional 2 workshop supervisors 1 will be redeployed in a full time

Scheduling role.

• The remaining workshop supervisor will be redeployed

required to cover for the 2 workshop supervisors and the Scheduler and hence will be

available less 12 weeks (456 hrs)

• The Apprentice Mechanics will attend TAFE classes and developing skills and are available

say 50% of the time.

Available Labour Hours

Based on expected staffing levels under the 2 workshop scenario there will be 6 plant mechanics and

2 apprentices providing 9, 344 available maintenance hours which is 6.67 FTE mechanics. Refer

Table 20.

Table 20 - Available Labour Hours

Staff Annual Hours

Mechanics (5) 1,400

Redeployed Supervisor Mechanic

1,400

Less

456

Apprentices (2) 1,400

Note: Uniqco adopts 1400 as the annual available mechanic hours

Projected Minimum Labour Requirements for Mechanical Maintenance

Our first principles assessment of

requirement for 7,798 hours which equates to 5.57 FTE mechanics

• all plant/vehicles are up to date in respect to optimum replacement principles

• continued outsourcing of some light fleet servic

• mechanics are not used for non mechanical tasks which is not currently the case. We

understand mechanics are used to collect and deliver light vehicles which is not good use of a

skilled resource.

We have allowed 30% to the calculated labour requiremen

by mechanics to get to/from a job.


MECHANICAL SERVICES

Up to date fleet and no items in operation beyond their optimum replacement in terms of

Assumptions for Available Hours

Workshop Supervisor will be fully admin / overhead at Grafton

Workshop Supervisor will be 80% admin / overhead at Grafton

Of the current 2 additional 2 workshop supervisors 1 will be redeployed in a full time

The remaining workshop supervisor will be redeployed as a mechanic but will also be


available less 12 weeks (456 hrs)

The Apprentice Mechanics will attend TAFE classes and developing skills and are available



Labour Hours

Annual Hours Total Hours % Allocated to Maintenance

400 7,000 100

400

Less

456

944 100

400 2,800 50

Note: Uniqco adopts 1400 as the annual available mechanic hours Total

FTE Mechanics = 9,344/1,400


Our first principles assessment of mechanical maintenance requirements indicates a minimum

requirement for 7,798 hours which equates to 5.57 FTE mechanics (refer Table 21

all plant/vehicles are up to date in respect to optimum replacement principles

continued outsourcing of some light fleet servicing

mechanics are not used for non mechanical tasks which is not currently the case. We


We have allowed 30% to the calculated labour requirement to cater for the amount of travel required

by mechanics to get to/from a job.


Up to date fleet and no items in operation beyond their optimum replacement in terms of

Of the current 2 additional 2 workshop supervisors 1 will be redeployed in a full time

as a mechanic but will also be


The Apprentice Mechanics will attend TAFE classes and developing skills and are available



Total Available Hours

7,000

944

1,400

9,344 Hours

6.67 FTE


indicates a minimum

Table 21) provided that:

all plant/vehicles are up to date in respect to optimum replacement principles

mechanics are not used for non mechanical tasks which is not currently the case. We


t to cater for the amount of travel required


Table 21 – Calculated Mechanic Hours

Item

Plant & Heavy Vehicles

Light Fleet

Small plant

Total

Plus 30% Travel Time allowance

Total required hours

Annual hours per FTE mechanic

Calculated FTE Mechanics

Under the current 4 workshop arrangement the resource requirement is greater than with only 2

workshops because of the need for shift coverage and supervisors leave.

While this exercise is an indication there may be a surplus mechanic position in future,

to be reassessed12 months after the 2 workshops scenario is in place.

Apart from the in-house capability there is a need to have the skills and knowledge to be able to

manage external services providers. In future there will be an increasing

processes and record more information for reporting purposes and this will create a net increase in

administrative work for mechanics and reduce the time available for maintenance tasks.

RECOMMENDATION

Estimated Mechanical Maintena

Requirements

35. Council note the current level of mechanical resources


of a rural environment.

36. A further resourcing assessment is undertaken 12


workshops scenario.

37. Light fleet maintenance be outsourced for cars and



be completed when staff do not require the vehicle.

3.9. Ancillary Equipment and Minor Plant

Ancillary and minor plant and equipment

water pumps, radios, electronic sign trailers, light trailers, plate compactors, and concrete saws.

Servicing of these items is currently undertaken within the depot workshop.

Our preferred option is to charge an annual fee to the end user department for each item.

In our experience, ancillary plant and small items can easily go unnoticed within operational budgets.

Without some degree of control these minor items can become costly in terms of lost pro

operational expense.


MECHANICAL SERVICES

Calculated Mechanic Hours

Calculated Annual Hours

3,578

719

1,701

5,998

allowance 1,800

7,798

Annual hours per FTE mechanic 1,400

5.57


workshops because of the need for shift coverage and supervisors leave.

While this exercise is an indication there may be a surplus mechanic position in future,

to be reassessed12 months after the 2 workshops scenario is in place.

house capability there is a need to have the skills and knowledge to be able to

manage external services providers. In future there will be an increasing requirement to document



Estimated Mechanical Maintenance Labour Impact to Organisation

Council note the current level of mechanical resources


A further resourcing assessment is undertaken 12


Light fleet maintenance be outsourced for cars and



eted when staff do not require the vehicle.

Ancillary Equipment and Minor Plant

Ancillary and minor plant and equipment includes items such as push mowers, edgers, chainsaws,


Servicing of these items is currently undertaken within the depot workshop.

o charge an annual fee to the end user department for each item.


Without some degree of control these minor items can become costly in terms of lost pro



While this exercise is an indication there may be a surplus mechanic position in future, this will need

house capability there is a need to have the skills and knowledge to be able to

requirement to document




includes items such as push mowers, edgers, chainsaws,


o charge an annual fee to the end user department for each item.


Without some degree of control these minor items can become costly in terms of lost productivity and


The following management guidelines are recommended for ancillary plant:

• Itemise every minor item and tag them with an identification number or, preferably, a bar code

which is more efficient. Simple metal tags can howe

can be monitored, these items should not be lumped into one all inclusive account where high

cost items cannot be identified.

• Develop a schedule to ensure each item is serviced at least once every 12 months and t

is tagged and recorded as serviceable.

• Ensure that internal hire rates include the cost for both the maintenance and replacement of

these items of plant. For example, when a work

basis, the vehicle hire rate as

(say a couple of dollars) to recover the costs of the ancillary plant.

• Ensure replacement criteria are established and made known to equipment maintenance staff

to avoid more money being spent o

example, it is not wise to spend 15 hours removing and replacing a piston and crankshaft in a

pump that can be replaced for $800.

• Review maintenance costs on minor equipment every six months. Items that

presented for service or maintenance may not be used regularly and may not be required at

all.

• Spare replacement items should be available for machines that are subject to heavy use to

ensure a job is not held up while the item is in the work

• Ensure new operators of minor and major items are trained on how to start and operate the

equipment and trained in the correct procedure in the case of a machine failure. Minimal

operator training on an item as small

maintenance costs.

• Develop a schedule of annual charges for these smaller items. Ensure end user managers and

supervisors are aware of the annual cost of ownership to their departments.

• Light, highly mobile items such as pumps, chainsaws and edgers are extremely difficult to

secure. It is recommended that all operators be required to present these items on a regular

basis for ongoing safety and stock

• Ancillary equipment is best controlle

efficiently serviced items in return for units requiring maintenance. A storeman can regularly

ensure all items are still issued to the person responsible for their operations. The store can

provide the facility for operational repair assessment and incident recording to ensure abuse

and mishandling issues are recorded for monitoring by management.


MECHANICAL SERVICES

The following management guidelines are recommended for ancillary plant:

Itemise every minor item and tag them with an identification number or, preferably, a bar code

which is more efficient. Simple metal tags can however be just as effective. To ensure costs


cost items cannot be identified.

Develop a schedule to ensure each item is serviced at least once every 12 months and t

is tagged and recorded as serviceable.

Ensure that internal hire rates include the cost for both the maintenance and replacement of

these items of plant. For example, when a work-crew needs a chainsaw on a permanent

basis, the vehicle hire rate associated with that crew can be increased by a marginal amount

(say a couple of dollars) to recover the costs of the ancillary plant.

Ensure replacement criteria are established and made known to equipment maintenance staff

to avoid more money being spent on repairs than the cost of a replacement item. For


pump that can be replaced for $800.

Review maintenance costs on minor equipment every six months. Items that


Spare replacement items should be available for machines that are subject to heavy use to

ensure a job is not held up while the item is in the workshop for a minor breakdown or service.

Ensure new operators of minor and major items are trained on how to start and operate the


operator training on an item as small as a trimmer can save time and both operational and

Develop a schedule of annual charges for these smaller items. Ensure end user managers and


mobile items such as pumps, chainsaws and edgers are extremely difficult to


basis for ongoing safety and stock-take purposes.

Ancillary equipment is best controlled from an issue store. The store can provide clean,



e facility for operational repair assessment and incident recording to ensure abuse

and mishandling issues are recorded for monitoring by management.


Itemise every minor item and tag them with an identification number or, preferably, a bar code

ver be just as effective. To ensure costs


Develop a schedule to ensure each item is serviced at least once every 12 months and the item

Ensure that internal hire rates include the cost for both the maintenance and replacement of

crew needs a chainsaw on a permanent

sociated with that crew can be increased by a marginal amount

Ensure replacement criteria are established and made known to equipment maintenance staff

n repairs than the cost of a replacement item. For


Review maintenance costs on minor equipment every six months. Items that have not been


Spare replacement items should be available for machines that are subject to heavy use to

shop for a minor breakdown or service.

Ensure new operators of minor and major items are trained on how to start and operate the


as a trimmer can save time and both operational and

Develop a schedule of annual charges for these smaller items. Ensure end user managers and


mobile items such as pumps, chainsaws and edgers are extremely difficult to


d from an issue store. The store can provide clean,



e facility for operational repair assessment and incident recording to ensure abuse


RECOMMENDATION

Ancillary and Minor Plant

38. A separate budget allocation is made for ancillary plant


charge to end users.

39. Ancillary plant and small items be subject to


40. Each item of minor plant is serviced at least once every


mechanic.

3.10. Minimising Risk in Mechanical Maintenance

Minimising Risk in the Workshop

Detailed Records

Apart from monitoring cost and performance, detailed records of servicing and repair and

maintenance are essential to avoid the issue of liability in the case of operational accidents being

open to question.

Use of Genuine Parts

Wherever possible, genuine manufacturer’s parts should be specified in repairs.

• Warranty on genuine spare parts often ensures subsequent premature failures are also

covered by warranty.

• Where evidence can be produced that genuine parts have been used, this will normally

improve the resale value.

Programmed Safety Checks

Safety checks on every item of plant and vehicle are critical.

• Miscellaneous plant must be checked every year as a minimum

• Low utilisation plant should be checked and serviced regularly (ev

ensure there is no downtime accumulated from flat batteries and the like when the plant or

vehicle is required for operational use.

Repairs to Manufacturer’s Specifications

When specifying repairs, ensure that the repair is under

specifications.

• In many circumstances items are repaired just to keep them running, but this often causes

more failures.

• Where repairs are undertaken by an in

is a greater likelihood that warranty claims will be accepted.


MECHANICAL


budget allocation is made for ancillary plant


Ancillary plant and small items be subject to


Each item of minor plant is serviced at least once every


Minimising Risk in Mechanical Maintenance

Minimising Risk in the Workshop



manufacturer’s parts should be specified in repairs.

Warranty on genuine spare parts often ensures subsequent premature failures are also

Where evidence can be produced that genuine parts have been used, this will normally

e resale value.

Programmed Safety Checks

Safety checks on every item of plant and vehicle are critical.

Miscellaneous plant must be checked every year as a minimum – 6 months recommended.

Low utilisation plant should be checked and serviced regularly (every six months minimum) to


vehicle is required for operational use.

Repairs to Manufacturer’s Specifications

When specifying repairs, ensure that the repair is undertaken to the plant or vehicle to manufacturer's

In many circumstances items are repaired just to keep them running, but this often causes

Where repairs are undertaken by an in-house workshop to manufacturer’s specification th

is a greater likelihood that warranty claims will be accepted.





Warranty on genuine spare parts often ensures subsequent premature failures are also

Where evidence can be produced that genuine parts have been used, this will normally

6 months recommended.

ery six months minimum) to


taken to the plant or vehicle to manufacturer's

In many circumstances items are repaired just to keep them running, but this often causes

house workshop to manufacturer’s specification there


Avoid Specifications that are too

In writing specifications, it is important to give the supplier all of the information about what the item

will be used for to avoid the purch

• The product if what is specified cannot meet the requirements of job.

• Personal Injury as a result of the item being incorrectly used.

Undertake a Risk Assessment on New Items of Plant/vehicles

OH&S legislation places a positive obligation on employers and site/contract controllers to provide a

safe place of work, specifically requiring that all plant & equipment is safe for use.

Suppliers of plant & equipment also have a positive obligation to provide all relevant hazard

safety information to a purchaser of an item. State Regulations & the associated Code of Practice

specifies the requirement on employers to conduct plant & equipment risk assessments.

Simply put, if you supply, operate or control plant & equipment in

assessment and developing a safe system around plant is essential.

AS/NZS 4360 Risk Management Standard clarifies and confirms the process of hazard identification,

risk assessment and control to be the most effective proce

specifies a 3 stage process, and the use of the “consequence/likelihood matrix” for risk rating, and the

“hierarchy of controls”. AS/NZS 4360 is effectively echoed in State regulations and Codes of Practice,

which provide a clear expectation of employers for the process and form of plant & equipment risk

assessments.

A risk assessment should be required from suppliers as part of the tender process for new plant. The

Council should also ensure a risk assessment is undertak

the item.

Minimising Risk in Operational Use of Plant and Vehicles

Ensure Appropriate Staff Training

Staff must be adequately (and continuously) trained in the proper use of plant/vehicles/equipment.

Induction training is required each time a new item of plant/vehicle is introduced or the operator will

use an existing item for the first time. Having a licence does not ensure an operator will be familiar

with a machine they haven’t used before. This also applies

Ensure Staff have the Appropriate Licence to Operate/Drive

It is the responsibility of Operational supervisors to ensure their staff hold the necessary licenses for

the work to be performed.


MECHANICAL SERVICES

Avoid Specifications that are too prescriptive


will be used for to avoid the purchaser accepting liability risk for:

The product if what is specified cannot meet the requirements of job.

Personal Injury as a result of the item being incorrectly used.

Undertake a Risk Assessment on New Items of Plant/vehicles

sitive obligation on employers and site/contract controllers to provide a


Suppliers of plant & equipment also have a positive obligation to provide all relevant hazard



Simply put, if you supply, operate or control plant & equipment in a workplace, conducting a risk

assessment and developing a safe system around plant is essential.


risk assessment and control to be the most effective process to conduct a risk assessment. It



e a clear expectation of employers for the process and form of plant & equipment risk


Council should also ensure a risk assessment is undertaken after delivery and prior to operation of

Minimising Risk in Operational Use of Plant and Vehicles

Ensure Appropriate Staff Training


training is required each time a new item of plant/vehicle is introduced or the operator will


with a machine they haven’t used before. This also applies to light vehicles.

Ensure Staff have the Appropriate Licence to Operate/Drive




sitive obligation on employers and site/contract controllers to provide a


Suppliers of plant & equipment also have a positive obligation to provide all relevant hazard and



a workplace, conducting a risk


ss to conduct a risk assessment. It



e a clear expectation of employers for the process and form of plant & equipment risk


en after delivery and prior to operation of


training is required each time a new item of plant/vehicle is introduced or the operator will




RECOMMENDATION

Minimising Risk in Mechanical

41. In order to minimise risk the items listed in Section 3.9


42. Operational supervisors are reminded of their







3.11. Contract Maintenance on New Plant

A contract for scheduled servicing and maintenance is recommended as an option to be called when

preparing tender documents for new and replacement plant purchases

maintenance contract the following issues need to be addressed:

• Does the service provider have the necessary qualifications and specialist skills?

• Is servicing available out of hours?

• Where will the servicing be conducted?

o Breakdowns on site?

o Planned maintenance?

o Who will be responsible for transport of vehicle/plant and in what circumstances?

• What is the contract term? Are there any “out” clauses if the service level provided is not as

expected?

• What performance benchmarks will be use

o Unless fixed rates are offered by a contractor, the contractor must be subject to

meeting flat rate repair times. To not do so is to provide an open cheque book.

o A contractor shall always be responsible for rework at his cost.

• What are the downtime cost

o The cost of transporting the unit to the contractor’s workshop facility must be added to

the contractor’s price unless the contractor has a mobile service or the work can be

undertaken in the client’s workshop.

• Total cost comparisons between options

o Tendered prices

o Downtime comparisons

o Transport and labour taking plant to and from the service provider


MECHANICAL SERVICES

Minimising Risk in Mechanical Maintenance Impact to Organisation

In order to minimise risk the items listed in Section 3.9


Operational supervisors are reminded of their







Contract Maintenance on New Plant


preparing tender documents for new and replacement plant purchases. When assessing a

maintenance contract the following issues need to be addressed:

Does the service provider have the necessary qualifications and specialist skills?

Is servicing available out of hours?

Where will the servicing be conducted?

on site?

Planned maintenance?

Who will be responsible for transport of vehicle/plant and in what circumstances?

What is the contract term? Are there any “out” clauses if the service level provided is not as

What performance benchmarks will be used?

Unless fixed rates are offered by a contractor, the contractor must be subject to


A contractor shall always be responsible for rework at his cost.

What are the downtime costs?

The cost of transporting the unit to the contractor’s workshop facility must be added to


undertaken in the client’s workshop.

Total cost comparisons between options

ndered prices

Downtime comparisons

Transport and labour taking plant to and from the service provider




. When assessing a

Does the service provider have the necessary qualifications and specialist skills?

Who will be responsible for transport of vehicle/plant and in what circumstances?

What is the contract term? Are there any “out” clauses if the service level provided is not as

Unless fixed rates are offered by a contractor, the contractor must be subject to


The cost of transporting the unit to the contractor’s workshop facility must be added to


Transport and labour taking plant to and from the service provider


The following assessment matrix shown in

a contractor with the in house team.

Table 22 –Maintenance Contract Assessment Matrix

Selection Criteria

Weight Factor

Specialist Skills 20

Out of Hours Servicing

15

Field Servicing 15

Warranty 5

Cost 35

Benchmarking 5

Downtime 5

TOTALS: 100

RECOMMENDATION

Contract Maintenance

43. For new and replacement plant &



3.12. Service Level Agreements (SLA’s)

In our experience the SLA approach to managing the servicing, maintenance and repairs to plant and

vehicles can deliver improved service and cost control and we recommend a service level agreement

is put in place with all external service providers. All agreements need to provide clear definitions of

responsibility and guidelines to follow when performance requirements are not met. A draft service

level agreement is attached in Appendix 8

Uniqco clients.

RECOMMENDATION


44. Service level agreements are put in place with regular



MECHANICAL SERVICES

The following assessment matrix shown in Table 22 provides a mechanism to compare contractors or

a contractor with the in house team.

Maintenance Contract Assessment Matrix

Maintenance Service Provider

Supplier 1 Supplier

Score Total Score


For new and replacement plant & vehicle purchases,



Level Agreements (SLA’s)



service providers. All agreements need to provide clear definitions of


Appendix 8. The draft SLA is based on agreements in pla


Service level agreements are put in place with regular



provides a mechanism to compare contractors or

Maintenance Service Provider

Supplier 2

Total




service providers. All agreements need to provide clear definitions of


. The draft SLA is based on agreements in place at other



3.13. Summary Mechanical Workshop Best Practice

Figure 4 – Mechanical Workshop Best Practice



MECHANICAL SERVICES

Summary Mechanical Workshop Best Practice

Mechanical Workshop Best Practice




4. MANAGEMENT

4.1. Introduction

Plant & Fleet represents a significant organisational expenditure that requires competent and ongoing

management.

Apart from ensuring value for money is achieved from procurement and operational performance,

actively managing the plant and vehicle fleet is essential in delivering efficient works and services in

public works

Managing the mechanical plant and vehicle fleet like any other resource requires accurate, reliable,

timely, relevant and quantifiable information. The lack of

plant and fleet at Clarence Valley poses a high risk for the Council not only in cost risk but also Work

Health & Safety risk and risk of legal compliance is a big issue and cannot be understated

Such data is required to set charge out rates for full cost recovery, undertake buy / hire business case

assessments, develop maintenance programs and set service and works programs and budgets.

Plant and vehicle fleet items are capital goods that need to be treated and ac

way to fixed capital assets such as land and buildings. Applying systematic analysis to the

procurement, management and maintenance of the fleet will provide a foundation to maximise the

return on investment.

In our experience our recommendations for change, if accepted, will not be successfully implemented

without the full support of senior management. It is also critical that management has an

understanding of the drivers for improvement and is involved in the change process.

Uniqco has developed its own reporting system and tailored management reports that provide the

assessment framework to deliver performance monitoring and improvement through the KPI’s

recommended in the IPWEA best practice Plant & Vehicle Management Manual

Our focus in this section is management issues in relation to fleet including:

• Fleet Management Reporting

• Governance

• Procurement

• 10 Year Plant & Vehicle Replacement Plan

• Funding the Plant & Vehicle Fleet

• Chain of Responsibility

• Fleet Management – Structure, Staff Skills and Knowledge Transfer

• Assessment Framework


MANAGEMENT



lant and vehicle fleet is essential in delivering efficient works and services in


timely, relevant and quantifiable information. The lack of useable information for the management of



red to set charge out rates for full cost recovery, undertake buy / hire business case


Plant and vehicle fleet items are capital goods that need to be treated and accounted for in a similar



recommendations for change, if accepted, will not be successfully implemented





recommended in the IPWEA best practice Plant & Vehicle Management Manual.

Our focus in this section is management issues in relation to fleet including:


10 Year Plant & Vehicle Replacement Plan

Funding the Plant & Vehicle Fleet

Structure, Staff Skills and Knowledge Transfer

Assessment Framework

MANAGEMENT 89



lant and vehicle fleet is essential in delivering efficient works and services in


useable information for the management of



red to set charge out rates for full cost recovery, undertake buy / hire business case


counted for in a similar



recommendations for change, if accepted, will not be successfully implemented






4.2. Fleet Management Reporting

Council is reliant on the TechnologyOne

managing the fleet. We understand that there

management or financial reports available since use of AusFleet ceased.

address this shortfall we are unaware of the details.

Fleet staff are currently unable to monitor utilisation of the fleet and fuel data

TechnologyOne system.

As a result the management reports needed to monitor fleet KPI’s and minimise life cycle costs are

not currently available. More effective fleet management reporting is considered one of the highest

priorities for optimising plant & fleet utilisation, reducing fleet life cycle costs and minimising financial

and WHS risk.

Reporting for financial risk by asset includes:

• A Plant and Equipment List

registration number, serial number, supplier, the purchase date and the current engine hour

and/or kilometres registered on that plant item.

• Utilisation - provides data on actual utilisation versus projected utilisation and a comparison

of timesheet hours allocated to t

• Fuel Consumption in litres per 100km but also ‘over a given period per plant item and/or

per department’ and Fuel Consumption analysis.

• Fuel Tax credit and FBT liability reporting

• Income & Budget Vs Actual

actual and allowing for adjustments to eliminate overrun and under

• Downtime all costs associated with an item of the fleet being out of action for repairs or

maintenance other than the costs of the work on the item.

• 10 Year Replacement program

Reporting for workplace health and safety risk includes:

• Optimum replacement timing

• Services Due and Complete

• Maintenance Failure Records

owner.

• Scheduled Maintenance due

manner and electronic records are regularly maintained for every asset including

• Scheduled Vs Unscheduled labour hours

maintenance that equals 70% of scheduled maintenance

Most of the above items have been discussed in the earlier sections of this report other than

Consumption.


MANAGEMENT


Council is reliant on the TechnologyOne - Work & Assets module and Excel spreadsheets for

managing the fleet. We understand that there has been no formal specific fleet performance

or financial reports available since use of AusFleet ceased. While there are plans to

address this shortfall we are unaware of the details.

unable to monitor utilisation of the fleet and fuel data is unavailable in the



or optimising plant & fleet utilisation, reducing fleet life cycle costs and minimising financial

Reporting for financial risk by asset includes:

A Plant and Equipment List - includes the plant number, the make, the model, the

mber, serial number, supplier, the purchase date and the current engine hour

and/or kilometres registered on that plant item.

provides data on actual utilisation versus projected utilisation and a comparison

of timesheet hours allocated to the plant.

in litres per 100km but also ‘over a given period per plant item and/or

per department’ and Fuel Consumption analysis.

Fuel Tax credit and FBT liability reporting

Income & Budget Vs Actual providing a detailed analysis of budget expenditure, verses

actual and allowing for adjustments to eliminate overrun and under-recovery.

all costs associated with an item of the fleet being out of action for repairs or

maintenance other than the costs of the work on the item.

eplacement program based on km or engines or years.

Reporting for workplace health and safety risk includes:

Optimum replacement timing in years or actual utilisation whichever occurs first

Services Due and Complete based on manufacturers recommendations

Maintenance Failure Records type of failure. Reason for the failures by driver and/or

Scheduled Maintenance due to ensure that all maintenance is undertaken in a timely

manner and electronic records are regularly maintained for every asset including

Scheduled Vs Unscheduled labour hours for highlighting where assets have unscheduled

maintenance that equals 70% of scheduled maintenance

Most of the above items have been discussed in the earlier sections of this report other than

MANAGEMENT 90

Work & Assets module and Excel spreadsheets for

performance

While there are plans to

is unavailable in the



or optimising plant & fleet utilisation, reducing fleet life cycle costs and minimising financial

includes the plant number, the make, the model, the

mber, serial number, supplier, the purchase date and the current engine hour

provides data on actual utilisation versus projected utilisation and a comparison

in litres per 100km but also ‘over a given period per plant item and/or

expenditure, verses

recovery.

all costs associated with an item of the fleet being out of action for repairs or

in years or actual utilisation whichever occurs first

based on manufacturers recommendations

type of failure. Reason for the failures by driver and/or

to ensure that all maintenance is undertaken in a timely

manner and electronic records are regularly maintained for every asset including minor plant

for highlighting where assets have unscheduled

Most of the above items have been discussed in the earlier sections of this report other than Fuel


Fuel consumption in litres per hundred kilometres or litres per engine hour is an important

performance measure and unless closely monitored can be the source of avoidable financial losses.

It is important accurate records are maintained

the plant number and mileage or engine hours of the item requiring the fuel. This is particularly

important where items are refuelled from a bulk fuel trailer/tanker in the field. The fuel needs to be

correctly allocated to the receiving item and the mileage/engine hours recorded in order to accurately

calculate utilisation and allocate fuel costs.

Accurate fuel data allocation will also maximise fuel rebates. We understand Finance is responsible

for this activity.

Fuel Management is also important as fuel issued to a plant and vehicle fleet located over a wide

geographical area needs to be well controlled and accounted for.

All fuel issued needs to be allocated to a vehicle or plant number and reconciled

fuel consumption of the equipment.

Each fuel transaction record needs a date, time, litres pumped, plant number or rego number of the

vehicle or plant it is issued to, and the kilometre or engine hour meter reading. The fuel transacti

for plant and fleet that is refuelled from bulk tanks at remote locations also needs to be recorded. The

process would begin with recording the fuel issued to a bulk tank, and then allocating it to that bulk

tank. The fuel pumped from the bulk tank in

total litres issued to ensure no leakage from the bulk tank has occurred.

The reconciliation process is similar whether issues are made to a bulk tank, or directly via a fuel

card, to equipment that has no hour meter, such as pumps, chainsaws, lighting plant, mowers, etc.

The bulk issue can be made to a number of assets, and there is no need to itemise each item’s fuel

usage, e.g. 2 litres to a chainsaw. All fuel issued to the non

the number of small plant items allocated to that tank or fuel card.

Reconciliation of fuel issues has a number of advantages:

• Cost control on fuel

• Reduced fuel leakage (a potential environmental issue)

• Fuel usage records are easily

• Many items have significant tax benefits through fuel tax rebate claims.

RECOMMENDATION


45. Fleet management reporting is given a priority in order



46. Accurate records are maintained of the type and




trailer/tanker in the field.


MANAGEMENT



It is important accurate records are maintained of the type and amount of fuel issued, together with



orrectly allocated to the receiving item and the mileage/engine hours recorded in order to accurately

calculate utilisation and allocate fuel costs.


is also important as fuel issued to a plant and vehicle fleet located over a wide

geographical area needs to be well controlled and accounted for.

All fuel issued needs to be allocated to a vehicle or plant number and reconciled using the estimated

fuel consumption of the equipment.


vehicle or plant it is issued to, and the kilometre or engine hour meter reading. The fuel transacti



tank. The fuel pumped from the bulk tank into plant and vehicle items is then reconciled back to the

total litres issued to ensure no leakage from the bulk tank has occurred.


has no hour meter, such as pumps, chainsaws, lighting plant, mowers, etc.


usage, e.g. 2 litres to a chainsaw. All fuel issued to the non-metered equipment is then reconciled to

the number of small plant items allocated to that tank or fuel card.

Reconciliation of fuel issues has a number of advantages:

Reduced fuel leakage (a potential environmental issue)

Fuel usage records are easily converted to total carbon CO2 output (environmental reporting)

Many items have significant tax benefits through fuel tax rebate claims.

Fleet Management Reporting Impact to Organisation

Fleet management reporting is given a priority in order



Accurate records are maintained of the type and




MANAGEMENT 91



of the type and amount of fuel issued, together with



orrectly allocated to the receiving item and the mileage/engine hours recorded in order to accurately


is also important as fuel issued to a plant and vehicle fleet located over a wide

using the estimated


vehicle or plant it is issued to, and the kilometre or engine hour meter reading. The fuel transactions



to plant and vehicle items is then reconciled back to the


has no hour meter, such as pumps, chainsaws, lighting plant, mowers, etc.


is then reconciled to

output (environmental reporting)



4.3. GPS

At face value GPS is an excellent fleet management tool however research shows that the level of

data GPS provides is often overwhelmi

be $200 plus installation and then $7.00 to $25 a month depending on what data is to be retrieved.

Positives of GPS

• You can immediately locate a vehicle, and allow for remote distress signals worker) but the worker has to be in or near t

• Accurate engine hour meter and odometer readings can be obtained. There is no human error induced by manual mileage entry.service scheduling.

• Analysing productivity. Can detect when vehicles are operating inefficiently or outside zones. Even with GPS it can still be

• Effective tool for measuring productivity of roadmarking, bitumen spray trucks.provide information that may improve productivity

• Knowing where a council vehicle is at any time. Closest vehicle to be response.

• Accurate response to ratepayer complaints, accidents, traffic fines by knowing when and where a vehicle had been or a service was provided eg missed rubbish bins.

Negatives GPS

• Too much information that then has to be inteinformation.

• Cost based on say $15 a month for 400 vehicles costs. Estimate = $80,000 a year

• GPS does not collect maintenance data (to comply with maintenance guidelines)• To integrate GPS data into corporate governance systems (finance) does not improve the

value of the information.

RECOMMENDATION

47. GPS units are only used to gather data to improve

productivity or improve the

provided for remotely located assets


MANAGEMENT


data GPS provides is often overwhelming and of little commercial use. The average cost of GPS can


You can immediately locate a vehicle, and allow for remote distress signals worker) but the worker has to be in or near the vehicle to activate. Accurate engine hour meter and odometer readings can be obtained. There is no human error induced by manual mileage entry. Accuracy of utilisation data results in i

. Can detect when vehicles are operating inefficiently or outside zones. Even with GPS it can still be difficult to define if the asset is actually working.

measuring productivity of road sweepers, waste collection vehicles, marking, bitumen spray trucks. All these vehicles have other functions that if measured can provide information that may improve productivity. Knowing where a council vehicle is at any time. Closest vehicle to be deployed in emergency

Accurate response to ratepayer complaints, accidents, traffic fines by knowing when and where a vehicle had been or a service was provided eg missed rubbish bins.

Too much information that then has to be interpreted (at a cost) to convert to useful

Cost based on say $15 a month for 400 vehicles = $72,000 plus the associated hardware = $80,000 a year.

GPS does not collect maintenance data (to comply with maintenance guidelines)integrate GPS data into corporate governance systems (finance) does not improve the

.


GPS units are only used to gather data to improve

or improve the engine hour or mileage data

provided for remotely located assets.

MANAGEMENT 92


The average cost of GPS can


You can immediately locate a vehicle, and allow for remote distress signals (unaccompanied

Accurate engine hour meter and odometer readings can be obtained. There is no human Accuracy of utilisation data results in improved

. Can detect when vehicles are operating inefficiently or outside zones. if the asset is actually working.

waste collection vehicles, line All these vehicles have other functions that if measured can

deployed in emergency

Accurate response to ratepayer complaints, accidents, traffic fines by knowing when and where a vehicle had been or a service was provided eg missed rubbish bins.

) to convert to useful

$72,000 plus the associated hardware

GPS does not collect maintenance data (to comply with maintenance guidelines). integrate GPS data into corporate governance systems (finance) does not improve the



4.4. Governance in Fleet

For Uniqco, governance in fleet means:

• Implementation of the Fleet Policy;

• Defining an accountability framework for decision making;

• Providing appropriate, timely and robust reporting cycle to the Executive;

• Identifying and escalating key risks to the appropriate level;

• Application of the Delegated Levels of Authority;

• Using the process to drive decisions; and

• Providing a strategic poin

To deliver a fleet policy at Clarence Valley there are a number of elements to address and these are

depicted in Figure 5.

Mobile plant and equipment engaged by Clarence Valley Council represents a significant investment

to the Council and management must ensure correct governance is applied to:

• Management of the asset over its whole of life cycle;

• Accountability regardless of ownership of plant assets (own, hire or lease);

• Communication and relationships with fleet servic

• Financial risk management;

• Financial accountability for funding plant maintenance and replacement;

• Operator training and OHS risk; and

• Both the on road and maintenance Chains of Responsibilities.

Executive Management participation in the ch

governance issues and KPI’s.

Figure 5 Governance in Fleet

Vehicle Specification / Configuration

Fleet and Vehicle

Procurement


MANAGEMENT

Governance in Fleet

For Uniqco, governance in fleet means:

Implementation of the Fleet Policy;

Defining an accountability framework for decision making;

Providing appropriate, timely and robust reporting cycle to the Executive;

Identifying and escalating key risks to the appropriate level;

Application of the Delegated Levels of Authority;

Using the process to drive decisions; and

Providing a strategic point of view for future investment.



the Council and management must ensure correct governance is applied to:

Management of the asset over its whole of life cycle;

Accountability regardless of ownership of plant assets (own, hire or lease);

Communication and relationships with fleet service providers;

Financial risk management;

Financial accountability for funding plant maintenance and replacement;

Operator training and OHS risk; and

Both the on road and maintenance Chains of Responsibilities.

Executive Management participation in the change process is crucial as will be familiarity with Fleet

Clarence Valley Council

Fleet Policy

Governance & Reporting

Processes, Tools & Systems

Fleet and Vehicle Selection &

Procurement

Operations &

Performance

ManagementConsiderations &

Opportunities

MANAGEMENT 93



Accountability regardless of ownership of plant assets (own, hire or lease);

ange process is crucial as will be familiarity with Fleet

Disposal

Considerations & Opportunities


4.5. Procurement – Category Management Fleet

Fleet is an area of Procurement Category Management that requires the application of rigorous best

practice to ensure a best value and compliance outcome. Ever

the fleet sector provides unique challenges to fleet, operat

While cost control is an underlying goal, successful fleet category management also requires

significant management of risk and compliance issues if the asset is to meet organisational goals.

In our experience, fleet legislation has become intensely wide

much of this relates to the need for an employer to provide an adequate duty of care, not only to its

employees but also to other road users where the fleet is on

An accident involving fleet could easily result in a large fine or even jail sentences for company

directors, when the law considers that there has been a catastrophic failure to provide duty of care.

Whether dealing with heavy duty vehicles, light commercials and cars or bo

should ensure that they are fully conversant with all of the legislation surrounding the duty of care for

operating fleets.

Legally a vehicle used for work counts as a workplace, so the responsibility for safety rests with the

employer as it would in an office, factory or other working location. The law says you must be doing

everything reasonably practical to ensure the health and safety of your workers, so letting someone

drive a vehicle for work without knowing the maintenance hi

gamble.

It’s therefore imperative that fleet, operations and procurement work to ensure the organisation is out

of a risk position and ensure they are compliant.

Best Value

A weighted analysis is currently being used for assessment purposes and the criteria and weightings

used are:

• Whole of Life Costs 40%

• Operational Requirements 20%

• Mechanical Assessment 12.5%

• Operators Assessment 12.5%

• Warranty/Service/Backup 15%

Provided this process is formally documente

and suggest for the specific issues faced at Clarence Valley the weightings be slightly amended to:

• Whole of Life Costs 40%

• Operational Requirements 20%

• Mechanical Assessment 10

• Operators Assessment 15%

• Warranty/Service/Backup 15


MANAGEMENT

Category Management Fleet


practice to ensure a best value and compliance outcome. Ever-changing and complex legislation in

the fleet sector provides unique challenges to fleet, operational and procurement managers.



ation has become intensely wide-ranging and full of complexity and


employees but also to other road users where the fleet is on-road.

g fleet could easily result in a large fine or even jail sentences for company


Whether dealing with heavy duty vehicles, light commercials and cars or both, procurement managers



oyer as it would in an office, factory or other working location. The law says you must be doing


drive a vehicle for work without knowing the maintenance history or registration status is a very large


of a risk position and ensure they are compliant.

being used for assessment purposes and the criteria and weightings

Whole of Life Costs 40%

Operational Requirements 20%

Mechanical Assessment 12.5%

Operators Assessment 12.5%

Warranty/Service/Backup 15%

Provided this process is formally documented this is best practice. We support the criteria being used


Whole of Life Costs 40%

Operational Requirements 20%

Mechanical Assessment 10%

ent 15%

Warranty/Service/Backup 15% (Local Support)

MANAGEMENT 94


changing and complex legislation in

ional and procurement managers.



ranging and full of complexity and


g fleet could easily result in a large fine or even jail sentences for company


th, procurement managers



oyer as it would in an office, factory or other working location. The law says you must be doing


story or registration status is a very large


being used for assessment purposes and the criteria and weightings

d this is best practice. We support the criteria being used



The IPWEA best practice Plant & Vehicle Management Manual provides guidelines for preparing

tender specifications and assessing plant & vehicle tender submissions.

In addition the following guidelines ar

• Undertake an operational assessment when an item is to be changed. Interview the operators

and review the specification to meet operational needs where applicable. Operators will

appreciate the time taken to pro

operational and capital costs may be found through the consultation process.

manufacturers design plant/vehicles to within load and operational tolerances. Ensure

operators are aware of these toler

failures resulting in increased costs.

• When specifying vehicles, explain the role the vehicle has to play. Describe the annual

kilometres the vehicle is expected to travel, the type of loads it will be

how the truck will be loaded. Let the manufacturers offer a vehicle they believe is suitable.

• Ensure the Request for tender/quotation clearly spells out the supplier’s responsibilities if the

vehicle supplied does not meet the spec

that will allow the return of the vehicle with all costs and expenditure refunded, and the supply

of a suitable replacement vehicle that will meet the specified requirements.

• Don’t be too specific when s

changes. Manufacturers will offer upgraded technology while the specification is based on

older technology for which a premium may be paid.

• All new trucks are required to comply with Australia

rules cover the fitting of mirrors, seatbelts, bodies, tow hitches, rims/tyres and exhaust

locations. It is important to understand these rules and not specify modifications outside the

rule requirements.

RECOMMENDATION

Governance in Fleet

48. The assessment criteria and methodology detailed in



quotations.

49. Fleet Management and Procurement should jointly and


various steps in the procurement process under their



accessible to staff who handle these functions

50. It is good practice to include supplier measurement and

monitoring in all contracts so that quality, price, delivery

and service level can be monitored

51. All stages of the procurement process are fully



MANAGEMENT


tender specifications and assessing plant & vehicle tender submissions.

In addition the following guidelines are put forward to minimise procurement risk

Undertake an operational assessment when an item is to be changed. Interview the operators


appreciate the time taken to provide for operational needs, and opportunities to save

operational and capital costs may be found through the consultation process.


operators are aware of these tolerances as overstressing vehicles can cause substantial

failures resulting in increased costs.

When specifying vehicles, explain the role the vehicle has to play. Describe the annual

kilometres the vehicle is expected to travel, the type of loads it will be expected to carry and


Ensure the Request for tender/quotation clearly spells out the supplier’s responsibilities if the

vehicle supplied does not meet the specification limits. Make sure conditions are included



Don’t be too specific when specifying a body or vehicle because vehicle design continuously


older technology for which a premium may be paid.

All new trucks are required to comply with Australian Design Rules (ADR’s). These design




The assessment criteria and methodology detailed in



Fleet Management and Procurement should jointly and


procurement process under their



accessible to staff who handle these functions.

It is good practice to include supplier measurement and

monitoring in all contracts so that quality, price, delivery

and service level can be monitored.

All stages of the procurement process are fully


MANAGEMENT 95


minimise procurement risk.

Undertake an operational assessment when an item is to be changed. Interview the operators


vide for operational needs, and opportunities to save

operational and capital costs may be found through the consultation process. All


ances as overstressing vehicles can cause substantial

When specifying vehicles, explain the role the vehicle has to play. Describe the annual

expected to carry and


Ensure the Request for tender/quotation clearly spells out the supplier’s responsibilities if the

ification limits. Make sure conditions are included



pecifying a body or vehicle because vehicle design continuously


n Design Rules (ADR’s). These design





4.6. Ten Year Plant & Vehicle Replacement Plan (Refer separate XL sheet)

Our draft 10 year plant & vehicle replacement plan

average annual funding requirement of $2,

points recommended in the IPWEA best Practice Plant & Vehicle Management Manual. The current

funding gap is $2,485,858. ie the difference between the Year 1 funding requirement of $

and the average annual funding requirement of $

Table 23 - Ten Year Plant & Vehicle Replacement Summary Funding Requirement

1

2

3

4

5

6

7

8

9

10

Figure 6 – Ten Year Plant & Vehicle Replacement Funding Chart

Our recommended strategies to deal with the funding gap are:

• Subject to a risk assessment deferring low utilisation items including the graders.

• Leasing heavy plant and vehicles with predictable utilisation

deferring their replacement.

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000


MANAGEMENT

Ten Year Plant & Vehicle Replacement Plan (Refer separate XL sheet)

10 year plant & vehicle replacement plan for the plant and heavy fleet, indicates an

average annual funding requirement of $2,841,130 is required based on the optimum changeover


. ie the difference between the Year 1 funding requirement of $

and the average annual funding requirement of $2,841,130. This gap can be easily managed.

Ten Year Plant & Vehicle Replacement Summary Funding Requirement

Year Net Replacement

Cost (Uniqco)

1 2015/16 $4,902,825

2 2016/17 $2,396,234

3 2017/18 $2,586,127

4 2018/19 $2,255,127

5 2019/20 $3,517,262

6 2020/21 $1,819,021

7 2021/22 $1,955,833

8 2022/23 $1,867,317

9 2023/24 $3,694,951

10 2024/25 $3,416,559

Year Plant & Vehicle Replacement Funding Chart

Our recommended strategies to deal with the funding gap are:

Subject to a risk assessment deferring low utilisation items including the graders.

Leasing heavy plant and vehicles with predictable utilisation such as the graders rather than

deferring their replacement.

MANAGEMENT 96

Ten Year Plant & Vehicle Replacement Plan (Refer separate XL sheet)

for the plant and heavy fleet, indicates an

is required based on the optimum changeover


. ie the difference between the Year 1 funding requirement of $4,902,825

. This gap can be easily managed.

Ten Year Plant & Vehicle Replacement Summary Funding Requirement

Subject to a risk assessment deferring low utilisation items including the graders.

such as the graders rather than


As mentioned in Section 1, light vehicles should not be considered for leasing as these are high risk in

terms of penalties for over or utilisation or overpayment for

RECOMMENDATION

Ten Year Plant & Heavy Vehicle Replacement Plan

52. The 10 year plant and heavy vehicle replacement



53. Rather than defer replacement, the Council lease




4.7. Funding the Plant & Vehicle Fleet

Traditionally local government either funds plant replacement through annual capital budget

allocations or from a plant replacement reserve. In the case of the latter, having adequate funds

available when required is dependent on internal hire rates that deliver full cost recovery. If internal

charge rates don’t relate to capital replacement needs, the plant reserv

replacement will fall short.

While the Council does have a replacement reserve the internal charge rates won’t cover capital

replacement needs unless internal hire rates are based on full cost recovery which in turn needs to be

based on whole of life costs and expected annual utilisation. We have calculated internal hire rates on

this basis. Refer XL sheet Hire Rate Heavy Plant Tab.

The sample calculation provided for a tractor in Appendix 7 details our recommended methodology for

calculating hire rates. Note the depreciation is allocated partly to fixed depreciation and partly to

operational depreciation.

Operating Lease Option

Leasing is an option available to reduce the capital required to fund the plant replacement program.

Lease payments are funded through operations as a direct cost to departments.

There are two types of operating lease available to fund plant and these are a fully maintained

Operating Lease or one without maintenance. Operational leases are similar to a f

the exception that the risk of loss on sale is born by the finance lease company and no capital is

reported for Council’s assets. A fully maintained operating lease includes all servicing in the cost of

the lease payments. The finance co

and the buyer therefore pays for the risk.

The choice of whether to take a fully maintained operating lease or a non maintenance lease will

depend on the ability of the maintenance service

to the manufacturer’s requirements.


obtains the target utilisation within the period of owner


exceeded.

At the end of the lease term the lessee will have four alternatives:


MANAGEMENT


terms of penalties for over or utilisation or overpayment for underutilisation.

Ten Year Plant & Heavy Vehicle Replacement Plan Impact to

Organisation The 10 year plant and heavy vehicle replacement



Rather than defer replacement, the Council lease




Funding the Plant & Vehicle Fleet


a plant replacement reserve. In the case of the latter, having adequate funds


charge rates don’t relate to capital replacement needs, the plant reserve method of funding plant



sed on whole of life costs and expected annual utilisation. We have calculated internal hire rates on

this basis. Refer XL sheet Hire Rate Heavy Plant Tab.




Lease payments are funded through operations as a direct cost to departments.


Operating Lease or one without maintenance. Operational leases are similar to a f



the lease payments. The finance company or supplier takes the risk on the residual value of the item

and the buyer therefore pays for the risk.


depend on the ability of the maintenance service provider (internal or external) maintaining the vehicle

to the manufacturer’s requirements.




At the end of the lease term the lessee will have four alternatives:

MANAGEMENT 97




a plant replacement reserve. In the case of the latter, having adequate funds


e method of funding plant



sed on whole of life costs and expected annual utilisation. We have calculated internal hire rates on





Operating Lease or one without maintenance. Operational leases are similar to a finance lease with



mpany or supplier takes the risk on the residual value of the item


provider (internal or external) maintaining the vehicle


ship, the Council suffers a lost opportunity with



• Upgrade or replace with a new item of plant/vehicle

• Extend the rental period

• Return the plant/vehicle with no further payments required (conditions apply)

• Purchase the plant/vehicle at a market price

A fully maintained operating lease can provide a competitive alternative to

utilisation of the item is predictable. If utilisation is not predictable there is potential for cost penalties

where utilisation exceeds the agreement or in the case of underutilisation, unnecessary overpayment.

We recommend that leasing be restricted to high capital cost and known utilisation items such as

graders, loaders and heavy trucks. The recommended practice when calling tenders for leasing items

of heavy plant/vehicles is to require tenderers to include the purchase price

comparison of lease versus buy.

As previously mentioned fully maintained operating lease for light vehicles is not recommended

because of the potential for changing roles of the vehicle users and the risk of penalties for exceedin

the agreed maximum mileage and strict monitoring is required.

4.8. Management Risk Issues

National Model OH&S Laws

The Commonwealth and each state and territory government in Australia have agreed to harmonise

their work health and safety laws, including Regu

similar in each jurisdiction.

The model Work Health and Safety (WHS) laws involve a new set of Acts, Regulations and Codes of

Practice which bring with them new occupational health and safety principles, obl

procedures across Australia. The authority responsible for the model laws is Safe Work Australia refer

http://www.safeworkaustralia.gov.au

The model laws include the following key elements imp

plant, vehicles and equipment:

• a primary duty of care requiring persons conducting a business or undertaking (PCBUs) to, so

far as is reasonably practicable, ensure the health and safety of workers and others who

be affected by the carrying out of work

• duties of care for persons who influence the way work is carried out, as well as the integrity of

products used for work

• a requirement that ‘officers’ exercise ‘due diligence’ to ensure compliance

• reporting requirements for ‘notifiable incidents’ such as the serious illness, injury or death of

persons and dangerous incidents arising out of the conduct of a business or undertaking

• a framework to establish a general scheme for authorisations such as licences, permit

registrations (e.g. users of certain plant)

The Key Changes

Some of the key changes that will flow from the model laws include:


MANAGEMENT

ith a new item of plant/vehicle

Extend the rental period

Return the plant/vehicle with no further payments required (conditions apply)

Purchase the plant/vehicle at a market price

A fully maintained operating lease can provide a competitive alternative to ownership provided the



leasing be restricted to high capital cost and known utilisation items such as


of heavy plant/vehicles is to require tenderers to include the purchase price for the item to enable a

comparison of lease versus buy.


because of the potential for changing roles of the vehicle users and the risk of penalties for exceedin

the agreed maximum mileage and strict monitoring is required.


National Model OH&S Laws


their work health and safety laws, including Regulations and Codes of Practice, so that they are


Practice which bring with them new occupational health and safety principles, obligations and


http://www.safeworkaustralia.gov.au.

The model laws include the following key elements impacting on the maintenance and operation of

a primary duty of care requiring persons conducting a business or undertaking (PCBUs) to, so

far as is reasonably practicable, ensure the health and safety of workers and others who

be affected by the carrying out of work

duties of care for persons who influence the way work is carried out, as well as the integrity of

a requirement that ‘officers’ exercise ‘due diligence’ to ensure compliance

rements for ‘notifiable incidents’ such as the serious illness, injury or death of


a framework to establish a general scheme for authorisations such as licences, permit

registrations (e.g. users of certain plant)

Some of the key changes that will flow from the model laws include:

MANAGEMENT 98

Return the plant/vehicle with no further payments required (conditions apply)

ownership provided the



leasing be restricted to high capital cost and known utilisation items such as


for the item to enable a


because of the potential for changing roles of the vehicle users and the risk of penalties for exceeding


lations and Codes of Practice, so that they are


igations and


acting on the maintenance and operation of

a primary duty of care requiring persons conducting a business or undertaking (PCBUs) to, so

far as is reasonably practicable, ensure the health and safety of workers and others who may

duties of care for persons who influence the way work is carried out, as well as the integrity of

rements for ‘notifiable incidents’ such as the serious illness, injury or death of


a framework to establish a general scheme for authorisations such as licences, permits and


• positive duties of due diligence being placed on officers and senior managers;

• the primary duty for safety shifting to a

of an “employer”. This imposes the duty to take all reasonably practicable steps for safety on

a broader group of people in recognition of the changed nature of business and contractual

arrangements;

• a significant increase in maximum penalties.

All levels of management and staff need to be aware that they have a part to play in occupational

health & safety in the organisation and that failure to exercise due diligence will expose them to

severe penalties in the event of injury.

Chain of Responsibility

Responsible Executive Management including CEOs assume a direct liability risk for fleet through the

Chain of Responsibility provisions under the

Health and Safety Act (2011).

An independent taskforce extended the Chain of Responsibility provisions to include heavy vehicle

standards and vehicle restraints in June 2014.

The chains of responsibility that management must be familiar with are:

Figure 7 - On-Road Chain of Responsibility


MANAGEMENT

positive duties of due diligence being placed on officers and senior managers;

the primary duty for safety shifting to a “person conducting a business or undertaking” instead



significant increase in maximum penalties.



in the event of injury.


Chain of Responsibility provisions under the Heavy Vehicle National Law (HVNL) and the


standards and vehicle restraints in June 2014.

The chains of responsibility that management must be familiar with are:

n of Responsibility

MANAGEMENT 99

positive duties of due diligence being placed on officers and senior managers;

“person conducting a business or undertaking” instead






(HVNL) and the Work



Figure 8 – Maintenance Chain of Responsibility

Under the legislation, even the CEO could be prosecuted if Council’s fleet is found to be unsafe on

the roads. The CEO is directly liable because the council owns the asset and under the law the CEO

could be prosecuted. As mentioned in Section 4.8.1 CEO’s

standards under the Work Health & Safety Act

If a fleet department, for example, fails to work to the manufacturer’s recommended service intervals

for a specific piece of machinery or neglects to hold record

equipment to these standards then

and injures someone, it will be the CEO that is held ultimately liable.

The danger is that executive management a

care of by the fleet department.

It is essential that Fleet should operate within a strong governance framework established by

Executive Management with service delivery targets to meet within Governanc

reporting to Executive Management is essential as well as the reports recommended to manage the

fleet.

An example of the level of reporting that Uniqco is able to provide executive management monthly is

attached in Appendix 9.

RECOMMENDATION


54. Council notes the increasing organisation



Act (2011).


MANAGEMENT

Maintenance Chain of Responsibility



could be prosecuted. As mentioned in Section 4.8.1 CEO’s must ensure their fleet departments meet

Work Health & Safety Act (2011).


for a specific piece of machinery or neglects to hold records that evidence they have maintained the

standards then something falls off that vehicle, or the vehicle fails in some way

and injures someone, it will be the CEO that is held ultimately liable.

The danger is that executive management and the CEO all assume that everything is being taken


Executive Management with service delivery targets to meet within Governance. Regular high level




Council notes the increasing organisation



Negative Impact

MANAGEMENT 100



must ensure their fleet departments meet


s that evidence they have maintained the

something falls off that vehicle, or the vehicle fails in some way

nd the CEO all assume that everything is being taken


e. Regular high level





4.9. Fleet Management

Currently light fleet falls under the responsibility of Corporate and plant and heavy fleet and the

mechanical workshop under Works & Civil.

From our observations there is close liaison between the Fleet Coordinator and the Supply & Light

Fleet Coordinator and we consider they are both highly competent operators.

In our experience it is most important that fleet department is autonomous of and not be

operations. Operations will always be the highest priority for fleet as the efficiency of coun

relies on availability of the fleet in delivery of works and services.

Where fleet resides in the organisation structure is not as critical as the knowledge of the Executive

on fleet KPI’s. Plant and fleet should operate within a strong gover

the Executive with service delivery targets within a Governance framework.

From an efficient use of resources and governance perspective there would be advantages in

combining the two separate areas under the one umbrella.

management capability.

Our assessment of priority areas for training and knowledge transfer are:

• Strategic plant and fleet mentoring for senior management and key fleet staff

• Understanding governance issues and the key

best practice

• Full documentation of the procurement process including assessment

• Understanding the importance of utilisation in managing the fleet

• Conducting a business case assessment

• Calculating whole of life

• Conducting an operating risk analysis prior to plant replacement deferral

• Preparing Service Level Agreements

We recommend Fleet and Procurement staff undertake the IPWEA Fleet Management Certificate

Course. For more detail visit www.ipwea.org/fleet

Management staff. Alternatively IPWEA offers the same professional development online over 6 by 1

hour sessions without the Certificate assessm

February 2016.


MANAGEMENT

Fleet Management – Structure, Staff Skills and Knowledge Transfer


mechanical workshop under Works & Civil.


r and we consider they are both highly competent operators.

In our experience it is most important that fleet department is autonomous of and not be

operations. Operations will always be the highest priority for fleet as the efficiency of coun

relies on availability of the fleet in delivery of works and services.


on fleet KPI’s. Plant and fleet should operate within a strong governance framework established by

the Executive with service delivery targets within a Governance framework.


combining the two separate areas under the one umbrella. It would also provide improved fleet

Our assessment of priority areas for training and knowledge transfer are:

Strategic plant and fleet mentoring for senior management and key fleet staff

Understanding governance issues and the key performance indicators for fleet management

Full documentation of the procurement process including assessment

Understanding the importance of utilisation in managing the fleet

Conducting a business case assessment

Calculating whole of life costs and internal hire rates

Conducting an operating risk analysis prior to plant replacement deferral

Preparing Service Level Agreements


www.ipwea.org/fleet. The course has also been completed by Executive


hour sessions without the Certificate assessments. The next online training is expected to be held in

MANAGEMENT 101

Structure, Staff Skills and Knowledge Transfer



In our experience it is most important that fleet department is autonomous of and not be embedded in

operations. Operations will always be the highest priority for fleet as the efficiency of council services


nance framework established by


It would also provide improved fleet

Strategic plant and fleet mentoring for senior management and key fleet staff

performance indicators for fleet management


. The course has also been completed by Executive


is expected to be held in


RECOMMENDATION

Fleet Management – Structure, Staff Skills and

Knowledge Transfer

55. Fleet management team needs to be autonomous and

able to report through a management structure directly

to the Executive Management Team

56. Consideration is given to staff training and skills


order to implement the recommendations of th

management review.

4.10. Performance Assessment Criteria

Our recommended performance assessment criteria are detailed in

many similar reviews and based on our experience the performance targets will provide the

framework for best practice fleet management.

RECOMMENDATION


57. Plant and heavy vehicle management assessment

criteria detailed in Table 24



Management Review.

4.11. Identification of next steps to “action” the recommendations

We offer a service through Uniqco Operations to action the recommendations of the review and




Although voluminous, the majority of the recommendations made in this report will have significant


level.

The risk to the organisation will be in the develop

provided at the operational level and the o

implementation of these recommend

In order to implement a sustainable change within Clarence Vall

• The creation of a steering group to champion the change and provide regular updates to

the Executive Management Team and provide governance over the implementation.

• Sequencing and prioritisation of the recommendations detailed in


• Establishment of a reporting framework for both the operational (plant and fleet)

performance / compliance and the realisation of the benefits achieved from implementing

these recommendations.

• Close liaison with fin

outcomes.


MANAG

Structure, Staff Skills and Impact to Organisation

Fleet management team needs to be autonomous and

to report through a management structure directly

to the Executive Management Team

Consideration is given to staff training and skills


order to implement the recommendations of the fleet


Our recommended performance assessment criteria are detailed in Table 24. Uniqco has undertaken


framework for best practice fleet management.

Performance Assessment Criteria Impact to Organisation

Plant and heavy vehicle management assessment

4 of the report are



Identification of next steps to “action” the recommendations

We offer a service through Uniqco Operations to action the recommendations of the review and




, the majority of the recommendations made in this report will have significant


The risk to the organisation will be in the developing an aligned executive that recognise

provided at the operational level and the opportunity available to Clarence Valley in the


In order to implement a sustainable change within Clarence Valley, we strongly advise:

The creation of a steering group to champion the change and provide regular updates to


Sequencing and prioritisation of the recommendations detailed in this report into an


Establishment of a reporting framework for both the operational (plant and fleet)


these recommendations.

Close liaison with finance to ensure accurate data provision and measurement of financial

MANAGEMENT 102


. Uniqco has undertaken



Identification of next steps to “action” the recommendations

We offer a service through Uniqco Operations to action the recommendations of the review and guide



, the majority of the recommendations made in this report will have significant


ing an aligned executive that recognises the value

pportunity available to Clarence Valley in the successful

ey, we strongly advise:

The creation of a steering group to champion the change and provide regular updates to


this report into an

Establishment of a reporting framework for both the operational (plant and fleet)


ance to ensure accurate data provision and measurement of financial


RECOMMENDATION

Identification of next steps to “action” the

recommendations;

58. Establish a Steering Group to govern the

implementation of these recommendations

59. Prioritise the recommendation aligned to Clarence

Valley corporate objectives

60. Establish a reporting framework to measure operations

and benefits related to the recommendations

61. Establish close ties with Finance

Table 24 – Plant & Vehicle Management Assessment Criteria

Report Item Explanation

Utilisation

Provide data on actual utilisation versus projected utilisation

Performance Measures

Utilisation to exceed benchmark for ownership

Maintain optimum

Projected timesheet Vs actual use reporting

Fuel Consumption

In litres per 100km’ or litres/engine hrs but also ‘over a given period per plant item and/or per department

Identify exceptions and investigate


Type of failure and reason for the failures by driver and/or owner


Target unscheduled maintenance and repair hours to be less than scheduled maintenance hours

Target scheduled maintenance hours within industry flat rates for

Monthly reporting on maintenance associated with accidents and incidents highlighting downtime, and cost associated with this failure record

Downtime

Measure the time associated with an item of the fleet being out of action for repairs maintenance other than the time spent working on the item. This is not a current priority but should be introduced in the longer term.

Identify total downtime

Maintenance Standards

Details of maintenance standards to be met.


Meet preventative maintenance strategies as detailed

Scheduled maintenance to be complete within 14 days of being due


Develop Service Level Agreements between fleet management and:

• The end users of fleet and

• Maintenance service providers (internal and external)


Refer Levels of Service

10 Year Replacement program

Based on km or engine hours or/years


Using whole of life costing and setting

Building a reserve fund sufficient to meet annual replacement requirements

Income & Budget Vs Actual

Providing a detailed analysis of budget expenditure, verses actual and allowing for adjustments to

Monthly review and exception report

Projected lost opportunity costs through lack of utilisation


MANAGEMENT

Identification of next steps to “action” the Impact to Organisation

Establish a Steering Group to govern the


se the recommendation aligned to Clarence

Valley corporate objectives.

Establish a reporting framework to measure operations

and benefits related to the recommendations

Establish close ties with Finance.

Plant & Vehicle Management Assessment Criteria

Explanation

Provide data on actual utilisation versus projected utilisation


Utilisation to exceed benchmark for ownership

Maintain optimum replacement changeover

Projected timesheet Vs actual use reporting

In litres per 100km’ or litres/engine hrs but also ‘over a given period per plant item and/or per department

Identify exceptions and investigate



Target unscheduled maintenance and repair hours to be less than scheduled maintenance hours

Target scheduled maintenance hours within industry flat rates for


Measure the time associated with an item of the fleet being out of action for repairs maintenance other than the time spent working on the item. This is not a current priority but should be introduced in the longer term.

Identify total downtime and the impact on cost

Details of maintenance standards to be met.


Meet preventative maintenance strategies as detailed in Table 19



The end users of fleet and

Maintenance service providers (internal and external)


Refer Levels of Service

Based on km or engine hours or/years


Using whole of life costing and setting internal hire rates to reflect full cost recovery


Providing a detailed analysis of budget expenditure, verses actual and allowing for adjustments to internal hire rates to eliminate overrun and under

Monthly review and exception report

Projected lost opportunity costs through lack of utilisation

MANAGEMENT 103


In litres per 100km’ or litres/engine hrs but also ‘over a given period per plant item


Target unscheduled maintenance and repair hours to be less than scheduled

Target scheduled maintenance hours within industry flat rates for scheduled services


Measure the time associated with an item of the fleet being out of action for repairs or maintenance other than the time spent working on the item. This is not a current

in Table 19



internal hire rates to reflect full cost recovery


Providing a detailed analysis of budget expenditure, verses actual and allowing for internal hire rates to eliminate overrun and under-recovery


4.12. Estimated savings by

The estimated savings are summarised in

It needs to be acknowledged that the estimated savings

considered to rely upon the successful implementation of the recommendations in aggregate.

Table 25 – Estimated Savings by

No. Task

4 Change optimum replacement of light vehicles to 150,000km or 5 years

15 Implement higher private use contributions

20 to 24

Extending the life of low utilised plant by undertaking risk assessments and extending life where possible

45 Improved efficiency on reporting

46

Improved productivity through the efficient analysis of actual utilisation Vs timesheet hours Reduced time in staff recording timesheet hours for job cost recovery being replaced by fixed monthly hire journals for all assets used on repetitive tasks small plant, parks and gardens

46

Savings by automated reporting of FBT (as a result of capturing accurate mileage and ownership) Savings created by automating the capture of fuel tax credits


MANAGEMENT

avings by adopting the recommendations

estimated savings are summarised in Table 25.

be acknowledged that the estimated savings are not necessarily separable and are


Estimated Savings by adopting the Report Recommendations in aggregate

Timeframe to realise

Estimated Savings

Change optimum replacement of light vehicles to 150,000km 3 months

Estimated $190,000 per year with an immediate reduction of $450,000 capital expenditure in this financial year

Implement higher private use

5 years as this will need to be implemented

and negotiated in new

contracts

$60,000 per year

undertaking

extending life where possible

3 months Estimated $50,000 in capital expenditure per year

6 months

This should save the total time of 1 FTE. We don't claim this will reduce a current FTE position. Rather it will make the administration of fleet less onerous negating the need for an additional FTE. Saving $100,000 on future total costs of employment

Improved productivity through the efficient analysis of actual utilisation Vs timesheet hours

recording timesheet hours for

replaced by fixed monthly hire journals for all assets used on

ive tasks small plant,

12 months

Estimate time saving 100 hours (cumulative) a week for operators to record and collate timesheet hours = 5200 hours a year a year @ $35.00 an hour with overhead = $182,000.

reporting of FBT (as a result of capturing accurate mileage

automating the capture of fuel

12 months

Estimate time saving 20 hours a month to capture and collate data = 240 hours a year @ $35.00 an hour with overhead = $8,400

MANAGEMENT 104

are not necessarily separable and are


in aggregate

Notes

immediate reduction of High confidence of data

High confidence in data

capital expenditure per

Low confidence data provided to verify. Potential for greater saving.

total time of 1 FTE. We

less onerous negating

additional FTE. Saving

Efficiency saving to the Council

100 hours (cumulative) a week for operators to

year @ $35.00 an hour


ar @ $35.00 an hour with overhead = $8,400



53

Reduced WHS, On Road Chain of Responsibility and Maintenance risk. Maintaining an accurate compliant list of all vehicles scheduled maintenance. Meeting Governance and compliance requirements to ensure there are no breaches of the on road chain of responsibility and the maintenance procedures required by law.

Total annual savings estimated

Less annual cost to implement

*Estimated cost to deploy management on best practice fleet management.

Net savings


MANAGEMENT

Reduced WHS, On Road Chain of Responsibility and

compliant list of all vehicles

Meeting Governance and compliance requirements to ensure there are no breaches

maintenance procedures

12 months

While this cannot be quantified it is probably Councils biggest financial risk with significant fines for an organisation that has a major breach

12 months

Confident of $500,000 with a stretch target of $700,000 per annum

nnual cost to implement 12 months *$100,000

cost to deploy Uniqco’s fleet reporting system, mentor staff and executive management on best practice fleet management. Separate proposal to be prepared

Net savings $400,000 with a stretch target of up to $600,000 per year plusreduced risk

MANAGEMENT 105

quantified it is probably

or an organisation that has a

Risk exposure reduced

By Uniqco

and executive to be prepared.

with a stretch target of up to plus significantly


APPENDIX 1 – VEHICLE COMPARISONS – BASED ON AVERAGE

ANNUAL WHOLE OF LIFE COSTS

Source: IPWEA Online Plant & Vehicle Management Tools - Light Fleet Selection Model (www.ipwea.org/fleet) Chart 1 –Vehicle Comparisons Large Cars - Average Annual 20,000km



Chart 2 –Vehicle Comparisons Small Cars - Average Annual 20,000km


APPENDIX 2 – LIGHT VEHICLE FLEET ANALYSIS - SURVEY

QUESTIONNAIRE TEMPLATE

PART 1 – VEHICLE DETAILS

This part relates to the vehicle allocated to you or for which you are responsible. Please check and amend the following information as appropriate. If the information shown is incorrect, please use the blank boxes below each entry to insert the correct information. Leave blank if correct.

Vehicle Make/Model/Type Licence Plate No.

Authorised Usage Main Driver/User or Main Business Task

PART 2 – MANAGEMENT ASSESSMENT

This part allows the Manager/Coordinator to provide an opinion on the suitability of this vehicle for the business activities performed by it. If this vehicle is not allocated solely for your use, please discuss your responses with the current user/s if necessary.

To what extent does this vehicle meet the business demands required of it? (Circle your choice).

0 1 2 3 4 |___________|_____________|______________|________________| Not at all Somewhat Fully

Using only the criteria of carrying requirements (for passengers, freight, equipment, tools, etc.) and terrain covered, what do you consider to be the most appropriate vehicle class to meet the MINIMUM requirements of the business task performed by this vehicle? (See attached Attachment A for vehicle class selection)

Class

_______

If your choice is not listed, please briefly describe the vehicle here:

_______________________________________________________________

Comments:

_______________________________________________________________

PART 3 – VEHICLE USAGE

This part relates to the usage of the vehicle and should be completed by the vehicle user/s. Two elements of usage are included, distance travelled and time in use, to take account of different usage patterns. (Kms Means Kilometres.)

The average weekly distance travelled has been previously recorded as: Kms.

Please enter an estimate of this vehicle’s AVERAGE WEEKLY travel distance into the relevant boxes below. The figures should relate to the average WEEKLY distance travelled when considered over a full year. Don’t worry about being too exact – your best estimate will suffice. Please ensure you make allowance for other users.

Commuting Use Business Use Private Use Total

_____Kms ______Kms ______Kms ______Kms

Please enter an estimate of this vehicle’s AVERAGE WEEKLY amount of time in use, including after hours use; e.g. 4 hours/day x 5 days = 20 hours

______Hrs

Current Odometer Reading: Date of Reading:


LIGHT VEHICLE FLEET ANALYSIS – SURVEY QUESTIONNAIRE

PART 4 – VEHICLE USAGE

This part relates to the usage of this vehicle and can be completed by the vehicle user/s. Please complete the information below where relevant.

Complete this question only if the vehicle is used on business activities on weekends: During the normal working year of 48 weeks, on how many weekend days would the vehicle be used to attend to business activities (e.g. call-outs, events, etc.) on a Saturday or Sunday? Tick one box only.

0-6 days 7-12 days 13-24 days 24-48 days 49-96 days

Complete this question only if the vehicle is a passenger vehicle (i.e. fitted with seating for 3 or more passengers, excluding the driver): During the normal working year of 48 weeks, on how many weekdays would the vehicle carry passengers for work purposes? Tick one box in each line only. 1 passenger

0-12 days (5%)

13-24 days (10%)

25-36 days (15%)

37-48 days (20%)

49-240 days (>20%)

2 passengers

0-12 days (5%)

13-24 days (10%)

25-36 days (15%)

37-48 days (20%)

49-240 days (>20%)

3 or more passengers

0-12 days (5%)

13-24 days (10%)

25-36 days (15%)

37-48 days (20%)

49-240 days (>20%)

Complete this question only if the vehicle is required to carry freight, equipment, tools, etc.: During the normal working year of 48 weeks, on how many weekdays would the vehicle carry freight, equipment, tools, etc. for work purposes? Tick one box only.

0-12 days (5%)

13-24 days (10%)

25-36 days (15%)

37-48 days (20%)

49-240 days (>20%)

Briefly describe the nature of the freight, equipment, tools, etc. carried (e.g. size, shape, weight, volume, etc.):

______________________________________________________________________________________________________________________________________________________________

Please describe any special issues associated with the freight, equipment, tools, etc. carried:

______________________________________________________________________________________________________________________________________________________________

Please describe any special accessibility requirements associated with the freight, equipment, tools, etc. carried:

______________________________________________________________________________________________________________________________________________________________

Is the security of the freight, equipment, tools, etc. that is carried an important consideration? If yes, please include a comment about the security requirements.

__________________________________________________________________________________________________________________________________________________________________

Complete this question only if the vehicle is a 4-wheel drive: What approximate percentage of the total travel distance demands engaging 4-wheel drive?

_____%

Data gathered from this survey will allow Uniqco International Vehicle Management to ascertain requirements for vehicle use and recommend appropriate specifications.


Attachment A VEHICLE CLASSIFICATIONS

CLASS DESCRIPTION EXAMPLES

1 Elite Sedan Ford Territory, Toyota Prado, Holden Caprice, Aurion Presara

2 Executive Sedan VW Passat, Holden Commodore, Ford Falcon Toyota Camry Atara, Holden Colorado

3 Large Sedan (Standard) Holden Malibu, Falcon, Camry, Mitsubishi Outlander

4 Large Station Wagon Mitsubishi ASX, Ford Kuga, VW Tiguan, Toyota RAV

5 People Mover Hyundai I Load

6 4WD Station Wagon (Soft-roader)

Subaru Forester, RAV 4, Nissan X Trail

7 Medium Sedan (2L+) Hyundai I30 Mitsubishi, Toyota Corolla

8 Medium Wagon or Hatch (2L+)

Hyundai I30 Holden Cruz

9 Medium Sedan (Under 2L) Ford Focus, Toyota Corolla, Nissan Pulsar, Mitsubishi Lancer, VW Golf, Mazda 3,

10 Medium Hatch (Under 2L) Ford Focus, Toyota Corolla, Nissan Pulsar, Mitsubishi Lancer, VW Polo, Mazda 3,

11 Small Sedan Honda Jazz Toyota Echo, Mazda 2, Ford Fiesta, Hyundai I20

12 Van Hyundai ILoad Kia Grand Carnival

13 Utility Holden Rodeo, Ford Rangerr, Toyota Hi Lux, Nissan Navara, Mitsubishi Triton

14 Utility with extended cab Holden Rodeo, Ford Ranger, Toyota Hi Lux, Nissan Navara, Mitsubishi Triton

15 Utility with dual cab Holden Rodeo, Ford Ranger, Toyota Hi Lux, Nissan Navara, Mitsubishi Triton

16 4WD Utility Holden Rodeo, Ford Ranger, Toyota Hi Lux, Nissan Navara, Mitsubishi Triton

17 4WD Rugged Utility with dual cab

Holden Rodeo, Ford Ranger Toyota Hi Lux, Nissan Navara, Mitsubishi Triton


APPENDIX 3 – FBT SAMPLE CALCULATIONS


• The statutory method; and • The operating cost method (log book).

The statutory formula method must be used unless an employer elects to use the operating cost method. A decision to use the operating cost method must be made no later than the day on which an FBT return is due to be lodged with the ATO or, by 21 May if a return is not required to be lodged. Employers are free to choose whichever method yields the lowest taxable value. There is no need to notify the ATO of the method chosen as business records are sufficient evidence of this. A reportable benefit must be included on the employee’s group certificate for the notional value of that benefit. This is calculated by taking the driver’s share of FBT and grossing up to the pre-tax position. The reportable benefit will not be included in staff’s assessable (or taxable) income. However the reportable benefit is taken into account by the Australian Taxation Office (ATO) for various income tests. Eg. Superannuation and termination surcharges, HECS, child support etc. For Fringe Benefit Tax reasons, a car is:

• a station wagon, sedan, panel van or ute (including four-wheel drive utes); • any other goods-carrying vehicle that has a capacity to carry 1 tonne or less; or • any other vehicle which is designed to carry less than nine passengers.

For a car to be defined as available for private use it can be:

• used in fact by the employee for private use; or • made available for private use by the employee, regardless of whether it is actually used

Exempt Vehicles Certain Vehicles – Providing the following vehicles are only used for home to work travel, business purposes and other minor, infrequent and irregular travel. The benefit received is exempt, MT 2024.

a) Motor Cycles b) Vehicles designed to carry a load of at least one tonne c) Taxis, panel vans, utilities and commercial vehicles designed to carry a load of less than 1

tonne but not principally designed to carry passengers. According to MT 2024 this includes Nissan Navara Dual Cab Ute DX, Mazda Bravo 4WD Dual Cab Ute DX5, Toyota Hilux 4x2 Dual Cab Ute, Ford Courier 4x2Crew Cab pick-up GL and Holden Ute Series III 179kw V8. Other vehicles that have more load space than passenger space may well qualify.

If the employee has a long way to travel to work consider providing a vehicle that fits into one of the classes Statutory Method The statutory formula method calculates the taxable value of the motor vehicle benefit as a percentage of the car's value, based on the number of days during the FBT year on which the car was available for private use. Percentage of car's value The percentage is called the ‘statutory fraction’. As of 1 April 2014 the percentage is a single statutory rate of 20% regardless of kilometres travelled.


Availability for private use A car is considered by the Australian Taxation Office to be available for private use if it is garaged at or kept at or near an employee’s private residence and/or in their custody and control. Driving a car from home to work is considered private use for tax purposes. Situations in which a car is considered not to be available for private use are:

a. the car is off the road for any reason for more than three days e.g. extensive repairs are being carried out, as opposed to a routine service or maintenance;

b. the vehicle is not garaged overnight at the employees place of residence e.g. it is garaged at work and the keys to the vehicle are held by your office and there is a prohibition on the private use of the vehicle.

The lower the number of days available for private use, the lower the value for FBT purposes. This means a lower reportable benefit shown on an employee payment summary and less fringe benefits tax paid by the employer. Calculation Under the statutory formula method, the value of the benefit is calculated as follows: Cost of the Car X Statutory Percentage X Days Vehicle Available for Private Use / Days in the Year less Employee Contribution Employee Contribution is any after tax payment made towards the cost of the car that has not been reimbursed by the employer. Example:

Notional value of the vehicle: $28,500

Number of kilometres driven in the year: 14,980

Days available for private use: 365

Contributions made by employee: Nil

Value of the benefit and FBT payable by the employer

= Cost of the Car X Statutory Percentage X Days Vehicle Available for Private Use/Days in the Year less contribution

= 28,500 X 0.20 X 365/365 – Nil

= $5,700 (FBT payable by the employer)

Grossed up value of benefit to appear on the employee’s payment summary

= 5,700 X 1/(1 – 0.465)

= 5,700 X 1.8692

= 10,654

The FBT payable by the employer is $5,700 and the grossed up amount of $10,654 would appear on the employee's payment summary. Reducing the base value after four years For the purpose of FBT calculations an employer can reduce the base value of a car by one-third in the FBT year that starts after the car has been owned or leased for four years. That is, the reduction applies from 1 April after the fourth anniversary of the date on which the car was first owned or leased. The reduction applies only once for a particular car and the reduced base value is used for subsequent years. The reduction does not apply to non-business accessories added after the car is acquired. Example: Reducing the base value after four years An employer purchases a car for $30,000 (including GST) on 1 July 2013. The employer can reduce the base value of the car by one-third ($10,000) in the FBT year beginning 1 April 2018. Operating Cost Method (Log Book) This method calculates the taxable value as a percentage of the total costs of operating the car during the FBT year. The value for FBT purposes is the private use percentage. To determine the business and private use percentage, a logbook must be maintained. As a minimum the logbook is required to be maintained for a continuous period of 12 weeks for the first year the logbook method is used and then every five years. The period may overlap 2 tax years. Calculation


Under the Operating Cost (log book) method, the value of the benefit is calculated as follows: Total Operating Costs X Percentage of Private Use less Employee Contribution Example: A car is leased (operating lease) by the employer and provided to an employee. The following costs were incurred for the FBT year ended 31 March 2011:

Lease costs 9,500

Fuel 3,000

Repairs 850

Insurance 600

RAC membership 60

Total 14,010

A logbook has been maintained for a continuous period of 12 weeks with the following information:

Total kilometres travelled 15,436 100%

Business kilometres travelled 5,650 37%

Private kilometres travelled 9,786 63%

Employee contribution post tax during the FBT year Nil

Value of the benefit and FBT payable by the employer

= Total Operating Costs X Percentage of Private Use less Employee Contribution

= $14,010 X .63 – Nil

= $8,826.30

Grossed up value of benefit to appear on the employee’s payment summary

= $8,826.30 X 1 / (1 – 0.465)

= $8,826.30 X 1.8692

= $16,498


APPENDIX 4 - NEW PLANT/VEHICLE/EQUIPMENT PURCHASE –

BUSINESS CASE TEMPLATE

Source: IPWEA Plant & Vehicle Management Manual 3

rd Edition 2012


New Plant/Vehicle/Equipment Purchase – Business Case Template with Example DATE Item to be purchased: 6X4 Wheel Tipper

Item Description User Business Unit

Explain why the item is essential to the business operation

New Item Requirements of New Item

Provide details of specific requirements of the item required – these are the key items that would form the basis of a tender technical specification.

300 HP

10m3 tipper

Conventional cab arrangement

Air operated swinging tail gate

6 rod suspension

Tow hitch and hydraulics extended for trailer use

Air conditioning

Bull bar

Questionnaire

History

1 Does the proposed item have a history of external hire? If yes provide annual utilisation. NO

Engine Hours

Timesheet Hours

Kms

2 What is the expected annual utilisation if the item is owned.

Engine Hours

Timesheet Hours

900 Kms 18,500

3 Was the hire wet or dry? (Dry hire is without an operator)

Hourly/Daily Dry Hire Rate

Hourly/Daily Wet Hire Rate

4

If there is NO history of hire, is there a contractor available with the required skills to provide a quality service at a competitive price?

Hourly/Daily Dry Hire Rate

No dry hire available

Hourly/Daily Wet Hire Rate

$60/hr

5 If a contractor is available what replacement service will the operator offer if the unit supplied breaks down?

100% availability (ie backup available) This company has a small fleet of trucks. Different scenario for single owner/operator

6 Is there an in house plant operator sufficiently skilled?

Yes

7 Is the work seasonal? If yes over what period?

October-April

Operating Conditions

8 How will the unit be transported to site? Self drive

9 What terrain will the unit be working in? Undulating

Operating Requirements

10 What other items of plant or equipment will be required to support the item?

Nil

Servicing and Maintenance


11 Will the item be maintained in house or by an external operator?

In house

In House

12 If in house what staff resources are required for servicing and repairs?

No additional staff requirement

13 Are the in house resources sufficiently skilled?

Yes

Contractor

14 Is there a contractor available to undertake servicing and repairs?

Yes

15 What is the minimum hire a contractor would expect – on site, off site charges?

500 hrs for an annual supply contract for a 3 year term

16 What will it cost to manage the hire?

Advertise, prepare specs, assess tenders, certify invoices, admin costs Allow $2/hr@900hrs = $1800

17 What replacement service will the operator offer if the unit supplied breaks down?

Replacement truck within 4 hours

18 Will the contractor charge by flat rate or hour meter or a combination of both?

Timesheet hours

19 Who is responsible for mechanical failures?

Truck Owner

20 Who is responsible for wear items like blades and tips?

Truck Owner

Operating Costs

21 What is the estimated annual operating cost of the item?

Covered in ownership cost below

22 What is the estimated annual ownership costs?

$44,520

44,520/900 = $49.47/hr

Operator Costs

23 What is the estimated annual operator costs?

900hrsX $30/hr =$27,000

Internal Hire Rate

24 What is the estimated wet hire rate? $30+$49.47 = $79.47

Cost Comparison

25 Total Contractor Cost $60 plus $2 admin = $62/hr

26 Total Day Labour Cost $79.47

27 Annual Cost Difference 79.47-62 = 17.47 * 900 = $15,723 in favour of Hire over Ownership


APPENDIX 5 – OPTIMUM REPLACEMENT POINT CALCULATION –

ROAD GRADER


APPENDIX 6 – GUIDELINES FOR THE CALCULATION OF INTERNAL

HIRE RATES

To calculate the hire rate for each vehicle or item of plant the following methodology is recommended. Using the Institute of Public Works Engineering Plant & Vehicle Management Manual calculations are made as follows:- In the following example we have a 6x4 truck travelling 44,253km a year 1. Truck value exclusive of GST $196,779 2. Fuel consumption 38 litre/100 km 3. Fuel price $1.35c per litre 4. Annual average maintenance over 8 years $10,439 per annum (this is based on manufacturers recommended maintenance per KM ie 0.23589c per kilometer) 5. Tyres cost $620 each 6. Tyres need to be replaced every 45,000 km 7. Oil consumption 4 litre per 10,000 km 8. Oil price is $12.70c a litre 9. Resale value at 8 years is $70,000 10. Opportunity costs is 9.5% 11. Risk allowance 30% per annum of average maintenance 12. Registration costs $3,890 per annum Table 1 Fixed Costs

Fixed Costs

Item Calculation Amount

Fixed Depreciation = Cost of the vehicle ($196,779) x 5% $9,839

Opportunity costs = 9.5%

= Cost of the vehicle ($196,779) x 9.5% $18,694

Vehicle Registration From existing cost ($3,890) $3,890

Insurance = Cost of insurance ($57,200) / fleet value ($12,000,000) x Cost of the vehicle ($196,779)

$938

Administration = Cost of administration ($200,000) / Fleet Value ($12,000,000) x cost of the vehicle ($196,779)

$3,278

Total fixed Costs $36,639


Table 2 - Variable Costs

Variable Costs

Item Calculation Amount

Operational Depreciation

= Purchase price ($196,779) – Resale Value ($70,000) / Anticipated life (8 years) less the fixed depreciation ($9,839)

$6,008

Fuel = 38litre per 100km

= Annual mileage 44253 / 100 x 38 litre x $1.35 $22,702

Tyres = 10 tyres @ $620.00 each

= (10 tyres x $620 = $6,200) / 45,000,km tyre life x 44253 annual km

$6,097

Oil = 4litre per 100,00km

= (Annual mileage 44253 / 10,000) x Oil price $12.70 per litre x 4 litres

$225

Repairs and maintenance

From data sheet ($10,439) $10,439

Risk allowance 30% of maintenance $3,132

Total variable costs $48,603

Internal Charge out rate

Item Calculation Amount Per Hour

Annual hire rate = $48,603 + $36,693 $85,296

Check Total hire rate based on 1200hrs

= $85,296/1200 $71.08


APPENDIX 7 - WHOLE OF LIFE COST CALCULATIONS

Example Tractor Assume the fleet is made up as follows: 1. The all up value is $12,000,000 2. The fleet comprises of a number of vehicles from Graders and Trucks, to Lawn mowers and Cars. 3. Current administration costs are $520,000 4. Insurance bill for the complete fleet is $57,200 Whole of life costs Scenario You own a Tractor and from utilisation calculations the Tractor is currently operating 576 hours a year. From your records staff are charging out 1320 timesheet hours a year. 13. Tractor value exclusive of GST $83,000 14. Fuel consumption 9.5 lt per hour 15. Fuel price $1.25c per litre 16. Annual average maintenance over 8 years $3,900 per annum 17. Tyres cost $370 each for front and $1190 rear 18. Tyres need to be replaced every 1900hrs 19. Oil consumption 5 lt per 1000hrs 20. Oil price is $4.70c a litre 21. Fixed depreciation is 5% 22. Resale value at 7 years is $27,000 23. Opportunity costs is 6.5% 24. Risk allowance $1200 per annum 25. Registration $56 per annum Annual Fixed Costs

Depreciation 5% $4150

Opportunity costs 6.5% $5395

Vehicle Registration $56 Insurance $396 Administration $3596

Total fixed Costs $13593

Annual Variable Costs

Replacement reserve

Purchas price – resale value / life (- fixed depreciation) $3850

Fuel 9.5lt per hour $6840

Tyres 2 tyres @ $370.00 each 2 tyres @ $1190 each

$946

Oil 5 lt per 1000hrs $14

Repairs and maintenance $3900

Risk allowance $1200

Total variable costs $16750

Total Annual costs

Replacement reserve $8000

Fixed costs $9443

Variable costs $12900

Total annual costs $30343

Internal Charge out rate

Replacement reserve

1320hrs $6.06

Operational cost recovery

1320hrs $16.93

Total hire rate 1320hrs $23.00

Skid Steer Loader


Source: IPWEA Online Plant & Vehicle Management Tools – Whole of Life Cost Calculator (www.ipwea.org/fleet)


5.5 Tonne Excavator

Source: IPWEA Online Plant & Vehicle Management Tools – Whole of Life Cost Calculator (www.ipwea.org/fleet)


APPENDIX 8 – DRAFT SERVICE LEVEL AGREEMENT BETWEEN

FLEET MANAGEMENT/MECHANICAL SERVICES/END USERS


Where is an SLA Required

• Fleet Owner with Fleet User

• Fleet Owner with Internal Maintenance Service Provider

• Fleet Owner with External Maintenance Service Provider

Determine Content

• The level and scope of the service to be provided

• The standard in terms of quality, quantity and timeliness of the service

• A clear agreement on the price or internal charge associated with the provision of the service

• Procedures for paying (or accounting for) the internal charges

• How the service is to be monitored and the performance measures for the service

• Agreement on dealing with any disputes.

Agreement

• All parties must be represented in discussions/negotiations

• Arrange formal sign off once agreement is reached

• Ensure all relevant staff are aware of the commitments

• Ensure regular reviews of performance


Clarence Valley Clarence Valley Clarence Valley Clarence Valley

CouncilCouncilCouncilCouncil

DRAFTDRAFTDRAFTDRAFT

SERVICE LEVEL AGREEMENTSERVICE LEVEL AGREEMENTSERVICE LEVEL AGREEMENTSERVICE LEVEL AGREEMENT

RESPONSIBILITIESRESPONSIBILITIESRESPONSIBILITIESRESPONSIBILITIES

FOR FOR FOR FOR

THE SUPPLY OF FLEET MANAGEMENT & THE SUPPLY OF FLEET MANAGEMENT & THE SUPPLY OF FLEET MANAGEMENT & THE SUPPLY OF FLEET MANAGEMENT &

MECHANICAL SERVICES MECHANICAL SERVICES MECHANICAL SERVICES MECHANICAL SERVICES

PARTIES TO THE AGREEMENTPARTIES TO THE AGREEMENTPARTIES TO THE AGREEMENTPARTIES TO THE AGREEMENT

• Fleet Management Fleet Management Fleet Management Fleet Management

• Mechanical ServicesMechanical ServicesMechanical ServicesMechanical Services

• End User DepartmentsEnd User DepartmentsEnd User DepartmentsEnd User Departments

NovemberNovemberNovemberNovember 2012012012015555


Fleet Management Responsibilities Fleet Management shall be responsible for:

o Making available to internal customers plant, equipment, vehicles and all other fleet items for hire on a full cost recovery basis.

o Ensuring all reasonable repairs & maintenance, scheduled services and appropriate consumables, including fuel, tyres and oil are included as part of the hire rate.

o Preparing the annual budget fleet replacement report for endorsement by Council as well as subsequent reports to Standing Committees for their endorsement and Council approval for the purchase of both budgeted and unbudgeted fleet items.

o Minimising the whole of life depreciation cost of assets through implementing optimum purchasing strategies linked and or supplemented by optimum disposal strategies.

o Expert technical advice and support as required. o Development of specifications incorporating the latest product innovations and technologies

designed to fulfil the customer’s operational requirements. o Arranging for purchase and disposal of all fleet assets. o Ensuring that the Council’s fleet assets comply with all the appropriate regulatory and safety

standards relevant to their application. o Maintaining a record of all accident related repairs/replacements. Accident repairs of value less

than the insurance excess are managed by Fleet .Accident repairs of value greater than the insurance excess are managed by Administration.

o Advice to light fleet users on minimising FBT penalties/exposure through improved vehicle utilisation.

o Initiating billing of end user departments for repairs deemed to be the responsibility of the end user will rest with the Manager Plant & Depot Services.

Mechanical Services Responsibilities Mechanical Services shall be responsible for providing the following:

o Supply of all necessary labour, materials, plant and equipment overheads to carry out all servicing, repairs and maintenance.

o Maintenance of the plant and vehicles in a usable and safe condition in compliance with all Federal, State and Local Laws including the Occupational Health and Safety Act.

o Regular maintenance of all plant and vehicles in accordance with this Agreement, the manufacturers’ recommendations and manuals and industry recognised plant and vehicle maintenance best practice.

o Supply of all consumables for all plant and vehicles such as oil, grease, tyres, belts, filters, and the like to keep all plant and vehicles operable under fair wear and tear conditions.

o Consumables such as cutting edges, brooms etc needing replacement under fair wear and tear conditions shall be charged to the machine and built into the hire rate.

o In liaison with fleet management, follow-up to suppliers for all warranty claims, charges and adjustments.

o Provide detailed records for the proper reporting and accounting of servicing and repairs of all plant and vehicles.

o Update the fleet management system plant & vehicle service records with detailed labour hours allocated to each task and maintenance failure records. The fleet management system will then produce monthly reports on servicing and repairs of all plant and vehicles using the data provided by the service provider. Records to be complete and maintained within 14 days of completing a job.

o Provide a servicing booking, information and scheduled maintenance and repair service. o Provide advice to the end User of a scheduled service a minimum of 14 days in advance. o Prepare the service schedule for the weekly service scheduling meeting. o Tagging of a vehicle once handed to the workshop. A vehicle once accepted by the workshop

cannot be taken from the workshop until cleared by the workshop supervisor. Note that the workshop shall not undertake “patch up” jobs and vehicles will only be released if they meet all OH&S safety requirements.

The response times to make plant and vehicles operable following breakdowns shall be:

o Respond to the request and confirm to the Supervisor that they are responding to the breakdown request within 30 minutes of being advised of a breakdown.

o Within 30 mins of arrival on site advise the Operations Supervisor the expected time to make operable or other action to be taken (within the hours of 6AM – 5PM).

o At the earliest opportunity the following day (by 3PM at latest) the Workshop shall advise the Operations Supervisor of the job status and the estimated timeframe for making the vehicle operable.


o If the Workshop does not have the resources to complete the work in house then the work will be outsourced, provided this will result in a more timely repair.

o Out of hours call out requirements shall be referred to the Workshop Supervisor. Response to a defect report

o A defect report shall be assessed and either attended to promptly or scheduled for future repair via a new job creation in the fleet management system and the Operations Supervisor be advised accordingly.

The Fleet User’s Responsibilities The User shall be responsible to ensure the following:

o Daily checks are completed and recorded in the daily check book and signed off weekly by the Supervisor

o Any maintenance requirement identified shall be recorded on an operator’s requisition form (defect report) and signed by the Operator and Supervisor and submitted promptly to the Workshop Supervisor. (A defect report shall be assessed and either attended to promptly or scheduled for future repair via a new job creation in the fleet management system and the Operations Supervisor shall be advised accordingly).

o Presenting the item for service at the agreed time (eg 8am) in a clean state (not covered in mud) so maintenance work can commence immediately. Any cleaning required by mechanical services shall be recorded on a job card or in the fleet management system as Operator Inattention.

o Outside of emergency situations, provide at least 48 hours notice to the service provider if an item scheduled for service is required for operational use on that day.

o Ensuring an item is not serviced more than 5% beyond the manufacturer’s recommended service schedule.

o All necessary driver / operator licensing, induction, training and instruction as necessary to meet all Federal, State and Local Laws including the Occupational Health and Safety Act.

o Operating all plant and vehicles strictly in accordance with the manufacturer’s recommendations, safe work practices and good practice.

o Keeping the plant and vehicles clean and fit for use as required for normal operation. o Daily cleaning and “maintenance” of all plant and vehicles as required by Fleet Management. o Attend a weekly service scheduling meeting. o Provide the appropriate function cost number for the recovery of the cost of accident damage

repairs up to the value of the insurance excess, for any plant and light vehicle in the client’s care. This does not include an accident that is acknowledged as the fault of another driver.

o Maintain correct and timely records of internal and external plant hire hours and appropriate cost number allocations.

Dispute Resolution Disputes should be resolved by the parties however if the parties cannot resolve the dispute then it will be referred to the appropriate Director(s) for determination. Signed Fleet Management Name__________________________ Date___________________________

Mechanical Services Name__________________________ Date___________________________

Waste Name__________________________ Date___________________________

Parks Name__________________________ Date___________________________

Maintenance Name__________________________ Date___________________________

Construction Name__________________________ Date___________________________


APPENDIX 9 – EXAMPLE FLEET REPORT

Business Rules Unifleet Reports RAG Charts

Bar charts are scaled by asset count ONLY. Reports are run on the 23of every month, covering the previous 6 months data. (For example, report run on 23

rd November covers data from 1

st May - 31

Utilisation Light Fleet Major Plant and Hire Plant Only assets with meter types Hours or Kilometres *Trailers that carry payload (gravel, water, fuel, machinery, etc) and have a value over $10,000 will be included. (These have to have a hub meter.)*Trailers that are dedicated plant trailers attached to an operational unit(truck) must be attached as a child (trailer) to the parent (truck) and are exempt from hub meter requirements. (Allocate to Minor Plant Category so they are not included in report.)

Operational Productivity Light Fleet & Major Plant Only assets with meter types Hours or Kilometres *Only applies to assets that use Income Units to recover costs.

Fuel Consumption Light Fleet Major Plant and Hire Plant Only assets with meter types Hours or Kilometres *Tick to exclude non-fuel using trailers from fuel consumption report.

Optimum Replacement Light Fleet, Major Plant & Assets Under $10,000 *This report is run with no end date to ensure that all relevant data is analysed.


EXAMPLE FLEET REPORTING TO EXECUTIVE MANAGEMENT (SOURCE UNIF

LY. Reports are run on the 23rd

of every month, covering the previous 6 months data. (For example,

31st October.)

RED AMBER

*Trailers that carry payload (gravel, water, fuel, machinery, etc) and have a value over $10,000 will be included. (These have to have a hub meter.) *Trailers that are dedicated plant trailers attached to an operational unit (truck) must be attached as a child (trailer) to the parent (truck) and are exempt from hub meter requirements. (Allocate to Minor Plant Category

Assets with actual utilisation vs budget utilisation of greater than +30% higher, or greater than -30% lower

Assets with actual utilisation vs budget utilisation of less than or equal to +30% higher but greater than +20% higher, or less than or equal to -30% lower but more than -20% lower

costs.

Assets with a variance between actual utilisation % and actual income units % of greater than +20% or greater than -20%

Assets with a variance between actual utilisation % and actual income units % of less than or equal to +20% but greater than +10%, or less than or equal to -20% but greater than -10%

fuel using trailers from fuel consumption report.

Assets with expected fuel economy vs actual fule economy of greater than +30% higher or greater than -30% lower

Assets with expected fuel economy vs actual fuel economy of less than or equal to +30% higher but greater than +20% higher, or less than or equal to -30% lower but greater than -lower

*This report is run with no end date to ensure that all relevant data is

Assets that are overdue for replacement by more than 3 months

Assets that are overdue for replacement by 3 months or less

AGEMENT (SOURCE UNIFLEET)

GREEN

Assets with actual utilisation vs budget utilisation of less than or equal to +30% higher

higher, or less than or equal 30% lower but more than

Assets with actual utilisation vs budget utilisation of less than or equal to +20% higher, or less than or equal to -20% lower

between actual utilisation % and actual income units % of less than or equal to +20%

10%, or 20%

Assets with a variance between actual utilisation % and actual income units % of less than or equal to +10%, or less than or equal to -10%

fuel economy vs actual fuel economy of less than or equal to +30% higher but greater than +20% higher, or

30% -20%

Assets with expected fuel economy vs actual fuel economy less than or equal to +20% higher, or less than or equal to -20% lower

Assets that are overdue for replacement by 3 months or

Assets that have an optimum replacement date yet to come


Whole of Life Costs Light Fleet & Major Plant Only

Maintenance Ratio - Scheduled to Unscheduled Light Fleet, Major Plant & Assets Under $10,000 *This report uses data captured over the previous 12 months

Scheduled Maintenance Light Fleet, Major Plant & Assets Under $10,000

Maintenance Failure Light Fleet, Major Plant & Assets Under $10,000 *This report uses data captured over the previous 12 months. *It is designed to provide information to assist fleet managers to improve preventative maintenance practices.

Flat Rate Times Light Fleet & Major Plant Only

Downtime Reports Light Fleet & Major Plant Only *This report is based on Unifleet standard available hours where 2600 hours = 10 hours a day 260 days a year. *This report uses the last 12 months data one month in arrears. (For example, report run on 23

rd November covers data from 1

November in prior year - 31st October in current year.)


Assets with costs vs income ratio of greater than +10%, or greater than -10%

Assets with costs vs income ratio of greater than +5% but less than or equal to +10%, or greater than -5% but less than or equal to -10%

This report uses data captured over the previous 12 months

Assets with non-scheduled maintenance hours of more than 70% of the scheduled maintenance hours

Assets with non-scheduled maintenance hours of lesthan or equal to 70%, or more than 30% of scheduled maintenance hours

Assets that have exceeded their service due date by more than 45 days

Assets that have exceeded their service due date by 45 days or less, but more than 14 days

*This report uses data captured over the previous 12 months. *It is designed to provide information to assist fleet managers to

Assets with normal wear and tear maintenance hours of more than 70% non-scheduled maintenance hours

Assets with normal wear and tear maintenance hours of less than or equal to 70%, or more than 30% of nonscheduled maintenance hours

Assets with labour allocations on scheduled services more than 30% higher than budget flat rate

Assets with labour allocations on scheduled services less than or equal to 30% hibut more than 20% higher than budget flat rate

available hours where

*This report uses the last 12 months data one month in arrears. November covers data from 1

st

October in current year.)

Assets with cumulative downtime hours in the last 12 months more than 390 (or 15% of 2600)

Assets with cumulative downtime hours in the last 12 months of 390 or less but more than 260 (more than10% of 2600)

Assets with costs vs income ratio of greater than +5% but less than or equal to +10%,

5% but less 10%

Assets with costs vs income ratio of less than +5% or less than -5%

scheduled maintenance hours of less than or equal to 70%, or more than 30% of scheduled

Assets with non-scheduled maintenance hours of less than or equal to 30% of scheduled maintenance hours

Assets that have exceeded their service due date by 45 days or less, but more than

Assets that have exceeded their service due date by 14 days or less

Assets with normal wear and tear maintenance hours of less than or equal to 70%, or more than 30% of non-scheduled maintenance

Assets with normal wear and tear hours of less than or equal to 30% of non-scheduled maintenance hours

Assets with labour allocations on scheduled services less than or equal to 30% higher, but more than 20% higher

Assets with labour allocations on scheduled services less than or equal to 20% higher than budget flat rate

Assets with cumulative downtime hours in the last 12 months of 390 or less but more than 260 (more

Assets with cumulative downtime hours in the last 12 months of 260 or less (less than10% of 2600)


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Report forReport for

Uniqco International Pty Ltd

PO Box A366

Australind WA 6233

A Unique Offering

Pty Ltd


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