Deciding on the right size of a Department of Transportation equipment fleet isn't a new problem, but when the Virginia DOT began work on its Equipment Program Strategic-Business Plan in 2001, managers ranked fleet size and utilization among their top priorities. Several business-plan initiatives started with developing new measurements and reports to help monitor each machine's utilization. Success of the right-sizing effort depends on frank discussion of the results with operations managers.
"On the one hand, VDOT serves the traveling public and has to be prepared for any and every contingency—even if it means retaining some equipment with low utilization," says Erle Potter, assistant director of equipment management. "On the other hand, VDOT has stewardship responsibilities to its taxpaying constituents to provide services in the most effective and efficient way possible. This means no waste or excess, and translates into a balancing act between sufficient capability and responsible budgets."
The task is formidable in an organization the size of VDOT, whose 10,000 people use 30,000 pieces of equipment to maintain 57,000 miles of roads and infrastructure. The department has two vast information systems, an Equipment Management System (EMS), and a Rental Equipment Budget System.
"Together, these two systems contain more information than could ever possibly be accessed or used," says Dick Bonistalli, equipment planning and performance manager.
So the DOT formed a small group of IT professionals and equipment managers to choose some pertinent yardsticks. The group adopted as its purpose, "to develop a set of objective, quantitative performance measures, computed and disseminated on a regular basis to promote better understanding of fleet-related strengths and weaknesses."
They began with seven measures of equipment-department's performance. The measures deal with equipment inventory, utilization, replacement, workforce, workload, cash flow and ancillary programs.
VDOT has had utilization data on individual units of equipment for 10 years, but it was a mountain of data with no real informational value because there were no benchmarks for acceptable utilization. Emergency response and seasonal-use equipment (mowers and snow blowers, for example) made the usage rates unpredictable. There was no policy to trigger action in cases of abnormal utilization.
The performance-measure task force applied statistical formulas to the utilization data, relating use of individual units to all other like machines statewide. They were able to identify upper and lower limits of acceptable utilization for every class of equipment in the inventory based on actual working conditions during the current period.
The group then programmed EMS to produce quarterly reports showing abnormal utilization—machines whose utilization falls outside the control limits. The control limits became the guidelines used to "red flag" over- and under-utilization. They also made reviewing usage reports more manageable.
VDOT developed a coordinated policy that requires annual partnering meetings and utilization reports between equipment managers in VDOT's nine districts and the operational managers they serve. In the meetings, they discuss each item of equipment that shows abnormal utilization and jointly decide what to do with it.
"The report shows machines below the lower control limit," says Blair Kinker, equipment acquisition manager. "It shows the hours or miles used, the hours the machine was broken down or down for maintenance, and the hours it was idle. And it allows the managers to compare actual cost per hour used to the average cost per hour for that class of machine throughout the state."
One district's year-end report, for example, noted 56 machines with abnormal utilization. On closer inspection it was discovered that 26 of them were not significantly underutilized when considering downtime, or they were deemed essential for emergency response. The report then detailed the status of the remaining 30 machines, noting options such as reassigning units to other districts, reassigning to higher-utilization work within the district, and changing work practices to make better use of the machine.
Another report that is beginning to have significant impact on the fleet is called "Equipment That Has Been Replaced But Not Surplused, Salvaged, or Sold." It provides managers at all levels a snapshot of equipment that remains in inventory after it has been replaced.
All the efforts to manage fleet size have resulted in a reduction of the fleet by 80 units; the potential to recapture over $500,000 from the sale of excess equipment; projected savings in excess of $5 million by not replacing the disposed equipment; and lower maintenance and repair costs of a smaller fleet. Of course, the program remains in its infancy. Utilization reviews have only been taking place for about 18 months. As everyone gains experience, Kinker expects results to accelerate.
One tool that should sharpen the utilization discussion is a new, automated fueling system that is currently being installed at VDOT's 284 fueling sites. The system automatically collects the equipment number and hour-meter or odometer reading when a vehicle shows up to be fueled. It will not dispense fuel to the vehicle unless the operator swipes a card through a digital reader, and then it will only dispense the correct kind of fuel in no greater quantity than that particular vehicle can carry. Data is downloaded immediately to EMS, and it is expected to dramatically improve the accuracy of utilization records.
VDOT equipment managers have embarked on a multi-year business improvement process guided by its strategic plan. The department can already boast of success on several important fronts. Performance measurement, improved equipment utilization, and the reduction in fleet size are clear examples.